AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 1999
REGISTRATION NO. 333-78447
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CENDANT CORPORATION DELAWARE 06-0918165
CENDANT CAPITAL II DELAWARE 22-356523
(exact name of (State or other (I.R.S.Employer
the registrants Jurisdiction of Identification No.)
as specified in Incorporation or
their respective Organization)
charters)
9 WEST 57TH STREET
NEW YORK, NY 10019
(212) 413-1800
FAX: (212) 265-1232
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
JAMES E. BUCKMAN, ESQ.
VICE CHAIRMAN
AND GENERAL COUNSEL
CENDANT CORPORATION
9 WEST 57TH STREET
NEW YORK, NY 10019
(212) 413-1800
FAX: (212) 413-1923
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
COPIES TO:
VINCENT J. PISANO, ESQ. ERIC J. BOCK, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP VICE PRESIDENT-LEGAL
919 THIRD AVENUE CENDANT CORPORATION
NEW YORK, NY 10022 9 WEST 57TH STREET
(212) 735-3000 NEW YORK, NY 10019
FAX: (212) 735-2000 (212) 413-1800
FAX: (212) 413-1922
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, as
amended please check the following box and list the Securities Act
Registration Statement Number of the earlier Effective Registration
Statement for the same offering. [ ]
If this Form is a Post-Effective Amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, as amended, check the following
box and list the Securities Act Registration Statement Number of the
earlier Effective Registration Statement for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF SECURITIES AMOUNT TO PROPOSED PROPOSED AMOUNT OF
TO BE REGISTERED BE MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING AGGREGATE FEE
PRICE OFFERING
PER PRICE(1)
SECURITY(1)
Debentures(2)
Common Stock,
$.01 par value(3)
Additional Income PRIDES(4)
New Income PRIDES(4)
Additional Growth PRIDES(5)
New Growth PRIDES(5)
Trust Preferred Securities
of Cendant Capital II(6)
Guarantees and Backup
Under-takings of Cendant
Corporation in connection
with Preferred Securities
of Cendant Capital II(7)
Total 100%(9) $ (3)(4) $343,338(8)
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(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o).
(2) Subject to note (8) below, there are being registered hereunder
an indeterminate principal amount of Debentures which will be issued
and sold by the Company to the Trust, which may later be distributed
to the holders of Trust Preferred Securities upon a dissolution of
the Trust and a distribution of the assets thereof.
(3) Subject to note (8) below, there are being registered hereunder
an indeterminate number of shares of Common Stock as shall be
issuable upon settlement of the Purchase Contracts that are
components of the additional Income PRIDES, new Income PRIDES,
additional Growth PRIDES and new Growth PRIDES registered hereunder.
(4) Subject to note (8) below, there are being registered hereunder
an indeterminate number of additional Income PRIDES and new Income
PRIDES.
(5) Subject to note (8) below, there are being registered hereunder
an indeterminate number of additional Growth PRIDES and new Growth
PRIDES.
(6) Subject to note (8) below, there are being registered hereunder
an indeterminate amount of Trust Preferred Securities.
(7) Includes the rights of holders of the Trust Preferred Securities
under the Guarantees and back-up undertakings, consisting of
obligations by the Company to provide certain indemnities in respect
of, and pay and be responsible for certain expenses, costs,
liabilities, and debts of, Cendant Capital II, as set forth in the
Amended and Restated Declaration of Trust, the Indenture and the
Supplemental Indenture thereto and as further described in the
Registration Statement. No separate consideration will be received
for the Guarantees or any back-up undertakings.
(8) Previously paid.
(9) The registration fee is based on the consideration to be paid for
the new FELINE PRIDES and the additional FELINE PRIDES. The
consideration per additional FELINE PRIDES, for purposes of
calculating the registration fee, is equal to the theoretical value
of the current FELINE PRIDES, which as of the close of business on
May 10, 1999, was $29.65. The consideration per new FELINE PRIDES is
equal to the market price of $31.25 of the current FELINE PRIDES plus
$17.57. The market price of a current FELINE PRIDES has been
estimated solely for the purpose of calculating registration fees
pursuant to Rule 457(c) based on the average high and low of the
registrants' Income PRIDES on May 10, 1999 as reported on the
composite tape of the NYSE.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
[FLAG]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PROSPECTUS
[NUMBER OF] NEW FELINE PRIDES(SM)
4,000,000 ADDITIONAL FELINE PRIDES(SM)
CENDANT CORPORATION
TRUST ORIGINATED PREFERRED SECURITIES (TOPRS(SM))
CENDANT CAPITAL II
(LIQUIDATION AMOUNT $50 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED TO
THE EXTENT PROVIDED IN THIS PROSPECTUS BY
CENDANT CORPORATION
This is an offering of new FELINE PRIDES(SM), 4,000,000 additional
FELINE PRIDES by Cendant Corporation and separately offered and separately
traded 6.45% trust originated preferred securities of Cendant Capital II, a
trust wholly owned by us. The new FELINE PRIDES consist of units referred
to as new Income PRIDES and new Growth PRIDES. The additional FELINE PRIDES
consist of units referred to as additional Income PRIDES and additional
Growth PRIDES. In addition to the separately offered and separately traded
trust preferred securities, the trust is issuing [number] trust preferred
securities that will initially be held as components of the new Income
PRIDES and additional Income PRIDES and will not be offered or traded
separately from the new Income PRIDES or additional Income PRIDES, unless
and until substitution is made as described in this prospectus.
This offering is made under a stipulation of settlement agreement we
have entered, the material terms of which are described in this prospectus.
The additional FELINE PRIDES may be used to exercise rights issued in
connection with the settlement.
References made in this prospectus to FELINE PRIDES refer to new
FELINE PRIDES and additional FELINE PRIDES. References made in this
prospectus to Income PRIDES refer to new Income PRIDES and additional
Income PRIDES. References made in this prospectus to Growth PRIDES refer to
new Growth PRIDES and additional Growth PRIDES.
INVESTING IN THE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 12.
We will apply for listing of the new Income PRIDES and the new Growth
PRIDES on the NYSE under the symbols and respectively, subject to
official notice of issuance and satisfaction of the NYSE minimum distribution
requirements. The additional FELINE PRIDES and the trust preferred
securities will not initially be listed on an exchange.
The new Income PRIDES and the new Growth PRIDES will be issued by us
only upon exercise of rights, described in this prospectus, that have been
issued in accordance with the settlement agreement. The offering price of
the additional FELINE PRIDES will be determined in accordance with a
formula described in this prospectus and will be included in a prospectus
supplement when it is determined.
The additional FELINE PRIDES may be sold directly by us, through
agents that we designate from time to time, or through underwriters or
dealers, although, as required by the settlement, they are being offered
initially to persons who received rights as part of the initial
distribution of rights and to other rights holders and will be offered to
others only if available. Any additional FELINE PRIDES purchased by holders
of rights must be immediately converted into new FELINE PRIDES. If any
agents or underwriters are involved in the sales of additional FELINE
PRIDES, the names of the agents or underwriters and any applicable fees,
commissions or discounts will be set forth in a prospectus supplement.
Neither the SEC, nor any state securities commission, has approved or
disapproved of these securities or passed upon the accuracy or adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
The date of this Prospectus is , 1999.
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SM Service Mark of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
Page
THE OFFERING - Q&A...........................................................1
RISK FACTORS................................................................12
THE COMPANY.................................................................20
THE TRUST...................................................................23
PRICE RANGE OF COMMON STOCK AND DIVIDENDS...................................24
ACCOUNTING TREATMENT........................................................25
USE OF PROCEEDS.............................................................26
EXECUTION OF THE LITIGATION SETTLEMENT......................................26
DESCRIPTION OF THE FELINE PRIDES............................................31
DESCRIPTION OF THE PURCHASE CONTRACTS.......................................38
PROVISIONS OF THE CONTRACT PURCHASE
AGREEMENT AND THE PLEDGE AGREEMENT........................................49
DESCRIPTION OF THE TRUST PREFERRED SECURITIES...............................52
DESCRIPTION OF THE GUARANTEE................................................66
DESCRIPTION OF THE DEBENTURES...............................................68
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE..............................................76
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................77
PLAN OF DISTRIBUTION........................................................86
LEGAL OPINIONS..............................................................86
EXPERTS.....................................................................87
FORWARD-LOOKING STATEMENTS..................................................87
WHERE YOU CAN FIND MORE INFORMATION.........................................88
THE OFFERING - Q&A
WHAT ARE FELINE PRIDES?
FELINE PRIDES consist of Income PRIDES and Growth PRIDES.
Income PRIDES contain two components:
(1) A purchase contract under which the investor agrees to purchase shares
of our common stock, $0.01 par value per share, on February 16, 2001.
The purchase contract also includes unsecured contract adjustment
payments of 1.05% of $50 per year paid quarterly.
(2) A trust preferred security under which the investor will be paid 6.45%
of $50 per year through and including February 15, 2001 and at the reset
rate after that date, but which will be pledged to us to secure the
investor obligations under the purchase contract. On February 16, 2001
the investor will have two options:
o Pay cash to settle the purchase contract for $50 and release the pledged
trust preferred securities, whose rate will have been reset at that
time, or
o Pay cash to settle the purchase contract by allowing the trust preferred
securities to be sold on its behalf in a remarketing process.
Growth PRIDES contain two components:
(1) A purchase contract under which the investor agrees to purchase shares
of our common stock, $0.01 par value per share, on February 16, 2001.
The purchase contract also includes unsecured contract adjustment
payments of 1.3% of $50 per year paid quarterly.
(2) A zero-coupon treasury security which is a 1/20th undivided beneficial
interest in a zero-coupon U.S. treasury security (CUSIP No. 912833 CD
0) with a principal amount at maturity equal to $1,000 and maturing on
February 15, 2001. The zero-coupon treasury security will be pledged to
us to secure the investor's obligations under the purchase contract.
WHAT ARE CURRENT FELINE PRIDES?
The current FELINE PRIDES were issued under a prospectus and prospectus
supplement, dated February 23, 1998, and February 24, 1998, respectively.
The current FELINE PRIDES have been trading on the NYSE since February 25,
1998. Current FELINE PRIDES consist of current Income PRIDES, NYSE symbol
"CDPrI," and current Growth PRIDES, NYSE symbol "CDPrG."
WHAT IS THE DIFFERENCE BETWEEN CURRENT FELINE PRIDES, ADDITIONAL FELINE
PRIDES AND NEW FELINE PRIDES?
The additional FELINE PRIDES have the same terms as the current FELINE
PRIDES. Holders of rights will be given priority in purchasing additional
PRIDES, which we have agreed will be sold by us no later than 1999.
Since the additional FELINE PRIDES will be offered at a price determined by
a formula, which is expected to be below the market price of the securities
today, we expect that all of them will be purchased by holders of rights
and used to exercise the rights.
Each new FELINE PRIDES, which will be issued only upon the exercise of
rights, will have the same terms as each current FELINE PRIDES except with
respect to the settlement rate and anti-dilution provisions for each
purchase contract. The settlement rate for each purchase contract relating
to a new FELINE PRIDES will be shares of Cendant Common Stock, while the
settlement rate for the current FELINE PRIDES is between 1.0395 and 1.3514
shares of Cendant Common Stock, depending on the average of our closing
stock prices on each of the 20 consecutive trading days ending on the third
trading day preceding February 16, 2001. The anti-dilution provisions of
each purchase contract relating to a new FELINE PRIDES will be identical to
those attaching to the current FELINE PRIDES, except in the event that
prior to , 1999, we issue or agree to issue more than one million
shares of common stock or any other security conferring the right to our
common stock, other than for cash at fair value or as consideration for an
acquisition of a business or business assets, and that agreement causes a
decline in the market value for the common stock, in which case, the
settlement rate for the new FELINE PRIDES may be subject to greater
adjustment.
WHAT ARE RIGHTS?
Under the settlement, we will issue up to rights. The stated value
of each right will be approximately $11.71. The rights will be distributed,
initially, to class members who held current FELINE PRIDES at the close of
business on April 15, 1998, in exchange for the release of any claims
arising from the purchase of FELINE PRIDES on or before April 15, 1998. The
rights will be listed on the NYSE and will trade on the NYSE until February
14, 2001. You may use the rights to exchange current FELINE PRIDES or
additional FELINE PRIDES for new FELINE PRIDES. If you exchange three
rights together with two current Income PRIDES or two additional Income
PRIDES, you will receive two new Income PRIDES. If you exchange three
rights together with two current Growth PRIDES or two additional Growth
PRIDES, you will receive two new Growth PRIDES.
HOW DO I EXERCISE RIGHTS?
In order to exercise rights, no later than February 14, 2001, you must
deliver the rights to , as rights agent, with the notice of
exercise on the reverse side filled in completely, together with the
appropriate number of current FELINE PRIDES or additional FELINE PRIDES
being used to exercise the rights. Since the FELINE PRIDES are book entry
only, they must be delivered to the Rights Agent by . The address of
the Rights Agent is . If the new FELINE PRIDES are to be issued to a
person other than the person in whose name the current FELINE PRIDES are
held, the person exercising rights must also submit to the rights agent
payment of any applicable transfer taxes.
We will issue two new Income PRIDES to any person who, prior to the close
of business on February 14, 2001, delivers to us three rights together with
two current Income PRIDES, or two additional Income PRIDES. We will issue
two new Growth PRIDES to any person who, prior to the close of business on
February 14, 2001, delivers to us three rights together with two current
Growth PRIDES, or two additional Growth PRIDES.
AM I ENTITLED TO EXCHANGE A CURRENT FELINE PRIDES OR ADDITIONAL FELINE
PRIDES FOR A NEW FELINE PRIDES?
Any person holding three rights and two current FELINE PRIDES or two
additional FELINE PRIDES is entitled to exchange for two new FELINE PRIDES.
The rights will originally be issued only to persons who owned FELINE
PRIDES at the close of business on April 15, 1998 who do not exclude
themselves from the settlement and who file a timely proof of claim.
However, the rights will be freely tradeable on the NYSE until February 14,
2001, enabling any person to purchase them and execute the exchange.
WHAT PAYMENTS AM I ENTITLED TO AS A HOLDER OF INCOME PRIDES?
Holders of Income PRIDES will be entitled to receive total cash
distributions at a rate of 7.50% of $50 per year, payable quarterly in
arrears. These cash distributions will consist of cumulative cash
distributions on the related trust preferred securities or on the treasury
portfolio, as applicable, payable at the rate of 6.45% of $50 per year
through and including February 15, 2001, and contract adjustment payments
payable by us at the rate of 1.05% of $50 per year, subject, in the case of
both the distributions on the trust preferred securities and of the
contract adjustment payments, to our right to defer the payment of these
amounts.
WHAT PAYMENTS AM I ENTITLED TO AS A HOLDER OF GROWTH PRIDES?
Holders of Growth PRIDES will be entitled to receive quarterly cash
distributions of contract adjustment payments payable by us at the rate of
1.3% of $50 per year, subject to our rights of deferral. In addition,
original issue discount ("OID") will accrue on each related treasury
security.
WHAT CONTRACT ADJUSTMENT PAYMENTS AM I ENTITLED TO?
Contract adjustment payments will be fixed at a rate per year of 1.05% of
$50 per purchase contract in the case of Income PRIDES, and 1.3% of $50 per
purchase contract in the case of Growth PRIDES.
DO WE HAVE THE OPTION TO DEFER CURRENT PAYMENTS?
We have the right at any time, and from time to time, limited to a period
not extending beyond the maturity date of our debentures, due February 16,
2003 and initially bearing interest at 6.45% per year, to defer the
interest payments due on the debentures (each, an "extension period"). As a
consequence of the deferral, the corresponding quarterly distributions to
holders of trust preferred securities and Income PRIDES would be deferred.
During any period of deferral, these distributions would continue to
accrue, compounded quarterly, at the rate of 6.45% per year through and
including February 15, 2001, and at the reset rate thereafter. We also have
the right to defer the payment of contract adjustment payments on the
related purchase contracts until no later than February 16, 2001. However,
any deferred contract adjustment payments would continue to accrue at the
rate of 7.5% per year until paid, compounded quarterly.
WHAT ARE THE PAYMENT DATES FOR THE SECURITIES?
The current payments described above in respect of the Income PRIDES and
Growth PRIDES will be payable quarterly in arrears on February 16, May 16,
August 16 and November 16 of each year (each, a "payment date"), commencing
to holders of record on the business day preceding the payment
dates. With respect to contract adjustment payments, the payments will be
payable through and including the earlier of February 16, 2001 or the most
recent quarterly date on or before any early settlement of the related
purchase contracts. In the case of trust preferred securities that are
components of Income PRIDES, the payments will be payable through and
including the most recent quarterly date on or before the earlier of
February 16, 2001 and the date the liquidation amounts of the trust
preferred securities together with all accumulated and unpaid distributions
are paid in full. All of these payments are subject to the deferral
provisions described below.
WHAT IS THE SETTLEMENT RATE?
The settlement rate is the number of newly issued shares of common stock
we are obligated to sell and you are obligated to buy upon settlement of a
purchase contract on February 16, 2001.
The settlement rate for each purchase contract related to additional
FELINE PRIDES, subject to adjustment under certain circumstances, will be
identical to the settlement rate for each purchase contract related to the
current FELINE PRIDES. The settlement rate will be as follows:
(a) If the applicable market value is equal to or greater than $48.10,
the settlement rate will be 1.0395 shares of our common stock per
purchase contract.
(b) If the applicable market value is less than $48.10 but greater than
$37, the settlement rate will be equal to $50 divided by the
applicable market value.
(c) If the applicable market value is less than or equal to $37, the
settlement rate, which is equal to $50 divided by $37, will be
1.3514 shares of our common stock per purchase contract.
Unlike the settlement rate for the additional FELINE PRIDES and current
FELINE PRIDES, which depends on the applicable market value, the settlement
rate of the new FELINE PRIDES is . At the settlement date of each
purchase contract relating to a new FELINE PRIDES, we will issue a holder
of new FELINE PRIDES shares of common stock per each purchase contract
relating to a new FELINE PRIDES, regardless of the market price of the
shares.
WHAT IS REMARKETING?
The trust preferred securities of Income PRIDES holders who have failed
to notify First National Bank of Chicago, as agent of the holders of the
FELINE PRIDES in its capacity as the purchase contract agent, on or prior
to the fifth business day before February 16, 2001 of their intention to
pay cash to satisfy their obligations under the related purchase contracts
will be remarketed on the third business day immediately preceding February
16, 2001.
The remarketing agent will use its reasonable efforts to remarket those
trust preferred securities (bearing the reset rate) on that date for
settlement on February 16, 2001. The remarketing agent will use its best
efforts to obtain a price of approximately 100.5% of the aggregate stated
liquidation amount of those trust preferred securities, plus any related
accrued and unpaid distributions, including deferred distributions.
The portion of the proceeds from the remarketing equal to the total
stated liquidation amount of those trust preferred securities will be
automatically applied to satisfy in full those Income PRIDES holders'
obligations to purchase our common stock under the related purchase
contracts. The remarketing agent will deduct as a remarketing fee an amount
not exceeding 25 basis points (.25%) of the aggregate stated liquidation
amount of the remarketed trust preferred securities from any amount of
those proceeds in excess of the aggregate stated liquidation amount of the
remarketed trust preferred securities plus any accrued and unpaid
distributions, including any deferred distributions. The remarketing agent
will remit the remaining portion of the proceeds, if any, for the benefit
of that holder.
WHAT HAPPENS IF THE REMARKETING AGENT DOES NOT SELL THE TRUST PREFERRED
SECURITIES?
We will exercise our rights as a secured party to dispose of the trust
preferred securities in accordance with applicable law and to satisfy in
full, from the proceeds of that disposition, your obligation to purchase
common stock under the related purchase contracts if
o the remarketing agent cannot remarket the related trust preferred
securities, other than to us, of your Income PRIDES at a price not less
than 100% of the total stated liquidation amount of those trust preferred
securities plus accrued and unpaid distributions, including deferred
distributions, if any, or
o if the remarketing has not occurred because a condition precedent to the
remarketing has not been fulfilled.
IF I AM NOT A PARTY TO A PURCHASE CONTRACT, MAY I STILL PARTICIPATE IN A
REMARKETING OF MY TRUST PREFERRED SECURITIES?
Holders of trust preferred securities that are not components of Income
PRIDES may elect, in the manner described below, to have their trust
preferred securities remarketed by the remarketing agent.
BESIDES PARTICIPATING IN A REMARKETING, HOW ELSE WILL MY OBLIGATIONS UNDER
THE PURCHASE CONTRACTS BE SATISFIED?
o through the early delivery of cash to the purchase contract agent in the
manner described below ("early settlement")
o in the case of Income PRIDES, by settling the related purchase contracts
with separate cash on the third business day prior to February 16, 2001
with prior notification to the purchase contract agent
o upon the termination of purchase contracts.
WHAT ARE THE TRUST PREFERRED SECURITIES?
The trust preferred securities represent undivided beneficial ownership
interests in the assets of the trust.
WHAT DISTRIBUTIONS WILL I RECEIVE ON THE TRUST PREFERRED SECURITIES?
Distributions on the trust preferred securities that are components of
Income PRIDES will constitute a portion of the distributions on the Income
PRIDES. Distributions will be payable initially at the annual rate of 6.45%
of the liquidation amount of $50 per trust preferred security to, but
excluding, February 16, 2001. If any trust preferred securities remain
outstanding on and after February 16, 2001, the distributions on these
trust preferred securities will be at the reset rate from February 16, 2001
to, but excluding, February 16, 2003.
WHEN WILL I RECEIVE DISTRIBUTIONS ON THE TRUST PREFERRED SECURITIES?
Distributions will be payable quarterly in arrears on each February 16,
May 16, August 16 and November 16, commencing , to holders of record
on the business day preceding each date.
WHAT IS THE RESET RATE?
The reset rate is the interest rate on the debentures, and therefore the
distribution rate on the trust preferred securities, following February 16,
2001. Merrill Lynch, Pierce, Fenner & Smith Incorporated in its capacity as
the reset agent will determine the reset rate that the trust preferred
securities should bear in order for a trust preferred security to have an
approximate market value of 100.5% of $50 on the third business day
immediately preceding February 16, 2001, except that we may limit the reset
rate to be no higher than the rate on the two-year benchmark treasury plus
200 basis points (2%).
WHEN WILL THE INTEREST RATE ON THE DEBENTURES BE RESET?
Unless a tax event redemption has occurred, the interest rate on the
debentures will be reset on the third business day immediately preceding
February 16, 2001. The debentures, and, thus, the trust securities, which
include the trust preferred securities and the common securities
representing undivided beneficial interests in the assets of the trust, are
redeemable at our option, in whole but not in part, upon the occurrence and
continuation of a tax event under the circumstances described to constitute
a tax event.
WHAT ARE THE DEBENTURES?
The debentures will be our senior unsecured obligations and will rank on
a parity with all of our senior unsecured obligations.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES RELATED TO THE INCOME PRIDES,
GROWTH PRIDES AND TRUST PREFERRED SECURITIES?
The purchase of additional FELINE PRIDES and automatic exchange of those
additional FELINE PRIDES and rights for new FELINE PRIDES should be treated
as a purchase of new FELINE PRIDES in exchange for cash and rights.
Investors, if any, that purchase additional FELINE PRIDES and continue to
hold the additional FELINE PRIDES may be considered to have received
consideration to assume the obligations under the related purchase contract
and to have paid that amount, in addition to the purchase price, for the
related trust preferred securities or treasury securities, but those
investors should consult their tax advisors concerning the tax consequences
associated with the acquisition of the additional FELINE PRIDES. The
exchange of current FELINE PRIDES or additional FELINE PRIDES and rights
for new FELINE PRIDES (other than the required delivery of additional
FELINE PRIDES and rights immediately following the purchase of additional
FELINE PRIDES pursuant to this offering) should be treated as a taxable
exchange of both the rights and the purchase contracts related to those
current FELINE PRIDES or additional FELINE PRIDES.
If we do not exercise our right to defer interest on the debentures, a
beneficial owner of Income PRIDES and trust preferred securities will
include in gross income its proportionate share of the stated interest on
the debentures when that interest income is paid or accrued in accordance
with the beneficial owner's regular method of tax accounting. We intend to
report the contract adjustment payments as income to holders of FELINE
PRIDES, but holders should consult their tax advisors concerning the
possibility that the contract adjustment payments may be treated as loans,
purchase price adjustments, rebates or option premiums rather than being
includible in income on a current basis. A beneficial owner of Growth
PRIDES will be required to include in gross income any OID with respect to
the treasury securities as it accrues on a constant yield to maturity
basis. If a tax event redemption has occurred, a beneficial owner of Income
PRIDES will be required to include in gross income its allocable share of
OID on the treasury portfolio as it accrues on a constant yield to maturity
basis.
HOW DO I BUY ADDITIONAL PRIDES?
Any person who receives this prospectus may provide to at
, an indication of his or her interest in purchasing
additional FELINE PRIDES. Indications of interest do not constitute a
commitment to purchase any securities. No later than , 1999, we
will instruct Merrill Lynch, as calculation agent, to determine the
offering price of the additional PRIDES in accordance with the formula
described in this prospectus. If this formula were used with the closing
price of the common stock as of , 1999, the offering price for the
additional Income PRIDES would be $ and the offering price for the
additional Growth PRIDES would be $ , while the closing prices of the
Income PRIDES and the Growth PRIDES on the New York Stock Exchange on that
date were $ and $ , respectively.
After the offering price is determined, we will issue a press release and
file a prospectus supplement and will contact those persons who have given
indications of interest. In filling orders, we will give priority to
persons as follows:
(1) Holders of rights who received them as part of the original
distribution.
(2) Any other holder of rights.
(3) The public.
In order to purchase additional PRIDES, holders of rights must submit
their rights for exercise and their preferential allocation will be limited
to the number of Income PRIDES or Growth PRIDES necessary to exercise all
such rights. In addition, in making allocations, we may make adjustments so
as to satisfy the NYSE listing criteria for the listing of the new FELINE
PRIDES.
We will allow persons belonging to the first two groups to purchase up to
two additional FELINE PRIDES for each right held by that person. However,
the purchase of the additional FELINE PRIDES by persons belonging to the
first two groups is subject to their consenting to immediately exchanging
the additional FELINE PRIDES and rights for new FELINE PRIDES. Allocation
will be limited to the number of Income PRIDES or Growth PRIDES necessary
to exercise all these Rights. If we sell all the additional FELINE PRIDES
to one group, we will not sell any additional FELINE PRIDES to a group of a
lesser priority. If the first two groups oversubscribe we will issue the
additional FELINE PRIDES proportionately among the subscribers. In
addition, in making allocations, we may make adjustments so as to attempt
to satisfy the NYSE listing criteria for the listing of the new FELINE
PRIDES, including the requirement that there be at least 400 holders.
We will not sell any additional FELINE PRIDES to the public unless
members of the first two groups as a whole acquire at least $100,000,000
face amount of additional FELINE PRIDES.
We will not sell you any additional Growth PRIDES unless (1) you received
rights as part of the original distribution and you were a beneficial owner
of Growth PRIDES on April 15, 1998, or (2) we otherwise elect to issue
additional Growth PRIDES.
EXPLANATORY DIAGRAMS
The following diagrams demonstrate some of the key features of the
purchase contracts, the new Income PRIDES, the additional Income PRIDES,
the new Growth PRIDES, the additional Growth PRIDES, the 6.45% trust
preferred securities, the transformation of Income PRIDES into Growth
PRIDES and trust preferred securities and the transformation of rights and
current FELINE PRIDES or additional FELINE PRIDES into new FELINE PRIDES.
FELINE PRIDES PURCHASE CONTRACT
o Income PRIDES and Growth PRIDES both include a purchase contract
under which the investor agrees to purchase shares of our common
stock, $0.01 par value per share, on February 16, 2001. In addition,
the purchase contracts include unsecured contract adjustment
payments shown in the diagrams on the following pages.
[GRAPHIC OMITTED]
(1) For each of the percentage categories shown, the percentage of shares
to be delivered at maturity to an investor in additional Income PRIDES
or additional Growth PRIDES is determined by dividing the related
number of shares to be delivered, as indicated in the footnote for
each category, by an amount equal to $50 divided by $37.
(2) The number of shares to be delivered will be calculated by dividing
$50 by $37.
(3) The number of shares to be delivered will be calculated by dividing
$50 by the applicable market value.(6)
(4) The number of shares to be delivered will be calculated by dividing
$50 by $48.10.
(5) The reported sales price of the common stock listed on the NYSE for
February 24, 1998.
(6) The applicable market value means the average of the closing price per
share of common stock on each of the twenty consecutive trading days
ending on the third trading day immediately preceding February 16,
2001.
[GRAPHIC OMITTED]
INCOME PRIDES
o Income PRIDES consist of two components as described below:
[GRAPHIC OMITTED]
o The investor owns the trust preferred security but will pledge it to
us to secure its obligations under the purchase contract.
GROWTH PRIDES
o Growth PRIDES consist of two components as described below:
[GRAPHIC OMITTED]
o The investor owns the zero-coupon treasury security but will pledge
it to us to secure its obligations under the purchase contract. A
"treasury security" is defined as a 1/20th undivided beneficial
interest in a zero- coupon U.S. treasury security (CUSIP No. 912833
CD 0) with a principal amount at maturity equal to $1,000 and
maturing on February 15, 2001.
TRUST PREFERRED SECURITIES
o Trust preferred securities
have the terms described below:
[GRAPHIC OMITTED]
o The holder of trust preferred securities that are components of Income
PRIDES has an option on February 16, 2001 to either:
o Pay cash to settle the purchase contract for $50 and release
the pledged trust preferred securities whose rates have been
reset on February 16, 2001, or
o Pay cash to settle the purchase contracts by allowing the trust
preferred securities to be included in the remarketing process.
o The holder of trust preferred securities that are separate and not
components of Income PRIDES has the option on February 16, 2001 to
either:
o Continue to hold the trust preferred securities whose rate has
been reset on February 16, 2001, or
o Deliver the trust preferred securities to the Chase Manhattan
Bank, in its capacity as our custodial agent, to be included in
the remarketing process.
TRANSFORMING INCOME PRIDES INTO GROWTH PRIDES AND TRUST PREFERRED SECURITIES
o To create a Growth PRIDES, the investor separates an Income
PRIDES into its components-the purchase contract and the trust
preferred security-and then combines the purchase contract with
a specific zero-coupon treasury security that matures
concurrently with the maturity of the purchase contract.
o The investor owns the zero-coupon treasury security but will
pledge it to us to secure its obligations under the purchase
contract.
o The zero-coupon treasury security together with the purchase
contract constitute a Growth PRIDES. The trust preferred
securities, which are no longer a component of the Income
PRIDES, are tradeable as separate securities.
[GRAPHIC OMITTED]
o The investor can also transform Growth PRIDES and trust
preferred securities into Income PRIDES.
o The transformation of Income PRIDES into Growth PRIDES and
trust preferred securities, and the transformation of Growth
PRIDES and trust preferred securities into Income PRIDES,
require minimum amounts of securities.
o An investor who tenders three rights together with two current
Income PRIDES or two additional Income PRIDES will receive in
exchange two new Income PRIDES. An investor who tenders three
rights together with two current Growth PRIDES or two
additional Growth PRIDES will receive in exchange two new
Growth PRIDES.
[GRAPHIC OMITTED]
RISK FACTORS
Your investment in the FELINE PRIDES will involve risks. You should
carefully consider the following discussion of risks as well as other
information contained in this prospectus.
DISCOVERY OF ACCOUNTING IRREGULARITIES AND RELATED LITIGATION AND GOVERNMENT
INVESTIGATIONS
We were created in December 1997, through the merger of HFS
Incorporated into CUC International with CUC surviving and changing its
name to Cendant Corporation. On April 15, 1998, we announced that, in the
course of transferring responsibility for our accounting functions from the
personnel associated with CUC before the merger to the personnel associated
with HFS before the merger and preparing for the reporting of first quarter
1998 financial results, we discovered accounting irregularities in several
CUC business units. As a result, we and the audit committee of our board of
directors and their respective counsel, assisted by auditors, immediately
began the investigations, which resulted, in part, in our restating
previously reported financial results for 1997, 1996, 1995 and the first
six months of 1998.
As a result of these accounting irregularities, more than 70 lawsuits
claiming to be class actions, two lawsuits claiming to be brought
derivatively on our behalf and several other lawsuits and arbitration
proceedings have been filed against us and other defendants. These lawsuits
assert, among other things, various claims under the federal securities
laws, including claims under sections 11, 12 and 15 of the Securities Act
of 1933 and sections 10(b), 14(a) and 20(a) of and Rules 10b-5 and 14a-9
under the Securities Exchange Act of 1934 and state statutory and common
laws, including claims that financial statements previously issued by us
allegedly were false and misleading and that we allegedly knew or should
have known that these statements allegedly caused the price of our
securities to be artificially inflated.
Although we expect to oppose any such contention, the plaintiffs in
one or more of these proceedings may contend that any damages in the
lawsuits should reflect, in whole or in part, the decline in market price
of our securities following: (1) the announcement of the accounting
irregularities April 15, 1998 after the NYSE closed; and (2) the press
release concerning the accounting irregularities that we issued on July 14,
1998. On April 15, 1998, the last sale price of our common stock on the
NYSE was $35.625. On April 16, 1998, the day following the announcement of
the accounting irregularities, the last sale price of our common stock on
the NYSE was $19.625. On July 13, 1998, the last sale price of our common
stock on the NYSE was $18.875. On July 14, 1998, the last sale price of our
common stock on the NYSE was $15.6875. On May 13, the last sale price of
our common stock on the NYSE was $18 1/16.
In addition, the SEC and the United States Attorney for the District
of New Jersey are conducting investigations relating to the accounting
issues. While our management has made all adjustments considered necessary
as a result of the findings of the investigations and the restatement of
our financial statements for 1997, 1996 and 1995, and the first six months
of 1998, we can provide no assurances that additional adjustments will not
be necessary as a result of these government investigations.
Other than with respect to the portion of the FELINE PRIDES class
action litigation which has been settled subject to court approval, we do
not believe that it is feasible to predict or determine the final outcome
or resolution of these proceedings and investigations or to estimate the
amounts or potential range of loss with respect to the resolution of these
proceedings and investigations. In addition, the timing of the final
resolution of these proceedings and investigations is uncertain. The
possible outcomes or resolutions of these proceedings or investigations
could include judgments against us or settlements and could require
substantial payments by us.
We believe that adverse outcomes in such proceedings and
investigation or any other resolutions, including settlements, could have a
material impact on our financial condition, results of operations and cash
flows.
INVESTMENT IN FELINE PRIDES REQUIRES HOLDERS TO PURCHASE COMMON STOCK
RESULTING IN THE RISK OF DECLINE IN EQUITY VALUE
Although as a holder of FELINE PRIDES you will be the beneficial
owner of the related trust preferred securities, treasury portfolio or
treasury securities, you have an obligation under the purchase contract to
buy our common stock. We cannot assure you that the market value of the
common stock you will receive on February 16, 2001 will be equal to or
greater than the $50 stated amount per FELINE PRIDES held by you.
Prior to February 16, 2001, unless you pay cash to satisfy your
obligation under the purchase contract or the purchase contracts are
terminated due to our bankruptcy, insolvency or reorganization, the
proceeds derived from the remarketing of the trust preferred securities or
the principal of the related treasury securities, or the appropriate
applicable ownership interest of the treasury portfolio, when paid at
maturity, as the case may be, will automatically be used to purchase a
specified number of shares of our common stock on your behalf. As a holder
of additional FELINE PRIDES, if the applicable market value of the common
stock is less than $ , the aggregate market value of the common stock
issued to you under each purchase contract on February 16, 2001 will be
less than the price you paid for the additional FELINE PRIDES and the
market value per share of that common stock will be less than the effective
price per share paid by you for such common stock on that date, in which
case you will suffer an economic loss as of February 16, 2001. Accordingly,
you assume the risk that the market value of the common stock may decline,
and that decline could be substantial.
LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION
Your opportunity for equity appreciation afforded by investing in the
additional FELINE PRIDES is less than your opportunity for equity
appreciation if you directly invested in the common stock. This opportunity
is less because the market value of the common stock to be received by you
under the purchase contract on February 16, 2001, assuming that the market
value is the same as the applicable market value of such common stock, will
only exceed the price you paid if the applicable market value of the common
stock exceeds $ , which represents an appreciation of approximately %
over $ . Moreover, in such event, you would receive on February 16, 2001
only approximately %, the percentage equal to $ divided by $ , of the
shares of common stock that you would have received if you had made a direct
investment in the common stock on that date. Therefore you would receive on
February 16, 2001 only approximately % of the appreciation in the value
of the common stock in excess of $ .
FACTORS AFFECTING TRADING PRICES
The trading prices of Income PRIDES and Growth PRIDES in the
secondary market will be directly affected by the trading prices of the
common stock, the general level of interest rates and our credit quality.
It is impossible to predict whether the price of our common stock or
interest rates will rise or fall. Trading prices of the common stock will
be influenced by our operating results and prospects and by economic,
financial and other factors, including the remaining class action
litigation against us. In addition, general market conditions can affect
the trust preferred securities markets generally, therefore affecting the
price of our common stock, including the level of, and fluctuations in, the
trading prices of stocks generally and sales of substantial amounts of
common stock by us in the market after the offering of the FELINE PRIDES or
the perception that those sales could occur. Fluctuations in interest rates
may give rise to arbitrage opportunities based upon changes in the relative
value of the common stock underlying the purchase contracts and of the
other components of the FELINE PRIDES. The arbitrage could, in turn, affect
the trading prices of the Income PRIDES, Growth PRIDES, trust preferred
securities and common stock.
LIMITED RIGHTS INCLUDING LIMITED VOTING RIGHTS
If you hold trust preferred securities you will not be entitled to
vote to appoint, remove or replace or to increase or decrease the number of
trustees of the trust, and generally will have no voting rights except in
limited circumstances. If you hold FELINE PRIDES you will not be entitled
to any rights with respect to the common stock, including, without
limitation, voting rights and rights to receive any dividends or other
distributions on the common stock. You will only be entitled to rights as a
holder of the common stock if we deliver shares of common stock for
FELINE PRIDES on February 16, 2001 or as a result of early settlement and
only if the applicable record date, if any, for the exercise of these
rights occurs after that date. For example, if an amendment is proposed to
our articles of incorporation or by-laws and the record date for
determining the stockholders of record entitled to vote on that amendment
occurs prior to the delivery, you will not be entitled to vote on that
amendment.
DILUTION OF THE COMMON STOCK MAY AFFECT THE SETTLEMENT RATE AND THE FELINE
PRIDES TRADING PRICES
The number of shares of common stock you are entitled to receive upon
the settlement of your purchase contract and the trading prices of Income
PRIDES and Growth PRIDES may be adversely affected due to dilution of our
common stock resulting from the issuance of additional common stock or
other equity interests.
The number of shares of common stock that you are entitled to receive
on February 16, 2001 or as a result of early settlement of a purchase
contract is subject to adjustment for certain events arising from stock
splits and combinations, stock dividends and other actions by us that
modify our capital structure. We will not adjust the number of shares of
common stock that you are to receive on February 16, 2001, or as a result
of early settlement of a purchase contract, for other events, including
most offerings of common stock for cash by us or in connection with
acquisitions. We are not restricted from issuing additional common stock
during the term of the purchase contracts and have no obligation to
consider your interests for any reason; except, that, in case of an
agreement to issue more than one million shares of common stock or any
other security conferring that the right to receive our common stock, other
than for cash at fair value or as consideration for an acquisition of a
business or business assets, and that agreement causes a decline in the
market value for the common stock. In that event, the settlement rate of
the new FELINE PRIDES may be adjusted, as described elsewhere in this
prospectus.
If we issue additional shares of common stock, the price of the
common stock may be materially and adversely affected and, because of the
relationship of the number of shares to be received on February 16, 2001 to
the price of the common stock, these events may adversely affect the
trading price of Income PRIDES or Growth PRIDES.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
We are unable to predict how the new FELINE PRIDES and the additional
FELINE PRIDES will trade in the secondary market or whether this market
will be liquid or illiquid.
We will apply to list the new Income PRIDES and the new Growth
PRIDES on the NYSE, subject to official notice of issuance and satisfaction
of the NYSE minimum distribution requirements. The NYSE will not list the
new FELINE PRIDES unless there are 400 holders of new FELINE PRIDES. The
new FELINE PRIDES are issued in the framework of a class action settlement.
We cannot predict how many persons will choose to participate in the
settlement and exercise the exchange rights provided in the settlement. The
exchange rights may be exercised until February 14, 2001. In addition, we
can neither predict at which point in time the holders of rights will
choose to exercise their exchange rights. The liquidity of the new Income
PRIDES and new Growth PRIDES depends on the number of people who elect to
execute their exchange rights and on the point in time in which they do so.
Additionally, we will not list additional FELINE PRIDES for trading unless
we issue them to the general public. We can, therefore, provide no
assurance as to the liquidity of any market that may develop for the new
FELINE PRIDES and the additional FELINE PRIDES, your ability to sell these
securities and whether a trading market if it develops will continue.
Moreover, if you were to substitute treasury securities for trust
preferred securities, or trust preferred securities for treasury
securities, thereby converting your Income PRIDES to Growth PRIDES or your
Growth PRIDES to Income PRIDES, the liquidity of Income Prides and Growth
PRIDES could be adversely affected. The liquidity of the additional FELINE
PRIDES could also be adversely affected if you were to exchange the rights
together with the additional FELINE PRIDES for new FELINE PRIDES. We can
provide no assurance that the new FELINE PRIDES or the additional FELINE
PRIDES will meet the minimum distribution requirements for listing on the
NYSE. We cannot provide assurance that the NYSE will not delist or suspend
the new FELINE PRIDES or additional FELINE PRIDES. The NYSE may delist or
suspend the new FELINE PRIDES or the additional FELINE PRIDES (if the
additional FELINE PRIDES have been listed) should you elect to (1) create
new Growth PRIDES or Income PRIDES by substituting collateral, or (2)
replace additional Income PRIDES or additional Growth PRIDES together with
rights for new Income PRIDES or new Growth PRIDES. This could cause the
number of Income PRIDES or Growth PRIDES to fall below the requirement for
listing securities that at least 1,000,000 additional Income PRIDES,
additional Growth PRIDES, new Income PRIDES and new Growth PRIDES be
outstanding at any time.
PLEDGED SECURITIES ENCUMBERED
Your rights to the trust preferred securities, treasury portfolio or
treasury securities (together, the "pledged securities"), as applicable,
will be subordinated to our security interest. Although you will be the
beneficial owners of the applicable pledged securities, those pledged
securities will be pledged with Chase Manhattan Bank, in its capacity as
our collateral agent, to secure your obligations under the related purchase
contracts. Additionally, notwithstanding the automatic termination of the
purchase contracts, if we become the subject of a case under the Bankruptcy
Code, the delivery of the pledged securities to you may be delayed by the
imposition of the automatic stay of section 362 of the Bankruptcy Code.
POSSIBLE DISSOLUTION OF THE TRUST DUE TO AN INVESTMENT COMPANY EVENT
The dissolution of the trust due to an investment company event may
affect the Income PRIDES' market prices.
If an investment company event occurs, we will dissolve the trust,
except in the limited circumstances described below, and distribute the
debentures to you in a total principal amount equal to the aggregate stated
liquidation amount of any trust preferred securities that you may hold. We
will only dissolve and distribute the debentures to you if we are unable to
avoid the investment company event within a 90-day period by taking some
ministerial action or pursuing some other reasonable measure that will have
no adverse effect on the trust, us or you, and will involve no material
cost to us. In addition, we will have the right to dissolve the trust at
any time.
There can be no assurance as to the impact on the market prices for
Income PRIDES if we dissolve the trust and distribute the debentures to you
in exchange for your trust preferred securities. Because Income PRIDES will
consist of debentures and related purchase contracts, if we dissolve the
trust as a result of an investment company event or otherwise, you are also
making an investment decision with regard to the debentures if you purchase
Income PRIDES and should carefully review all the information regarding the
debentures contained in this prospectus.
TAX EVENT REDEMPTION
The occurrence of a tax event redemption, described below, may affect
the market prices of Income PRIDES, due to the substitution of the treasury
portfolio for the redeemed trust preferred securities as collateral for
your obligations under the related purchase contract.
We have the option to redeem the debentures and, thus, the trust
securities, on not less than 30 days or more than 60 days prior written
notice, in whole but not in part, at any time before February 16, 2001 if a
tax event occurs and continues under the circumstances described below. If
a tax event occurs, we will redeem the debentures at a redemption price per
trust security equal to the redemption amount plus accrued and unpaid
interest, including deferred interest, if any. If we redeem all of the
debentures, the trust must redeem all of the trust securities and pay the
redemption price in cash to the holders of the trust securities.
If the tax event redemption occurs before February 16, 2001, the
redemption price payable to you due to liquidation of any interest you may
have in the trust as a holder of Income PRIDES will be distributed to the
collateral agent, who in turn will apply an amount equal to the redemption
amount of the redemption price to purchase the treasury portfolio on your
behalf.
We will substitute the treasury portfolio for the trust preferred
securities and pledge the treasury portfolio with the collateral agent to
secure your obligations to purchase our common stock under the purchase
contracts related to the Income PRIDES. If you do not hold trust preferred
securities in the form of Income PRIDES you will receive redemption
payments directly. There can be no assurance as to the impact on the market
prices for the Income PRIDES if we substitute the treasury portfolio as
collateral in replacement of any trust preferred securities so redeemed. A
tax event redemption will be a taxable event to the beneficial owners of
the trust preferred securities.
RIGHT TO DEFER CURRENT PAYMENTS
If we chose to exercise our right to defer payments on the purchase
contracts and on the trust preferred securities, you may also be adversely
affected by (1) the United States federal income tax consequences, (2) the
impact on your receipt of distributions on the trust preferred securities
and (3) the effect on the market prices of trust preferred securities
associated with the deferral of distributions on the trust preferred
securities.
We have the option to defer the payment of contract adjustment
payments on the purchase contracts until February 16, 2001. Any deferred
contract adjustment payments will bear additional contract adjustment
payments at the rate of 7.5% per year, compounding on each succeeding
payment date, until we pay them to you. If the purchase contracts are
settled early or terminated due to our bankruptcy, insolvency or
reorganization, the right to receive contract adjustment payments and
deferred contract adjustment payments, if any, will also terminate.
If we defer the payment of contract adjustment payments on the
purchase contracts until February 16, 2001, you will receive a number of
shares of common stock equal to the total amount of deferred contract
adjustment payments payable to you, divided by the applicable market value.
We will also have the right under the indenture to defer payments of
interest on the debentures by extending the interest payment period at any
time, and from time to time, on the debentures. As a consequence of that
extension, quarterly distributions on the trust preferred securities, held
either as a component of the Income PRIDES or held separately, would be
deferred. Any such deferrals would continue to accrue at a rate of 6.45%
per year through and including February 15, 2001, and at the reset rate
afterwards, compounded quarterly. Our right to extend the interest payment
period for the debentures will be limited and may not extend beyond
February 16, 2003.
During any extension period, we will not declare or pay dividends on,
make distributions with respect to, or redeem, purchase or acquire, or make
a liquidation payment with respect to, any of our capital stock except in
the following five situations:
o to purchase or acquire our own capital stock in order to
satisfy any obligations that we may have under any employee
benefit plans or to satisfy any obligations that we may have
under any contract or security outstanding on the date of that
event requiring us to purchase our own capital stock;
o as a result of any reclassification of our capital stock or the
exchange or conversion of one class or
series of our capital stock for another class or series of our
capital stock;
o to purchase fractional interests in shares of our capital stock
under the conversion or exchange provisions of our capital
stock or the conversion or exchange of that security;
o to pay dividends or distributions in our capital stock, or
rights to acquire our capital stock, or to repurchase or redeem
our capital stock solely from the issuance or exchange of
capital stock; or
o to redeem or repurchase any rights outstanding under a
shareholder rights plan or to declare a
dividend of rights in the future.
During any extension period, we also will not make any guarantee
payments with respect to the above, other than payments of distributions
and specific redemptions out of monies held by the trust and payments on
liquidation of the trust (the "guarantee") or payments of the obligations
of the trust with respect to the common securities (the "common securities
guarantee"). Before the termination of any extension period, we may further
extend the interest payment period. However, we may not extend the
extension period beyond February 16, 2003. Upon the termination of any
extension period and the payment of all amounts then due, we may commence a
new extension period, subject to the above requirements.
We do not currently intend to defer payments of stated interest on
the debentures and we currently believe that the likelihood of our doing so
is remote. Therefore, the debentures should not be considered to have been
issued with OID for United States federal income tax purposes as a result
of our right to defer payments of stated interest on the debentures unless
and until we actually exercise that deferral right. There can be no
assurance that the IRS will agree with our position.
Should we exercise our right to defer payments of interest by
extending the interest payment period, a U.S. holder of trust preferred
securities held either as a component of the Income PRIDES or held
separately would be required to include its proportionate share of the
stated interest on the debentures in gross income, as OID, on a daily
economic accrual basis, regardless of that U.S. holder's method of tax
accounting. As a result, a U.S. holder of trust preferred securities would
recognize income for United States federal income tax purposes in advance
of the receipt of cash attributable to that income, and would not receive
cash from the trust related to that income if that holder disposed of the
trust preferred securities prior to the record date for the date on which
distributions of such amounts were made.
In addition, as a result of our right to defer interest payments, the
market price of the trust preferred securities, which represent undivided
beneficial ownership interests in the assets of the trust, might be more
volatile than the market price of other securities that are not subject to
the deferral. Should we exercise that right in the future, the market price
of the trust preferred securities likely would be adversely affected. If
you were to dispose of your trust preferred securities during an extension
period, therefore, you might not receive the same return on your investment
as if you had continued to hold your trust preferred securities.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
No statutory, judicial or administrative authority directly addresses
the treatment of the FELINE PRIDES or instruments similar to the FELINE
PRIDES for United States federal income tax purposes, or of the exchange of
rights and current FELINE PRIDES or additional FELINE PRIDES for new FELINE
PRIDES. As a result, some United States federal income tax consequences of
the purchase, ownership and disposition of FELINE PRIDES are not entirely
clear.
PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT
You, as a holder of FELINE PRIDES, will not have the benefits of the
protection of the Trust Indenture Act of 1939.
The purchase contract agreement between us and the purchase contract
agent will not be qualified as an indenture under the Trust Indenture Act
and the purchase contract agent will not be required to qualify as a
trustee under the Trust Indenture Act, although the trust preferred
securities constituting a part of the Income PRIDES will be issued pursuant
to the declaration, which will be qualified under the Trust Indenture Act.
Accordingly, if you hold FELINE PRIDES you will not have the benefit of the
protections of the Trust Indenture Act. The protections generally afforded
the holder of a security issued under an indenture that has been qualified
under the Trust Indenture Act include:
o disqualification of the indenture trustee for conflicting interests.
o provisions preventing a trustee that is also a creditor of the issuer
from improving its own credit position at the expense of the security
holders immediately prior to or after a default under the indenture.
o the requirement that the indenture trustee deliver reports at least
annually with respect to specific matters concerning the indenture
trustee and the securities.
RIGHTS UNDER THE GUARANTEE
Except as described below, you as a holder of trust preferred
securities, will not be able to exercise directly any other rights with
respect to the debentures.
The guarantee will be qualified as an indenture under the Trust
Indenture Act. The Wilmington Trust Company will act as indenture trustee
under the guarantee in its capacity as the guarantee trustee for the
purposes of compliance with the provisions of the Trust Indenture Act. The
guarantee trustee will hold the guarantee for your benefit if you hold any
of the trust preferred securities.
If you hold any of the trust preferred securities, the guarantee will
guarantee you, generally on a senior unsecured basis, the payment of the
following:
o any accrued and unpaid distributions that are required to be
paid on the trust preferred securities, to the extent the trust
has funds available for this purpose.
o the redemption price, including all accumulated and unpaid
distributions to the date of redemption, of trust preferred
securities that we may have redeemed upon the occurrence of a
tax event redemption, to the extent the trust has funds
available for this purpose.
o upon a voluntary or involuntary dissolution of the trust, other
than in connection with the distribution of debentures to you,
the lesser of (a) the total of the liquidation amount and all
accrued and unpaid distributions on the trust preferred
securities to the date of payment to the extent the trust has
funds available for this purpose or (b) the amount of assets of
the trust remaining available for distribution to holders of
the trust preferred securities in liquidation of the trust.
The holders of a majority in liquidation amount of the trust
preferred securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
guarantee trustee or to direct the exercise of any trust or power conferred
upon the guarantee trustee under the guarantee. Notwithstanding the above,
but only under limited circumstances, holders of the trust preferred
securities may institute a legal proceeding directly against us to enforce
their rights under the guarantee without first instituting a legal
proceeding against the trust, the guarantee trustee or any other person or
entity.
If we were to default on our obligation to pay amounts payable on the
debentures or otherwise, the trust would lack funds for the payment of
distributions or amounts payable on redemption of the trust preferred
securities or otherwise, and, in that event, holders of the trust preferred
securities would not be able to rely upon the guarantee for payment of
these amounts. Instead, they would rely on the enforcement
o by the institutional trustee of its rights as registered holder
of the debentures against us pursuant to the terms of the
indenture and the debentures or
o by that holder of the institutional trustee's or that holder's
own rights against us to enforce payments on the debentures.
The declaration provides that each holder of trust preferred
securities, by its acceptance, agrees to the provisions of the guarantee
and the indenture.
ENFORCEMENT OF SPECIFIC RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
Except as described below, you, as holder of trust preferred
securities, will not be able to exercise directly any other rights with
respect to the debentures.
If a declaration event of default were to occur and were continuing,
holders of trust preferred securities would rely on the enforcement by the
institutional trustee of its rights as registered holder of the debentures
against us. In addition, the holders of a majority in liquidation amount of
the trust preferred securities would have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to
the institutional trustee or to direct the exercise of any trust or power
conferred upon the institutional trustee under the declaration, including
the right to direct the institutional trustee to exercise the remedies
available to it as the holder of the debentures.
The indenture provides that the debt trustee must give holders of
debentures notice of all defaults or events of default within 30 days after
occurrence. However, except in the cases of a default or an event of
default in payment on the debentures, the debt trustee will be protected in
withholding the notice if its responsible officers in good faith determine
that withholding of the notice is in the interest of such holders.
If the institutional trustee were to fail to enforce its rights under
the debentures in respect of an indenture event of default after a holder
of record of trust preferred securities had made a written request, such
holder of record of trust preferred securities may, to the extent permitted
by applicable law, institute a legal proceeding against us to enforce the
institutional trustee's rights under the debentures. In addition, if we
were to fail to pay interest or principal on the debentures on the date
that interest or principal is otherwise payable, and this failure to pay
were continuing, holders of trust preferred securities may directly
institute a proceeding for enforcement of payment of the principal of or
interest on the debentures having a principal amount equal to the aggregate
stated liquidation amount of your trust preferred securities (a "direct
action") after the respective due date specified in the debentures. In
connection with a direct action, we would have the right under the
indenture to set off any payment made to that holder by us.
LIMITED RIGHTS OF ACCELERATION
The institutional trustee, as holder of the debentures, may
accelerate payment of the principal and accrued and unpaid interest on the
debentures only upon the occurrence and continuation of a declaration event
of default or an indenture event of default. A declaration event of default
or indenture event of default are generally limited to payment defaults,
breaches of specific covenants and specific events of bankruptcy,
insolvency and reorganization relating to us and specific events of
dissolution of the trust. Accordingly, there is no right to acceleration
upon default of our payment obligations under the guarantee.
TRADING PRICE OF THE TRUST PREFERRED SECURITIES
The trust preferred securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest with respect to the
underlying debentures. If you are an accrual basis taxpayer and dispose of
your trust preferred securities between record dates for payments of
distributions you will be required to include accrued but unpaid interest
on the debentures through the date of disposition in income as ordinary
interest income, i.e., interest or, possibly, OID, and to add that amount
to your adjusted tax basis in your proportionate share of the underlying
debentures deemed disposed of. The same situation would arise to the
extent, if any, that there is OID on the debentures underlying the trust
preferred securities following any payment extension. To the extent the
selling price is less than your adjusted tax basis, you will recognize a
loss.
THE COMPANY
OVERVIEW
We are one of the foremost consumer and business services companies
in the world. We were created through the merger of HFS into CUC in
December 1997 with the resultant corporation being renamed Cendant
Corporation. We provide the fee-based services formerly provided by each of
CUC and HFS, including travel services, real estate services and
membership-based consumer services, to our customers throughout the world.
We operate in four principal divisions: travel related services, real
estate related services, alliance marketing related services and other
consumer and business services. Our businesses provide a wide range of
complementary consumer and business services, which together represent nine
business segments.
o The travel related services businesses facilitate vacation
timeshare exchanges, manage corporate and government vehicle
fleets and franchise car rental and hotel businesses.
o The real estate related services businesses franchise real
estate brokerage businesses, provide home buyers with mortgages
and assist in employee relocation.
o The alliance marketing related services businesses provide an
array of value driven products and services.
o Our other consumer and business services include our tax
preparation services franchise, information technology
services, car parks and vehicle emergency support and rescue
services in the United Kingdom, credit information services,
financial products and other consumer-related services.
As a franchisor of hotels, residential real estate brokerage offices,
car rental operations and tax preparation services, we license the owners
and operators of independent businesses to use our brand names. We do not
own or operate hotels, real estate brokerage offices, car rental operations
or tax preparation offices, except for certain company-owned Jackson Hewitt
offices which we intend to franchise. Instead, we provide our franchisee
customers with services designed to increase their revenue and
profitability.
MATTERS RELATING TO THE ACCOUNTING IRREGULARITIES AND
ACCOUNTING POLICY CHANGE
Accounting Irregularities
On April 15, 1998, we announced that in the course of transferring
responsibility for our accounting functions from Cendant personnel
associated with CUC prior to the merger to Cendant personnel associated
with HFS before the merger and preparing for the reporting of first quarter
1998 financial results, we discovered accounting irregularities in certain
CUC business units. As a result, we, together with our counsel and assisted
by auditors, immediately began an intensive investigation. In addition, our
audit committee engaged Willkie Farr & Gallagher as special legal counsel
and Willkie Farr engaged Arthur Andersen LLP to perform an independent
investigation into these accounting irregularities.
On July 14, 1998, we announced that the accounting irregularities
were greater than those initially discovered in April and that the
irregularities affected the accounting records of the majority of the CUC
business units. On August 13, 1998, we announced that our investigation was
complete. On August 27, 1998, we announced that our audit committee had
submitted its report to the board of directors on the audit committee
investigation into the accounting irregularities and its conclusions
regarding responsibility for those actions. A copy of the audit committee's
report has been filed as an exhibit to our report on Form 8-K dated August
28, 1998.
As a result of the findings of the investigations, we restated our
previously reported financial results for 1997, 1996 and 1995 and the six
months ended June 30, 1998 and 1997. The 1997 restated amounts also
included certain adjustments related to the former HFS businesses which are
substantially comprised of $47.8 million in reductions to merger-related
costs and other unusual charges ("Unusual Charges") and a $14.5 million
decrease in pre-tax income excluding Unusual Charges, which on a net basis
increased 1997 net income from continuing operations. The 1997 annual and
six months results have also been restated for a change in accounting,
effective January 1, 1997, related to revenue and expense recognition for
memberships with a full refund offer.
Class Action Litigation and Government Investigation
Since our April 15, 1998 announcement of the discovery of accounting
irregularities in the former CUC business units, and prior to the date of
this prospectus, 70 lawsuits claiming to be class actions, two lawsuits
claiming to be brought derivatively on our behalf and several other
lawsuits and arbitration proceedings have been filed in various courts
against us and, among others, our predecessor, HFS, and several current and
former officers and directors of Cendant and HFS, asserting various claims
under the federal securities laws and several state statutory and common
laws.
In addition, the SEC and the United States Attorney for the District
of New Jersey are conducting investigations relating to the accounting
irregularities. The SEC staff has advised us that its inquiry should not be
construed as an indication by the SEC or its staff that any violations of
law have occurred. While we have made all adjustments considered necessary
as a result of the findings of the investigations and the restatement of
our financial statements for 1997, 1996 and 1995 and the first six months
of 1998, we can provide no assurances that additional adjustments will not
be required as a result of these government investigations.
Other than with respect to the portion of the FELINE PRIDES
litigation which has been settled subject to court approval, we do not
believe that it is feasible to predict or determine the final outcome or
resolution of these proceedings and investigations or to estimate the
amounts or potential range of loss with respect to the resolution of these
proceedings and investigations. In addition, the timing of the final
resolution of these proceedings and investigations is uncertain. The
possible outcomes or resolutions of these proceedings and investigations
could include judgments against us or settlements and could require
substantial payments by us. Our management believes that adverse outcomes
in such proceedings and investigations or any other resolutions, including
settlements, could have a material impact on our financial condition,
results of operations and cash flows.
FELINE PRIDES LITIGATION AND LITIGATION SETTLEMENT
On February 1998, we, together with Cendant Capital I, a Delaware
Business Trust wholly owned by us, sold an aggregate of 29,900,000 current
FELINE PRIDES. We sold the current FELINE PRIDES through a public offering
pursuant to a registration statement on Form S-3, and a prospectus and
prospectus supplement each dated February 24, 1998. The current FELINE
PRIDES began trading on the NYSE on or about February 25, 1998.
Following our announcement of potential accounting irregularities on
April 15, 1998, eight suits were commenced against us, our present and
former officers, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities, Inc. and Ernst & Young, LLP, by persons who
had acquired or purchased our current FELINE PRIDES. A lead plaintiff was
selected to represent all persons who purchased or acquired current FELINE
PRIDES during the period of February 24, 1998 through and including April
15, 1998 and who purchased or acquired current FELINE PRIDES in the open
market during the period of April 16, 1998 through and including July 15,
1998. Kirby McInerney & Squire, LLP, is plaintiffs' lead counsel. An
amended and consolidated class action complaint was filed in the
consolidated action, which is entitled In Re Cendant Corporation PRIDES
Litigation and is pending in the United States District Court for the
District of New Jersey. The complaint asserts claims arising under sections
11, 12(a)(2) and 15 of the Securities Act of 1933, and sections 10(b) and
20(a) of the Securities Exchange Act of 1934. The complaint alleges that
the registration statement, prospectus and prospectus supplement for the
current FELINE PRIDES offering contained materially false and misleading
statements due to the accounting irregularities discussed above and that we
made other misstatements and omissions of material fact on and after April
15, 1998.
On March 17, 1999, we entered into a stipulation of settlement in the
consolidated action. The court granted the settlement its preliminary
approval, pending a fairness hearing to be held on May 18, 1999. Under the
settlement agreement, in return for the release of all claims arising from
any purchase of current FELINE PRIDES on or before April 15, 1998, we are
obligated to issue up to 29,161,474 rights with an aggregate theoretical
value of $341,500,000. Each class member who does not opt out and submits a
timely and valid proof of claim will be entitled to one right for each
current FELINE PRIDES that was held at the close of business on April 15,
1998. Under the settlement agreement, until February 14, 2001, we will
issue two new FELINE PRIDES, the value of each of which will exceed the
value of a current FELINE PRIDES by $17.57, to every person who delivers to
us three rights and two current FELINE PRIDES. The settlement does not
resolve claims based upon purchase of current FELINE PRIDES between April
16 and July 15, 1998.
In addition, we are obligated under the settlement to advance or pay,
as incurred, the reasonable costs of:
o assembling the list of class members;
o printing, mailing and publishing the notices;
o reimbursing brokers or nominees for costs in identifying and/or
forwarding notices to class members or their nominees;
o all listing, SEC registration and filing fees, and other costs
associated with issuance of the rights and the new FELINE
PRIDES;
o the settlement administrator, which costs will not exceed
$160,000; and
o other similar cash costs associated with the implementation of
the settlement. We are also obligated to pay the reasonable
expenses of the law firm of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, retained to assist lead plaintiffs' counsel in
drafting appropriate portions of the stipulation. Additionally,
we will be solely responsible for the costs identified in this
section if the settlement is ultimately not consummated.
Based on the settlement agreement, we recorded an after tax charge of
approximately $228 million, or $0.26 per diluted share, which is $351
million pre-tax, in the fourth quarter of 1998 associated with the
agreement in principle to settle the FELINE PRIDES securities class action.
We recorded an increase in additional paid-in capital of $350 million
offset by a decrease in retained earnings of $228 million resulting in a
net increase in stockholders' equity of $122 million as a result of the
prospective issuance of the common stock. As a result, the settlement
should not reduce net book value. In addition, the settlement is not
expected to reduce 1999 earnings per share unless our common stock price
materially appreciates.
THE TRUST
The trust is a statutory business trust formed under Delaware law
according to (1) a declaration of trust, executed by the sponsor and some
of the trustees and (2) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on February 6, 1998. This
declaration of trust will be amended and restated in its entirety
substantially in the form filed as an exhibit to the registration statement
of which this prospectus forms a part. The declaration will be qualified as
an indenture under the Trust Indenture Act.
Although upon issuance of the trust preferred securities, a holder of
Income PRIDES will be the beneficial owner of the related trust preferred
securities, those trust preferred securities will be pledged with the
collateral agent to secure the obligations of the holders under the related
purchase contracts. We will directly or indirectly acquire common
securities in an aggregate liquidation amount equal to 3% of the total
capital of the trust.
The trust exists for the exclusive purposes of
(1) issuing the trust securities representing undivided beneficial
ownership interests in the assets of the trust,
(2) investing the proceeds of the trust securities in the
debentures and
(3) engaging in only those activities necessary, appropriate,
convenient or incidental to the purposes specified in (1) and
(2) above. The trust has a term of approximately six years, but
may dissolve earlier as provided in the declaration.
The number of the trustees is initially three. Two of the trustees
(the "regular trustees") are persons who are our employees or officers or
who are affiliated with us. Under the declaration, the third trustee will
be a financial institution that is unaffiliated with us. This trustee will
serve as institutional trustee under the declaration and as indenture
trustee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "institutional trustee"). Initially, Wilmington Trust
Company, a Delaware banking corporation, will be the institutional trustee
until removed or replaced by the holder of the common securities. For
purposes of compliance with the provisions of the Trust Indenture Act,
Wilmington Trust Company will also act as the guarantee trustee and as
trustee resident in the State of Delaware (the "Delaware trustee") for
purposes of the Delaware Business Trust Act (the "Trust Act").
The institutional trustee will hold title to the debentures for the
benefit of the holders of the trust securities and the institutional
trustee will have the power to exercise all rights, powers and privileges
under the indenture as the holder of the debentures. In addition, the
institutional trustee will maintain exclusive control of a segregated
noninterest bearing bank account (the "property account") to hold all
payments made in respect of the debentures for the benefit of the holders
of the trust securities. The institutional trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the trust securities out of funds from the property account. The
guarantee trustee will hold the guarantee for the benefit of the holders of
the trust preferred securities.
We, as the direct or indirect holder of all the common securities,
will have the right to appoint, remove or replace any trustee and to
increase or decrease the number of trustees. However, the number of
trustees shall be at least two, at least one of which shall be a regular
trustee. We will pay all fees and expenses related to the trust and the
offering of the trust securities.
The rights of the holders of the trust preferred securities,
including economic rights, rights to information and voting rights, are
provided in the declaration, the Trust Act and the Trust Indenture Act.
The office of the Delaware trustee currently is Wilmington Trust
Company, Wilmington, Delaware. The principal place of business of the trust
shall be c/o Cendant Corporation, 9 West 57th Street, New York, NY 10019
and its telephone number shall be (212) 413-1800.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed and traded on the NYSE under the symbol
"CD". The following table provides, for the calendar quarters indicated,
the high and low closing sales prices per share on the NYSE for the periods
shown below as reported on the NYSE Composite Tape. On December 17, 1997,
CUC merged with HFS, with CUC surviving and changing its name to "Cendant
Corporation." All the common stock prices prior to the first quarter of
1998 are for CUC.
MARKET PRICE (1)
-----------------
PERIOD HIGH LOW
- ------ ---- ---
1997:
First Quarter...................................... $26 7/8 $22 1/2
Second Quarter..................................... 26 3/4 20
Third Quarter...................................... 31 3/4 23 11/16
Fourth Quarter..................................... 34 3/8 26 15/16
1998:
First Quarter...................................... $41 $32 7/16
Second Quarter..................................... 41 3/8 18 9/16
Third Quarter...................................... 22 7/16 10 7/16
Fourth Quarter..................................... 20 5/8 7 1/2
1999:
First Quarter ..................................... $22 9/16 $14 7/8
Second Quarter through May 13 .................... 22 3/4 15 1/2
We have never paid a cash dividend on our common stock. We do not
anticipate paying cash dividends on our capital stock in the foreseeable
future and intend to retain all earnings to finance the operations and
expansion of our business and the repurchase of common stock and debt
reduction. The payment of cash dividends in the future will depend on our
earnings, financial condition and capital needs and on other factors deemed
relevant by our board of directors at that time.
ACCOUNTING TREATMENT
The financial statements of the trust will be reflected in our
consolidated financial statements, with the trust preferred securities
shown on our balance sheet under the caption "Mandatorily redeemable
preferred securities issued by subsidiary." The financial statement
footnotes to our consolidated financial statements will reflect that the
sole asset of the trust will be the debentures. Distributions on the trust
preferred securities will be reflected as a charge to our consolidated
income, identified as minority interest, whether paid or accrued.
The present value of the FELINE PRIDES contract adjustment payments
are initially charged to equity, with an offsetting credit to liabilities.
Subsequent contract adjustment payments are allocated between this
liability account and interest expense based on a constant rate calculation
over the life of the transaction.
The issuance of the additional FELINE PRIDES for cash will result in
an increase in mandatorily redeemable preferred securities issued by
subsidiary in an amount equal to the current market value of the trust
preferred securities at such time. To the extent cash proceeds received are
less than the current market value of the trust preferred securities at the
time of issuance, a charge to paid-in-capital will be recorded for the
difference.
The FELINE PRIDES purchase contracts are forward transactions in our
common stock. Upon settlement of a purchase contract, we will receive $50
on that purchase contract and will issue the requisite number of shares of
common stock. The $50 we receive will be credited to shareholders' equity
allocated between the common stock and paid-in-capital accounts.
Before the issuance of shares of common stock upon settlement of the
purchase contracts, the FELINE PRIDES will be reflected in our earnings per
share calculations using the treasury stock method. Under this method,
the number of shares of common stock used in calculating earnings per share
is deemed to be increased by the excess, if any, of the number of shares
issuable upon settlement of the purchase contracts over the number of
shares that could be purchased by us in the market, at the average market
price during the period, using the proceeds receivable upon settlement.
Consequently, we anticipate that there will be no dilutive effect on our
earnings per share except during periods when the average market price of
common stock is above $48.10, with respect to both the current FELINE
PRIDES and additional FELINE PRIDES and $ with respect to the new
FELINE PRIDES.
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the additional
Growth PRIDES will be used to purchase the underlying treasury securities
to be transferred to holders of the additional Growth PRIDES, and we will
receive no proceeds from the sale of the additional Growth PRIDES. All or
substantially all of the proceeds from the sale of the additional Income
PRIDES and from the common securities will be invested by the trust in our
debentures. We currently anticipate using substantially all of the net
proceeds from the sale of the debentures, estimated to be approximately $
million, after deducting expenses, for general corporate purposes which may
include repaying outstanding indebtedness, repurchasing our common stock
and other purposes.
There will not be any proceeds to us from the exchange of the current
or additional Growth PRIDES and rights for new Growth PRIDES. There will
not be any proceeds to us from the exchange of the current or additional
Income PRIDES and rights for new Income PRIDES. Our issuance of the
debentures and the purchase contracts relating to the new FELINE PRIDES
will not result in the receipt of any cash proceeds but will be done to
settle the claims against us discussed in this prospectus.
EXECUTION OF THE LITIGATION SETTLEMENT
EXECUTION OF THE EXCHANGE
We will issue two new Income PRIDES to each person who delivers three
rights along with two current Income PRIDES or two additional Income
PRIDES, and we will issue two new Growth PRIDES to each person who delivers
three rights along with two current Growth PRIDES or two additional Growth
PRIDES.
New FELINE PRIDES will not be issued to any person with respect to
rights submitted after February 14, 2001. We will not be required to issue
new FELINE PRIDES to you if the rights agent receives your rights
certificates, current FELINE PRIDES certificates or additional FELINE
PRIDES certificates after that date, regardless of when you sent them.
After you have exercised your right, you may not revoke that
exercise.
With respect to an exchange of current Income PRIDES for new Income
PRIDES, Chase Manhattan Bank, the collateral agent for the current FELINE
PRIDES, will release the trust preferred securities relating to the current
Income PRIDES pledged to it to Cendant Capital I, a Delaware Business
Trust, which issued the trust preferred securities relating to the current
Income PRIDES. The regular trustees of Cendant Capital I will cancel the
trust preferred securities and the indenture trustee under the indenture
will cancel the equivalent principal amount of debentures. In addition, the
purchase contract agent relating to the current FELINE PRIDES will cancel
the related purchase contracts. The new trust will issue a trust preferred
security for each new Income PRIDES. If the rights are exchanged together
with additional Income PRIDES, the new Income PRIDES will not be issued a
new trust preferred security, as it will already include a trust preferred
security issued by Cendant Capital II.
With respect to exchanges of current Growth PRIDES for new Growth
PRIDES, the collateral agent for the current Growth PRIDES will release the
related treasury securities pledged to it, and will transfer them to the
collateral agent for the new Growth PRIDES, with whom such treasury
securities will be pledged to secure the holder's obligation under the
purchase contract relating to the new Growth PRIDES. In addition, the
purchase contract agent for the current Growth PRIDES will cancel the
purchase contracts relating to such exchanged Growth PRIDES. With respect
to exchanges of additional Growth PRIDES for new Growth PRIDES, the new
collateral agent will transfer the treasury securities pledged to it under
the purchase contracts relating to the additional Growth PRIDES from the
collateral account relating to the additional Growth PRIDES to the
collateral account relating to the new Growth PRIDES. In addition, the
purchase contract agent for the additional Growth PRIDES will cancel the
purchase contracts relating to the exchanged additional Growth PRIDES.
You may exercise your rights by delivering to the rights agent on or
prior to February 14, 2001:
o a properly completed and duly executed rights certificate
representing an adequate number of rights;
o any required signature guarantees; and
o FELINE PRIDES certificates representing the requisite amount of
current FELINE PRIDES or additional FELINE PRIDES.
You should deliver your rights certificate and the FELINE PRIDES
certificates to the rights agent. We have appointed as rights agent for
this offering. The rights agent's address for packages sent by mail,
courier or overnight delivery is:
The rights agent telephone number is and its facsimile number
is .
If the new FELINE PRIDES are to be issued to a person other than the
person in whose name the current FELINE PRIDES are held, the person
exercising the rights must also submit to the rights agent payment of any
transfer taxes.
If you do not specify the number of rights being exercised on your
rights certificate, or the number of current FELINE PRIDES or additional
FELINE PRIDES tendered is not sufficient consideration for all of the new
FELINE PRIDES that you indicated you wished to purchase, you will be deemed
to have exercised the maximum number of rights that could be exercised for
the amount of current FELINE PRIDES that the rights agent receives from
you.
Signatures on the rights certificate must be guaranteed by an
eligible guarantor institution, as defined in Rule 17Ad-15 of the Exchange
Act, subject to the standards and procedures adopted by the rights agent.
Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges and savings associations.
Signatures on the rights certificate do not need to be guaranteed if:
(1) the rights certificate provides that the new FELINE PRIDES are to be
delivered directly to you, the record owner of those rights, or
(2) the rights certificate is submitted for the account of a member firm
of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United
States.
DISTINGUISHING CHARACTERISTICS OF THE NEW FELINE PRIDES
The new FELINE PRIDES will have the same terms as those of the
current FELINE PRIDES and additional FELINE PRIDES, except that:
o the settlement rate of the related purchase contract will be
modified so that it is equal to ; and
o the purchase contracts relating to the new FELINE PRIDES will
benefit from more favorable anti-dilution protection as
discussed below.
The new FELINE PRIDES will be listed, subject to the NYSE 400 holders
minimum distribution requirement, which is not expected to be satisfied
when the rights are first distributed.
Each purchase contract underlying a new FELINE PRIDES, unless earlier
terminated, or earlier settled at your option, will obligate you to
purchase, and us to sell, on February 16, 2001, for the stated amount of
the new FELINE PRIDES, which equals $50, a number of newly issued shares of
our common stock equal to the settlement rate. The settlement rate of the
related purchase contract entitles you to purchase and obligates us to sell
a number of newly issued shares of our common stock greater than that of
the purchase contract related to a current FELINE PRIDES or an additional
FELINE PRIDES.
The anti-dilution provisions of purchase contracts relating to the
new FELINE PRIDES will be identical to those attaching to the purchase
contracts relating to the current FELINE PRIDES and the additional FELINE
PRIDES; provided, however, in case we issue, or undertake or agree to
issue, in one or a series of related transactions, an aggregate of more
than one million shares of common stock or any other security conferring
such right, other than for cash at fair value or as consideration for an
acquisition of a business or business assets, and that agreement causes a
decline in the market value for the common stock, the settlement rate for
purchase contracts relating to new FELINE PRIDES may be subject to further
adjustment as described in "Description of the purchase contracts -Anti-
Dilution Adjustments."
ISSUANCE OF ADDITIONAL FELINE PRIDES AND SPECIAL FELINE PRIDES
We have incorporated other features into the settlement to assist
holders of rights in obtaining current FELINE PRIDES and additional FELINE
PRIDES to exercise their rights. First, on a date which is no earlier than
, 1999 and is no later than , 1999, we will sell to interested
rights holders up to 4,000,000 additional FELINE PRIDES that can be used to
exercise rights at an offering price per additional FELINE PRIDES equal to
100% of its theoretical value, as described below. Second, we will file a
shelf registration statement covering 15,000,000 FELINE PRIDES (the
"special FELINE PRIDES") with the same terms as the current FELINE PRIDES
and the additional FELINE PRIDES and which may be used to exercise rights,
if issued. We have no obligation to sell any special FELINE PRIDES except
that, within 30 days of the expiration of the rights, we must offer holders
of unexpired rights the opportunity to purchase special FELINE PRIDES for
cash at a price of 105% of their theoretical value.
The price of an additional FELINE PRIDES will equal 100% of its
theoretical value. The additional FELINE PRIDES will be priced not less
than fifteen nor more than sixty days after the distribution date of the
rights. The price will be determined by Merrill Lynch in its capacity as
the calculation agent. As promptly as practicable upon receipt of the
pricing confirmation, we will file with the SEC and distribute a prospectus
supplement containing definitive pricing information and announce the price
to the public.
We will sell the additional FELINE PRIDES according to the following
priority:
(1) holders of rights who received them as part of the original
distribution, to the extent required to exercise their rights;
(2) any other holders of rights, to the extent required to exercise
their rights;
(3) the public.
The purchase of the additional FELINE PRIDES by persons belonging to
the first two groups is subject to their consent to use the additional
FELINE PRIDES to exchange the rights and is limited to the number of
additional FELINE PRIDES each person requires to exercise its rights. If we
sell all the additional FELINE PRIDES to one of the groups, we will not
sell any additional FELINE PRIDES to a group of a lesser priority. If the
first two groups oversubscribe we will distribute the additional FELINE
PRIDES proportionately among the subscribers. We will not sell any
additional FELINE PRIDES to the public unless members of the first two
groups acquire as a whole at least $100,000,000 face amount of additional
FELINE PRIDES.
In addition to the restrictions stated above, we will not sell any
additional Growth PRIDES unless (1) the sale is to a rights holder who
received those rights as part of the original distribution and was a
beneficial owner of Growth PRIDES on April 15, 1998, or (2) we elect to
issue additional Growth PRIDES.
We will require holders of rights belonging to one of the first two
groups to place orders to purchase additional FELINE PRIDES with the rights
agent not later than the close of business on the first full business day
after the price is first publicly announced. Settlement will occur on the
fifth business day after the announcement date. On the settlement date,
holders of rights will be required to submit funds for the additional
FELINE PRIDES being acquired together with the certificates for the rights.
On the settlement date, we will issue the additional FELINE PRIDES
and will immediately exchange the additional FELINE PRIDES and rights for
new FELINE PRIDES. If we issue the additional FELINE PRIDES to the general
public, we will use reasonable efforts to list the additional FELINE PRIDES
on the NYSE, subject to satisfaction of the minimum distribution
requirements.
Payment for the additional FELINE PRIDES by members of the first two
groups must be made by submitting with their rights, in the manner
described above and by:
(1) bank draft drawn upon a United States bank or a postal,
telegraphic or express money order payable to
, in its capacity as the rights agent, or
(2) wire transfer of funds to the account maintained by the rights
agent for this purpose at .
Payment will be deemed to have been received by the rights agent only
upon receipt by the rights agent of any bank draft drawn upon U.S. bank,
any postal, telegraphic or express money order or any wire transfer.
We may, at our discretion from time to time, issue special FELINE
PRIDES. Except as set forth below, we will have no obligation to issue any
special FELINE PRIDES. If we issue special FELINE PRIDES, they will have
terms that are substantially identical to the current FELINE PRIDES and
additional FELINE PRIDES. We will not offer, issue, or sell special FELINE
PRIDES unless holders of unexpired rights are given priority to purchase
the special FELINE PRIDES on the same terms and conditions as such special
FELINE PRIDES are to be offered to any third party.
No later than thirty days prior to February 16, 2001, which is the
purchase contract settlement date, we will distribute to all record holders
of the rights a preliminary prospectus with respect to the 15 million
special FELINE PRIDES, which will consist of special Income PRIDES and/or
special Growth PRIDES or any combination of them, at our option. We will
inform those persons that they are entitled to purchase special FELINE
PRIDES for cash at a price no greater than 105% of their theoretical value,
including accrued interest. However, purchasers of special FELINE PRIDES
must undertake to exercise all of the rights held by them with respect to
which special FELINE PRIDES are issued, as described below. Not later than
five business days prior to February 14, 2001, we will file with the SEC
and distribute a pricing prospectus and announce the price to the public.
Until the close of business day on February 14, 2001, persons who
hold rights may submit rights and the cash necessary to purchase the number
of special FELINE PRIDES required to exercise all their rights. Not later
than the fifth business day after February 14, 2001, we will issue the
special FELINE PRIDES, which will be immediately exchanged with the
applicable rights for new FELINE PRIDES, the purchase contracts relating to
which will be settled.
Do not send the certificates to us. You are responsible for choosing
the payment and delivery method for your certificates, and you bear the
risks associated with that delivery. If you choose to deliver your
certificates and payment by mail, we recommend that you use registered
mail, properly insured, with return receipt requested. We also recommend
that you allow a sufficient number of days to ensure delivery to the rights
agent and clearance of payment prior to February 14, 2001.
DESCRIPTION OF THE FELINE PRIDES
The summaries of the provisions of documents described below are not
necessarily complete, and in each instance reference is made to the copies
of those documents, including the definitions of terms, which are on file
with the commission. Wherever particular sections of, or terms defined in,
those documents are referred to in this prospectus, those sections or
defined terms are incorporated by reference.
Each FELINE PRIDES will be issued under the purchase contract
agreement between us and the purchase contract agent. The
FELINE PRIDES, including new FELINE PRIDES and additional
FELINE PRIDES offered initially will consist of (A) units referred
to as Income PRIDES, including new Income PRIDES and new Growth
PRIDES, and (B) units referred to as Growth PRIDES, including
new Growth PRIDES and additional Growth PRIDES.
Each Income PRIDES will initially consist of a unit comprised of
(a) a purchase contract under which
(1) you will purchase from us on February 16, 2001, a
number of newly issued shares of our common stock
equal to the settlement rate described below
(2) we will pay you contract adjustment payments at the
rate of 1.05% of $50 per year paid quarterly,
subject to our right to defer these payments, and
(b) beneficial ownership of a 6.45% trust originated
preferred security, having a stated liquidation amount
per trust preferred security equal to $50, representing
an undivided beneficial ownership interest in the assets
of the trust, which will consist solely of the
debentures,
(1) in the case of a distribution of the debentures
upon the dissolution of the trust as a result of an
investment company event, as described below, or
otherwise, debentures having a principal amount
equal to $50, or
(2) upon the occurrence of a tax event redemption prior
to February 16, 2001, the appropriate applicable
ownership interest in the treasury portfolio.
"Applicable ownership interest" means, with respect
to an Income PRIDES and the U.S. treasury
securities in the treasury portfolio, (A) a 1/20,
or 5%, undivided beneficial ownership interest in a
$1,000 principal or interest amount of a principal
or interest strip in a U.S. treasury security which
matures on or prior to February 15, 2001 and (B)
for each scheduled interest payment date on the
debentures that occurs after the tax event
redemption date, a .080625% undivided beneficial
ownership interest in a $1,000 face amount of the
U.S. treasury security which is a principal or
interest strip maturing on that date.
Each Growth PRIDES will initially consist of a unit comprised of
(a) a purchase contract under which
(1) the holder will purchase from us on February 16,
2001, for an amount in cash equal to $50, a number
of newly issued shares of our common stock, equal
to the settlement rate described below, and
(2) we will pay the holder contract adjustment payments
at the rate of 1.3% of $50 per year paid quarterly,
subject to our right to defer these payments, and
(b) a 1/20 undivided beneficial interest in a treasury
security.
The new FELINE PRIDES are generally identical to the current FELINE
PRIDES in all aspects, excluding the settlement rate and the anti-dilution
protections. The trust preferred securities contained in the new Income
PRIDES and additional Income PRIDES and the separately traded trust
preferred securities offered in this prospectus are issued by Cendant
Capital II trust, while the trust preferred securities contained in the
current Income PRIDES are issued by Cendant Capital I trust. New Income
PRIDES holders and additional Income PRIDES holders may, therefore,
exercise voting rights only as they apply to Cendant Capital II.
The purchase price of each FELINE PRIDES will generally be allocated
between the related purchase contract and the related trust preferred
security or interest in a treasury security in proportion to their
respective fair market values at the time of purchase. We will take the
position that
(1) in the case of a new FELINE PRIDES, the entire purchase price
of that new FELINE PRIDES will be allocated to the related
trust preferred security or interest in a treasury security,
and that no amount will be allocated to the related purchase
contract and
(2) in the case of an additional FELINE PRIDES, the entire purchase
price of that additional FELINE PRIDES plus an amount equal to
the negative value of the related purchase contract will be
allocated to the related trust preferred security or interest
in a treasury security, and no amount will be allocated to the
related purchase contract.
This position generally will be binding on each beneficial owner of
each Income PRIDES, but not on the IRS. As long as FELINE PRIDES are in the
form of Income PRIDES or Growth PRIDES, the related trust preferred
securities or the appropriate applicable ownership interest of the treasury
portfolio or treasury securities, as applicable, will be pledged to the
collateral agent to secure your obligation to purchase our common stock
under the related purchase contracts.
SUBSTITUTION OF PLEDGED SECURITIES
Each holder of an Income PRIDES, unless a tax event redemption has
occurred, will have the right, at any time on or prior to the fifth
business day immediately preceding February 16, 2001, to substitute for the
related trust preferred securities held by the collateral agent treasury
securities in an aggregate principal amount equal to the aggregate stated
liquidation amount of those trust preferred securities.
The treasury securities will be pledged with the collateral agent to
secure the holder's obligation to purchase our common stock under the
related purchase contracts. Because treasury securities are issued in
integral multiples of $1,000, holders of Income PRIDES may make the
substitution only in integral multiples of 20 Income PRIDES. However, if a
tax event redemption has occurred prior to February 16, 2001, and the
treasury portfolio has become a component of the Income PRIDES, you may
make those substitutions only in integral multiples of 160,000 Income
PRIDES by obtaining the release of the treasury portfolio, rather than the
trust preferred securities, at any time on or prior to the second business
day immediately preceding February 16, 2001.
FELINE PRIDES with respect to which treasury securities have been
substituted for the related trust preferred securities or the appropriate
applicable ownership interest of the treasury portfolio, as the case may
be, as collateral to secure that holder's obligation under the related
purchase contracts will be referred to as Growth PRIDES.
To create 20 Growth PRIDES, unless a tax event redemption has
occurred, you must
(a) deposit with the collateral agent a treasury security having a
principal amount at maturity of $1,000 and
(b) transfer 20 Income PRIDES to the purchase contract agent
accompanied by a notice stating that you have deposited a
treasury security with the collateral agent and are requesting
that the purchase contract agent instruct the collateral agent
to release to you the 20 trust preferred securities relating to
the 20 Income PRIDES.
If contract adjustment payments are at a higher rate for Growth
PRIDES than for Income PRIDES, you will also be required to deliver cash in
an amount equal to the excess of the contract adjustment payments that
would have accrued since the last payment date through the date of
substitution on the Growth PRIDES being created by you, over the contract
adjustment payments that have accrued over the same period on the related
Income PRIDES.
Upon that deposit and the receipt of an instruction from the purchase
contract agent, the collateral agent will effect the release of the related
20 trust preferred securities from the pledge under the pledge agreement
free and clear of our security interest to the purchase contract agent,
which will
(a) cancel the 20 Income PRIDES,
(b) transfer to you the 20 related trust preferred securities, and
(c) deliver to you 20 Growth PRIDES.
The treasury security will be substituted for the trust preferred
securities and will be pledged with the collateral agent to secure your
obligation to purchase our common stock under the related purchase
contracts. The related trust preferred securities released to you will
trade separately from the resulting Growth PRIDES. Contract adjustment
payments will be payable by us on those Growth PRIDES on each payment date
from the later of and the last payment date on which
contract adjustment payments were paid. In addition, OID for
United States federal income tax purposes will accrue on the related
treasury securities. Distributions on any trust preferred securities, up to
but not including February 16, 2001, including after a substitution of
collateral resulting in the creation of Growth PRIDES, will continue to be
payable quarterly by the trust at the rate of 6.45% of $50 per year,
subject to our deferral rights.
Each holder of a Growth PRIDES, unless a tax event redemption has
occurred, will have the right, at any time on or prior to the fifth
business day immediately preceding February 16, 2001, to substitute for the
related treasury securities held by the collateral agent trust preferred
securities in an aggregate principal amount equal to the aggregate stated
liquidation amount of those treasury securities, thereby creating Income
PRIDES.
The trust preferred securities will be pledged with the collateral
agent to secure the holder's obligation to purchase our common stock under
the related purchase contract. Because treasury securities are issued in
integral multiples of $1,000, you may make those substitutions only in
integral multiples of 20 Growth PRIDES. However, if a tax event redemption
has occurred and the treasury portfolio has become a component of the
Income PRIDES, you may make that substitution only in integral multiples of
160,000 Growth PRIDES, at any time, on or prior to the second business day
immediately preceding February 16, 2001.
To create 20 Income PRIDES, unless a tax event redemption has
occurred, you must
(a) deposit with the collateral agent 20 trust preferred securities
and
(b) transfer 20 Growth PRIDES certificates to the purchase contract
agent accompanied by a notice stating that you had deposited 20
trust preferred securities with the collateral agent and are
requesting that the purchase contract agent instruct the
collateral agent to release to you the treasury security
relating to those Growth PRIDES.
Upon the deposit and receipt of an instruction from the purchase
contract agent, the collateral agent will effect the release of the related
treasury security from the pledge under the pledge agreement free and clear
of our security interest to the purchase contract agent, which will
(a) cancel the 20 Growth PRIDES,
(b) transfer to you the related treasury security and
(c) deliver to you 20 Income PRIDES.
The substituted trust preferred securities will be pledged with the
collateral agent to secure your obligation to purchase our common stock
under the related purchase contacts. Cumulative cash distribution, payable
quarterly at a rate of 7.5% of $50 per year on those Income PRIDES, subject
to our deferral rights, will be payable by us on those Income PRIDES on
each payment date from the later of and the last payment
date on which those cumulative cash distributions, if any, were paid.
Holders who elect to substitute pledged securities, creating or
recreating Growth PRIDES or Income PRIDES, shall be responsible for any
fees or expenses payable in connection with substitution.
RECREATING INCOME PRIDES OR GROWTH PRIDES
On or prior to the fifth business day immediately preceding February
16, 2001, a holder of Growth PRIDES or Income PRIDES may, unless a tax
event redemption has occurred, recreate Income PRIDES or Growth PRIDES by
(a) depositing with the collateral agent 20 trust preferred
securities or a treasury security and
(b) transferring 20 Growth PRIDES or Income PRIDES, as applicable,
to the purchase contract agent accompanied by a notice stating
that the Growth PRIDES or Income PRIDES holder has deposited 20
trust preferred securities or a treasury security with the
collateral agent and requesting that the purchase contract
agent instruct the collateral agent to release to that holder
the related treasury security or trust preferred securities, as
applicable.
Upon the deposit and receipt of instructions from the purchase
contract agent, the collateral agent will effect the release of the related
treasury security or trust preferred securities, as applicable, from the
pledge of the pledge agreement free and clear of our security interest to
the purchase contract agent, which will
(a) cancel the 20 Growth PRIDES or Income PRIDES, as applicable,
(b) transfer to you the treasury security or trust preferred
securities, as applicable, and
(c) deliver to you 20 Income PRIDES or 20 Growth PRIDES, as
applicable.
If, however, a tax event redemption has occurred prior to February
16, 2001 and the treasury portfolio has become a component of the Income
PRIDES, holders of Growth PRIDES or Income PRIDES, as applicable, may make
those substitutions (by using, in the case of the Growth PRIDES, the
appropriate applicable ownership interest of the treasury portfolio rather
than the trust preferred securities) at any time on or prior to the second
business day immediately preceding February 16, 2001, but only in integral
multiples of 160,000 Growth PRIDES or Income PRIDES, as applicable.
If contract adjustment payments are at a higher rate for Growth
PRIDES than for Income PRIDES, holders of Income PRIDES wishing to recreate
Growth PRIDES will also be required to deliver cash in an amount equal to
the excess of the contract adjustment payments that would have accrued
since the last payment date through the date of substitution on the Growth
PRIDES being recreated by those holders, over the contract adjustment
payments that have accrued over the same time period on the related Income
PRIDES.
The substituted trust preferred securities, the appropriate
applicable ownership interest of the treasury portfolio or a treasury
security will be pledged with the collateral agent to secure your
obligation to purchase our common stock under the related purchase
contracts.
CURRENT PAYMENTS
Holders of Income PRIDES are entitled to receive aggregate cash
distributions at a rate of 7.5% of $50 per year from and after
through and including February 15, 2001, payable quarterly in arrears. The
quarterly payments on the Income PRIDES will consist of
(1) cumulative cash distributions on the related trust preferred
securities or the treasury portfolio, as applicable, payable at
the rate of 6.45% of $50 per year and
(2) contract adjustment payments payable by us at the rate of 1.05%
of $50 per year,
subject, in the case of distributions on the trust preferred
securities and the contract adjustment payments, to our right of deferral.
Each holder of Growth PRIDES will be entitled to receive quarterly
contract adjustment payments payable by the us at the rate of 1.3% of $50
per year, subject to our rights of deferral. In addition, OID will accrue
on the related treasury securities.
The ability of the trust to make the quarterly distributions on the
trust preferred securities is solely dependent upon the receipt of
corresponding interest payments from us on the debentures. We have the
right at any time, and from time to time, limited to a period not extending
beyond February 16, 2003, to defer the interest payments on the debentures.
As a consequence of that deferral, unless a tax event redemption has
occurred, quarterly distributions to holders of Income PRIDES or any trust
preferred securities outstanding after February 16, 2001 or after a
substitution of collateral resulting in the creation of Growth PRIDES would
be deferred. However, despite the deferral, the distributions would
continue to accumulate quarterly and would accrue interest compounded
quarterly at the rate of 6.45% per year through and including February 15,
2001, and at the reset rate afterwards.
We also have the right to defer the payment of contract adjustment
payments on the related purchase contracts until February 16, 2001.
However, deferred contract adjustment payments will bear additional
contract adjustment payments at the rate of 7.5% per year. The deferred
installments of contract adjustment payments, together with the additional
contract adjustment payments, shall be referred to as the "deferred
contract adjustment payments."
If a tax event redemption has occurred and the treasury portfolio
has become a component of the Income PRIDES, quarterly distributions on the
treasury portfolio, as a portion of the cumulative quarterly distributions
to the holders of Income PRIDES, will not be deferred.
Our obligations with respect to the debentures will be senior and
unsecured and will rank on a parity in right of payment with all our other
senior unsecured obligations. Our obligations with respect to the contract
adjustment payments will be subordinated and junior in right of payment to
our senior indebtedness.
VALUATION
The theoretical value of the new FELINE PRIDES equals the theoretical
value of the current FELINE PRIDES plus $17.57 as of , 1999. The
theoretical value of the additional FELINE PRIDES equals 100% of the
theoretical value of the current FELINE PRIDES as of , 1999.
Theoretical value is the value of a FELINE PRIDES calculated in accordance
with the formula set forth , which is a generally accepted method
for valuing similar securities. The theoretical values are only as of the
date rights are issued. We, Merrill Lynch or any other party to the
settlement cannot and are not assuring or guaranteeing the values and
market prices for the new FELINE PRIDES and the additional FELINE PRIDES.
The calculation agent will conduct the valuation process pursuant to
the following steps. These steps are illustrated in the table entitled
"Hypothetical Valuation across a Range of Stock Prices" below.
First, the calculation agent will determine the theoretical value of
the current FELINE PRIDES marked "f". The additional FELINE PRIDES are
designed to have a theoretical value equal to 100% of the theoretical value
of the current FELINE PRIDES. The current FELINE PRIDES will be valued as a
sum of their component parts:
o Fixed Income Component:
o Present Value of 7.50% coupons discounted at our debt rate
o Present Value of $50 stated value discounted at term LIBOR
o Options Component:
o Short 1.3514 puts struck at $37.00 per share
o Long 1.0395 calls struck at $48.10 per share
Both options are valued assuming a discount rate of term LIBOR and
using a trailing 100-day volatility schedule as determined by Bloomberg LP.
Second, the calculation agent will determine the theoretical value of
the new FELINE PRIDES:
o The new FELINE PRIDES are designed to have a value equal to the
theoretical value of current FELINE PRIDES plus $17.57
Third, the calculation agent will determine the settlement rate that
generates the theoretical value of the new FELINE PRIDES:
o The new FELINE PRIDES have the same coupons and maturity as the
current FELINE PRIDES and the additional FELINE PRIDES.
o The equity value of the new FELINE PRIDES is equal to the
theoretical value of the new FELINE PRIDES minus the present
value of the coupons.
o The settlement rate will be the equity value of the new FELINE
PRIDES divided by the closing common stock price on the
determination date.
Hypothetical Valuation across a Range of Stock Prices
===============================================================================================================
Stock Price as
of Determination
Date $5.00 $10.00 $15.00 $17.4375 $20.00 $25.00 $30.00 $35.00 $40.00
PV Coupons(1) $6.99 $6.99 $6.99 $6.99 $6.99 $6.99 $6.99 $6.99 $6.99
PV Principal(2) $45.06 $45.06 $45.06 $45.06 $45.06 $45.06 $45.06 $45.06 $45.06
Put Value(2)(3) ($38.36) ($32.19) ($26.94) ($24.72) ($22.61) ($19.08) ($16.19) ($13.82) ($11.87)
Call Value(2)(3) $0.02 $0.27 $1.00 $1.57 $2.30 $4.15 $6.48 $9.22 $12.32
Current &
additional
FELINE PRIDES
Value $13.71 $20.13 $26.11 $28.90 $31.74 $37.12 $42.34 $47.45 $52.50
Value of 1.5
rights
assumed as of
determination
date $17.57 $17.57 $17.57 $17.57 $17.57 $17.57 $17.57 $17.57 $17.57
new FELINE
PRIDES
Value $31.28 $37.70 $43.68 $46.47 $49.31 $54.69 $59.91 $65.02 $70.07
new FELINE
PRIDES
Equity Value $24.29 $30.71 $36.69 $39.48 $42.32 $47.70 $52.92 $58.03 $63.08
Settlement Rate 4.8580 3.0710 2.4460 2.2641 2.1160 1.9080 1.7640 1.6580 1.5770
================================================================================================================
The figures are provided by way of example only. The actual values
will be determined by the calculation agent as of the close of business on
the determination date. The theoretical values are only as of the date that
the rights are issued:
(1) discounted at two-year Eurodollar LIBOR of 5.47% + 1.5% credit
spread determined as of March 15, 1999;
(2) discounted at two-year Eurodollar LIBOR of 5.47% determined as of
March 15, 1999; and
(3) historical volatility over the previous 100 trading days of 60.0%
used in valuing options determined as of March 15, 1999.
The prices we have set for the additional FELINE PRIDES and new
FELINE PRIDES are not necessarily an indication of our actual value or of
the value of the FELINE PRIDES or common stock. We cannot assure you that
the market price of the FELINE PRIDES will not decline during this
offering. We also cannot assure you that we will be able to sell new FELINE
PRIDES or additional FELINE PRIDES at a price equal to or greater to the
prices determined here.
VOTING AND OTHER RIGHTS
Holders of trust preferred securities, in that capacity, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease
the number of regular trustees and will generally have no voting rights
except in limited circumstances. Holders of purchase contracts relating to
the Income PRIDES or Growth PRIDES, in that capacity, will have no voting
or other rights in respect of our common stock.
LISTING OF THE SECURITIES
We will apply to list the new Income PRIDES and the new Growth PRIDES
on the NYSE under the symbols and , respectively, subject to
official notice of issuance and minimum distribution requirements. The
additional FELINE PRIDES will not initially be listed on any exchange.
NYSE SYMBOL OF COMMON STOCK
The common stock is listed on the NYSE under the symbol "CD." The
current FELINE PRIDES are listed under the symbols "CDPrI" and "CDPrG."
MISCELLANEOUS
We or our affiliates may from time to time purchase any of the
securities offered in this prospectus which are then outstanding by tender,
in the open market or by private agreement.
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each purchase contract underlying a FELINE PRIDES, unless earlier
terminated, or earlier settled at your option, will obligate you to
purchase, and us to sell, on February 16, 2001, for an amount in cash equal
to $50, a number of newly issued shares of our common stock equal to the
settlement rate.
The settlement rate, which is the number of newly issued shares of
our common stock issuable upon settlement of a purchase contract on
February 16, 2001, will be calculated for additional FELINE PRIDES, subject
to adjustment under certain circumstances, as follows:
(a) if the applicable market value is equal to or greater than the
threshold appreciation price of $48.10, which is 30% above $37,
the last reported sale price of the common stock on February
24, 1998, the settlement rate, which is equal to $50 divided by
$48.10, will be 1.0395; accordingly, if, between the date of
this prospectus and the period during which the applicable
market value is measured, the market price for the common stock
increases to an amount that is higher than $48.10, the
aggregate market value of the shares of common stock issued
upon settlement of each purchase contract, assuming that this
market value is the same as the applicable market value of the
common stock, will be higher than $50, and if the market price
equals $48.10, the aggregate market value of those shares,
assuming that this market value is the same as the applicable
market value of the common stock, will equal $50;
(b) if the applicable market value is less than $48.10 but greater
than $37, the settlement rate will be equal to $50 divided by
the applicable market value; accordingly, if the market price
for the common stock increases between the date of this
prospectus and the period during which the applicable market
value is measured but that market price is less than $48.10,
the aggregate market value of the shares of common stock issued
upon settlement of each purchase contract, assuming that this
market value is the same as the applicable market value of the
common stock, will equal $50; and
(c) if the applicable market value is less than or equal to $37,
the settlement rate, which is equal to $50 divided by $37, will
be 1.3514; accordingly, if the market price for the common
stock decreases between the date of this prospectus and the
period during which the applicable market value is measured,
the aggregate market value of the shares of common stock issued
upon settlement of each purchase contract, assuming that the
market value is the same as the applicable market value of the
common stock, will be less than $50, and if the market price
stays the same, the aggregate market value of those shares,
assuming that this market value is the same as the applicable
market value of the common stock, will equal $50.
The applicable market value means the average of the closing prices
per share of common stock on each of the twenty consecutive trading days
ending on the third trading day immediately preceding February 16, 2001.
The closing price of the common stock on any date of determination
means the closing sale price or, if no closing price is reported, the last
reported sale price of the common stock on the NYSE on that date. If the
common stock is not listed for trading on the NYSE on any of those dates,
the closing price of the common stock on any date of determination means
the closing sales price as reported in the composite transactions for the
principal U.S. securities exchange on which the common stock is so listed,
or if the common stock is not so listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq stock market, or, if the
common stock is not so reported, the last quoted bid price for the common
stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization or, if that bid price is not available, the
market value of the common stock on that date as determined by a nationally
recognized independent investment banking firm retained by us for this
purpose.
A trading day is a day on which the common stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the common stock.
Each purchase contract underlying a new FELINE PRIDES, unless earlier
terminated, or earlier settled at your option, will obligate you to
purchase, and us to sell, on February 16, 2001, for $50 cash, a number of
newly issued shares of our common stock equal to the settlement rate.
Unlike the settlement rate of the additional FELINE PRIDES and
current FELINE PRIDES, which varies depending on the applicable market
value, the settlement rate of the new FELINE PRIDES is fixed at . At
the settlement date, we will issue a holder of new FELINE PRIDES shares
of common stock per each new FELINE PRIDES, regardless of the market price
of our common stock.
The new FELINE PRIDES settlement rate entitles a holder of new FELINE
PRIDES to purchase, and obligates us to sell, a number of newly issued
shares of common stock greater than the number issued to a holder of
current FELINE PRIDES or additional FELINE PRIDES. The difference in value
between the amount of common stock we will issue a holder of current FELINE
PRIDES or additional FELINE PRIDES and the amount of common stock we will
issue a holder of new FELINE PRIDES will equal $17.57 per new FELINE
PRIDES, subject to adjustment for expenses. We selected the fixed
settlement rate of because, given an initial stock price of $17.4375,
this rate will return $11.71 of value per right. One and a half rights are
required to generate the additional value of $17.57 for each new FELINE
PRIDES.
The following table demonstrates the net additional shares per right
to be delivered to a holder of new FELINE PRIDES, as compared to current
FELINE PRIDES and additional FELINE PRIDES, upon settlement of the related
purchase contracts. The table displays that the value of the right varies
positively with the price of our common stock. Because the new FELINE
PRIDES settlement rate is fixed, the higher the price of our stock, the
more value the holder of new FELINE PRIDES will receive for its fixed
amount of common stock. The values in the table are theoretical values and
may not represent the price that may actually be realized in the market.
The actual values will be determined at the close of the determination
date, which will take place two days prior to the distribution of the
rights.
NET ADDITIONAL SHARES FROM RIGHT:
STOCK CONVERSION RATIOS
A B C D E
STOCK Current New Net VALUE
PRICE & Addi PRIDES Shares PER
tional Per Right RIGHT
PRIDES (C-B)x2/3 (AXD)
- ------- ------- -------- --------- --------
5 1.3514 0.6085 3.04
10 1.3514 0.6085 6.08
15 1.3514 0.6085 9.13
17.4375 1.3514 0.6085 10.61
20 1.3514 0.6085 12.17
30 1.3514 0.6085 18.25
35 1.3514 0.6085 21.30
37 1.3514 0.6085 22.51
39 1.2821 0.6547 25.53
41 1.2195 0.6964 28.55
43 1.1628 0.7342 31.57
45 1.1111 0.7687 34.59
47 1.0638 0.8002 37.61
50 1.0395 0.8164 40.82
No fractional shares of common stock will be issued by us pursuant to
the purchase contracts. In place of fractional shares otherwise issuable,
calculated on an aggregate basis, in respect of the purchase contracts you
are settling, you will be entitled to receive an amount of cash equal to
the fractional share times the applicable market value.
On the business day immediately preceding February 16, 2001, unless
(1) you have settled the related purchase contracts prior to
February 16, 2001 through the early delivery of cash to
the purchase contract agent, in the manner described
under "-Early Settlement,"
(2) in the case of Income PRIDES, you have settled the
related purchase contracts with separate cash on the
business day immediately preceding February 16, 2001,
having given prior notice in the manner described under
"--Notice to Settle with Cash",
(3) you have had the trust preferred securities related to
your purchase contracts remarketed in the manner
described in this prospectus, or
(4) an event described under "--Termination" below has
occurred, then
In the case of Income PRIDES, unless a tax event redemption has
occurred, we will exercise our rights as a secured party to dispose of the
trust preferred securities in accordance with applicable law. In the case
of Growth PRIDES or Income PRIDES, if a tax event redemption has occurred,
the principal amount of the related treasury securities or the appropriate
applicable ownership interest of the treasury portfolio, as applicable,
when paid at maturity, will automatically be applied to satisfy in full
your obligation to purchase common stock under the related purchase
contracts. The common stock will then be issued and delivered to you or
your designee, upon presentation and surrender of the certificate
evidencing the FELINE PRIDES and payment by you of any transfer or similar
taxes payable in connection with the issuance of the common stock to any
person other than you. Where a holder of either Income PRIDES or Growth
PRIDES effects the early settlement of the related purchase contracts
through the delivery of cash or, in the case of Income PRIDES, settles the
related purchase contracts with cash on the business day immediately
preceding February 16, 2001, the related trust preferred securities or
treasury securities, as the case may be, will be released to the holder as
described in this prospectus. The funds received by the collateral agent on
the business day immediately preceding February 16, 2001, upon cash
settlement of a purchase contract, will be promptly invested in overnight
permitted investments and paid to us on February 16, 2001. Any funds
received by the collateral agent in respect of the interest earned from the
overnight investment in permitted investments will be distributed to the
purchase contract agent for payment to the holders.
Prior to the date on which shares of common stock are issued in
settlement of purchase contracts, the common stock underlying the related
purchase contracts will not be deemed to be outstanding for any purpose and
the holders of those purchase contracts will not have any voting rights,
rights to dividends or other distributions, rights or privileges of a
stockholder of Cendant by virtue of holding the purchase contracts.
As a holder of an Income PRIDES or Growth PRIDES, you will, by
acceptance and under the terms of the purchase contract agreement and the
related purchase contracts, be deemed to have
(a) irrevocably agreed to be bound by the terms of the related
purchase contracts and the pledge agreement for so long as you
remain a holder of that FELINE PRIDES, and
(b) duly appointed the purchase contract agent as your
attorney-in-fact to enter into and perform the related purchase
contracts on behalf of and in your name.
In addition, as a beneficial owner of Income PRIDES or Growth
PRIDES, you, by acceptance of the interest, will be deemed to have agreed
to treat for United States federal, state and local income and franchise
tax purposes,
(a) yourself as the owner of the related trust preferred
securities, the appropriate applicable ownership interest of
the treasury portfolio or the treasury securities, as the case
may be, and
(b) the debentures as indebtedness that we have issued.
REMARKETING
Under the remarketing agreement and subject to the terms of the
remarketing underwriting agreement between the remarketing agent, the
purchase contract agent, us and the trust, the trust preferred securities
of Income PRIDES holders' who have failed to notify the purchase contract
agent, on or prior to the fifth business day immediately preceding February
16, 2001 of their intention to settle the related purchase contracts with
separate cash on the business day immediately preceding February 16, 2001,
will be remarketed on the third business day immediately preceding the
February 16, 2001.
The remarketing agent will use its reasonable efforts to remarket
those trust preferred securities on that date at a price of approximately
100.5% of the aggregate stated liquidation amount of those trust preferred
securities, plus accrued and unpaid distributions, including any deferred
distributions. The portion of the proceeds from that remarketing equal to
the aggregate stated liquidation amount of those trust preferred securities
will automatically be applied to satisfy in full those Income PRIDES
holders' obligations to purchase common stock under the related purchase
contracts. In addition, after deducting as the remarketing fee an amount
not exceeding 25 basis points (.25%) of the aggregate stated liquidation
amount of the remarketed trust preferred securities, from any amount of
those proceeds in excess of the aggregate stated liquidation amount of the
remarketed trust preferred securities plus any accrued and unpaid
distributions, including any deferred distributions, the remarketing agent
will remit the remaining portion of the proceeds, if any, for the benefit
of that holder. Income PRIDES holders whose trust preferred securities are
so remarketed will not otherwise be responsible for the payment of any
remarketing fee.
If, despite using its reasonable efforts, the remarketing agent
cannot remarket the related trust preferred securities of those holders of
Income PRIDES at a price not less than 100% of the aggregate stated
liquidation amount of those trust preferred securities plus accrued and
unpaid distributions, including any deferred distributions, and thus
resulting in a failed remarketing, we will exercise our rights as a secured
party to dispose of the trust preferred securities in accordance with the
applicable law and satisfy in full, from the proceeds of that disposition,
that holder's obligation to purchase common stock under the related
purchase contracts. However, if we exercise those rights as a secured
creditor, any accrued and unpaid distributions, including any deferred
distributions, on those trust preferred securities will be paid in cash by
us to the holders of record of those trust preferred securities. We will
cause a notice of the failed remarketing to be published on the second
business day immediately preceding February 16, 2001 by publication in a
daily newspaper in the English language of general circulation in the city
of New York, which is expected to be The Wall Street Journal. In addition,
we will request, not later than ten nor more than 15 calendar days prior to
the remarketing date, that the depository notify its participants holding
trust preferred securities, Income PRIDES and Growth PRIDES of the
remarketing and of the procedures that must be followed if a trust
preferred security holder wishes to exercise its right to put its trust
preferred security to us as described in this prospectus. We will endeavor
to ensure that a registration statement with regard to the full amount of
the trust preferred securities to be remarketed shall be effective in a
form that will enable the remarketing agent to rely on it in connection
with the remarketing process. It is currently anticipated that Merrill
Lynch, Pierce, Fenner & Smith Incorporated will be the remarketing agent.
EARLY SETTLEMENT
A holder of Income PRIDES may settle the related purchase contracts
on or prior to the fifth business day immediately preceding February 16,
2001 by presenting and surrendering the FELINE PRIDES certificate
evidencing those Income PRIDES at the offices of the purchase contract
agent. The holder should also present the form of election to settle early
on the reverse side of that certificate completed and executed as
indicated, accompanied by payment payable to us in immediately available
funds of an amount equal to $50 times the number of purchase contracts
being settled. However, if a tax event redemption has occurred prior to
February 16, 2001 and the treasury portfolio has become a component of the
Income PRIDES, holders of those Income PRIDES may settle early only in
integral multiples of 160,000 Income PRIDES, and the related appropriate
applicable ownership interest of the treasury portfolio, at any time on or
prior to the second business day immediately preceding February 16, 2001.
A holder of Growth PRIDES may settle the related purchase contracts
on or prior to the second business day immediately preceding February 16,
2001 by presenting and surrendering the FELINE PRIDES certificate
evidencing the Growth PRIDES at the offices of the purchase contract agent
with the form of election to settle early on the reverse side of that
certificate completed and executed as indicated, accompanied by payment in
immediately available funds of an amount equal to $50 times the number of
purchase contracts being settled.
So long as the FELINE PRIDES are evidenced by one or more global
security certificates deposited with the depositary, procedures for early
settlement will also be governed by standing arrangements between the
depositary and the purchase contract agent.
Upon early settlement of the purchase contracts related to any Income
PRIDES or Growth PRIDES:
(a) as a holder of an additional FELINE PRIDES, you will receive
newly issued shares of common stock per Income PRIDES
or Growth PRIDES, regardless of the market price of the common
stock on the date of the early settlement. As a holder of a new
FELINE PRIDES, you will receiv shares of common stock per new
FELINE PRIDES. The number of newly issued shares of common
stock in both cases will be subject to adjustment under the
circumstances described in "--Anti-Dilution Adjustments" below;
(b) the trust preferred securities, the appropriate applicable
ownership interest of the treasury portfolio or the treasury
securities, related to the Income PRIDES or Growth PRIDES, as
applicable, will then be transferred to you free and clear of
our security interest;
(c) your right to receive any deferred contract adjustment payments
on the purchase contracts being settled will be forfeited;
(d) your right to receive future contract adjustment payments will
terminate; and
(e) no adjustment will be made to or for you on account of any
deferred contract adjustment payments or any amounts accrued in
respect of contract adjustment payments.
If the purchase contract agent receives a FELINE PRIDES certificate,
accompanied by the completed election to settle early form and the
requisite amount of immediately available funds, from you by 5:00 p.m., New
York City time, on a business day, that day will be considered the
settlement date. If the purchase contract agent receives those documents
after 5:00 p.m., New York City time, on a business day or at any time on a
day that is not a business day, unless you are an Income PRIDES holder and
a tax event redemption has occurred, the next business day will be
considered the settlement date.
Upon early settlement of purchase contracts in the manner described
above, presentation and surrender of the FELINE PRIDES certificate
evidencing the related Income PRIDES or Growth PRIDES and payment of any
transfer or similar taxes payable by the holder in connection with the
issuance of the related common stock to any person other than the holder of
the Income PRIDES or Growth PRIDES, we will cause the shares of common
stock being purchased to be issued, and the related trust preferred
securities, the appropriate applicable ownership interest of the treasury
portfolio or the treasury securities, as the case may be, securing those
purchase contracts to be released from the pledge under the pledge
agreement and transferred, within three business days following the
settlement date, to you or your designee.
NOTICE TO SETTLE WITH CASH
If you want to settle the purchase contract underlying a FELINE
PRIDES with separate cash on the business day immediately preceding
February 16, 2001, you must notify the purchase contract agent by
presenting and surrendering the FELINE PRIDES certificate evidencing those
FELINE PRIDES. You must present the certificates at the offices of the
purchase contract agent with the form of "Notice to Settle by Separate
Cash" on the reverse side of the certificate completed and executed as
indicated. You must present the documents on or prior to 5:00 p.m., New
York City time, on the second business day immediately preceding February
16, 2001 if you are a Growth PRIDES holder or if you are an Income PRIDES
holder and a tax event redemption has occurred. If you are an Income PRIDES
holder, you must present the document on the fifth business day immediately
preceding February 16, 2001.
If you have given notice of your intention to settle the related
purchase contract with separate cash but failed to deliver the cash on the
business day immediately preceding February 16, 2001, then we will exercise
our right as a secured party to dispose of, in accordance with the
applicable law, the related trust preferred securities, the applicable
ownership interest of the treasury portfolio or the treasury securities, as
the case may be, to satisfy in full from the proceeds of that disposition
your obligation to purchase common stock under the related purchase
contract.
CONTRACT ADJUSTMENT PAYMENTS
Contract adjustment payments will be fixed at a rate per year of
1.05% of $50 per purchase contract in the case of Income PRIDES, and at a
rate per year of 1.3% of $50 per purchase contract in the case of Growth
PRIDES. Contract adjustment payments that are not paid when due, after
giving effect to any permitted deferrals, will continue to accrue at the
rate per year of 7.5% compounded quarterly, until paid. Contract adjustment
payments payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. Contract adjustment payments will accrue from
and will be payable quarterly in arrears on February 16, May 16,
August 16 and November 16 of each year, commencing .
Contract adjustment payments will be payable to the holders of
purchase contracts as they appear on the books and records of the purchase
contract agent on the relevant record dates.
As long as the Income PRIDES or Growth PRIDES remain in book-entry
only form, the record dates will be one business day prior to the relevant
payment dates. Those distributions will be paid through the purchase
contract agent who will hold amounts received in respect of the contract
adjustment payments for your benefit relating to those Income PRIDES or
Growth PRIDES. Subject to any applicable laws and regulations, each of
those payments will be made as described under "--Book-Entry System." If
the Income PRIDES or Growth PRIDES do not continue to remain in book-entry
only form, we shall have the right to select relevant record dates, which
shall be more than one business day but less than 60 business days prior to
the relevant payment dates.
If any date on which contract adjustment payments are to be made on
the purchase contracts related to the Income PRIDES or Growth PRIDES is not
a business day, then payment of the contract adjustment payments payable on
that date will be made on the next succeeding day which is a business day,
and no interest or payment will be paid in respect of the delay. However,
if that business day is in the next succeeding calendar year, that payment
shall be made on the immediately preceding business day, in each case with
the same force and effect as if made on that payment date. A "business day"
shall mean any day other than Saturday, Sunday or any day on which banking
institutions in New York City in the State of New York are permitted or
required by any applicable law to close.
Our obligations with respect to contract adjustment payments will be
subordinated and junior in right of payment to our obligations under any
senior indebtedness.
OPTION TO DEFER CONTRACT ADJUSTMENT PAYMENTS
We may, at our option and upon prior written notice to the holders of
the FELINE PRIDES and the purchase contract agent, defer the payment of
contract adjustment payments on the purchase contracts until no later than
February 16, 2001. However, deferred contract adjustment payments, if any,
will bear additional contract adjustment payments at the rate of 7.5% per
year, compounding on each succeeding payment date, until paid. If the
purchase contracts are terminated upon the occurrence of specific events of
our bankruptcy, insolvency or reorganization, the right to receive contract
adjustment payments and deferred contract adjustment payments, if any, will
also terminate.
If we elect to defer the payment of contract adjustment payments on
the purchase contracts until February 16, 2001, you will receive on
February 16, 2001, in respect of the deferred contract adjustment payments,
instead of a cash payment, a number of shares of our common stock equal to
(x) the aggregate amount of deferred contract adjustment payments payable
to you divided by (y) the applicable market value.
If we exercise our option to defer the payment of contract adjustment
payments, until the deferred contract adjustment payments have been paid,
we shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of our capital stock or make guarantee payments with
respect to the above-mentioned, other than
o purchases or acquisitions of our capital stock in connection
with the satisfaction of our obligations under any employee or
agent benefit plans or under any contract or security
outstanding on the date of that event requiring us to purchase
our capital stock,
o as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital
stock for another class or series of our capital stock,
o the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of our
capital stock or the security being converted or exchanged,
o dividends or distributions in our capital stock (or rights to
acquire capital stock) or repurchases or redemptions of capital
stock solely from the issuance or exchange of capital stock or
o redemptions or repurchases of any rights outstanding under a
shareholder rights plan.
ANTI-DILUTION ADJUSTMENTS
The formula for determining the settlement rate will be subject to
adjustment, without duplication, upon the occurrence of events, including:
(a) the payment of dividends and distributions of our common stock on
our common stock;
(b) the issuance to all holders of our common stock of rights,
warrants or options entitling them, for a period of up to 45
days, to subscribe for or purchase our common stock at less
than the current market price;
(c) subdivisions, splits and combinations of our common stock;
(d) distributions to all holders of our common stock of our
evidences of indebtedness, shares of capital stock, securities,
cash or property, excluding any dividend or distribution
covered by clause (a) or (b) above and any dividend or
distribution paid exclusively in cash;
(e) distributions consisting exclusively of cash to all holders of
our common stock in an aggregate amount that, together with
o all-cash distributions made within the preceding 12
months and
o any cash and the fair market value, as of the expiration
of the tender or exchange offer referred to below, of
consideration payable in respect of any tender or
exchange offer by us or a subsidiary of ours for the
common stock concluded within the preceding 12 months,
exceeds 15% of our aggregate market capitalization; the
aggregate market capitalization being the product of the
current market price of the common stock multiplied by
the number of shares of common stock then outstanding on
the date of that distribution; and
(f) the successful completion of a tender or exchange offer made by
us or any subsidiary of ours for our common stock which
involves an aggregate consideration that, together with
o any cash and the fair market value of consideration
payable in respect of any tender or exchange offer by us
or a subsidiary of ours for the common stock concluded
within the preceding 12 months and
o the aggregate amount of any all-cash distributions to all
holders of our common stock made within the preceding 12
months, exceeds 15% of our aggregate market
capitalization on the expiration of the tender or
exchange offer.
The "current market price" per share of common stock on any day means
the average of the daily closing prices for the five consecutive trading
days selected by us commencing not more than 30 trading days before, and
ending not later than, the earlier of the day in question and the day
before the "ex date" with respect to the issuance or distribution requiring
that computation. For purposes of this paragraph, the term "ex date," when
used with respect to any issuance or distribution, shall mean the first
date on which the common stock trades regular way on that exchange or in
that market without the right to receive the issuance or distribution.
The new FELINE PRIDES will benefit from additional anti-dilution
provisions, providing that if after the distribution date of the rights and
prior to the date which is 70 days after the distribution date:
(a) we issue, undertake, or agree to issue in one or a series of
related transactions an aggregate of more than one million
shares of our common stock or securities which are or may be
convertible into, exchangeable for, or which confer or may
confer a right to acquire more than one million shares of our
common stock, subject to adjustment for mergers,
consolidations, stock splits, recapitalizations, or similar
transactions, other than for cash at fair value, as determined
in good faith by our board of directors or as consideration for
an acquisition of a business or of assets to be used in its
business; and
(b) following the announcement of our intention to issue those
shares or other securities, which includes a description of the
material terms of that issuance, the calculation average of the
closing prices of our common stock on the NYSE for the ten
consecutive trading days following the announcement is less
than the closing price of the stock on the NYSE on the trading
day immediately prior to the announcement, then the settlement
rate shall be adjusted further, but using the calculation
average as the market value of our common stock for purposes of
that calculation.
We will deem these agreements, undertakings or issuances as a
material corporate event in determining the timing of any announcements.
In the case of reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions in accordance to which our common
stock is converted into the right to receive securities, cash or property,
each purchase contract then outstanding would, without the consent of the
holders of the related Income PRIDES or Growth PRIDES, become a contract to
purchase only the kind and amount of securities, cash and property
receivable upon consummation of the transaction by a holder of the number
of shares of common stock which would have been received by the holder of
the related Income PRIDES or Growth PRIDES immediately prior to the date of
consummation of that transaction if that holder had then settled that
purchase contract.
If at any time (1) we make a distribution of property to our
stockholders which would be taxable to those stockholders as a dividend for
United States federal income tax purposes, which includes generally
distributions of our evidences of indebtedness or assets, but generally not
stock dividends or rights to subscribe to capital stock; and (2) according
to the settlement rate adjustment provisions of the purchase contract
agreement, the settlement rate is increased, that increase may give rise to
a taxable dividend to holders of FELINE PRIDES.
In addition, we may make increases to the settlement rate as our
board of directors deems advisable to avoid or diminish any income tax to
holders of our capital stock resulting from any dividend, distribution of
capital stock, distribution of rights to acquire capital stock or from any
event treated similarly for income tax purposes or for any other reasons.
Adjustments to the settlement rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the settlement rate shall be
required unless that adjustment would require an increase or decrease of at
least one percent in the settlement rate. However, any adjustments which by
reason of the above are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
We will be required, within ten business days following the
adjustment of the settlement rate, to provide written notice to the
purchase contract agent of the occurrence of that event and a statement
specifying in reasonable detail the method by which the adjustment to the
settlement rate was determined and the revised settlement rate.
Each adjustment to the settlement rate will result in a corresponding
adjustment to the number of shares of common stock issuable upon early
settlement of a purchase contract.
TERMINATION OF PURCHASE CONTRACTS
The purchase contracts, our related rights and obligations and those
of the holders of the FELINE PRIDES, including the right to receive accrued
contract adjustment payments or deferred contract adjustment payments and
the right and obligation to purchase common stock, will automatically
terminate upon the occurrence of particular events of our bankruptcy,
insolvency or reorganization.
Upon termination, the collateral agent will release the related trust
preferred securities or the appropriate applicable ownership interest of
the treasury portfolio and the treasury securities held by it to the
purchase contract agent for distribution to the holders. The release will
be subject in the case of the treasury portfolio to the purchase contract
agent's disposition of the subject securities for cash and the payment of
the cash to the holders to the extent that the holders would otherwise have
been entitled to receive less than $1,000 of any security. Upon
termination, however, the release and distribution may be subject to a
delay. If we become the subject of a case under the Bankruptcy Code, a
delay may occur as a result of the automatic stay under the Bankruptcy Code
and continue until the automatic stay has been lifted. We expect the delay
to be limited.
PLEDGED SECURITIES AND PLEDGE AGREEMENT
The trust preferred securities related to the Income PRIDES, or the
treasury portfolio if a tax event redemption has occurred prior to February
16, 2001 and the treasury securities related to the Growth PRIDES
(collectively, the "pledged securities") will be pledged to the collateral
agent, for our benefit. According to the pledge agreement, the pledged
securities will secure the obligations of holders of FELINE PRIDES to
purchase our common stock under the related purchase contracts. Your rights
to the related pledged securities will be subject to our security interest
created by the pledge agreement. You will not be permitted to withdraw the
pledged securities related to the Income PRIDES or Growth PRIDES from the
pledge arrangement except
(1) to substitute treasury securities for the related trust
preferred securities or the appropriate applicable ownership
interest of the treasury portfolio,
(2) to substitute trust preferred securities or the appropriate
applicable ownership interest of the treasury portfolio for the
related treasury securities, or
(3) upon the termination or early settlement of the related
purchase contracts.
Subject to the security interest and the terms of the purchase
contract agreement and the pledge agreement, (1) each holder of Income
PRIDES, unless a tax event redemption has occurred, will be entitled
through the purchase contract agent and the collateral agent to all of the
proportional rights and preferences of the related trust preferred
securities, including distribution, voting, redemption, repayment and
liquidation rights, and (2) each holder of Growth PRIDES or Income PRIDES,
if a tax event redemption has occurred, will retain beneficial ownership of
the related treasury securities or the appropriate applicable ownership
interest of the treasury portfolio, pledged in respect of the related
purchase contracts. We will have no interest in the pledged securities
other than our security interest.
Except as described in "Description of the purchase contracts --
General," the collateral agent will, upon receipt of distributions on the
pledged securities, distribute those payments to the purchase contract
agent, which will in turn distribute them, together with contract
adjustment payments received from us, to the persons in whose names the
related Income PRIDES or Growth PRIDES are registered at the close of
business on the record date immediately preceding the date of the
distribution.
BOOK ENTRY-SYSTEM
The Depository Trust Company will act as securities depositary for
the FELINE PRIDES. The FELINE PRIDES will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
"depositary's nominee"). One or more fully-registered global security
certificates, representing the total aggregate number of FELINE PRIDES,
will be issued and deposited with the depositary and will bear a legend
regarding the restrictions on exchanges and registration of transfer
referred to below.
The laws of some jurisdictions require that some purchasers of
securities take physical delivery of securities in definitive form. Those
laws may impair the ability to transfer beneficial interests in the FELINE
PRIDES so long as the FELINE PRIDES are represented by global security
certificates.
The depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to the provisions of section 17A of
the Exchange Act.
The depositary holds securities that its participants deposit with
the depositary. The depositary also facilitates the settlement among
participants of securities transactions, including transfers and pledges,
in deposited securities through electronic computerized book-entry changes
in participants' accounts, thus eliminating the need for physical movement
of securities certificates. Direct participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations. The depositary is owned by a number of its direct
participants and by the NYSE, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. ("participants"). Access
to the depositary system is also available to others, including securities
brokers and dealers, banks and trust companies that clear transactions
through or maintain a direct or indirect custodial relationship with a
direct participant either directly or indirectly ("indirect participants").
The rules applicable to the depositary and its participants are on file
with the commission.
No FELINE PRIDES represented by global security certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no transfer
of global security certificates in whole or in part may be registered, in
the name of any person other than the depositary or any nominee of the
depositary, unless, however, the depositary has notified us that it is
unwilling or unable to continue as depositary for the global security
certificates, has ceased to be qualified to act as required by the purchase
contract agreement or there is a continuing default by us in respect of our
obligations under one or more purchase contracts. All FELINE PRIDES
represented by one or more global security certificates or any portion of
them will be registered in those names as the depositary may direct.
As long as the depositary or its nominee is the registered owner of
the global security certificates, the depositary or that nominee will be
considered the sole owner and holder of the global security certificates
and all FELINE PRIDES represented by those certificates for all purposes
under the FELINE PRIDES and the purchase contract agreement. Except in the
limited circumstances referred to above, owners of beneficial interests in
global security certificates will not be entitled to have the global
security certificates or the FELINE PRIDES represented by those
certificates registered in their names, will not receive or be entitled to
receive physical delivery of FELINE PRIDES certificates in exchange and
will not be considered to be owners or holders of the global security
certificates or any FELINE PRIDES represented by those certificates for any
purpose under the FELINE PRIDES or the purchase contract agreement. All
payments on the FELINE PRIDES represented by the global security
certificates and all related transfers and deliveries of trust preferred
securities, treasury portfolio, treasury securities and common stock will
be made to the depositary or its nominee as their holder.
Ownership of beneficial interests in the global security certificates
will be limited to participants or persons that may hold beneficial
interests through institutions that have accounts with the depositary or
its nominee. Ownership of beneficial interests in global security
certificates will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the
depositary or its nominee with respect to participants' interests or by the
participant with respect to interests of persons held by the participants
on their behalf.
Procedures for settlement of purchase contracts on February 16, 2001
or upon early settlement will be governed by arrangements among the
depositary, participants and persons that may hold beneficial interests
through participants designed to permit the settlement without the physical
movement of certificates. Payments, transfers, deliveries, exchanges and
other matters relating to beneficial interests in global security
certificates may be subject to various policies and procedures adopted by
the depositary from time to time.
Neither we or any of our agents, nor the purchase contract agent or
any of its agents will have any responsibility or liability for any aspect
of the depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in global security
certificates, or for maintaining, supervising or reviewing any of the
depositary's records or any participant's records relating to those
beneficial ownership interests.
The information in this section concerning the depositary and its
book-entry system has been obtained from sources that we and the trust
believe to be reliable, but neither we nor the trust take responsibility
for its accuracy.
PROVISIONS OF THE CONTRACT PURCHASE
AGREEMENT AND THE PLEDGE AGREEMENT
OVERVIEW
Distributions on the FELINE PRIDES will be payable, purchase
contracts and documents related to it will be settled and transfers of the
FELINE PRIDES will be registrable at the office of the purchase contract
agent in the Borough of Manhattan, The City of New York. In addition, in
the event that the FELINE PRIDES do not remain in book-entry form, payment
of distributions on the FELINE PRIDES may be made, at our option, by check
mailed to the address of the person entitled to it as shown on the security
register.
Shares of our common stock will be delivered on February 16, 2001 or
earlier upon early settlement or, if the purchase contracts have
terminated, the related pledged securities will be delivered potentially
after a delay as a result of the imposition of the automatic stay under the
Bankruptcy Code, in either case upon presentation and surrender of the
FELINE PRIDES certificate at the office of the purchase contract agent. We
expect any delay to be limited.
If you fail to present and surrender the FELINE PRIDES certificate
evidencing the Income PRIDES or Growth PRIDES to the purchase contract
agent on February 16, 2001, the shares of common stock issuable in
settlement of the related purchase contract and in payment of any deferred
contract adjustment payments will be registered in the name of the purchase
contract agent. The shares of common stock, together with any related
distributions, shall be held by the purchase contract agent as agent for
your benefit, until the FELINE PRIDES certificate is presented and
surrendered or you provide satisfactory evidence that the certificate has
been destroyed, lost or stolen, together with any indemnity that may be
required by the purchase contract agent and us.
If the purchase contracts have terminated prior to February 16, 2001,
the related pledged securities have been transferred to the purchase
contract agent for distribution to you and you fail to present and
surrender the FELINE PRIDES certificate evidencing your Income PRIDES or
Growth PRIDES to the purchase contract agent, the related pledged
securities delivered to the purchase contract agent and related payments
shall be held by the purchase contract agent as agent for your benefit,
until the FELINE PRIDES certificate is presented or you provide the
evidence and indemnity described above.
The purchase contract agent will have no obligation to invest or to
pay interest on any amounts held by the purchase contract agent pending
distribution.
No service charge will be made for any registration of transfer or
exchange of the FELINE PRIDES, except for any related tax or other
governmental charge that may be imposed.
MODIFICATION
The purchase contract agreement and the pledge agreement will contain
provisions permitting us and the purchase contract agent or collateral
agent with the consent of the holders of not less than a majority of the
purchase contracts at the time outstanding, to modify the terms of the
purchase contracts, the purchase contract agreement and the pledge
agreement. If any particular series of FELINE PRIDES are materially and
adversely affected, the consent of the majority of that series' holders of
contract purchase FELINE PRIDES will be required. However, we, the purchase
contract agent or collateral agent may not, without the consent of the
holder of each outstanding purchase contract,
(a) change any payment date,
(b) change the amount or type of pledged securities related to the
purchase contract, impair the right of the holder of any
pledged securities to receive distributions on the pledged
securities except for the rights of holders of Income PRIDES to
substitute treasury securities for the related trust preferred
securities or treasury portfolio or the rights of holders of
Growth PRIDES to substitute trust preferred securities or
treasury portfolio for the related treasury securities or
otherwise adversely affect the holder's rights in or to those
pledged securities,
(c) change the place or currency of payment or reduce any contract
adjustment payments or any deferred contract adjustment
payments,
(d) impair the right to institute suit for the enforcement of the
purchase contract,
(e) reduce the amount of common stock purchasable under the
purchase contract, increase the price to purchase common stock
on settlement of the purchase contract, change the purchase
contract settlement date or otherwise adversely affect the
holder's rights under the purchase contract or
(f) reduce the above-stated percentage of outstanding purchase
contracts the consent of whose holders is required for the
modification or amendment of the provisions of the purchase
contracts, the purchase contract agreement or the pledge
agreement. However, if any amendment or proposal referred to
above would adversely affect only the Income PRIDES or the
Growth PRIDES, then only the affected class of holder will be
entitled to vote on that amendment or proposal and that
amendment or proposal shall not be effective except with the
consent of the holders of not less than a majority of that
class.
NO CONSENT TO ASSUMPTION
You, by your acceptance of the Income PRIDES or Growth PRIDES, will,
under the terms of the purchase contract agreement and the Income PRIDES or
Growth PRIDES, be deemed expressly to have withheld any consent to the
assumption, i.e., affirmance, of the related purchase contracts by us or
our trustee if we become the subject of a case under the Bankruptcy Code.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
We will covenant in the purchase contract agreement that we will not
merge or consolidate with any entity or sell, assign, transfer, lease or
convey all or substantially all of our properties and assets to any person,
firm or corporation unless we are the continuing corporation or the
successor corporation is a corporation organized under the laws of the
United States of America or one of its states and that corporation
expressly assumes our obligations under the purchase contracts, the
debentures, the purchase contract agreement and the pledge agreement, and
we or the successor corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in default
in the performance of any of these obligations.
TITLE
We, the purchase contract agent and the collateral agent may treat
the registered owner of any FELINE PRIDES as its absolute owner for the
purpose of making payment and settling the related purchase contracts and
for all other purposes.
REPLACEMENT OF FELINE PRIDES CERTIFICATES
In the case that physical certificates have been issued, we will
replace any mutilated FELINE PRIDES certificate at the expense of the
holder upon surrender of that certificate to the purchase contract agent.
We will replace any FELINE PRIDES certificates that become destroyed, lost
or stolen at the expense of the holder upon delivery to us and the purchase
contract agent of satisfactory evidence of its destruction, loss or theft.
In the case of a destroyed, lost or stolen FELINE PRIDES certificate, an
indemnity satisfactory to the purchase contract agent and us may be
required at the expense of the holder of the FELINE PRIDES evidenced by
that certificate before a replacement will be issued.
Notwithstanding the above, we will not be obligated to issue any
Income PRIDES or Growth PRIDES on or after February 16, 2001, after early
settlement or after the purchase contracts have terminated. The purchase
contract agreement will provide that, in place of the delivery of a
replacement FELINE PRIDES certificate following February 16, 2001, the
purchase contract agent, upon delivery of the evidence and indemnity
described above, will deliver the common stock issuable pursuant to the
purchase contracts included in the Income PRIDES or Growth PRIDES evidenced
by that certificate. If the purchase contracts have terminated prior to
February 16, 2001, the purchase contract agent will transfer the principal
amount of the pledged securities included in the Income PRIDES or Growth
PRIDES evidenced by that certificate.
GOVERNING LAW
The purchase contract agreement, the pledge agreement and the
purchase contracts will be governed by, and construed in accordance with,
the laws of the State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
The First National Bank of Chicago will be the purchase contract agent.
The purchase contract agent will
act as your agent from time to time. The purchase contract agreement will
not obligate the purchase contract agent to exercise any discretionary
actions in connection with a default under the terms of the Income PRIDES
and Growth PRIDES or the purchase contract agreement.
The purchase contract will contain provisions limiting the liability
of the purchase contract agent. The purchase contract agreement will
contain provisions under which the purchase contract agent may resign or be
replaced. That resignation or replacement would be effective upon the
appointment of a successor.
INFORMATION CONCERNING THE COLLATERAL AGENT
The Chase Manhattan Bank will be the collateral agent. The collateral
agent will act solely as our agent and will not assume any obligation or
relationship of agency or trust for or with you except for the obligations
owed by a pledgee of property to the owner under the pledge agreement and
applicable law.
The pledge agreement will contain provisions limiting the liability
of the collateral agent. The pledge agreement will contain provisions under
which the collateral agent may resign or be replaced. That resignation or
replacement would be effective upon the appointment of a successor.
maintains commercial banking relationships with us.
MISCELLANEOUS
The purchase contract agreement will provide that we will pay all fees
and expenses related to
(1) the offering of the FELINE PRIDES,
(2) the retention of the collateral agent and
(3) the enforcement by the purchase contract agent of the rights
of the holders of the FELINE PRIDES.
Should you elect to substitute the related pledged securities,
creating Growth PRIDES or Income PRIDES or recreating Income PRIDES or
Growth PRIDES, you shall be responsible for any fees or expenses payable in
connection with that substitution, as well as any commissions, fees or
other expenses incurred in acquiring the pledged securities to be
substituted, and we shall not be responsible for any of those fees or
expenses.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The trust preferred securities will be issued according to the terms
of the declaration. The declaration will be qualified as an indenture under
the Trust Indenture Act. The institutional trustee, Wilmington Trust
Company, an independent trustee, will act as indenture trustee for the
trust preferred securities under the declaration for purposes of compliance
with the provisions of the Trust Indenture Act. The terms of the trust
preferred securities will include those stated in the declaration and those
made part of the declaration by the Trust Indenture Act. The following
summary of provisions of the trust preferred securities and the declaration
is not necessarily complete, and reference is made to the copy of the
declaration, including the definitions, which is filed as an exhibit to the
registration statement relating to this prospectus, the Trust Act and the
Trust Indenture Act. Whenever particular defined terms are referred to in
this prospectus, those defined terms are incorporated in this prospectus by
reference.
OVERVIEW
The declaration authorizes the regular trustees to issue on behalf of
the trust the trust securities, which represent undivided beneficial
ownership interests in the assets of the trust. We will own directly or
indirectly all of the common securities. The common securities rank on a
parity, and related payments will be made on a proportionate basis, with
the trust preferred securities. However, upon the occurrence and during the
continuance of an indenture event of default, the rights of the holders of
the common securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the trust preferred securities. The
declaration does not permit the issuance by the trust of any securities
other than the trust securities or the incurrence of any indebtedness by
the trust.
Under the declaration, the institutional trustee will own the
debentures purchased by the trust for the benefit of the holders of the
trust securities. The payment of distributions out of money held by the
trust, and payments upon redemption of the trust preferred securities or
liquidation of the trust, are guaranteed by us to the extent described
under "description of the guarantee." The guarantee, when taken together
with our obligations under the debentures and the indenture and our
obligations under the declaration, including the obligations to pay costs,
expenses, debts and liabilities of the trust other than with respect to the
trust preferred securities, provides a full and unconditional guarantee of
amounts due on the trust preferred securities. Wilmington Trust Company,
the guarantee trustee, will hold the guarantee for the benefit of the
holders of the trust preferred securities. The guarantee does not cover
payment of distributions when the trust does not have sufficient available
funds to pay those distributions. In that case, except in the limited
circumstances in which the holder may take direct action, the remedy of a
holder of trust preferred securities is to vote to direct the institutional
trustee to enforce the institutional trustee's rights under the debentures.
DISTRIBUTIONS
Distributions on the trust preferred securities will be fixed
initially at a rate per year of 6.45% of the stated liquidation amount of
$50 per trust preferred security. Distributions applicable on the trust
preferred securities that remain outstanding on and after February 16, 2001
will be reset on the third business day immediately preceding February 16,
2001. Distributions in arrears for more than one quarter will bear interest
at the rate of 6.45% per year through and including February 15, 2001 and
at the reset rate afterwards, compounded quarterly. The term "distribution"
as used here includes any interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months.
Distributions on the trust preferred securities will be cumulative
and will accrue from and will be payable quarterly in arrears on
February 16, May 16, August 16, and November 16 of each year, commencing
, when, as and if funds are available for payment. Distributions will
be made by the institutional trustee, except as otherwise described below.
We have the right under the indenture to defer payments of interest
on the debentures by extending the interest payment period. If we exercise
the right, quarterly distributions on the trust preferred securities would
be deferred during the interest payment period. However, those
distributions would continue to accrue with interest at the rate of 6.45%
per year through and including February 15, 2001, and at the reset rate
afterwards. The right to extend the interest payment period for the
debentures is limited to a period, in the aggregate, not extending beyond
February 16, 2003. If we exercise this right, then
(a) we shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of our capital stock,
other than
o purchases or acquisitions of our capital stock in
connection with the satisfaction of our obligations under
any employee or agent benefit plans or under any contract
or security outstanding on the date of that event
requiring us to purchase our capital stock,
o as a result of a reclassification of our capital stock or
the exchange or conversion of one class or series of our
capital stock for another class or series of our capital
stock,
o the purchase of fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of our capital stock or the security being
converted or exchanged,
o dividends or distributions in our capital stock (or
rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or
exchange of capital stock or
o redemptions or repurchases of any rights outstanding under
a shareholder rights plan.
(b) We shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt
securities issued by us that rank junior to those debentures,
and
(c) We shall not make any guarantee payments with respect to the
above other than according to the guarantee or the common
securities guarantee.
Prior to the termination of any extension period, we may further
extend the interest payment period. However, the extension period, together
with all previous and further extensions, may not extend beyond February
16, 2003. Upon the termination of any extension period and the payment of
all amounts then due, we may select a new extension period, subject to the
above requirements. If distributions are deferred, the deferred
distributions and accrued interest shall be paid to holders of record of
the trust preferred securities as they appear on the books and records of
the trust on the record date next following the termination of that
extension period.
The trust must pay distributions on the trust preferred securities on
the dates payable to the extent that it has funds available in the property
account for the payment of those distributions. The trust's funds available
for distribution to you as a holder of the trust preferred securities will
be limited to payments received from us on the debentures. We guarantee the
payment of distributions out of moneys held by the trust to the extent
specified under "Description of the guarantee."
Distributions on the trust preferred securities will be payable to
holders, including the collateral agent, as they appear on the books and
records of the trust on the relevant record dates. As long as the trust
preferred securities remain in book-entry only form, the record dates will
be one business day prior to the relevant payment dates. Distributions will
be paid through the institutional trustee, who will hold amounts received
in respect of the debentures in the property account for your benefit.
Subject to any applicable laws and regulations and the provisions of the
declaration, each payment will be made as described under "--Book-Entry
Only Issuance -- The Depository Trust Company" below. With respect to trust
preferred securities not in book-entry form, the regular trustees shall
have the right to select relevant record dates, which shall be more than
one business day but less than 60 business days prior to the relevant
payment dates.
If any date on which distributions on the trust preferred securities
are to be made is not a business day, payment of the distributions payable
on that date will be made on the next succeeding day that is a business
day, without any interest or other payment in respect of any delay, but if
that business day is in the next succeeding calendar year, the payment
shall be made on the immediately preceding business day, in each case with
the same force and effect as if made on that record date.
MARKET RATE RESET
The applicable quarterly distribution rate on the trust preferred
securities and the interest rate on the related debentures that remain
outstanding on and after February 16, 2001 will be reset on the third
business day immediately preceding February 16, 2001 to the reset rate.
The reset rate will be equal to the sum of the reset spread and the
rate on the two-year benchmark treasury in effect on the third business day
immediately preceding February 16, 2001 and will be determined by the reset
agent as the rate the trust preferred securities should bear for a trust
preferred security to have an approximate market value on the third
business day immediately preceding February 16, 2001 of 100.5% of $50.
However, we may limit the reset rate to be no higher than the rate on the
two-year benchmark treasury on February 16, 2001 plus 200 basis points
(2%). The market value of the trust preferred securities may be less than
100.5% if the reset spread is limited to a maximum of 2%.
The "two-year benchmark treasury" shall mean direct obligations of
the United States, which may be obligations traded on a when-issued basis
only, having a maturity comparable to the remaining term to maturity of the
trust preferred securities, as agreed upon by us and the reset agent. The
rate for the two-year benchmark treasury will be the bid side rate
displayed at 10:00 A.M., New York City time, on the third business day
immediately preceding February 16, 2001 in the Telerate system. If the
Telerate system is (a) no longer available on the third business day
immediately preceding February 16, 2001 or (b) in the opinion of the reset
agent, after consultation with us, no longer an appropriate system from
which to obtain that rate, another nationally recognized quotation system
as, in the opinion of the reset agent, after consultation with the us, is
appropriate. If that rate is not so displayed, the rate for the two-year
benchmark treasury shall be, as calculated by the reset agent, the yield to
maturity for the two-year benchmark treasury, expressed as a bond
equivalent on the basis of a year of 365 or 366 days, and applied on a
daily basis. It shall be computed by taking the arithmetic mean of the
secondary market bid rates, as of 10:30 A.M., New York City time, on the
third business day immediately preceding February 16, 2001, of three
leading United States government securities dealers selected by the reset
agent, after consultation with us. These dealers may include the reset
agent or its affiliate.
We currently anticipate that Merrill Lynch, Pierce, Fenner & Smith
Incorporated will be the investment banking firm acting as the reset agent.
On the tenth business day immediately preceding February 16, 2001,
the two-year benchmark treasury to be used to determine the reset rate on
February 16, 2001 will be selected. On that date, the reset agent will
establish the reset spread to be added to the rate on the two-year
benchmark treasury in effect on the third business day immediately
preceding February 16, 2001, and we will announce the reset spread and the
two-year benchmark treasury. We will cause a notice of the reset spread and
the two-year benchmark treasury to be published on the business day
following the reset announcement date by publication in a daily newspaper
in the English language of general circulation in The City of New York,
which is expected to be The Wall Street Journal. We will request, not later
than ten nor more than 15 calendar days prior to the reset announcement
date, that the depositary notify its participants holding trust preferred
securities, Income PRIDES or Growth PRIDES of the reset announcement date
and of the procedures that must be followed if any owner of FELINE PRIDES
wants to settle the related purchase contract with cash on the business day
immediately preceding February 16, 2001.
OPTIONAL REMARKETING
Under the remarketing agreement and subject to the terms of the
remarketing underwriting agreement, on or prior to the fifth business day
immediately preceding February 16, 2001, but no earlier than the payment
date immediately preceding February 16, 2001, holders of trust preferred
securities which are not components of Income PRIDES may elect to have
their trust preferred securities remarketed by delivering their trust
preferred securities along with a notice of such election to the custodial
agent. The custodial agent will hold these trust preferred securities in an
account separate from the collateral account in which the pledged
securities will be held. Holders of trust preferred securities electing to
have their trust preferred securities remarketed will also have the right
to withdraw that election on or prior to the fifth business day immediately
preceding February 16, 2001.
On the fourth business day immediately preceding February 16, 2001,
the custodial agent will deliver these separate trust preferred securities
to the remarketing agent for remarketing. The remarketing agent will use
its reasonable efforts to remarket these trust preferred securities on that
date at a price of approximately 100.5% of the aggregate stated liquidation
amount of these trust preferred securities, plus accrued and related unpaid
distributions, including any deferred distributions. The portion of the
proceeds from that remarketing equal to the aggregate stated liquidation
amount of these trust preferred securities will automatically be remitted
by the remarketing agent to the custodial agent for the benefit of the
holders of these trust preferred securities. In addition, after deducting
as the remarketing fee an amount not exceeding 25 basis points (.25%) of
the aggregate stated liquidation amount of the remarketed securities from
any amount of those proceeds in excess of the aggregate stated liquidation
amount of the remarketed trust preferred securities plus any accrued and
unpaid distributions, including any deferred distributions, the remarketing
agent will remit to the custodial agent any remaining portion of the
proceeds for the benefit of that holder.
If, despite using its reasonable efforts, the remarketing agent
cannot remarket the related trust preferred securities of these holders at
a price not less than 100% of the aggregate stated liquidation amount of
the trust preferred securities plus accrued and unpaid distributions,
including any deferred distributions and thus, resulting in a failed
remarketing. The custodial agent will promptly return these trust preferred
securities to the custodial agent to release to these holders. We will
cause a notice of the failed remarketing to be published on the second
business day immediately preceding February 16, 2001 by publication in a
daily newspaper in the English language of general circulation in the city
of New York, which is expected to be The Wall Street Journal. In addition,
we will request, not later than ten nor more than 15 calendar days prior to
the remarketing date, that the depository notify its participants holding
trust preferred securities, Income PRIDES and Growth PRIDES of the
remarketing and of the procedures that must be followed if a trust
preferred security holder wishes to exercise its right to put its trust
preferred security to us. We will endeavor to ensure that a registration
statement with regard to the full amount of the trust preferred securities
to be remarketed shall be effective in a form as will enable the
remarketing agent to rely on it in connection with the remarketing process.
We currently anticipate that Merrill Lynch, Pierce, Fenner & Smith
Incorporated will be the remarketing agent.
OPTIONAL REDEMPTION
The debentures are redeemable at our option, in whole but not in
part, on not less than 30 days nor more than 60 days notice, upon the
occurrence and continuation of a tax event under the circumstances
described under "Description of the debentures -- tax event redemption." If
we redeem the debentures upon the occurrence and continuation of a tax
event, the proceeds from that repayment shall simultaneously be applied on
a proportionate basis to redeem trust preferred securities having an
aggregate stated liquidation amount equal to the aggregate principal amount
of the debentures so redeemed at a redemption price, per trust preferred
security, equal to the redemption amount plus accrued and unpaid interest
to the date of that redemption. Those proceeds will be payable in cash to
the holders of the trust preferred securities. If a tax event redemption
occurs prior to February 16, 2001, the redemption price payable to the
collateral agent, in liquidation of the Income PRIDES holders' interests in
the trust, will be simultaneously applied by the collateral agent to
purchase the treasury portfolio on behalf of the holders' of the Income
PRIDES. The treasury portfolio will be pledged with the collateral agent to
secure the obligation of Income PRIDES holders' to purchase common stock
under the related purchase contracts.
If a failed remarketing has occurred, holders of trust securities and
holders of debentures following the distribution of the debentures upon a
dissolution of the trust, after February 16, 2001, will have the right,
o in the case of trust securities, to require the trust to put to
us the related debentures, or
o in the case of the debentures, to put the debentures directly
to us on March 2, 2001, upon at least three business days'
prior notice, at a price per debenture equal to $50, plus
accrued and unpaid interest, including any deferred interest.
Upon our repurchase of those debentures from the trust
o the proceeds from the repurchase shall simultaneously be
applied, in the case of the trust securities, to redeem the
trust securities of the holder in an aggregate stated
liquidation amount equal to the aggregate principal amount of
the debentures so repurchased and
o any accrued and unpaid distributions, including any deferred
distributions, with respect to those trust securities will be
paid to such holder in cash.
REDEMPTION PROCEDURES
If the trust gives a notice of redemption, which will be irrevocable,
in respect of all of the trust preferred securities, then, by 12:00 noon,
New York City time, on the redemption date, the trust will irrevocably
deposit with the depositary, the purchase contract agent or the collateral
agent, as applicable, funds sufficient to pay the redemption price, but
only if we have paid to the institutional trustee sufficient amount of cash
in connection with the related redemption or maturity of the debentures.
The trust will give the depositary, the purchase contract agent or the
collateral agent irrevocable instructions and authority to pay the
redemption price to the holders of the trust preferred securities called
for redemption.
If notice of redemption has been given and funds deposited as
required, then, immediately prior to the close of business on the date of
the deposit, distributions will cease to accrue and all rights of holders
of those trust preferred securities called for redemption will cease,
except for the right of the holders of those trust preferred securities to
receive the redemption price without interest on the redemption price.
If any date fixed for redemption of trust preferred securities is
not a business day, then payment of the redemption price payable on that
date will be made on the next succeeding day that is a business day,
without any interest or other payment in respect of any delay, except that
if the business day falls in the next calendar year, the payment will be
made on the immediately preceding business day.
DISTRIBUTION OF THE DEBENTURES
"Investment company event" means that the regular trustees have
received an opinion from independent counsel experienced in practice under
the 1940 Act that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority, which change in 1940 Act law becomes effective on or
after the date of this prospectus, there is more than an insubstantial risk
that the trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940 (the
"1940 Act").
If, at any time, an investment company event shall occur and be
continuing, the trust shall be dissolved. As a result, debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on,
the trust securities would be distributed to the holders of the trust
securities in liquidation of the holders' interests in the trust on a
proportionate basis within 90 days following the occurrence of the
investment company event. However, the dissolution and distribution shall
be conditioned on us being unable to avoid the investment company event
within a 90-day period either by taking some ministerial action or by
pursuing some other similar reasonable measure that will have no adverse
effect on the trust, us or the holders of the trust securities and will
involve no material cost. If an investment company event occurs, debentures
distributed to the collateral agent in liquidation of holders' interests in
the trust would be pledged, in place of the trust preferred securities, to
secure Income PRIDES holders' obligations to purchase common stock under
the purchase contracts.
We will have the right at any time to dissolve the trust and, after
satisfaction of liabilities of creditors of the trust as provided by
applicable law, to cause the debentures to be distributed to the holders of
the trust securities. As of the date of any distribution of debentures upon
dissolution of the trust,
o the trust preferred securities will no longer be deemed to be
outstanding,
o the depositary or its nominee, as the record holder of the
trust preferred securities, will receive a registered global
certificate or certificates representing the debentures to be
delivered upon the distribution, and
o any certificates representing trust preferred securities not
held by the depositary or its nominee will be deemed to
represent debentures having an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on,
those trust preferred securities until the certificates are
presented to us or our agent for transfer or reissuance.
Debentures distributed to the collateral agent in liquidation of the
interest of the holders of the trust preferred securities in the trust
would be substituted for the trust preferred securities and pledged to
secure Income PRIDES holders' obligations to purchase our common stock
under the purchase contracts.
We cannot predict the market prices for either the trust preferred
securities or the debentures that may be distributed in exchange for the
trust preferred securities if a dissolution of the trust were to occur.
Accordingly, the trust preferred securities or the debentures that an
investor may receive if a dissolution of the trust were to occur may trade
at a discount to the price that the investor paid to purchase the trust
preferred securities forming a part of the Income PRIDES offered here.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In case of a voluntary or involuntary dissolution of the trust,
unless a tax event redemption has occurred, the then holders of the trust
preferred securities will be entitled to receive out of the assets of the
trust, after satisfaction of liabilities to creditors, debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on,
the trust preferred securities on a proportionate basis in exchange for
those trust preferred securities.
The holders of the common securities will be entitled to receive
distributions upon any such dissolution proportionately with the holders of
the trust preferred securities. However, if a declaration event of default
has occurred and is continuing, the trust preferred securities shall have a
preference over the common securities with regard to those distributions.
Under the declaration, the trust shall dissolve
(1) on March 2, 2005, the expiration of the term of the trust,
(2) upon our bankruptcy or the bankruptcy of the holder of the
common securities,
(3) upon our filing of a certificate of dissolution or its
equivalent or the revocation of our charter and the expiration
of 90 days after the date of revocation without its
reinstatement,
(4) after the receipt by the institutional trustee of written
direction from us to dissolve the trust or the filing of a
certificate of dissolution or its equivalent with respect to
the trust,
(5) upon the distribution of debentures,
(6) upon the occurrence and continuation of a tax event redemption or
(7) upon the entry of a decree of a judicial dissolution of the
holder of the common securities, us or the trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the indenture constitutes an event of
default under the declaration with respect to the trust securities.
However, under the declaration, the holder of the common securities will be
deemed to have waived any declaration event of default with respect to the
common securities until all declaration events of default with respect to
the trust preferred securities have been cured, waived or otherwise
eliminated. Until any declaration events of default with respect to the
trust preferred securities have been so cured, waived or otherwise
eliminated, the institutional trustee will be deemed to be acting solely on
behalf of the holders of the trust preferred securities. Only the holders
of the trust preferred securities will have the right to direct the
institutional trustee with respect to particular matters under the
declaration and, therefore, the indenture. If a declaration event of
default with respect to the trust preferred securities is waived by holders
of trust preferred securities, the waiver will also constitute the waiver
of the declaration event of default with respect to the common securities
without any further act, vote or consent of the holders of the common
securities.
If the institutional trustee fails to enforce its rights under the
debentures in respect of an indenture event of default after a holder of
record of trust preferred securities has made a written request, that
holder of record of trust preferred securities may, to the fullest extent
permitted by applicable law, institute a legal proceeding against us to
enforce the institutional trustee's rights under the debentures without
first proceeding against the institutional trustee or any other person or
entity. Notwithstanding the above, if a declaration event of default has
occurred and is continuing and that event is attributable to our failure to
pay interest or principal on the debentures on the date that interest or
principal is otherwise payable, after giving effect to any right of
deferral, then you, as a holder of trust preferred securities, may directly
institute a proceeding after the respective due date specified in the
debentures for enforcement of payment (a "direct action") to you directly
of the principal of or interest on the debentures having a principal amount
equal to the aggregate liquidation amount of your trust preferred
securities. In connection with the direct action, we shall have the right
under the indenture to set off any payment made to you. The holders of
trust preferred securities will not be able to exercise directly any other
remedy available to the holders of the debentures.
Upon the occurrence of a declaration event of default, the
institutional trustee, as the sole holder of the debentures, will have the
right under the indenture to declare the principal of and interest on the
debentures to be immediately due and payable. We and the trust are each
required to file annually with the institutional trustee an officer's
certificate as to our compliance with all conditions and covenants under
the declaration.
VOTING RIGHTS
Except as described here, under the Trust Act and the Trust Indenture
Act and under "Description of the Guarantee -- Modification of the
Guarantee; Assignment," and as otherwise required by law and the
declaration, the holders of the trust preferred securities will have no
voting rights.
Subject to the requirement of the institutional trustee obtaining a
tax opinion in specific circumstances provided below, the holders of a
majority in aggregate stated liquidation amount of the trust preferred
securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the institutional
trustee, or direct the exercise of any trust or power conferred upon the
institutional trustee under the declaration, including the right to direct
the institutional trustee, as holder of the debentures, to
(1) exercise the remedies available under the indenture with respect
to the debentures,
(2) waive any past indenture event of default that is waivable
under the indenture,
(3) exercise any right to rescind or annul a declaration that the
principal of all the debentures shall be due and payable or
(4) consent to any amendment, modification or termination of the
indenture or the debentures where that consent shall be
required. However, where a consent or action under the
indenture would require the consent or act of holders of more
than a majority in principal amount of the affected
debentures (a "super-majority"), only the holders of at least
the super-majority in aggregate stated liquidation amount of
the trust preferred securities may direct the institutional
trustee to give the consent or take the action.
The institutional trustee shall notify all holders of the trust
preferred securities of any notice of default received from the debt
trustee with respect to the debentures. The notice shall state that the
indenture event of default also constitutes a declaration event of default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the institutional trustee shall not take any of
the actions described in clauses (1), (2) or (3) above unless the
institutional trustee has obtained an opinion of tax counsel experienced in
those matters that, as a result of the action, the trust will not fail to
be classified as a grantor trust for United States federal income tax
purposes.
If the consent of the institutional trustee, as the holder of the
debentures, is required under the indenture with respect to any amendment,
modification or termination of the indenture or the debentures, the
institutional trustee shall request the direction of the holders of the
trust preferred securities and the common securities with respect to that
amendment, modification or termination. The indenture trustee shall vote
with respect to that amendment, modification or termination as directed by
a majority in stated liquidation amount of the trust preferred securities
and the common securities voting together as a single class. However, where
a consent under the indenture would require the consent of a
super-majority, the institutional trustee may only give that consent at the
direction of the holders of at least the proportion in stated liquidation
amount of the trust preferred securities and the common securities which
the relevant super-majority represents of the aggregate principal amount of
the debentures outstanding. The institutional trustee shall not take any
action in accordance with the directions of the holders of the trust
preferred securities and the common securities unless the institutional
trustee has obtained an opinion of tax counsel experienced in those matters
that, as a result of the action, the trust will not fail to be classified
as a grantor trust for United States federal income tax purposes.
A waiver of an indenture event of default will constitute a waiver of
the corresponding declaration event of default.
Any required approval or direction of holders of trust preferred
securities may be given at a separate meeting of holders of trust preferred
securities convened for that purpose, at a meeting of all of the holders of
trust securities or according to written consent. The regular trustees will
cause a notice of any meeting at which holders of trust preferred
securities are entitled to vote, or of any matter upon which action by
written consent of those holders is to be taken, to be mailed to each
holder of record of trust preferred securities. Each notice will include a
statement specifying the following information:
o the date of the meeting or the date by which the action is to be
taken;
o a description of any resolution proposed for adoption at the
meeting on which the holders are entitled to vote or of the
matter upon which written consent is sought; and
o instructions for the delivery of proxies or consents.
No vote or consent of the holders of trust preferred securities will
be required for the trust to cancel trust preferred securities or
distribute debentures in accordance with the declaration.
Notwithstanding that holders of trust preferred securities are
entitled to vote or consent under any of the circumstances described above,
any trust preferred securities that are owned at that time by us or any
entity directly or indirectly controlling or controlled by, or under direct
or indirect common control with, us, shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if
those trust preferred securities were not outstanding.
The procedures by which holders of trust preferred securities may
exercise their voting rights are described below.
Holders of the trust preferred securities will have no rights to
appoint or remove the trustees, who may be appointed, removed or replaced
solely by us as the indirect or direct holder of all of the common
securities.
MODIFICATION OF THE DECLARATION
The declaration may be modified and amended if approved by the
regular trustees and, in some circumstances, the institutional trustee or
the Delaware trustee. However, if any proposed amendment provides for, or
the regular trustees otherwise propose to effect,
(1) any action that would adversely affect the powers, preferences
or special rights of the trust securities, whether by way of
amendment to the declaration or otherwise or
(2) the dissolution of the trust other than according to the terms
of the declaration,
then the holders of the trust securities voting together as a single class
will be entitled to vote on that amendment or proposal, and that amendment
or proposal shall not be effective except with the approval of at least a
majority in such stated liquidation amount of the affected trust
securities. If any amendment or proposal referred to in clause (1) above
would adversely affect only the trust preferred securities or the common
securities, then only the affected class will be entitled to vote on that
amendment or proposal and that amendment or proposal shall not be effective
except with the approval of a majority in stated liquidation amount of that
class of securities. In addition, the declaration may be amended without
the consent of the holders of the trust securities to, among other things,
cause the trust to continue to be classified as a grantor trust for United
States federal income tax purposes.
Notwithstanding the above, no amendment or modification may be made to
the declaration if that amendment or modification would
(1) cause the trust to be classified as other than a grantor trust
for United States federal income tax purposes,
(2) reduce or otherwise adversely affect the powers of the
institutional trustee or
(3) cause the trust to be deemed an "investment company" which is
required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below or as described in "Liquidation Distribution Upon
Dissolution".
The trust may, with the consent of the regular trustees and without
the consent of the holders of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as
under the laws of any state except that
(1) if the trust is not the surviving entity, the successor entity
either (x) expressly assumes all of the obligations of the
trust under the trust securities or (y) substitutes for the
trust securities other securities having substantially the same
terms as the trust securities (the "successor securities"). The
successor securities must rank the same as the trust securities
with respect to distributions and payments upon liquidation,
redemption and otherwise,
(2) we expressly acknowledge a trustee of the successor entity
possessing the same powers and duties as the institutional
trustee as the holder of the debentures,
(3) if the trust preferred securities are listed, any successor
securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on
which the trust preferred securities are then listed or quoted,
(4) the merger, consolidation, amalgamation or replacement does not
cause the trust preferred securities, including any successor
securities, to be downgraded by any nationally recognized
statistical rating organization,
(5) the merger, consolidation, amalgamation or replacement does not
adversely affect the rights,
preferences and privileges of the holders of the trust
securities, including any successor
securities, in any material respect other than with respect to
any dilution of the holders' interest in
the new entity,
(6) the successor entity has a purpose substantially identical to
that of the trust,
(7) prior to the merger, consolidation, amalgamation or
replacement, we have received an opinion of a nationally
recognized independent counsel to the trust experienced in
those matters that,
o the merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and
privileges of the holders of the trust securities,
including any successor securities, in any material
respect other than with respect to any dilution of the
holders' interest in the new entity,
o following the merger, consolidation, amalgamation or
replacement, neither the trust nor the successor entity
will be required to register as an investment company
under the 1940 Act and
o following the merger, consolidation, amalgamation or
replacement, the trust or the successor entity will
continue to be classified as a grantor trust for United
States federal income tax purposes, and
(8) we guarantee the obligations of the successor entity under the
successor securities at least to the extent provided by the
guarantee and the common securities guarantee.
Notwithstanding the above, the trust shall not, except with the
consent of holders of 100% in stated liquidation amount of the trust
securities, consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if that consolidation, amalgamation,
merger or replacement would cause the trust or the successor entity to be
classified as other than a grantor trust for United States federal income
tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
If the trust preferred securities are issued as one or more
fully-registered global trust preferred securities certificates
representing the total aggregate number of trust preferred securities, the
depositary will act as securities depositary for any trust preferred
securities that are held separately from the Income PRIDES. In that case,
the trust preferred securities will be issued only as fully-registered
securities registered in the name of Cede & Co., the depositary's nominee.
However, under some circumstances, the regular trustees with our consent
may decide not to use the system of book-entry transfers through the DTC
with respect to the trust preferred securities. In that case, certificates
of the trust preferred securities will be printed and delivered to the
holders.
The laws of some jurisdictions require that some purchasers of
securities take physical delivery of securities in definitive form. These
laws may impair the ability to transfer beneficial interests in the global
trust preferred securities as represented by a global certificate.
Purchases of trust preferred securities within the depositary's
system must be made by or through direct participants, which will receive a
credit for the trust preferred securities on the depositary's records. The
beneficial ownership interest of each actual purchaser of each trust
preferred security is in turn to be recorded on the direct and indirect
participants' records. Beneficial owners will not receive written
confirmation from the depositary of their purchases, but beneficial owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
direct or indirect participants through which the beneficial owners
purchased trust preferred securities. Transfers of ownership interests in
the trust preferred securities are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership interests
in the trust preferred securities, except if use of the book-entry system
for the trust preferred securities is discontinued.
To facilitate subsequent transfers, all the trust preferred
securities deposited by participants with the depositary will be registered
in the name of the depositary's nominee, Cede & Co. The deposit of trust
preferred securities with the depositary and their registration in the name
of Cede & Co. cause no change in beneficial ownership. The depositary has
no knowledge of the actual beneficial owners of the trust preferred
securities. The depositary's records reflect only the identity of the
direct participants to whose accounts those trust preferred securities are
credited, which may or may not be the beneficial owners. The participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
So long as the depositary or its nominee is the registered owner or
holder of a global certificate, the depositary or the nominee will be
considered the sole owner or holder of the trust preferred securities
represented for all purposes under the declaration and the trust preferred
securities. No beneficial owner of an interest in a global certificate will
be able to transfer that interest except in accordance with the depositary
applicable procedures, in addition to those provided for under the
declaration.
The depositary has advised us that it will take any action permitted
to be taken by a holder of trust preferred securities, including the
presentation of trust preferred securities for exchange, only at the
direction of one or more participants to whose account the depositary's
interests in the global certificates are credited and only in respect of
the portion of the stated liquidation amount of trust preferred securities
as to which such participant or participants has or have given such
directions. However, if there is a declaration event of default under the
trust preferred securities, the depositary will exchange the global
certificates for certificated securities, which it will distribute to its
participants.
Conveyance of notices and other communications by the depositary to
direct participants and indirect participants and by direct participants
and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements that may be in force from time to time.
Although voting with respect to the trust preferred securities is
limited, in those cases where a vote is required, neither the depositary
nor Cede & Co. will itself consent or vote with respect to trust preferred
securities. Under its usual procedures, the depositary would mail an
omnibus proxy to the trust as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the trust preferred securities are
credited on the record date. The direct participants are identified in a
listing attached to the omnibus proxy. We and the trust believe that the
arrangements among the depositary, direct and indirect participants, and
beneficial owners will enable the beneficial owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a
record holder of a beneficial interest in the trust.
Distribution payments on the trust preferred securities issued in the
form of one or more global certificates will be made to the depositary in
immediately available funds. The depositary's practice is to credit direct
participants' accounts on the relevant payment date in accordance with
their respective holdings shown on the depositary's records unless the
depositary has reason to believe that it will not receive payments on that
payment date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form or
registered in "street name." Those payments will be the responsibility of
the participant and not of the depositary, the trust or us, subject to any
statutory or regulatory requirements to the contrary that may be in force
from time to time. Payment of distributions to the depositary is the
responsibility of the trust, disbursement of such payments to direct
participants is the responsibility of the depositary, and disbursement of
those payments to the beneficial owners is the responsibility of direct and
indirect participants.
Except as provided here, a beneficial owner in a global trust
preferred security certificate will not be entitled to receive physical
delivery of trust preferred securities. Accordingly, each beneficial owner
must rely on the procedures of the depositary to exercise any rights under
the trust preferred securities.
Although the depositary has agreed to the above procedure to
facilitate transfer of interests in the global certificates among
participants, the depositary is under no obligation to perform or continue
to perform these procedures and these procedures may be discontinued at any
time. Neither us, nor the trust or any trustee will have any responsibility
for the performance by the depositary or its participants or indirect
participants under the rules and procedures governing the depositary. The
depositary may discontinue providing its services as securities depositary
with respect to the trust preferred securities at any time by giving
reasonable notice to the trust. Under these circumstances, if a successor
securities depositary is not obtained, trust preferred securities
certificates are required to be printed and delivered to holders.
Additionally, the regular trustees, with our consent, may decide to
discontinue use of the system of book-entry transfers through the
depositary or any successor depositary, with respect to the trust preferred
securities. In that case, certificates for the trust preferred securities
will be printed and delivered to holders. In each of the above
circumstances, we will appoint a paying agent with respect to the trust
preferred securities.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from sources that we and
the trust believe to be reliable, but neither we nor the trust take
responsibility for its accuracy.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the trust preferred securities represented by
the global certificates shall be made to the depositary. The depositary
shall credit the relevant accounts at the depositary on the applicable
distribution dates. In the case of certificated securities, those payments
shall be made by check mailed to the address of the holder entitled to it
as that address appears on the register. The paying agent shall be
permitted to resign as paying agent upon 30 days' written notice to the
trustees. If First National Bank of Chicago shall no longer be the paying
agent, the regular trustees shall appoint a successor to act as paying
agent, which shall be a bank or trust company.
The First National Bank of Chicago will act as registrar, transfer
agent and paying agent for the trust preferred securities.
Registration of transfers of trust preferred securities will be made
without charge by or on behalf of the trust. However, payment shall be made
and any indemnity as the trust or we may require shall be given in respect
of any tax or other government charge which may be imposed in relation to
it.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The institutional trustee, prior to the occurrence of a default with
respect to the trust securities and after the curing of any defaults that
may have occurred, undertakes to perform only those duties that are
specified in the declaration. The institutional trustee, after default,
shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to those
provisions, the institutional trustee is under no obligation to exercise
any of the powers vested in it by the declaration at the request of any
holder of trust preferred securities, unless offered reasonable indemnity
by that holder against the costs, expenses and liabilities which it might
incur. The holders of trust preferred securities will not be required to
offer an indemnity in the case that those holders, by exercising their
voting rights, direct the institutional trustee to take any action it is
empowered to take under the declaration following a declaration event of
default. The institutional trustee also serves as trustee under the
guarantee.
The institutional trustee maintains commercial banking relationships
with us.
GOVERNING LAW
The declaration and the trust preferred securities will be governed
by, and construed in accordance with, the internal laws of the State of
Delaware.
MISCELLANEOUS
The regular trustees are authorized and directed to operate the trust
in a way that the trust will not be required to register as an "investment
company" under the 1940 Act or be characterized as other than a grantor
trust for United States federal income tax purposes. We are authorized and
directed to conduct our affairs so that the debentures will be treated as
our indebtedness for United States federal income tax purposes. In this
connection, we and the regular trustees are authorized to take any action
not inconsistent with applicable law, the declaration of trust, the
certificate of trust of the trust or our certificate of incorporation, that
we and the regular trustees determine in our discretion to be necessary or
desirable to achieve that end, as long as that action does not adversely
affect the interests of the holders of the trust preferred securities or
vary its terms.
Holders of the trust preferred securities have no preemptive or
similar rights.
DESCRIPTION OF THE GUARANTEE
Provided below is a summary of information concerning the guarantee
which will be executed and delivered by us for the benefit of the holders
from time to time of trust preferred securities. The guarantee will be
qualified as an indenture under the Trust Indenture Act. The Wilmington
Trust Company will act as the guarantee trustee for the purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
guarantee will be those provided in the guarantee and those made part of
the guarantee by the Trust Indenture Act. The following summary is not
necessarily complete, and reference is made to the copy of the form of
guarantee including the definitions which is filed as an exhibit to the
registration statement relating to this prospectus, and to the Trust
Indenture Act. Whenever particular defined terms of the guarantee are
referred to in this prospectus, these defined terms are incorporated by
reference in this prospectus. The guarantee will be held by the guarantee
trustee for the benefit of the holders of the trust preferred securities.
OVERVIEW
Under the guarantee, we will irrevocably and unconditionally agree,
to the extent provided there, to pay in full on a senior unsecured basis,
to the holders of the trust preferred securities issued by the trust, the
guarantee payments. We shall pay the guarantee payments as and when due,
regardless of any defense, right of set-off or counterclaim which the trust
may have or assert. We shall make these payments except to the extent paid
by the trust. The following payments or distributions with respect to trust
preferred securities issued by the trust to the extent not paid by or on
behalf of the trust, will be subject to the guarantee, without duplication:
(a) any accrued and unpaid distributions which are required to be
paid on the trust preferred securities, to the extent the trust
shall have funds available;
(b) the redemption price, including all accumulated and unpaid
distributions to the date of redemption, of trust preferred
securities in respect of which the related debentures have been
redeemed by us upon the occurrence of a tax event redemption,
to the extent the trust shall have funds available; and
(c) upon a voluntary or involuntary dissolution of the trust, other
than in connection with the distribution of debentures to the
holders of trust preferred securities, the lesser of
o the aggregate of the stated liquidation amount and all
accrued and unpaid distributions on the trust preferred
securities to the date of payment, to the extent the
trust has funds available, and
o the amount of assets of the trust remaining available for
distribution to holders of the trust preferred securities
in liquidation of the trust.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of trust preferred
securities or by causing the trust to pay those amounts to the holders.
The guarantee will be a full and unconditional guarantee on a senior
unsecured basis with respect to the trust preferred securities issued by
the trust, but will not apply to any payment of distributions except to the
extent the trust shall have funds available. If we do not make interest
payments on the debentures purchased by the trust, the trust will not pay
distributions on the trust preferred securities and will not have funds
available.
The guarantee, when taken together with our obligations under the
debentures, the indenture, and the declaration, will have the effect of
providing a full and unconditional guarantee on a senior unsecured basis by
us of payments due on the trust preferred securities.
We have also agreed separately to irrevocably and unconditionally
guarantee the obligations of the trust with respect to the common
securities to the same extent as the guarantee. However, in the case of an
indenture event of default, holders of trust preferred securities shall
have priority over holders of common securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CENDANT'S GUARANTEE COVENANTS
In the guarantee, we will covenant that, so long as any trust
preferred securities issued by the trust remain outstanding, if there shall
have occurred any event that would constitute an event of default under the
guarantee or the declaration, then
(a) we shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of our capital stock,
other than
o purchases or acquisitions of our capital stock in
connection with the satisfaction of our obligations under
any employee or agent benefit plans or under any contract
or security outstanding on the date of that event
requiring us to purchase our capital stock,
o as a result of a reclassification of our capital stock or
the exchange or conversion of one class or series of our
capital stock for another class or series of our capital
stock,
o the purchase of fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of our capital stock or the security being
converted or exchanged,
o dividends or distributions in our capital stock (or
rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or
exchange of capital stock or
o redemptions or repurchases of any rights outstanding under
a shareholder rights plan;
(b) We shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt
securities issued by us that rank junior to those debentures;
and
(c) We shall not make any guarantee payments with respect to the
above other than according to the guarantee or the common
securities guarantee.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the
rights of holders of trust preferred securities, in which case no vote will
be required, the guarantee may be amended only with the prior approval of
the holders of not less than a majority in stated liquidation amount of the
outstanding trust preferred securities issued by the trust. All guarantees
and agreements contained in the guarantee shall bind the successors,
assigns, receivers, trustees and our representatives and shall inure to the
benefit of the holders of the trust preferred securities then outstanding.
TERMINATION
The guarantee will terminate
(a) upon distribution of the debentures held by the trust to the
holders of the trust preferred securities,
(b) upon full payment of the redemption price of all the trust
preferred securities in the case that we repurchase all of the
debentures upon the occurrence of a tax event redemption or
(c) upon full payment of the amounts payable in accordance with the
declaration upon liquidation of the trust.
The guarantee will continue to be effective, or will be reinstated,
if at any time any holder of trust preferred securities must return payment
of any sums paid under the trust preferred securities or the guarantee.
EVENTS OF DEFAULT
An event of default under the guarantee will occur upon our failure
to perform any of our payment or other obligations under the guarantee.
The holders of a majority in stated liquidation amount of the trust
preferred securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee
in respect of the guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the guarantee. If the guarantee
trustee fails to enforce the guarantee, any holder of trust preferred
securities may institute a legal proceeding directly against us to enforce
the holder's rights under the guarantee, without first instituting a legal
proceeding against the trust, the guarantee trustee or any other person or
entity. We waive any right or remedy to require that any action be brought
first against the trust or any other person or entity before proceeding
directly against us.
STATUS OF THE GUARANTEE
The guarantee will constitute our unsecured obligation and will rank
on a parity with all our other senior unsecured obligations.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default with
respect to the guarantee, undertakes to perform only those duties that are
specified in the guarantee. The guarantee trustee, after default, shall
exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. According to these provisions, the
guarantee trustee is under no obligation to exercise any of the powers
vested in it by the guarantee at the request of any holder of trust
preferred securities, unless offered reasonable indemnity against the
costs, expenses and liabilities which it might incur. However, this shall
not relieve the guarantee trustee, upon the occurrence of an event of
default under the guarantee, from exercising the rights and powers vested
in it by the guarantee.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with
the internal laws of the State of New York.
DESCRIPTION OF THE DEBENTURES
Provided below is a description of the specific terms of the
debentures in which the trust will invest the proceeds from the issuance
and sale of the trust securities. The following description is not
necessarily complete, and reference is made to the copy of the form of the
indenture to be entered into between us and The Bank of Nova Scotia Trust
Company of New York , as debt trustee, which is filed as an exhibit to the
registration statement relating to this prospectus, and to the Trust
Indenture Act. Certain capitalized terms used here are defined in the
indenture.
Under specific circumstances involving the dissolution of the trust,
debentures may be distributed to the holders of the trust securities in
liquidation of the trust.
OVERVIEW
The debentures will be issued as senior unsecured debt under the
indenture and will rank on a parity in right of payment with all our other
senior unsecured debt obligations. The debentures will be limited in
aggregate principal amount to $ million.
The debentures will not be subject to a sinking fund provision.
Unless a tax event redemption has occurred prior to February 16, 2001, the
entire principal amount of the debentures will mature and become due and
payable, together with any accrued and unpaid interest thereon including
compound interest and expenses and taxes of the trust, if any, on February
16, 2003.
We will have the right at any time to dissolve the trust and cause
the debentures to be distributed to the holders of the trust securities. If
debentures are distributed to holders of trust securities in liquidation of
the holders' interests in the trust, those debentures will initially be
issued as a global security.
As described in this prospectus, under specific limited
circumstances, debentures may be issued in certificated form in exchange
for a global security. In the case that debentures are issued in
certificated form, these debentures will be in denominations of $50 and
integral multiples of $50 and may be transferred or exchanged at the
offices described below. Payments on debentures issued as a global security
will be made to the depositary, a successor depositary or, in the case that
no depositary is used, to a paying agent for the debentures. In the case
that debentures are issued in certificated form, principal and interest
will be payable, the transfer of the debentures will be registrable and
debentures will be exchangeable for debentures of other denominations of a
like aggregate principal amount, at the corporate trust office or agency of
the institutional trustee in Wilmington, Delaware. However, at our option,
payment of interest may be made by check mailed to the address of the
entitled holder or by wire transfer to an account appropriately designated
by the entitled holder. Notwithstanding the above, so long as the holder of
any debentures is the institutional trustee, the payment of principal and
interest on the debentures held by the institutional trustee will be made
at the place and to the account as may be designated by the institutional
trustee.
The indenture does not contain provisions that afford holders of the
debentures protection in case we are involved in a highly leveraged
transaction or other similar transaction that may adversely affect those
holders.
INTEREST
Each debenture shall initially bear interest at the rate of 6.45% per
year from the original date of issuance, payable quarterly in arrears on
February 16, May 16, August 16 and November 16 of each year, commencing
. Each debenture shall bear interest to the person in whose name
that debenture is registered, subject to certain exceptions, at the close
of business on the business day next preceding that interest payment date.
The applicable interest rate on the debentures and the distribution
rate on the related trust preferred securities outstanding on and after
February 16, 2001 will be reset on the third business day immediately
preceding February 16, 2001 to the reset rate. The reset rate will be equal
to the sum of the reset spread and the rate on the two-year benchmark
treasury in effect on the third business day immediately preceding February
16, 2001. The reset rate will be determined by the reset agent as the rate
the trust preferred securities should bear in order for a trust preferred
security to have an approximate market value on the third business day
immediately preceding February 16, 2001 of 100.5% of $50. However, we may
limit the reset rate to be no higher than the rate on the two-year
benchmark treasury on the third business day immediately preceding February
16, 2001 plus 200 basis points (2%). The market value of the trust
preferred securities may be less than 100.5% if the reset spread is limited
to a maximum of 2%.
On the reset announcement date, the two-year benchmark treasury will
be selected and the reset agent will establish the reset spread to be added
to the rate on the two-year benchmark treasury in effect on the third
business day immediately preceding February 16, 2001. On that date, we will
announce the reset spread and the two-year benchmark treasury. We will
cause a notice of the reset spread and the two-year benchmark treasury to
be published on the business day following the reset announcement date by
publication in a daily newspaper in the English language of general
circulation in The City of New York, which is expected to be The Wall
Street Journal. If debentures shall not continue to remain in book-entry
only form, we shall have the right to select record dates, which shall be
more than fifteen business days but less than 60 business days prior to the
interest payment date.
The amount of interest payable for any period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for
which interest is computed will be computed on the basis of the actual
number of days elapsed in that 90-day period. In the case that any date on
which interest is payable on the debentures is not a business day, then
payment of the interest payable on that date will be made on the next
succeeding day that is a business day. However, no interest or other
payment shall be paid in respect of the delay but if that business day is
in the next succeeding calendar year, then that payment shall be made on
the immediately preceding business day, in each case with the same force
and effect as if made on that date.
TAX EVENT REDEMPTION
If a tax event shall occur and be continuing, we may, at our option,
redeem debentures in whole but not in part at any time prior to February
16, 2001. The redemption price shall equal, for each debenture, the
redemption amount plus accrued and unpaid interest, including compound
interest and expenses and taxes of the trust, if any, to the date of
redemption. If, following the occurrence of a tax event, we exercise our
option to redeem the debentures, then the proceeds of that redemption will
be applied to redeem trust securities having a liquidation amount equal to
the principal amount of debentures to be paid, in accordance with their
terms, at the redemption price. The redemption price will be payable in
cash to the holders of the trust securities. If a tax event redemption
occurs prior to February 16, 2001, the redemption price payable in
liquidation of the Income PRIDES holders' interest in the trust will be
distributed to the collateral agent. The collateral agent will apply an
amount equal to the redemption amount of the redemption price to purchase
the treasury portfolio on behalf of the holders of Income PRIDES and remit
any remaining portion of the redemption price to the purchase contract
agent for payment to the holders of those Income PRIDES. The treasury
portfolio will be substituted for the trust preferred securities and will
be pledged with the collateral agent to secure the Income PRIDES holders'
obligation to purchase our common stock under the purchase contracts.
However, if the tax event redemption occurs after February 16, 2001, the
treasury portfolio will not be purchased.
Tax event means the receipt by the trust of an opinion of a
nationally recognized independent tax counsel experienced in such matters
that, as a result of
(a) any amendment to, or change, including any announced
prospective change in, the laws or any regulations of the
United States or any political subdivision or taxing authority
or which affects taxation,
(b) any amendment to or change in an interpretation or application
of these laws or regulations by any legislative body, court,
governmental agency or regulatory authority or
(c) any interpretation or pronouncement that provides for a
position with respect to these laws or regulations that differs
from the generally accepted position on the date the trust
securities are issued,
which amendment or change is effective or which interpretation or
pronouncement is announced on or after the date of issuance of the trust
securities under the declaration, there is more than an insubstantial risk
that
(a) interest payable by us on the debentures would not be
deductible, in whole or in part, by us for United States
federal income tax purposes or
(b) the income of the trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental
charges.
Treasury portfolio means, with respect to the applicable principal
amount of debentures
(a) if the tax event redemption date occurs prior to February 16,
2001, a portfolio of zero-coupon U.S.
treasury securities consisting of
o interest or principal strips of U.S. treasury securities
which mature on or prior to February
15, 2001 in an aggregate amount equal to the applicable
principal amount and
o with respect to each scheduled interest payment date on the
debentures that occurs after
the tax event redemption date, interest or principal strips
of U.S. treasury securities which
mature on or prior to that date in an aggregate amount
equal to the aggregate interest
payment that would be due on the applicable principal
amount of the debentures on that
date, and
(b) if the tax event redemption date occurs after February 16, 2001,
a portfolio of zero-coupon U.S. treasury securities consisting
of
o principal or interest strips of U.S. treasury securities
which mature on or prior to February 15, 2003 in an
aggregate amount equal to the applicable
principal amount and
o with respect to each scheduled interest payment date on
the debentures that occurs after the tax event redemption
date, interest or principal strips of the U.S. treasury
securities which mature on or prior to that date in an
aggregate amount equal to the aggregate interest payment
that would be due on the applicable principal amount of
the debentures on that date.
Applicable principal amount means either
o if the tax event redemption date occurs prior to February 16,
2001, the aggregate principal amount of the debentures
corresponding to the aggregate stated liquidation amount of the
trust preferred securities which are components of Income
PRIDES on that tax event redemption date or
o if the tax event redemption occurs on or after February 16,
2001, the aggregate principal amount of the debentures
corresponding to the aggregate stated liquidation amount of the
trust preferred securities outstanding on that tax event
redemption date.
Redemption amount means for each debenture, the product of
o the principal amount of that debenture and
o a fraction whose numerator is the treasury portfolio purchase
price and whose denominator is the applicable principal amount.
Treasury portfolio purchase price means the lowest aggregate price
quoted by a primary U.S. government securities dealer in New York City to
the quotation agent on the third business day immediately preceding the tax
event redemption date for the purchase of the treasury portfolio for
settlement on the tax event redemption date.
Quotation agent means
o Merrill Lynch Government Securities, Inc. and its respective
successors. However, if they shall cease to be a primary
treasury dealer, we shall substitute another primary treasury
dealer, and
o any other primary treasury dealer selected by us.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each registered holder of
debentures to be redeemed at its registered address. Unless we default in
payment of the redemption price, on and after the redemption date interest
shall cease to accrue on the redeemed debentures.
PUT OPTION
If a failed remarketing has occurred, holders of debentures,
including the institutional trustee and following the distribution of the
debentures upon a dissolution of the trust those debenture holders, will
have the right to put their debentures to us on March 2, 2001, upon at
least three business days' prior notice at a price per debenture equal to
$50, plus any accrued and unpaid interest. Upon our repurchase of those
debentures, the proceeds from the repurchase shall simultaneously be
applied to redeem, in the case of trust securities, any outstanding trust
preferred securities of those holders having an aggregate stated
liquidation amount equal to the aggregate principal amount of the
debentures so repurchased plus accrued and unpaid distributions, including
any deferred distributions.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
We shall have the right at any time, and from time to time, during
the term of the debentures, to defer payments of interest by extending the
interest payment period for a period not extending beyond the maturity date
of the debentures, at the end of which extension period, we shall pay all
interest then accrued and unpaid, including any expenses and taxes of the
trust, together with interest compounded quarterly at the rate of 6.45% per
year through and including February 15, 2001, and at the reset rate
afterwards, to the extent permitted by applicable law ("compound
interest"). However, during any extension period,
(a) we shall not declare or pay dividends on, make distributions
with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of our capital stock,
other than
o purchases or acquisitions of our capital stock in
connection with the satisfaction of our obligations under
any employee or agent benefit plans or under any contract
or security outstanding on the date of that event
requiring us to purchase our capital stock,
o as a result of a reclassification of our capital stock or
the exchange or conversion of one class or series of our
capital stock for another class or series of our capital
stock,
o the purchase of fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of our capital stock or the security being
converted or exchanged,
o dividends or distributions in our capital stock (or
rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or
exchange of capital stock or
o redemptions or repurchases of any rights outstanding under
a shareholder rights plan,
(b) we shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt
securities issued by us that rank junior to those debentures,
and
(c) we shall not make any guarantee payments with respect to the
above other than according to the guarantee or the common
securities guarantee.
Prior to the termination of any extension period, we may further
defer payments of interest by extending the interest payment period.
However, the extension period, including all previous and further
extensions, may not extend beyond the February 16, 2003. Upon the
termination of any extension period and the payment of all amounts then
due, we may commence a new extension period, subject to the terms specified
in this section. No interest during an extension period, except at its end,
shall be due and payable, but we, at our option, may prepay on any interest
payment date all of the interest accrued during the then elapsed portion of
an extension period. We have no present intention of exercising our right
to defer payments of interest by extending the interest payment period on
the debentures.
If the institutional trustee shall be the sole holder of the
debentures, we shall give the regular trustees and the institutional
trustee notice of its selection of that extension period one business day
prior to the earlier of
(1) the date distributions on the trust preferred securities are
payable or
(2) the date the regular trustees are required to give notice, if
applicable, to the NYSE, other applicable self-regulatory
organization or to holders of the trust preferred securities of
the record or payment date of that distribution.
The regular trustees shall give notice of our selection of that
extension period to the holders of the trust preferred securities. If the
institutional trustee shall not be the sole holder of the debentures, we
shall give the holders of the debentures notice of our selection of that
extension period ten business days prior to the earlier of
(1) the interest payment date or
(2) the date upon which we are required to give notice, if
applicable, to the NYSE, other applicable self-regulatory
organization or to holders of the debentures of the record or
payment date of that related interest payment.
EXPENSES AND TAXES OF THE TRUST
In the indenture, we, as borrower, have agreed to pay all debts and
other obligations, other than with respect to the trust securities, and all
costs and expenses of the trust. These include the costs and expenses
relating to the organization of the trust, the fees and expenses of the
trustees and the costs and expenses relating to the operation of the trust
and any and all related taxes costs and expenses, other than United States
withholding taxes, to which the trust might become subject. We also have
agreed in the indenture to execute those additional agreements as may be
necessary or desirable to give full effect to the above.
INDENTURE EVENTS OF DEFAULT
If any indenture event of default shall occur and be continuing, the
institutional trustee, as the holder of the debentures, will have the right
to declare the principal of and the interest on the debentures, including
any compound interest and expenses and taxes of the trust, if any, and any
other amounts payable under the indenture, to be due and payable and to
enforce its other rights as a creditor with respect to the debentures.
The following are events of default under the indenture with respect
to the debentures:
o failure to pay interest on the debentures when due, continued
for a period of 30 days. However, if we are permitted by the
terms of the debentures to defer the payment in question, then
the date on which that payment is due and payable shall be the
date on which we are required to make payment following that
deferral, if that deferral has been elected according to the
terms of the debentures;
o failure to pay the principal of or premium, if any, on the
debentures when due and payable on February 16, 2003, upon
redemption or otherwise. However, if we are permitted by the
terms of the debentures to defer the payment in question, the
date on which that payment is due and payable shall be the date
on which we are required to make payment following the
deferral, if the deferral has been elected according to the
terms of the debentures;
o failure to observe or perform in any material respect other
covenants contained in the indenture, continued for a period of
90 days after written notice has been given to us by the debt
trustee or holders of at least 25% in aggregate principal
amount of the outstanding debentures; and
o particular events of our bankruptcy, insolvency or reorganization.
The indenture provides that the debt trustee shall, within 90 days
after the occurrence of any default or event of default with respect to the
debentures, give the holders of the debentures notice of all uncured
defaults or events of default known to it. The term default includes any
event which after notice or passage of time or both would be an event of
default.
However, in the case of a default in the payment of the principal of
or premium, if any, on, or interest on any debt securities of that series,
or in the payment of any sinking fund installment with respect to debt
securities of that series, the trustee shall be protected in withholding
that notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or responsible officers of
the trustee in good faith determines that the withholding of that notice is
in the interest of the holders of debt securities of that series and any
related coupons. Except that in the case of an event of default or a
default in a payment on the debentures, the debt trustee shall be protected
in withholding the notice so long as the board of directors, the executive
committee or directors or responsible officers of the debt trustee in good
faith determine that the withholding of that notice is in the interest of
the holders of the debentures.
If an event of default with respect to the debentures occurs and is
continuing, the debt trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debentures, by notice in writing to us
and to the debt trustee if given by the holders of at least 25% in
aggregate principal amount of the debentures, may declare the unpaid
principal of and accrued interest to the date of acceleration on all the
outstanding debentures to be due and payable immediately and, upon that
declaration, the debentures shall become immediately due and payable.
In addition, in the case of the debentures held by the trust, if an
event of default has occurred and is continuing, and that event is
attributable to our failure to pay interest or principal, then a holder of
trust preferred securities may directly institute a proceeding against us
for payment.
Any declaration with respect to the debentures may be annulled and
past events of default and defaults, except, unless cured, an event of
default or a default in payment of principal of or interest on the
debentures, may be waived by the holders of a majority of the principal
amount of the outstanding debentures, upon the conditions provided in the
indenture.
The indenture provides that we shall periodically file statements
with the debt trustee regarding compliance by us with some of its
respective covenants and shall specify any event of default or defaults
with respect to the debentures, in performing those covenants, of which we
as signers may have knowledge.
An indenture event of default also constitutes a declaration event of
default. The holders of trust preferred securities in some circumstances
have the right to direct the institutional trustee to exercise its rights
as the holder of the debentures. Notwithstanding the above, if an event of
default has occurred and is continuing and that event is attributable to
our failure to pay interest or principal on the debentures on the date that
interest or principal is otherwise payable, we acknowledge that a holder of
trust preferred securities may directly institute a proceeding for
enforcement of payment to that holder directly of the principal of and
interest on the debentures having a principal amount equal to the aggregate
stated liquidation amount of the trust preferred securities of that holder
after the respective due date specified in the debentures. In connection
with that action, we shall have the right under the indenture to set-off
any payment made to that holder by us. The holders of trust preferred
securities will not be able to exercise directly any other remedy available
to the holders of the debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of trust preferred securities in connection
with the involuntary or voluntary dissolution of the trust, the debentures
will be issued in the form of one or more global certificates (each a
"global security") registered in the name of the depositary or its nominee.
Except under the limited circumstances described below, debentures
represented by the global security will not be exchangeable for, and will
not otherwise be issuable as, debentures in certificated form. The global
securities described above may not be transferred except by the depositary
to a nominee of the depositary or by a nominee of the depositary to the
depositary or another nominee of the depositary or to a successor
depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in certificated form. These
laws may impair the ability to transfer beneficial interests in a global
security.
Except as provided below, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of debentures in
certificated form and will not be considered its holders for any purpose
under the indenture. No global security representing debentures shall be
exchangeable, except for another global security of like denomination and
tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each beneficial owner
must rely on the procedures of the depositary or if that person is not a
participant, on the procedures of the participant through which that person
owns its interest to exercise any rights of a holder under the indenture.
THE DEPOSITARY
If debentures are distributed to holders of trust preferred
securities in liquidation of those holders' interests in the trust, the
depositary will act as securities depositary for the debentures. As of the
date of this prospectus, the description of the depositary's book-entry
system and the depositary's practices as they relate to purchases,
transfers, notices and payments with respect to the trust preferred
securities apply in all material respects to any debt obligations
represented by one or more global securities held by the depositary. We may
appoint a successor to the depositary or any successor depositary if the
depositary or a successor depositary is unable or unwilling to continue as
a depositary for the global securities.
Neither us nor the trust, the institutional trustee, any paying
agents, any of our other agents or the debt trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global
security for the debentures or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
A global security shall be exchangeable for debentures registered in
the names of persons other than the depositary or its nominee only if
(1) the depositary notifies us that it is unwilling or unable to
continue as a depositary for that global security and no
successor depositary shall have been appointed,
(2) the depositary at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the depositary
is required to be so registered to act as a depositary and no
successor depositary shall have been appointed,
(3) we, in our sole discretion, determine that the global security
shall be so exchangeable or
(4) there shall have occurred an indenture event of default with
respect to such debentures.
Any global security that is exchangeable according to the preceding
sentence shall be exchangeable for debentures registered in those names as
the depositary shall direct. It is expected that these instructions will be
based upon directions received by the depositary from its participants with
respect to ownership of beneficial interests in the global security.
GOVERNING LAW
The indenture and the debentures will be governed by, and construed
in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
We will pay all fees and expenses related to
(1) the offering of the trust securities and the debentures,
(2) the organization, maintenance and dissolution of the trust,
(3) the retention of the trustees and
(4) the enforcement by the institutional trustee of the rights of
the holders of the trust preferred securities.
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE
As provided in the declaration, the sole purpose of the trust is to
issue the trust securities evidencing undivided beneficial interests in the
assets of the trust, and to invest the proceeds from the issuance and sale
in the debentures and engage in only other necessary or incidental
activities.
As long as payments of interest and other payments are made when due
on the debentures, those payments will be sufficient to cover distributions
and payments due on the trust securities because of the following factors:
o the aggregate principal amount of debentures will be equal to
the sum of the aggregate stated liquidation amount of the trust
securities;
o the interest rate and the interest and other payment dates on
the debentures will match the distribution rate and
distribution and other payment dates for the trust securities;
o we shall pay, and the trust shall not be obligated to pay,
directly or indirectly, all costs, expenses, debts, and
obligations of the trust, other than with respect to the trust
securities; and
o the declaration further provides that the trustees shall not
take or cause or permit the trust to, among other things,
engage in any activity that is not consistent with the purposes
of the trust.
Payments of distributions, to the extent funds are available, and
other payments due on the trust preferred securities, to the extent funds
therefor are available, are guaranteed by us as to the extent provided
under "Description of the Guarantee." If we do not make interest payments
on the debentures purchased by the trust, the trust will not have
sufficient funds to pay distributions on the trust preferred securities.
The guarantee does not apply to any payment of distributions unless and
until the trust has sufficient funds for the payment of such distributions.
If we fail to make interest or other payments on the debentures when
due, taking account of any extension period, the declaration provides a
mechanism enabling the holders of the trust preferred securities to direct
the institutional trustee to enforce its rights under the indenture. If the
institutional trustee fails to enforce its rights under the indenture in
respect of an indenture event of default, a holder of record of trust
preferred securities may, to the fullest extent permitted by applicable
law, institute a legal proceeding against us to enforce the institutional
trustee's rights under the indenture without first instituting any legal
proceeding against the institutional trustee or any other person or entity.
Notwithstanding the above, if a declaration event of default has
occurred and is continuing and that event is attributable to our failure to
pay interest or principal on the debentures on the date that interest or
principal is otherwise payable, then a holder of trust preferred securities
may directly institute a proceeding against us for payment. We, under the
guarantee, acknowledge that the guarantee trustee shall enforce the
guarantee on behalf of the holders of the trust preferred securities. If we
fail to make payments under the guarantee, the guarantee provides a
mechanism enabling the holders of the trust preferred securities to direct
the guarantee trustee to enforce its rights under the guarantee.
Notwithstanding the above, if we fail to make a payment under the
guarantee, any holder of trust preferred securities may institute a legal
proceeding directly against us to enforce its rights under the guarantee
without first instituting a legal proceeding against the trust, the
guarantee trustee, or any other person or entity.
The guarantee, when taken together with our obligations under the
debentures and the indenture and its obligations under the declaration,
including its obligations to pay costs, expenses, debts and liabilities of
the trust, other than with respect to the trust securities, has the effect
of providing a full and unconditional guarantee of amounts due on the trust
preferred securities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States
federal income tax consequences of the acquisition, ownership and
disposition of FELINE PRIDES, trust preferred securities and common stock
acquired under a purchase contract. Unless otherwise stated, the summary
deals only with FELINE PRIDES, trust preferred securities and common stock
held as capital assets (generally, assets held for investment) by U.S.
holders that purchase FELINE PRIDES from Cendant pursuant to this offering.
The tax treatment of a U.S. holder may vary depending on its particular
situation. This summary does not address all of the tax consequences that
may be relevant to holders that may be subject to special tax treatment
such as, for example, insurance companies, broker dealers, tax-exempt
organizations, or foreign taxpayers. In addition, this summary does not
address the tax consequences to shareholders, partners or beneficiaries of
a holder of FELINE PRIDES, trust preferred securities or common stock, nor
does it address any aspects of state, local, or foreign tax laws. This
summary is based on the United States federal income tax laws in effect as
of the date hereof, which is subject to change, possibly on a retroactive
basis. Each investor should consult its tax advisor as to the particular
tax consequences of acquiring, owning, and disposing of FELINE PRIDES or
trust preferred securities, including the application and effect of United
States federal, state, local, foreign and other tax laws.
No statutory, administrative or judicial authority directly addresses
the treatment of FELINE PRIDES or instruments similar of FELINE PRIDES for
United States federal income tax purposes. As a result, no assurance can be
given that the IRS will agree with the tax consequences described herein.
For purposes of this summary, the term "U.S. holder" means a holder
of FELINE PRIDES or trust preferred securities that is, for United States
federal income tax purposes, (1) a citizen or resident of the United
States, (2) a corporation or partnership created or organized in or under
the laws of the United States or any state thereof or the District of
Columbia, (3) an estate the income of which is subject to United States
federal income taxation, regardless of its source, (4) a trust if a court
within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States persons have the
authority to control all substantial decisions of such trust or (5) any
person or entity otherwise subject to United States federal income taxation
on a net basis in respect of its investment in FELINE PRIDES
The following summary does not address the tax consequences
associated with the acquisition of rights. Holders that acquire rights as
part of a litigation settlement or otherwise should consult their tax
advisors concerning the tax consequences associated with such acquisition
of the rights.
ACQUISITION, OWNERSHIP AND DISPOSITION OF FELINE PRIDES
HOLDERS THAT ACQUIRE AND IMMEDIATELY EXCHANGE ADDITIONAL FELINE
PRIDES AND RIGHTS FOR NEW FELINE PRIDES. The purchase of additional FELINE
PRIDES pursuant to this offering by a U.S. holder of rights that is
required to immediately exchange those additional FELINE PRIDES and rights
for new FELINE PRIDES should be treated as a single integrated transaction
for United States federal income tax purposes. Accordingly, (1) such a U.S.
holder's acquisition of additional FELINE PRIDES should be disregarded and
(2) the U.S. holder should be treated as having purchased new FELINE PRIDES
for an amount equal to the sum of the cash paid for the additional FELINE
PRIDES plus the fair market value of the rights exchanged for the new
FELINE PRIDES. In that event, the U.S. holder would recognize gain or loss
on the transfer of the rights equal to the difference between the fair
market value of the rights and the U.S. holder's tax basis in the rights.
The gain or loss would be capital gain or loss, and would generally be
long-term capital gain or loss if the U.S. holder held the rights for more
than one year immediately prior to the exchange. Long-term capital gains of
individuals are eligible for reduced rates of taxation. The deductibility
of capital losses is subject to limitations.
HOLDERS THAT PURCHASE AND CONTINUE TO HOLD ADDITIONAL FELINE PRIDES.
The treatment of the acquisition of additional FELINE PRIDES by U.S.
holders that continue to hold the additional FELINE PRIDES, if any, is not
clear, in part because the purchase contract related to the additional
FELINE PRIDES currently has a negative value and there is no authority
directly on point as to how such negative value should be characterized. It
is possible that a U.S. holder that purchases additional FELINE PRIDES
pursuant to this offering and continues to hold the additional FELINE
PRIDES would be considered to have received consideration to assume the
obligations under the related purchase contract in an amount equal to that
negative value, and to have paid that amount, in addition to the purchase
price, for the trust preferred securities or treasury securities related to
additional FELINE PRIDES. Any U.S. holders that purchase additional FELINE
PRIDES and that continue to hold the additional FELINE PRIDES should
consult their tax advisors concerning the acquisition of additional FELINE
PRIDES when the related purchase contracts have a negative value.
HOLDERS THAT DELIVER RIGHTS AND CURRENT FELINE PRIDES (OR ADDITIONAL
FELINE PRIDES OBTAINED IN THE SECONDARY MARKET) IN EXCHANGE FOR NEW FELINE
PRIDES. A holder that delivers rights and current FELINE PRIDES (or
additional FELINE PRIDES acquired in the secondary market) in exchange for
new FELINE PRIDES should be treated (1) in the case of holders of Income
PRIDES only, as transferring the trust preferred securities related to the
current Income PRIDES or additional Income PRIDES in exchange for the trust
preferred securities related to the new Income PRIDES and (2) in the case
of holders of both Income PRIDES and Growth PRIDES, as transferring the
purchase contracts related to the current FELINE PRIDES or additional
FELINE PRIDES, together with the rights, in exchange for the purchase
contracts related to the new FELINE PRIDES.
The exchange of the trust preferred securities related to the current
Income PRIDES (or additional Income PRIDES acquired in the secondary
market) for the trust preferred securities associated with the new Income
PRIDES should not constitute a "significant modification" of the trust
preferred securities (or the underlying debentures) related to the Income
PRIDES for United States federal income tax purposes and, accordingly,
despite the fact that there will be a physical exchange of securities, the
new trust preferred securities should be treated as a "continuation" of the
trust preferred securities surrendered. As a result, there should be no
United States federal income tax consequences with respect to the exchange
of the trust preferred securities related to the current Income PRIDES (or
additional Income PRIDES acquired in the secondary market) for the trust
preferred securities related to the new Income PRIDES. Therefore, an
exchanging U.S. holder should have the same adjusted tax basis and holding
period in the new trust preferred securities as it had in the surrendered
trust preferred securities immediately before the exchange.
There is no authority addressing the treatment, under current law, of
the transfer of the purchase contracts related to the current FELINE PRIDES
(or additional FELINE PRIDES acquired on the secondary market) and the
rights in exchange for the purchase contracts related to the new FELINE
PRIDES. Although the matter is not free from doubt, a U.S. holder likely
would (1) recognize capital gain or loss on the cancellation of the
purchase contracts related to the current FELINE PRIDES (or additional
FELINE PRIDES acquired on the secondary market) equal to the difference
between the fair market value (which may be negative) of the cancelled
purchase contracts and the U.S. holder's adjusted tax basis in the
cancelled purchase contracts and (2) recognize capital gain or loss on the
transfer of the rights equal to the difference between the fair market
value of the rights and the U.S. holder's tax basis in the transferred
rights. In each case, the capital gain or loss would be long-term or
short-term capital gain or loss depending upon the U.S. holder's holding
period for the surrendered purchase contracts and surrendered rights,
respectively. If the purchase contracts related to the new FELINE PRIDES
were to have a negative value at the time the exchange of purchase
contracts described above took place, it is possible that the U.S. holder's
loss on the cancellation of the purchase contracts related to the current
FELINE PRIDES (or additional FELINE PRIDES acquired on the secondary
market) would be limited to the fair market value of the rights
surrendered. Alternatively, the U.S. holder could be treated as having
received consideration to enter into the purchase contracts related to the
new FELINE PRIDES in an amount equal to their negative value and to have
paid that amount, in addition to the rights, to be released from its
obligation under the purchase contracts surrendered in the exchange. The
U.S. holder's tax basis in the purchase contracts related to the new FELINE
PRIDES likely would equal their fair market value (but likely would not be
less than zero, even if the new purchase contracts had negative value at
the time they were transferred to the holder). U.S. holders should consult
their tax advisors regarding the exchange of the purchase contracts related
to the current FELINE PRIDES (or additional FELINE PRIDES acquired on the
secondary market) and the rights for the purchase contracts related to the
new FELINE PRIDES.
ALLOCATION OF PURCHASE PRICE. In general, a U.S. holder that acquires
new FELINE PRIDES through the purchase from and immediate surrender of
additional FELINE PRIDES to Cendant or that acquires additional FELINE
PRIDES which such holder is not required to surrender (if additional FELINE
PRIDES are sold to any such persons) should be treated as acquiring a unit
consisting of two components -- in the case of an Income PRIDES, a trust
preferred security and a purchase contract constituting such Income PRIDES
and, in the case of a Growth PRIDES, an interest in a treasury security and
a purchase contract constituting such Growth PRIDES. The amount paid for
each FELINE PRIDES generally will be allocated between the two components
in proportion to their respective fair market values at the time of
purchase. Such allocation will establish the U.S. holder's initial tax
bases in the trust preferred security or interest in the treasury security,
as the case may be, and the purchase contract. The proper allocation of the
purchase price of an additional FELINE PRIDES is not clear, in part because
the purchase contract related to an additional FELINE PRIDES currently has
a negative value and there is no authority directly on point as to how such
negative value should be allocated. It is possible that the purchase of
additional FELINE PRIDES would be treated as if the U.S. holder received
consideration to assume the obligations under the related purchase
contract in an amount equal to that negative value, and to have paid that
amount, in addition to the purchase price, for the related trust preferred
security. Based upon the above, Cendant will report the fair market value
of each trust preferred security and each interest in a treasury security
so that (1) in the case of new FELINE PRIDES, the entire purchase price of
a new FELINE PRIDES will be allocable to the trust preferred security or
interest in the treasury security, as the case may be, and no amount will
be allocable to the purchase contract and (2) in the case of additional
FELINE PRIDES (other than any additional FELINE PRIDES that are immediately
surrendered for new FELINE PRIDES), the entire purchase price of an
additional FELINE PRIDES plus an amount equal to the negative value of the
related purchase contract will be allocable to the trust preferred security
or interest in the treasury security, as the case may be, and no amount
will be allocable to the purchase contract. These positions will be binding
upon each U.S. holder (but not on the IRS) unless the U.S. holder
explicitly discloses a contrary position on a statement attached to that
U.S. holder's timely filed United States federal income tax return for the
taxable year in which a FELINE PRIDES is acquired. Thus, absent such
disclosure, a U.S. holder should allocate the purchase price for a FELINE
PRIDES in accordance with the allocations set forth above. The remainder of
this discussion assumes that these allocations of the purchase price of new
FELINE PRIDES and additional FELINE PRIDES will be respected for United
States federal income tax purposes. A different allocation could affect the
timing and character of income to a U.S. holder.
OWNERSHIP OF TRUST PREFERRED SECURITIES OR TREASURY SECURITIES. A
U.S. holder will be treated as owning the trust preferred securities or
treasury securities constituting a part of the Income PRIDES or Growth
PRIDES, respectively. Cendant and, by acquiring FELINE PRIDES, each U.S.
holder agree to treat that holder as the owner, for United States federal,
state and local income and franchise tax purposes, of the trust preferred
securities or treasury securities constituting a part of the FELINE PRIDES
beneficially owned by that U.S. holder. Based upon this agreement, Cendant
intends to take the position, and the remainder of this summary assumes,
that U.S. holders of FELINE PRIDES will be treated as the owners of the
trust preferred securities or treasury securities constituting a part of
their FELINE PRIDES for United States federal, state and local income and
franchise tax purposes. The United States federal income tax consequences
of owning the trust preferred securities or treasury securities are
discussed below. See "-- Trust Preferred Securities", "-- Treasury
Securities" and "-- Tax Event Redemption of Trust Preferred Securities."
SALES, EXCHANGES OR OTHER TAXABLE DISPOSITIONS OF FELINE PRIDES. Upon
a sale, exchange or other taxable disposition (collectively, a
"disposition") of FELINE PRIDES, a U.S. holder will be treated as having
sold, exchanged or disposed of the purchase contract and the trust
preferred securities, treasury portfolio or, in the case of Growth PRIDES,
the treasury securities, that constitute those FELINE PRIDES and will
generally have gain or loss equal to the difference between the portion of
the proceeds to the U.S. holder allocable to the purchase contract and the
trust preferred securities, treasury portfolio or treasury securities, as
the case may be, and that U.S. holder's respective adjusted tax bases in
the purchase contract and the trust preferred securities, treasury
portfolio or treasury securities. Such gain or loss will generally be
capital gain or loss, except to the extent that the U.S. holder is treated
as receiving an amount with respect to accrued but unpaid interest on the
trust preferred securities or the treasury portfolio, which amount will be
treated as ordinary interest income, or to the extent the U.S. holder is
treated as receiving an amount with respect to accrued contract adjustment
payments or deferred contract adjustment payments, which may be treated as
ordinary income, in each case to the extent not previously included in
income. Such capital gain or loss will generally be long-term capital gain
or loss if the U.S. holder held the FELINE PRIDES for more than one year
immediately prior to their disposition. Long-term capital gains of
individuals are eligible for reduced rates of taxation. The deductibility
of capital losses is subject to limitations. If a disposition of FELINE
PRIDES were to occur when the purchase contract had negative value,
although the matter is not free from doubt, the U.S. holder should be
considered to have received additional consideration for the trust
preferred securities, treasury portfolio or treasury securities, as the
case may be, in an amount equal to such negative value and to have paid
that amount to be released from its obligation under the purchase contract.
U.S. holders should consult their tax advisors regarding a disposition of
the FELINE PRIDES at a time when the purchase contract has negative value.
In determining gain or loss, payments to a U.S. holder of contract
adjustment payments or deferred contract adjustment payments properly
excluded from income should either reduce that U.S. holder's adjusted tax
basis in the purchase contract or result in an increase in the amount
realized on the disposition of the purchase contract. Any contract
adjustment payments or deferred contract adjustment payments included in a
U.S. holder's income but not paid should increase the U.S. holder's
adjusted tax basis in the purchase contract. Payments in cash that have
been made by a U.S. holder to create Growth PRIDES but not offset against
payments of contract adjustment payments or deferred contract adjustment
payments may increase the U.S. holder's adjusted tax basis in the purchase
contract or result in a decrease in the amount realized on the disposition
of the purchase contract. See "-- Contract Adjustment Payments and Deferred
Contract Adjustment Payments; Delivery of Cash."
TRUST PREFERRED SECURITIES
CLASSIFICATION OF THE TRUST. Cendant believes that the trust will be
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes. As a result,
each U.S. holder of trust preferred securities will be treated as owning an
undivided beneficial ownership interest in the debentures and, as further
discussed below, each U.S. holder of trust preferred securities will be
required to include in its gross income its pro rata share of the interest
income or OID that is paid or accrued on the debentures. See "-- Interest
Income and Original Issue Discount."
CLASSIFICATION OF THE DEBENTURES. Cendant believes that the
debentures will be classified as indebtedness for United States federal
income tax purposes. Cendant, the trust and, by acquiring Income PRIDES or
trust preferred securities, each U.S. holder agree to treat the debentures
as indebtedness of Cendant for all United States tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the applicable
Treasury regulations, the debentures will not be considered to have been
issued with OID. Accordingly, except as set forth below, stated interest on
the debentures will generally be included in income by a U.S. holder at the
time such interest income is paid or accrued in accordance with that U.S.
holder's regular method of tax accounting. If, however, Cendant were to
exercise its right to defer payments of interest on the debentures, U.S.
holders (even those using a cash basis method of accounting) would be
required to accrue the stated interest on the debentures (as OID) on a
daily economic accrual basis even though Cendant would not pay such
interest during the deferral period. For periods, if any, after Cendant
exercised its right to defer payments of interest on the debentures, the
debentures would be subject to tax as OID instruments for as long as they
remained outstanding, which would require U.S. holders to include accrued
OID in gross income in advance of the receipt of cash attributable to such
accrued OID. Under the OID economic accrual rules, a U.S. holder would
accrue an amount of interest income each year that approximates the stated
interest payments called for under the terms of the debentures, and actual
cash payments of interest on the debentures would not be reported
separately as taxable income. Any amount of OID included in a U.S. holder's
gross income would increase that U.S. holder's adjusted tax basis in its
trust preferred securities, and the amount of a distribution received by a
U.S. holder with respect to those trust preferred securities would reduce
the adjusted tax basis of such trust preferred securities.
The Treasury regulations described above have not yet been addressed
in any rulings or other interpretations by the IRS, and it is possible that
the IRS could take a contrary position. If the IRS were to assert
successfully that the stated interest on the debentures was OID regardless
of whether or not Cendant exercised its right to defer payments of interest
on such debentures, all U.S. holders would be required to include stated
interest on the debentures in income on a daily economic accrual basis as
described above.
U.S. holders that are corporations will not be entitled to a
dividends received deduction with respect to any income recognized with
respect to the trust preferred securities.
DISTRIBUTION OF DEBENTURES TO U.S. HOLDERS OF TRUST PREFERRED
Securities. A distribution by the trust of the debentures as described
under the caption "Description of the Trust Preferred Securities --
Liquidation Distribution Upon Dissolution" would not be a taxable event to
U.S. holders. In the event of such a distribution, a U.S. holder would have
an aggregate adjusted tax basis in the debentures received in the
liquidation equal to the aggregate adjusted tax basis that the U.S. holder
had in its trust preferred securities surrendered in the liquidation of the
trust, and the holding period of those debentures would include the period
during which the U.S. holder had held those trust preferred securities. In
addition, a U.S. holder would continue to include interest (or OID) in
respect of debentures received from the trust in the manner described under
"-- Interest Income and Original Issue Discount."
SALES, EXCHANGES OR OTHER TAXABLE DISPOSITIONS OF TRUST PREFERRED
SECURITIES. Gain or loss will be recognized by a U.S. holder on a
disposition of a trust preferred security (including a redemption for cash
or the remarketing of the trust preferred security) in an amount equal to
the difference between the amount realized by the U.S. holder on the
disposition of the trust preferred security (except to the extent that the
amount realized is characterized as a payment in respect of accrued but
unpaid interest on the U.S. holder's allocable share of the debentures that
the U.S. holder has not previously included in gross income, which amount
will be subject to tax as ordinary interest income) and the U.S. holder's
adjusted tax basis in that trust preferred security. Selling expenses
incurred by a U.S. holder, including the remarketing fee, will reduce the
amount of gain or increase the amount of loss recognized by the U.S. holder
upon a disposition of a trust preferred security. Gain or loss realized by
a U.S. holder on a disposition of a trust preferred security generally will
be capital gain or loss and generally will be long-term capital gain or
loss if the U.S. holder held that trust preferred security for more than
one year immediately prior to its disposition. Long-term capital gains of
individuals are eligible for reduced rates of taxation. The deductibility
of capital losses is subject to limitations.
TREASURY SECURITIES
ORIGINAL ISSUE DISCOUNT. A U.S. holder of Growth PRIDES will be
required to treat its ownership interest in the treasury securities
comprising a Growth PRIDES as an interest in a bond that was originally
issued on the date the Growth PRIDES is purchased and that has OID equal to
the excess of the stated amount of the Growth PRIDES over the purchase
price of the Growth PRIDES. A U.S. holder will be required to include that
OID in income on a daily economic accrual basis over the period between the
issue date of the Growth PRIDES and the day immediately preceding the
purchase contract settlement date, regardless of the U.S. holder's method
of tax accounting and in advance of the receipt of cash attributable to
that OID. Amounts of OID included in a U.S. holder's gross income will
increase the U.S. holder's adjusted tax basis in its interest in the
treasury securities.
SALES, EXCHANGES OR OTHER TAXABLE DISPOSITIONS OF TREASURY
SECURITIES. In the event that a U.S. holder obtains the release of treasury
securities by delivering trust preferred securities to the collateral
agent, gain or loss will be recognized by the U.S. holder on a subsequent
disposition of the treasury securities in an amount equal to the difference
between the amount realized by the U.S. holder on the disposition and the
U.S. holder's adjusted tax basis in the treasury securities. Such gain or
loss generally will be capital gain or loss and generally will be long-term
capital gain or loss if the U.S. holder held those treasury securities for
more than one year immediately prior to their disposition. Long-term
capital gains of individuals are eligible for reduced rates of taxation.
The deductibility of capital losses is subject to limitations.
PURCHASE CONTRACTS
CONTRACT ADJUSTMENT PAYMENTS AND DEFERRED CONTRACT ADJUSTMENT
PAYMENTS; DELIVERY OF CASH. There is no direct authority addressing the
treatment, under current law, of the contract adjustment payments and
deferred contract adjustment payments, or the delivery of cash in respect
of excess accrued contract adjustment payments by a U.S. Holder of Income
PRIDES upon the creation of Growth PRIDES and such treatment is, therefore,
unclear. Contract adjustment payments and deferred contract adjustment
payments may constitute taxable income to a U.S. holder of FELINE PRIDES
when received or accrued, in accordance with the U.S. holder's regular
method of tax accounting. To the extent that Cendant is required to file
information returns with respect to contract adjustment payments or
deferred contract adjustment payments, it intends to report those payments
as taxable income to each U.S. holder. U.S. holders should consult their
tax advisors concerning the treatment of contract adjustment payments and
deferred contract adjustment payments and the delivery of cash upon the
creation of Growth PRIDES, including the possibility that any contract
adjustment payment or deferred contract adjustment payment may be treated
as a loan, purchase price adjustment, rebate or payment analogous to an
option premium, rather than being includible in income on a current basis,
and that the delivery of cash upon the creation of Growth PRIDES may be
treated as an offset to contract adjustment payments or deferred contract
adjustment payments or as a purchase price adjustment. The treatment of
contract adjustment payments, deferred contract adjustment payments and the
delivery of cash upon the creation of Growth PRIDES could affect a U.S.
holder's adjusted tax basis in a purchase contract or common stock received
under a purchase contract or the amount realized by a U.S. holder upon the
disposition of a FELINE PRIDES or the termination of a purchase contract.
See "-- Acquisition of Common Stock Under a Purchase Contract," "-- Sales,
Exchanges or Other Taxable Dispositions of FELINE PRIDES" and "--
Termination of Purchase Contract."
ACQUISITION OF COMMON STOCK UNDER A PURCHASE CONTRACT. A U.S. holder
of FELINE PRIDES generally will not recognize gain or loss on the purchase
of common stock under a purchase contract, except with respect to any cash
received in lieu of a fractional share of common stock. Subject to the
following discussion, a U.S. holder's aggregate initial tax basis in the
common stock received under a purchase contract should generally equal the
purchase price paid for such common stock plus that U.S. holder's adjusted
tax basis in the purchase contract, if any, less the portion of that
purchase price and adjusted tax basis allocable to the fractional share.
Payments of contract adjustment payments or deferred contract adjustment
payments that have been received in cash by a U.S. holder but not included
in income by that U.S. holder should reduce the U.S. holder's adjusted tax
basis in the purchase contract or the common stock to be received under
that purchase contract; payments in cash that have been made by a U.S.
holder to create Growth PRIDES but not offset against payments of contract
adjustment payments or deferred contract adjustment payments may increase
that U.S. holder's adjusted tax basis in the purchase contract or the
common stock to be received under that purchase contract. See "-- Contract
Adjustment Payments and Deferred Contract Adjustment Payments." The holding
period for common stock received under a purchase contract will commence on
the day following the acquisition of that common stock.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT. Any
distribution on common stock paid by Cendant out of its current or
accumulated earnings and profits, as determined for United States federal
income tax purposes, will constitute a dividend and will be includible in
income by a U.S. holder when received. Any dividend on the common stock
will be eligible for the dividends received deduction if received by an
otherwise qualifying corporate U.S. holder that meets the holding period
and other requirements for the dividends received deduction.
Upon a disposition of common stock, a U.S. holder generally will
recognize capital gain or loss equal to the difference between the amount
realized and the U.S. holder's adjusted tax basis in the common stock. Such
capital gain or loss generally will be long-term capital gain or loss if
the U.S. holder held that common stock for more than one year immediately
prior to its disposition. Long-term capital gains of individuals are
eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
EARLY SETTLEMENT OF PURCHASE CONTRACT. A U.S. holder of FELINE PRIDES
will not recognize gain or loss on the receipt of its proportionate share
of trust preferred securities, treasury securities or the treasury
portfolio upon early settlement of a purchase contract and will have the
same adjusted tax basis in those trust preferred securities, treasury
securities or the treasury portfolio as before the early settlement. Any
contract adjustment payments or deferred contract adjustment payments that
have been included in a U.S. holder's income but forfeited and not paid
upon early settlement of a purchase contract should increase that U.S.
holder's adjusted tax basis in the common stock received under a purchase
contract.
TERMINATION OF PURCHASE CONTRACT. If a purchase contract terminates,
a U.S. holder of FELINE PRIDES will recognize gain or loss equal to the
difference between the amount realized, if any, upon the termination and
the U.S. holder's adjusted tax basis, if any, in the purchase contract at
the time of the termination. Payments of contract adjustment payments or
deferred contract adjustment payments received by a U.S. holder but not
included in income by the U.S. holder should either reduce the U.S.
holder's adjusted tax basis in the purchase contract or increase the amount
realized on the termination of the purchase contract. Any contract
adjustment payments or deferred contract adjustment payments included in a
U.S. holder's income but not paid should increase the U.S. holder's
adjusted tax basis in the purchase contract; payments in cash that have
been made by a U.S. holder to create Growth PRIDES but not offset against
payments of contract adjustment payments or deferred contract adjustment
payments may increase the U.S. holder's adjusted tax basis in the purchase
contract or result in a deduction on the termination of the purchase
contract. See "-- Contract Adjustment Payments and Deferred Contract
Adjustment Payments." Such gain or loss generally will be capital gain or
loss and generally will be long-term capital gain or loss if the U.S.
holder held the purchase contract for more than one year immediately prior
to its termination. Long-term capital gains of individuals are eligible for
reduced rates of taxation. The deductibility of capital losses is subject
to limitations. A U.S. holder will not recognize gain or loss on the
receipt of its proportionate share of the trust preferred securities,
treasury securities or treasury portfolio upon termination of the purchase
contract and will have the same adjusted tax basis in those trust preferred
securities, treasury securities or treasury portfolio as before that
termination.
ADJUSTMENT TO SETTLEMENT RATE. U.S. holders of FELINE PRIDES might be
treated as receiving a constructive dividend distribution from Cendant if
(1) the settlement rate is adjusted and as a result of that adjustment, the
proportionate interest of U.S. holders of FELINE PRIDES in the assets or
earnings and profits of Cendant is increased and (2) the adjustment is not
made pursuant to a bona fide, reasonable anti-dilution formula. An
adjustment in the settlement rate would not be considered made pursuant to
such a formula if the adjustment were made to compensate a U.S. holder for
certain taxable distributions with respect to the Cendant's common stock.
SUBSTITUTION OF TREASURY SECURITIES TO CREATE OR RECREATE GROWTH PRIDES
A U.S. holder of an Income PRIDES that delivers treasury securities
to the collateral agent in substitution for trust preferred securities will
generally not recognize gain or loss upon the delivery of those treasury
securities or the release of the trust preferred securities to the U.S.
holder. The U.S. holder will continue to take into account items of income
or deduction otherwise includible or deductible, respectively, by that U.S.
holder with respect to those treasury securities and trust preferred
securities, and the U.S. Holder's adjusted tax bases in the treasury
securities, the trust preferred securities and the purchase contract will
not be affected by such delivery and release.
SUBSTITUTION OF TRUST PREFERRED SECURITIES TO CREATE OR RECREATE INCOME
PRIDES
A U.S. holder of a Growth PRIDES that delivers trust preferred
securities to the collateral agent in substitution for treasury securities
will generally not recognize gain or loss upon the delivery of those trust
preferred securities or the release of the treasury securities to the U.S.
holder. The U.S. holder will continue to take into account items of income
or deduction otherwise includible or deducible, respectively, by that U.S.
holder with respect to those treasury securities and trust preferred
securities, and the U.S. holder's adjusted tax bases in the treasury
securities, the trust preferred securities and the purchase contract will
not be affected by such delivery and release.
TAX EVENT REDEMPTION OF TRUST PREFERRED SECURITIES
A tax event redemption will be a taxable event for U.S. holders of
trust preferred securities which will be subject to tax in the manner
described under "Trust Preferred Securities -- Sales, Exchanges or Other
Taxable Dispositions of Trust Preferred Securities."
OWNERSHIP OF TREASURY PORTFOLIO. Cendant, the trust and, by acquiring
Income PRIDES, each U.S. holder agree to treat that U.S. holder as the
owner, for United States federal, state and local income and franchise tax
purposes, of its applicable ownership interest of the treasury portfolio
constituting a part of the Income PRIDES beneficially owned by that U.S.
holder in the event of a tax event redemption prior to the purchase
contract settlement date. Based upon this agreement, each U.S. holder will
include in income any amount earned on its pro rata portion of the treasury
portfolio for all United States federal, state and local income and
franchise tax purposes. The remainder of this summary assumes that U.S.
holders of Income PRIDES will be treated as the owners of the applicable
ownership interest of the treasury portfolio constituting a part of those
Income PRIDES for United States federal, state and local income and
franchise tax purposes.
ORIGINAL ISSUE DISCOUNT. The treasury portfolio will consist of
stripped U.S. treasury securities. Following a tax event redemption prior
to the purchase contract settlement date, a U.S. holder of Income PRIDES
will be required to treat its pro rata portion of each U.S. treasury
security in the treasury portfolio as a bond that was originally issued on
the date the collateral agent acquired the relevant U.S. treasury security
and that has OID equal to the U.S. holder's pro rata portion of the excess
of the amounts payable on that U.S. treasury security over the value of the
U.S. treasury security at the time the collateral agent acquires them on
behalf of holders of Income PRIDES. A U.S. holder will be required to
include that OID in income on a daily economic basis over the life of the
U.S. treasury security. The aggregate amount of this excess will constitute
only a portion of the total amounts payable in respect of the treasury
portfolio. Consequently, a portion of each scheduled interest payment to
U.S. holders will be treated as a return of the U.S. holders' investment in
the treasury portfolio and will not be considered current income for United
States federal income tax purposes.
A U.S. holder, whether on the cash or accrual method of tax
accounting, will be required to include OID (other than OID on short-term
U.S. treasury securities as defined below) in income for United States
federal income tax purposes as it accrues on a constant yield to maturity
basis. See "-- Trust Preferred Securities-- Interest Income and Original
Issue Discount." In the case of any U.S. treasury security with a maturity
of one year or less from the date of its issue (as "short-term U.S.
treasury security"), in general only accrual basis taxpayers will be
required to include OID in income as it accrues. Unless an accrual basis
U.S. holder elects to accrue the OID on a short-term U.S. treasury security
according to the constant-yield-to-maturity method, such OID will be
accrued on a straight-line basis.
TAX BASIS OF THE TREASURY PORTFOLIO. A U.S. holder's initial tax
basis in its applicable ownership interest of the treasury portfolio will
equal the U.S. holder's pro rata portion of the amount paid by the
collateral agent for the treasury portfolio. A U.S. holder's adjusted tax
basis in the treasury portfolio will be increased by the amount of OID
included in income with respect to the treasury portfolio and decreased by
the amount of cash received in respect of the treasury portfolio.
PLAN OF DISTRIBUTION
We may sell the additional FELINE PRIDES offered in this prospectus
in any of, or any combination of, the following ways:
o directly to purchasers;
o through agents;
o through underwriters; or
o through dealers.
Offers to purchase may be solicited directly by us or by agents
designated by us from time to time. Any agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, involved
in the offer or sale of the additional FELINE PRIDES will be named, and any
commissions payable by us to that agent will be described in prospectus
supplement. Unless otherwise indicated, any agent will be acting on a best
efforts basis for the period of its appointment, which is usually five
business days or less.
If an underwriter or underwriters are utilized in the offer or sale
of the additional FELINE PRIDES, we will execute an underwriting agreement
with the underwriters at the time of their sale to the underwriters and the
names of the underwriters and the principal terms of our agreement with the
underwriters will be described in prospectus supplement.
If a dealer is utilized in the offer or sale of additional FELINE
PRIDES, we will sell the additional FELINE PRIDES to that dealer, as
principal. That dealer may then resell them to the public at varying prices
to be determined by that dealer at the time of resale. The name of the
dealer and the principal terms of our agreement with that dealer will be
described in the prospectus supplement.
Agents, underwriters, and dealers may be entitled under agreements
with us to indemnification by us against certain liabilities, including
liabilities under the Securities Act of 1933. Agents, dealers and
underwriters may also be customers of, engage in transactions with, or
perform services for us in the ordinary course of their business.
Underwriters, agents or their controlling persons may engage in
transactions with and perform services for us in the ordinary course of
business.
The place and time of delivery for the additional FELINE PRIDES will
be described in the prospectus supplement.
LEGAL OPINIONS
The validity of the purchase contracts, the common stock issuable
upon their settlement and the debentures will be passed upon for us by Eric
J. Bock, Esq., our Vice President-Legal, and Skadden, Arps, Slate, Meagher
& Flom LLP. Several matters of Delaware law with respect to the validity of
the trust preferred securities offered here will be passed upon for us and
for the trust by Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Bock owns
common stock and options to acquire shares of our common stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from our annual report on Form 10-K/A for the year ended
December 31, 1998 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, (which expresses an unqualified
opinion and includes explanatory paragraphs relating to certain litigation
as described in Note 18, and the change in the method of recognizing
revenue and membership solicitation costs as described in Note 2) which is
incorporated herein by reference, and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
The financial statements of PHH for the year ended December 31, 1996,
are consolidated with those of Cendant. The Cendant financial statements
which are incorporated by reference in this prospectus, have been
incorporated by reference in reliance upon the report of KPMG LLP,
independent auditors, incorporated herein by reference and upon the
authority of such firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
We make statements about our future results in this prospectus that
may constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are
based on our current expectations and the current economic environment. We
caution you that these statements are not guarantees of future performance.
They involve a number of risks and uncertainties that are difficult to
predict. Our actual results could differ materially from those expressed or
implied in the forward-looking statements. Important assumptions and other
important factors that could cause our actual results to differ materially
from those in the forward-looking statements, include, but are not limited
to:
o the resolution or outcome of the pending litigation and government
investigations relating to the previously announced accounting
irregularities;
o uncertainty as to our future profitability and our ability to
integrate and operate successfully acquired businesses and the risks
associated with such businesses, including the merger that created
Cendant and the NPC acquisition;
o our ability to successfully divest non-strategic assets and implement
our new Internet strategy;
o our ability to develop and implement operational and financial systems
to manage rapidly growing operations;
o competition in our existing and potential future lines of business;
o our ability to obtain financing on acceptable terms to finance our
growth strategy and for us to operate within the limitations imposed
by financing arrangements; and
o our ability and our vendors', franchisees' and customers' ability to
complete the necessary actions to achieve a year 2000 conversion for
computer systems and applications.
We derived the forward-looking statements in this prospectus,
including the documents incorporated by reference in this prospectus, from
the above factors and from other factors and assumptions, and the failure
of such assumptions to be realized as well as other factors may also cause
actual results to differ materially from those projected. We assume no
obligation to publicly correct or update these forward-looking statements
to reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements or if we later become
aware that they are not likely to be achieved.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Our filings with the commission are
available to the public over the Internet at the commission's web site at
http:www.sec.gov. You may also read and copy any document we file at the
commission at the public reference rooms of the commission in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the commission
at 1-800-SEC-0330 for further information on the public reference rooms.
The commission allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus and
information that we file later with the commission will automatically
update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the commission
under sections 13(a), 13(c), 14 or 15(d) of the Exchange until we sell all
of the securities.
o Annual Report on Form 10-K for the year ended December 31, 1998
o Annual Report on Form 10-K/A for the year ended December 31, 1998
o Current Report on Form 8-K dated April 22, 1999
o The description of our common stock contained in the registration
statements on Form 8-A dated July 27, 1984 and August 15, 1989
You may request a copy of these filings at no cost, by writing or
telephoning us at the following:
Investor Relations
Cendant Corporation
9 West 57th Street
New York, NY 10019
Telephone: (212) 413-1800
-------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. Neither we nor any underwriter has authorized
anyone to provide you with different information. Neither we nor any
underwriter is making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should not assume that the
information contained or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front cover of this
prospectus.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, THIS INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US,
THE TRUST OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR
ANY SALE MADE UNDER IT, SHALL UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN CHANGE IN OUR AFFAIRS OR THE AFFAIRS OF THE
TRUST SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH AN
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING THAT
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
Page
THE OFFERING - Q&A...........................................................1
RISK FACTORS................................................................12
THE COMPANY.................................................................20
THE TRUST...................................................................23
PRICE RANGE OF COMMON STOCK AND
DIVIDENDS................................................................24
ACCOUNTING TREATMENT........................................................25
USE OF PROCEEDS.............................................................26
EXECUTION OF THE LITIGATION SETTLEMENT......................................26
DESCRIPTION OF THE FELINE PRIDES............................................31
DESCRIPTION OF THE PURCHASE CONTRACTS.......................................38
PROVISIONS OF THE CONTRACT PURCHASE
AGREEMENT AND THE PLEDGE AGREEMENT.......................................49
DESCRIPTION OF THE TRUST PREFERRED
SECURITIES...............................................................52
DESCRIPTION OF THE GUARANTEE................................................66
DESCRIPTION OF THE DEBENTURES...............................................68
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE.............................................76
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES.............................................................77
PLAN OF DISTRIBUTION........................................................86
LEGAL OPINIONS..............................................................86
EXPERTS.....................................................................87
FORWARD-LOOKING STATEMENTS..................................................87
WHERE YOU CAN FIND MORE INFORMATION.........................................88
CENDANT CORPORATION
CENDANT CAPITAL II
NEW FELINE PRIDES(SM)
4,000,000
ADDITIONAL FELINE PRIDES(SM)
6.45% TRUST ORIGINATED
PREFERRED SECURITIES
(TOPRSSM)
PROSPECTUS
1999
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission Registration Fee.........$343,338
*Trustee's Expenses..........................................$10,000
*Accounting Fees and Expenses...............................$100,000
*Legal Fees and Expenses....................................$100,000
*Miscellaneous..............................................$200,000
Total Expenses $753,338
- ---------------
* Estimated for purposes of completing the information required
pursuant to this Item 14.
The Company will pay all fees and expenses associated with filing the
Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation)
by reason of the fact that such person is or was a director, officer,
employee or agent of such corporation or is or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding, provided
that such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interest of the corporation
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe such person's conduct was unlawful. A Delaware corporation
may indemnify directors, officers, employees and other agents of such
corporation in an action by or in the right of a corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the person to be indemnified has been adjudged to be liable to
the corporation. Where a director, officer, employee or agent of the
corporation is successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, the corporation must indemnify such person against
the expenses (including attorneys' fees) which he or she actually and
reasonably incurred in connection therewith.
The Registrant's By-Laws contain provisions that provide for
indemnification of officers and directors and their heirs and distributees
to full extent permitted by, and in the manner permissible under, the
General Corporation Law of the State of Delaware.
As permitted by Section 102(b)(7) of the General Corporation Law of
the State of Delaware, registrant's Amended and Restated Certificate of
Incorporation contains a provision eliminating the personal liability of a
director to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director, subject to certain exceptions.
The Company maintains, at its expense, a policy of insurance which
insures its directors and officers, subject to certain exclusions and
deductions as are usual in such insurance policies, against certain
liabilities which may be incurred in those capacities.
Article IV of the Declaration of Trust for the Trust limits the
liability to the Trust and certain other persons and provides for the
indemnification by the Trust or the Company of Trustees, the Officers,
other employees and certain other persons.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT NO. DESCRIPTION PAGE NO.
1.1 Form of Underwriting Agreement (Standard
Provisions) for Debt Securities.
(Incorporated by reference to Exhibit 1.1
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.2 Form of Underwriting Agreement (Standard
Provisions) for Common Stock.
(Incorporated by reference to Exhibit 1.2
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.3 Form of Underwriting Agreement (Standard
Provisions) for Preferred Stock.
(Incorporated by reference to Exhibit 1.3
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.4 Forms of Underwriting Agreement for
Offering of Preferred Securities, Stock
Purchase Units, Stock Purchase Contracts,
Guarantees and Warrants. (To be filed
under subsequent Form 8-K, which is
incorporated herein by reference)
3.1 Amended and Restated Certificate of
Incorporation of the Registrant
(incorporated by reference to Appendix B
to the Joint Proxy Statement/Prospectus
included as part of the Registration
Statement on Form S-4 of the Registrant,
Registration No. 333-34517).
3.2 Amended and Restated By-Laws of the
Registrant (incorporated by reference to
Appendix C of the Registrant's Proxy
Statement/Prospectus included as part of
the Registration Statement of the
Registrant, Registration No. 333-34517).
4.1 Form of Certificate for the Company's
Common Stock, par value $.01 per share.
(Incorporated by reference to Exhibit 4.1
to the Company's Form S-3 Registration
Statement No. 333-45227)
4.2 Form of Senior Indenture to be entered
into by the Company and The Bank of Nova
Scotia Trust Company of New York, as
Trustee. (Incorporated by reference to
Exhibit 4.2 to the Company's Form S-3
Registration Statement No. 333-45227)
4.3 Form of Subordinated Indenture to be
entered into by the Company and The Bank
of Nova Scotia Trust Company of New York,
as Trustee. (Incorporated by reference to
Exhibit 4.3 to the Company's Form S-3
Registration Statement No. 333-45227)
4.4 Certificate of Trust of Cendant Capital
II. (Incorporated by reference to Exhibit
4.5 to the Company's Form S-3 Registration
Statement No. 333-45227)
4.5 Declaration of Trust of Cendant Capital
II. (Incorporated by reference to Exhibit
4.8 to the Company's Form S-3 Registration
Statement No. 333-45227)
4.6 Form of Amended and Restated Declaration
of Trust of Cendant Capital II.
4.7 Form of Preferred Securities Guarantee
Agreement by Cendant Corporation with
respect to Cendant Capital II.
4.8 Form of Purchase Contract Agreement
between Cendant Corporation and The First
National Bank of Chicago, as Purchase
Contract Agent.
4.9 Form of Pledge Agreement among Cendant
Corporation, The Chase Manhattan Bank, as
Collateral Agent, and The First National
Bank of Chicago, as Purchase Contract
Agent.
4.10 Form of Second Supplemental Indenture
among Cendant Corporation and the Bank of
Nova Scotia Trust Company of New York as
Indenture Trustee.
4.11 Form of Senior Debenture (included as part
of Exhibit 4.10).
4.12 Form of Preferred Security Certificate
(included as part of Exhibit 4.6).
4.13 Form of Income PRIDES certificate
(included as part of Exhibit 4.8).
4.14 Form of Growth PRIDES certificate
(included as part of Exhibit 4.8).
5.1 Opinion of Eric J. Bock, Esq. regarding
the legality of the Securities being
registered by the Company hereby.**
5.2 Opinion of Skadden, Arps, Slate, Meagher &
Flom LLP regarding the legality of the
Securities being registered by the Cendant
Trusts hereby.**
12.1 Statement re: Computation of Consolidated
Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP related
to the financial statements of Cendant
Corporation.*
23.2 Consent of KPMG LLP related to the
financial statements of PHH Corporation.*
24.1 Power of Attorney.*
25.1 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of The
Bank of Nova Scotia Trust Company of New
York, as Trustee for the Debentures.**
25.2 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of
Wilmington Trust Company, as Trustee under
the Declaration of Trust of Cendant
Capital II.**
25.3 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of
Wilmington Trust Company, as Trustee under
the Preferred Securities Guarantee of
Cendant Capital II.**
* Previously filed.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The Undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement, to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of each such Registrant's annual report pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof;
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrants of expenses incurred or
paid by a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, such Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(i) The undersigned Registrants hereby undertake that:
(1) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Cendant
Corporation certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement, to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
July 12, 1999.
CENDANT CORPORATION
By: /s/ James E. Buckman
---------------------------
James E. Buckman
Vice Chairman
General Counsel and Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
*
/s/ Eric J. Bock
--------------------- Chairman of the Board, July 12, 1999
(Henry R. Silverman) President,
Chief Executive
Officer and
Director
*
/s/ Eric J. Bock
--------------------- Vice Chairman, July 12, 1999
(James E. Buckman) General Counsel and
Director
*
/s/ Eric J. Bock
--------------------- Vice Chairman and Director July 12, 1999
(Stephen P. Holmes)
*
/s/ Eric J. Bock
--------------------- Vice Chairman and Director July 12, 1999
(Robert D. Kunisch)
*
/s/ Eric J. Bock
--------------------- Vice Chairman and Director July 12, 1999
(Michael P. Monaco)
*
/s/ Eric J. Bock Senior Executive Vice July 12, 1999
--------------------- President and
(David M. Johnson) Chief Financial Officer
(Principal Financial
Officer)
*
/s/ Eric J. Bock Senior Vice President and July 12, 1999
--------------------- Corporate Controller
(Tobia Ippolito) (Principal Accounting
Officer)
*
/s/ Eric J. Bock Director July 12, 1999
---------------------
(John D. Snodgrass)
*
/s/ Eric J. Bock Director July 12, 1999
---------------------
(Leonard S. Coleman)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Martin L. Edelman)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Dr. Carole G. Hankin)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(The Rt. Hon. Brian Mulroney,
P.C., LL.D.)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Robert W. Pittman)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Leonard Schutzman)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Robert F. Smith)
*
/s/ Eric J. Bock
--------------------- Director July 12, 1999
(Robert E. Nederlander)
*By: /s/ Eric J. Bock
---------------------
(Eric J. Bock)
attorney-in-fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Cendant
Capital II certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and that it has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of
New York on July 12, 1999.
CENDANT CAPITAL II
By: /s/ Michael P. Monaco
--------------------------------
Michael P. Monaco,
Trustee
By: /s/ James E. Buckman
--------------------------------
James E. Buckman,
Trustee
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
1.1 Form of Underwriting Agreement (Standard
Provisions) for Debt Securities.
(Incorporated by reference to Exhibit 1.1
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.2 Form of Underwriting Agreement (Standard
Provisions) for Common Stock.
(Incorporated by reference to Exhibit 1.2
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.3 Form of Underwriting Agreement (Standard
Provisions) for Preferred Stock.
(Incorporated by reference to Exhibit 1.3
to the Company's Form S-3 Registration
Statement No. 333-45227)
1.4 Forms of Underwriting Agreement for
Offering of Preferred Securities, Stock
Purchase Units, Stock Purchase Contracts,
Guarantees and Warrants. (To be filed
under subsequent Form 8-K, which is
incorporated herein by reference)
3.1 Amended and Restated Certificate of
Incorporation of the Registrant
(incorporated by reference to Appendix B
to the Joint Proxy Statement/Prospectus
included as part of the Registration
Statement on Form S-4 of the Registrant,
Registration No. 333-34517).
3.2 Amended and Restated By-Laws of the
Registrant (incorporated by reference to
Appendix C of the Registrant's Proxy
Statement/Prospectus included as part of
the Registration Statement of the
Registrant, Registration No. 333-34517).
4.1 Form of Certificate for the Company's
Common Stock, par value $.01 per share.
(Incorporated by reference to Exhibit 4.1
to the Company's Form S-3 Registration
Statement No. 333-45227)
4.2 Form of Senior Indenture to be entered
into by the Company and The Bank of Nova
Scotia Trust Company of New York, as
Trustee. (Incorporated by reference to
Exhibit 4.2 to the Company's Form S-3
Registration Statement No. 333-45227)
4.3 Form of Subordinated Indenture to be
entered into by the Company and The Bank
of Nova Scotia Trust Company of New York,
as Trustee. (Incorporated by reference to
Exhibit 4.3 to the Company's Form S-3
Registration Statement No. 333-45227)
4.4 Certificate of Trust of Cendant Capital
II. (Incorporated by reference to Exhibit
4.5 to the Company's Form S-3 Registration
Statement No. 333-45227)
4.5 Declaration of Trust of Cendant Capital
II. (Incorporated by reference to Exhibit
4.8 to the Company's Form S-3 Registration
Statement No. 333-45227)
4.6 Form of Amended and Restated Declaration
of Trust of Cendant Capital II.
4.7 Form of Preferred Securities Guarantee
Agreement by Cendant Corporation with
respect to Cendant Capital II.
4.8 Form of Purchase Contract Agreement
between Cendant Corporation and The First
National Bank of Chicago, as Purchase
Contract Agent.
4.9 Form of Pledge Agreement among Cendant
Corporation, The Chase Manhattan Bank, as
Collateral Agent, and The First National
Bank of Chicago, as Purchase Contract
Agent.
4.10 Form of Second Supplemental Indenture
among Cendant Corporation and the Bank of
Nova Scotia Trust Company of New York as
Indenture Trustee.
4.11 Form of Senior Debenture (included as part
of Exhibit 4.10).
4.12 Form of Preferred Security Certificate
(included as part of Exhibit 4.6).
4.13 Form of Income PRIDES certificate
(included as part of Exhibit 4.8).
4.14 Form of Growth PRIDES certificate
(included as part of Exhibit 4.8).
5.1 Opinion of Eric J. Bock, Esq. regarding
the legality of the Securities being
registered by the Company hereby.**
5.2 Opinion of Skadden, Arps, Slate, Meagher &
Flom LLP regarding the legality of the
Securities being registered by the Cendant
Trusts hereby.**
12.1 Statement re: Computation of Consolidated
Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP related
to the financial statements of Cendant
Corporation.*
23.2 Consent of KPMG LLP related to the
financial statements of PHH Corporation.*
24.1 Power of Attorney.*
25.1 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of The
Bank of Nova Scotia Trust Company of New
York, as Trustee for the Debentures.**
25.2 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of
Wilmington Trust Company, as Trustee under
the Declaration of Trust of Cendant
Capital II.**
25.3 Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of
Wilmington Trust Company, as Trustee under
the Preferred Securities Guarantee of
Cendant Capital II.**
* Previously filed.
** To be filed by amendment.
Exhibit 4.6
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
Cendant Capital II
Dated as of [ ]
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS..........................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.....................9
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.......................9
SECTION 2.3 REPORTS BY THE INSTITUTIONAL TRUSTEE................10
SECTION 2.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE...........10
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH
CONDITIONS PRECEDENT................................10
SECTION 2.6 EVENTS OF DEFAULT; WAIVER...........................10
SECTION 2.7 EVENT OF DEFAULT; NOTICE............................12
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME................................................12
SECTION 3.2 OFFICE..............................................12
SECTION 3.3 PURPOSE.............................................12
SECTION 3.4 AUTHORITY...........................................13
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST......................13
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES...........13
SECTION 3.7 PROHIBITION OF ACTIONS BY
THE TRUST AND THE TRUSTEES..........................16
SECTION 3.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE......16
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES
OF THE INSTITUTIONAL TRUSTEE........................18
SECTION 3.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE.............20
SECTION 3.11 DELAWARE TRUSTEE....................................22
SECTION 3.12 EXECUTION OF DOCUMENTS..............................22
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS
OR ISSUANCE OF SECURITIES...........................22
SECTION 3.14 DURATION OF TRUST...................................22
SECTION 3.15 MERGERS.............................................22
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.............24
SECTION 4.2 RIGHTS AND RESPONSIBILITIES OF THE SPONSOR..........24
SECTION 4.3 RIGHT TO PROCEED....................................24
SECTION 4.4 EXPENSES............................................25
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES..................................25
SECTION 5.2 DELAWARE TRUSTEE....................................26
SECTION 5.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY..................26
SECTION 5.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND
DELAWARE TRUSTEE GENERALLY..........................27
SECTION 5.5 REGULAR TRUSTEES....................................27
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES....28
SECTION 5.7 VACANCIES AMONG TRUSTEES............................29
SECTION 5.8 EFFECT OF VACANCIES.................................29
SECTION 5.9 MEETINGS............................................29
SECTION 5.10 DELEGATION OF POWER.................................30
SECTION 5.11 MERGER, CONVERSION. CONSOLIDATION OR SUCCESSION
TO BUSINESS.........................................30
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.......................................30
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDINGSECURITIES..............31
SECTION 7.2 PAYINGAGENT.........................................31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OFTRUST.................................32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OFSECURITIES...............................33
SECTION 9.2 TRANSFER OFCERTIFICATES.............................33
SECTION 9.3 DEEMED SECURITYHOLDERS..............................33
SECTION 9.4 BOOK ENTRYINTERESTS.................................34
SECTION 9.5 NOTICES TO CLEARINGAGENCY...........................34
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARINGAGENCY.............35
SECTION 9.7 DEFINITIVE PREFERRED SECURITYCERTIFICATES...........35
SECTION 9.8 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES...35
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY...........................................36
SECTION 10.2 EXCULPATION.........................................36
SECTION 10.3 FIDUCIARY DUTY......................................37
SECTION 10.4 INDEMNIFICATION.....................................37
SECTION 10.5 OUTSIDE BUSINESSES..................................40
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.........................................40
SECTION 11.2 CERTAIN ACCOUNTING MATTERS..........................40
SECTION 11.3 BANKING.............................................41
SECTION 11.4 WITHHOLDING.........................................41
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS..........................................41
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT.....................................43
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL
TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL
TRUSTEE.............................................44
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE
TRUSTEE.............................................45
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.............................................46
SECTION 14.2 GOVERNING LAW.......................................47
SECTION 14.3 INTENTION OF THE PARTIES...........................47
SECTION 14.4 HEADINGS............................................47
SECTION 14.5 SUCCESSORS AND ASSIGNS..............................47
SECTION 14.6 PARTIAL ENFORCEABILITY..............................47
SECTION 14.7 COUNTERPARTS........................................47
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CENDANT CAPITAL II
[ DATE ]
AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration")
dated and effective as of [ ] by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the Holders (as defined herein), from
time to time, of the securities representing undivided beneficial interests
in the assets of the Trust to be issued pursuant to this Declaration;
WHEREAS,[ ] (the "Original Delaware Trustee"), [ ], as
trustees, and the Sponsor established Cendant Capital II (the "Trust"), a
trust under the Business Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of [DATE] (the "Original Declaration") and a
Certificate of Trust filed with the Secretary of State of the State of
Delaware on [DATE] for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will
be held in trust for the benefit of the Trust and Holders, from time to
time, of the securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions of this
Declaration.
ARTICLE II
INTERPRETATION AND DEFINITIONS
SECTION 2.1 DEFINITIONS
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Applicable Ownership Interest" has the meaning set forth
in Annex I hereto.
"Applicable Principal Amount" has the meaning set forth
in Annex I hereto.
"Authorized Newspaper" means a daily newspaper, in the
English language, customarily published on each day that is a Business Day
in The City of New York, whether or not published on days that are Legal
Holidays, and of general circulation in The City of New York. The
Authorized Newspaper for the Purposes of the Reset Spread Announcement
Date, is currently anticipated to be The Wall Street Journal.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described in Section
9.4.
"Business Day" means any day other than Saturday, Sunday
or any day on which banking institutions in New York City, in the State of
New York, are permitted or required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is
acting as depositary for the Preferred Securities and in whose name or in
the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and
pledges of the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to
time the Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation.
"Commission" means the Securities and Exchange
Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee
agreement to be dated as of [ ] of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive
certificate in fully registered form representing a Common Security
substantially in the form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular
Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or
agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
"Corporate Trust Office" means the office of the
Institutional Trustee at which the corporate trust business of the
Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is
located at
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Cendant Corporation, a Delaware
corporation, in its capacity as issuer of the Debentures under the
Indenture.
"Debenture Trustee" means [ ], as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of ____% Subordinated
Debentures to be issued by the Debenture Issuer under the Indenture, a
specimen certificate for such series of Debentures being Exhibit B.
"Debenture Repayment Price" means, with respect to any
Debentures put to the Sponsor on [ ], an amount per Debenture equal to
$[ ], plus accumulated and unpaid interest (including deferred interest, if
any).
"Definitive Preferred Security Certificates" has the
meaning set forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section
5.2.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person;
or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Direct Action" has the meaning specified in Section
3.8(e).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Event of Default" in respect of the Securities means an
Event of Default (as defined in the Indenture) has occurred and is
continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor legislation.
"Failed Remarketing" has the meaning specified in Section
5.4(b) of the Purchase Contract Agreement.
"Fiduciary Indemnified Person" has the meaning set forth
in Section 10.4(b).
"Global Certificate" has the meaning set forth in Section
9.4.
"Holder" or "holder" means a Person in whose name a
Certificate representing a Security is registered, such Person being a
beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of [DATE], among
the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth
in Section 3.8(c).
"Investment Company" means an investment company as
defined in the Investment Company Act.
"Investment Company Act" means the Investment Company Act
of 1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in
Annex I hereto.
"Legal Action" has the meaning set forth in Section
3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms and conditions of the Preferred Securities
set forth in Annex I hereto or by the Trust Indenture Act, Holder(s) of
outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation
or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) of all outstanding Securities of the
relevant class.
"Ministerial Action" has the meaning set forth in the
terms of the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by two Authorized Officers of such Person. Any
Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Declaration shall include:
(a) a statement that the officers signing the Officers'
Certificate have read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by the officer in rendering the Officers'
Certificate;
(c) a statement that such officers have made such examination or
investigation as, in such officers' opinion, is necessary to enable such
officers to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officers,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Pledge Agreement" means the Pledge Agreement dated as of
[ ] among the Sponsor, [ ], as collateral agent (the "Collateral Agent"),
and Wilmington Trust Company, as purchase contract agent (the "Purchase
Contract Agent").
"Preferred Securities Guarantee" means the guarantee
agreement to be dated as of [DATE] of the Sponsor in respect of the
Preferred Securities.
"Preferred Security" has the meaning specified in Section
7.1.
"Preferred Security Beneficial Owner" means, with respect
to a Book Entry Interest, a Person who is the beneficial owner of such Book
Entry Interest, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Pricing Agreement" means the pricing agreement between
the Trust, the Debenture Issuer, and the underwriters designated by the
Regular Trustees with respect to the offer and sale of the Preferred
Securities.
"Primary Treasury Dealer" has the meaning set forth in
Annex I hereto.
"Purchase Contract Agreement" means the Purchase Contract
Agreement dated as of [ ] among Wilmington Trust Company, as Purchase
Contract Agent, and the Sponsor.
"Purchase Contract Settlement Date" means [ ].
"Put Option" has the meaning set forth in Annex I hereto.
"Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both of them.
"Quotation Agent" has the meaning set forth in Annex I
hereto.
"Redemption Amount" has the meaning set forth in Annex I
hereto.
"Redemption Price" has the meaning set forth in Annex I
hereto.
"Regular Trustee" has the meaning set forth in Section
5.1.
"Related Party" means, with respect to the Sponsor, any
direct or indirect wholly owned subsidiary of the Sponsor or any other
Person that owns, directly or indirectly, 100% of the outstanding voting
securities of the Sponsor.
"Reset Agent" means a nationally recognized investment
banking firm chosen by the Sponsor to determine the Reset Rate. It is
currently anticipated that Merrill Lynch & Co. will act in such capacity.
"Reset Announcement Date" means the tenth (10) Business
Day immediately preceding the Purchase Contract Settlement Date.
"Reset Rate" means the distribution rate per annum (to be
determined by the Reset Agent), equal to the sum of (X) the Reset Spread
and (Y) the rate of interest on the Two-Year Benchmark Treasury in effect
on the third Business Day immediately preceding Purchase Contract
Settlement Date, that the Preferred Securities should bear in order for the
Preferred Securities to have an approximate market value of [ %] of their
aggregate liquidation amount on the third Business Day immediately
preceding the Purchase Contract Settlement Date; provided, that the Sponsor
may limit such Reset Spread to be no higher than [ ] basis points [ %].
"Reset Spread" means a spread amount to be determined by
the Reset Agent on the tenth (10) Business Day immediately preceding the
Purchase Contract Settlement Date.
"Responsible Officer" means, with respect to the
Institutional Trustee, any officer within the Corporate Trust Office of the
Institutional Trustee, including, without limitation, any vice-president,
any assistant vice-president, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Institutional Trustee assigned by the Institutional Trustee to administer
its corporate trust matters and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company
Act.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Guarantees" means the Common Securities
Guarantee and the Preferred Securities Guarantee.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Sponsor" means Cendant Corporation, a Delaware
corporation, or any successor entity in a merger or consolidation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"Tax Event Redemption" has the meaning set forth in Annex
I hereto.
"Tax Event Redemption Date" has the meaning set forth in
Annex I hereto.
" [ ]% in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holders of outstanding
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of [ ]% or more of the
aggregate liquidation amount (including the stated amount that would be
paid on repayment, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Securities of the relevant class.
"Termination Event" has the meaning set forth in Section
1 of the Purchase Contract Agreement.
"Treasury Portfolio" has the meaning set forth in Annex I
hereto.
"Treasury Portfolio Purchase Price" has the meaning set
forth in Annex I hereto.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by
the United States Treasury, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"Treasury Securities" has the meaning set forth in
Section 1 of the Purchase Contract Agreement.
"Trustee" or "Trustees" means each Person who has signed
this Declaration as a trustee, so long as such Person shall continue in
office in accordance with the terms hereof, and all other Persons who may
from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee
or the Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended from time to time, or any successor legislation.
"Two-Year Benchmark Treasury" means direct obligations of
the United States (which may be obligations traded on a when-issued basis
only) having a maturity comparable to the remaining term to maturity of the
Preferred Securities, as agreed upon by the Sponsor and the Reset Agent.
The rate for the Two-Year Benchmark Treasury will be the bid side rate
displayed at 10:00 A.M., New York City time, on the third Business Day
immediately preceding the Purchase Contract Settlement Date in the Telerate
system (or if the Telerate system is (a) no longer available on the third
Business Day immediately preceding the Purchase Contract Settlement Date or
(b) in the opinion of the Reset Agent (after consultation with the Sponsor)
no longer an appropriate system from which to obtain such rate, such other
nationally recognized quotation system as, in the opinion of the Reset
Agent (after consultation with the Sponsor) is appropriate). If such rate
is not so displayed, the rate for the Two-Year Benchmark Treasury shall be,
as calculated by the Reset Agent, the yield to maturity for the Two-Year
Benchmark Treasury, expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis, and
computed by taking the arithmetic mean of the secondary market bid rates,
as of 10:30 A.M., New York City time, on the third Business Day immediately
preceding the Purchase Contract Settlement Date of three leading United
States government securities dealers selected by the Reset Agent (after
consultation with the Sponsor) (which may include the Reset Agent or an
Affiliate thereof).
"Underwriting Agreement" means the Underwriting Agreement
for the offering and sale of Preferred Securities.
ARTICLE III
TRUST INDENTURE ACT
SECTION 3.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) Any application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 3.2 LISTS OF HOLDERS OF SECURITIES.
(b) Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide the Institutional Trustee (i) within 14 days after
each record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees, on behalf of
the Trust, shall be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees
on behalf of the Trust, and (ii) at any other time, within 30 days of
receipt by the Trust of a written request by the Institutional Trustee for
a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in the Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity),
provided that the Institutional Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(d) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 310(b) and 312(b) of the Trust Indenture Act.
SECTION 3.3 REPORTS BY THE INSTITUTIONAL TRUSTEE.
Within 60 days after [ ] of each year, commencing [ ], the
Institutional Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by ss.313 of the Trust Indenture
Act, if any, in the form and in the manner provided by ss.313 of the Trust
Indenture Act. The Institutional Trustee shall also comply with the
requirements of ss.313(d) of the Trust Indenture Act.
SECTION 3.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such documents, reports
and information as required by ss.314 (if any) and the compliance
certificate required by ss.314 of the Trust Indenture Act in the form, in
the manner and at the times required by ss.314 of the Trust Indenture Act.
SECTION 3.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Declaration that relate to any of the matters set forth in ss. 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to ss. 314(c) (1) may be given in the form of an
Officers' Certificate.
SECTION 3.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under this Declaration may only be waived by the vote of
the Holders of at least the proportion in liquidation amount of
the Preferred Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a) (1)(B) of the Trust Indenture Act and such ss. 316(a) (1) (B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Preferred Securities, as permitted by the Trust Indenture Act. Upon
such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or an Event of
Default with respect to the Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Preferred Securities
of an Event of Default with respect to the Preferred Securities shall also
be deemed to constitute a waiver by the Holders of the Common Securities of
any such Event of Default with respect to the Common Securities for all
purposes of this Declaration without any further act, vote, or consent of
the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived
such Event of Default under this Declaration as provided below in
this Section 2.6(b), the Event of Default under this Declaration
shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under this
Declaration as provided below in this Section 2.6(b), the Event
of Default under this Declaration may only be waived by the vote
of the Holders of at least the proportion in liquidation amount
of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to
the Common Securities and its consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the Holders of the Preferred Securities and only the
Holders of the Preferred Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this
Section 2.6(b), upon such waiver, any such default shall cease to exist and
any Event of Default with respect to the Common Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other
default or Event of Default with respect to the Common Securities or impair
any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event of Default with
respect to the Preferred Securities under this Declaration. Any waiver of
an Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Preferred Securities shall also be deemed
to constitute a waiver by the Holders of the Common Securities of the
corresponding Event of Default under this Declaration with respect to the
Common Securities for all purposes of this Declaration without further act,
vote or consent of the Holders of the Common Securities. The foregoing
provisions of this Section 2.6(c) shall be in lieu of ss. 316(a)(1)(B) of
the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust Indenture
Act is hereby expressly excluded from this Declaration and the Securities,
as permitted by the Trust Indenture Act.
SECTION 3.7 EVENT OF DEFAULT; NOTICE.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, actually known to a Responsible Officer
of the Institutional Trustee, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all such defaults
with respect to the Securities, unless such defaults have been cured before
the giving of such notice (the term "defaults" for the purposes of this
Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Institutional Trustee shall be
protected in withholding such notice if and so long as a Responsible
Officer of the Institutional Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.1 and 5.3 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible
Officer of the Institutional Trustee charged with the
administration of this Declaration shall have actual knowledge.
ARTICLE V
ORGANIZATION
SECTION 5.1 NAME.
The Trust is named "Cendant Capital II," as such name may be
modified from time to time by the Regular Trustees following written notice
to the Holders of the Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 5.2 OFFICE.
The address of the principal office of the Trust is c/o Cendant
Corporation, 9 West 57th Street, New York, New York 10019. On ten Business
Days written notice to the Institutional Trustee and Holders of the
Securities, the Regular Trustees may designate another principal office.
SECTION 5.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue
and sell the Securities and use the gross proceeds from such sale to
acquire the Debentures, and (b) except as otherwise set forth herein, to
engage in only those other activities necessary, appropriate, convenient or
incidental thereto. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would
cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust. It is the intent of the parties to this
Declaration for the Trust to be classified as a grantor trust for United
States federal income tax purposes under Subpart E of Subchapter J of the
Code, pursuant to which the owners of the Preferred Securities and the
Common Securities will be the owners of the Trust for United States federal
income tax purposes, and such owners will include directly in their gross
income the income, gain, deduction or loss of the Trust as if the Trust did
not exist. By the acceptance of this Trust neither the Trustees, the
Sponsor nor the Holders of the Preferred Securities or Common Securities
will take any position for United States federal income tax purposes which
is contrary to the classification of the Trust as a grantor trust.
SECTION 5.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the
Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an
action taken by the Institutional Trustee on behalf of the Trust in
accordance with its powers shall constitute the act of and serve to bind
the Trust. In dealing with the Trustees acting on behalf of the Trust, no
Person shall be required to inquire into the authority of the Trustees to
bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in
this Declaration.
SECTION 5.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures
and the Institutional Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. A Holder shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 5.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that there
shall be no interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to a simultaneous issuance of both
Preferred Securities and Common Securities on each Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement and the prospectus relating to the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments or supplements, thereto, pertaining to
the Preferred Securities and any other securities of the Sponsor
which the Sponsor may desire to include in such registration
statement;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary in order to qualify or register all or part of the
Preferred Securities in any state in which the Sponsor has
determined to qualify or register such Preferred Securities for
sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor, relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act; and
(v) execute and enter into the Underwriting Agreement
and Pricing Agreement providing for the sale of the Preferred
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of
record in the name of the Institutional Trustee for the benefit of the
Trust and the Holders of the Preferred Securities and the Holders of Common
Securities;
(d) to give the Sponsor and the Institutional Trustee prompt
written notice of the occurrence of a Tax Event or an Investment Company
Event; provided that the Regular Trustees shall consult with the Sponsor
before taking or refraining from taking any Ministerial Action in relation
to a Tax Event or Investment Company Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, repayments, redemptions and exchanges, and to
issue relevant notices to the Holders of Preferred Securities and Holders
of Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities and this
Declaration;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against
the Trust ("Legal Action"), unless pursuant to Section 3.8(e) the
Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate, convenient
or incidental to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Debenture as authorized by the Indenture, or (ii) to
extend the maturity date of the Debentures if so authorized by the
Indenture, provided that any such extension of the maturity date will not
adversely affect the Federal income tax status of the Trust;
(n) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the
laws of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure
that the Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes,
provided that such action relating to this clause (iii) does not
adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Regular Trustees,
on behalf of the Trust;
(q) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary, appropriate, convenient or incidental to the foregoing; and
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none
of the powers or the authority of the Institutional Trustee set forth in
Section 3.8. No permissive power or authority available to the Regular
Trustees shall be construed to be a duty.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Sponsor.
SECTION 5.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall cause the Trust not to, engage in any activity
other than as required or authorized by this Declaration. In particular,
the Trust shall not and the Trustees (including the Institutional Trustee)
shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration
and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness for
borrowed money, other than loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any
way whatsoever (except to the extent expressly authorized in this
Declaration or by the terms of the Securities);
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust
other than the Securities; or
(vii) other than as provided in this Declaration or
Annex I,
(A) direct the time, method and place of exercising any trust or
power
conferred upon the Debenture Trustee with respect to the
Debentures,
(B) waive any past default that is waivable under the Indenture,
(C)
exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the
Indenture
or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk
that
for United States federal income tax purposes the Trust will not
be
classified as a grantor trust.
SECTION 5.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Institutional Trustee in trust for the benefit
of the Trust and the Holders of the Securities. The right, title and
interest of the Institutional Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as
Institutional Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in
the name of and under the exclusive control of the Institutional
Trustee on behalf of the Trust and the Holders of the Securities
and, upon the receipt of payments of funds made in respect of the
Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the
Holders of the Preferred Securities and Holders of the Common
Securities from the Institutional Trustee Account in accordance
with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration. The Institutional Trustee Account shall be an
account that is maintained with a banking institution the rating
on whose long-term unsecured indebtedness is rated at least "A"
or above by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary, appropriate, convenient or incidental to effect the
repayment of the Preferred Securities and the Common Securities
to the extent the Debentures mature or are redeemed or the Put
Option is exercised; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary,
appropriate, convenient or incidental to effect the distribution
of the Debentures to Holders of Securities upon the occurrence of
certain special events (as may be defined in the terms of the
Securities) arising from a change in law or a change in legal
interpretation or other specified circumstances pursuant to the
terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities and this Declaration.
(e) The Institutional Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration,
the Business Trust Act or the Trust Indenture Act; provided, however, that
if the Institutional Trustee fails to enforce its rights under the
Debentures after a Holder of Preferred Securities has made a written
request, such Holder of Preferred Securities may, to the fullest extent
permitted by applicable law, institute a legal proceeding against the
Debenture Issuer without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay
interest on or principal of the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in
the Debentures. In connection with such Direct Action, the rights of the
Holders of Common Securities will be subrogated to the rights of such
Holders of Preferred Securities. In connection with such Direct Action, the
Debenture Issuer shall be subrogated to the rights of such Holder of
Preferred Securities with respect to payments on the Preferred Securities
under this Declaration to the extent of any payment made by the Debenture
Issuer to such Holder of Preferred Securities in such Direct Action. Except
as provided in the preceding sentences, the Holders of Preferred Securities
will not be able to exercise directly any other remedy available to the
Holders of the Debentures.
(f) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of
Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with
Section 5.6.
(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing,
the Institutional Trustee shall, for the benefit of Holders of the
Securities, enforce its rights as holder of the Debentures subject to the
rights of the Holders pursuant to the terms of such Securities and this
Declaration.
(h) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the
Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional
Trustee shall not take any action that is inconsistent with the purposes
and functions of the Trust set out in Section 3.3.
SECTION 5.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE.
(a) The Institutional Trustee, before the occurrence of any Event
of Default and after the curing or waiver of all Events of Default that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Institutional Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant
to Section 2.6) of which a Responsible Officer of the Institutional Trustee
has actual knowledge, the Institutional Trustee shall exercise such of the
rights and powers vested in it by this Declaration, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the
Institutional Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into
this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part
of the Institutional Trustee, the Institutional Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming
to the requirements of this Declaration; but in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer
of the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Securities relating
to the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee, or exercising
any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
the repayment of such funds or liability is not reasonably
assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such
risk or liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of the
Debentures and the Institutional Trustee Account shall be to deal
with such property in a similar manner as the Institutional
Trustee deals with similar property for its fiduciary accounts
generally, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this
Declaration, the Business Trust Act and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may
otherwise agree with the Sponsor. Money held by the Institutional
Trustee need not be segregated from other funds held by it except
in relation to the Institutional Trustee Account maintained by
the Institutional Trustee pursuant to Section 3.8(c)(i) and
except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be
responsible for monitoring the compliance by the Regular Trustees
or the Sponsor with their respective duties under this
Declaration, nor shall the Institutional Trustee be liable for
any default or misconduct of the Regular Trustees or the Sponsor.
SECTION 5.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officer's Certificate;
(iii) whenever in the administration of this
Declaration, the Institutional Trustee shall deem it desirable
that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Institutional Trustee
(unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively
rely upon an Officer's Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the
Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see
to any recording, filing or registration of any instrument
(including any financing or continuation statement or any filing
under tax or securities laws) or any rerecording, refiling or
registration thereof;
(v) the Institutional Trustee may consult with counsel
or other experts and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope
of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include
any of its employees. The Institutional Trustee shall have the
right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(vi) the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional
Trustee security and indemnity, reasonably satisfactory to the
Institutional Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may
be requested by the Institutional Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve
the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document, but the Institutional Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or
attorneys and the Institutional Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any
such action and no third party shall be required to inquire as to
the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the
Institutional Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration
the Institutional Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i)
may request instructions from the Holders of the Securities which
instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be
entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii)
may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii)
shall be protected in conclusively relying on or acting in or
accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts, or to exercise any
such right, power, duty or obligation. No permissive power or authority
available to the Institutional Trustee shall be construed to be a duty.
SECTION 5.11 DELAWARE TRUSTEE.
[TO COME]
SECTION 5.12 EXECUTION OF DOCUMENTS.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there
are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that
the Regular Trustees have the power and authority to execute pursuant to
Section 3.6; provided that, the registration statement referred to in
Section 3.6(b)(i), including any amendments thereto, shall be signed by all
of the Regular Trustees.
SECTION 5.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration shall be taken as the
statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration or the Securities.
SECTION 5.14 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall dissolve on [ ].
SECTION 5.15 MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that if the Trust is not the surviving entity:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Securities; or
(B) substitutes for the Preferred Securities
other securities having substantially the same terms as
the Preferred Securities (the "Successor Securities"),
so long as the Successor Securities rank the same as
the Preferred Securities rank with respect to
Distributions and payments upon liquidation,
redemption, repayment and otherwise and substitutes for
the Common Securities other securities having
substantially the same terms as the Common Securities
(the "Successor Common Securities"), so long as the
Successor Common Securities rank the same as the Common
Securities rank with respect to Distributions and
payments upon liquidation, redemption, repayment and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers
and duties as the Institutional Trustee as the holder of the
Debentures;
(iii) if necessary, the Preferred Securities or any
Successor Securities will be listed, or any Successor Securities
will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any
Successor Securities and any Successor Common Securities) in any
material respect (other than with respect to any dilution of such
Holders' interests in the new entity);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation
or replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any
material respect (other than with respect to any
dilution of the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the
Successor Entity) will continue to be classified as a
grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the
extent provided by the Securities Guarantees.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such consolidation, amalgamation,
merger or replacement would cause the Trust or Successor Entity to be
classified as other than a grantor trust for United States federal income
tax purposes.
ARTICLE VII
SPONSOR
SECTION 7.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to [ ]% of the
capital of the Trust, at the same time as the Preferred Securities are
sold.
SECTION 7.2 RIGHTS AND RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue, sale and, if necessary, the
remarketing of the Preferred Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto (which registration statement may also
include other securities of the Sponsor);
(b) if necessary, to determine the States in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be executed and
filed by the Trust, as the Sponsor deems necessary or advisable in order to
comply with the applicable laws of any such States;
(c) if necessary, to prepare for filing by the Trust of an
application to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice of issuance
of any Preferred Securities;
(d) if necessary, to prepare for filing by the Trust with the
Commission of a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Remarketing Agreement, the
Remarketing Underwriting Agreement, the Underwriting Agreement and the
Pricing Agreement providing for the sale of the Preferred Securities.
SECTION 7.3 RIGHT TO PROCEED.
The Sponsor acknowledges the rights of Holders to institute a
Direct Action as set forth in Section 3.8(e) hereto.
SECTION 7.4 EXPENSES.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with the sale of
the Securities by the Trust, the Sponsor, in its capacity as borrower with
respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and Pricing Agreement and
compensation of the Trustee under the Indenture in accordance with the
provisions of the Indenture;
(b) be responsible for and shall pay all debts and obligations
(other than with respect to the Securities) and all costs and expenses of
the Trust (including, but not limited to, costs and expenses relating to
the organization, maintenance and dissolution of the Trust, the offering,
sale and issuance of the Securities (including commissions to the
underwriters in connection therewith), the fees and expenses (including
reasonable counsel fees and expenses) of the Institutional Trustee, the
Delaware Trustee and the Regular Trustees (including any amounts payable
under Article X of this Declaration), the costs and expenses relating to
the operation of the Trust, including, without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
Trust assets and the enforcement by the Institutional Trustee of the rights
of the Holders of the Securities;
(c) be primarily liable for any indemnification obligations
arising under Section 10.4 with respect to this Declaration; and
(d) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust.
The Sponsor's obligations under this Section 4.4 shall be for the
benefit of, and shall be enforceable by, any person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or
not such Creditor has received notice hereof. Any such Creditor may enforce
the Sponsor's obligations under this Section 4.4 directly against the
Sponsor and the Sponsor irrevocably waives any right or remedy to require
that any such Creditor take any action against the Trust or any other
Person before proceeding against the Sponsor. The Debenture Issuer agrees
to execute such additional agreements as may be necessary or desirable in
order to give full effect to the provisions of this Section 4.4.
ARTICLE IX
TRUSTEES
SECTION 9.1 NUMBER OF TRUSTEES.
The number of Trustees initially shall be three (3), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities; provided, however, that, the
number of Trustees shall in no event be less than two (2); provided further
that (1) one Trustee, shall meet the requirements of Section 5.2 (a) and
(b); (2) there shall be at least one Trustee who is an employee or officer
of, or is affiliated with the Sponsor (a "Regular Trustee"); and (3) one
Trustee shall be the Institutional Trustee for so long as this Declaration
is required to qualify as an indenture under the Trust Indenture Act, and
such Institutional Trustee may also serve as Delaware Trustee if it meets
the applicable requirements.
SECTION 9.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, provided that, if the Institutional Trustee
has its principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no
application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19801
SECTION 9.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee for so long as this Declaration is required to
qualify as an Indenture under the Trust Indenture Act, which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 750 million U.S. dollars
($750,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for
the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in ss. 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
ss. 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee and the Indenture shall be
deemed to be specifically described in this Declaration and the Indenture
for purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
6 Sylvan Way
Parsippany, New Jersey 07054
SECTION 9.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a
natural person who is at least 21 years of age or a legal entity that shall
act through one or more Authorized Officers.
SECTION 9.5 REGULAR TRUSTEES.
The initial Regular Trustees shall be:
[ ]
[ ]
[ ]
[ }
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter
over which the Regular Trustees have power to act, any power of the Regular
Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any
documents which the Regular Trustees have the power and authority to cause
the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents that the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 9.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the
Common Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a
successor Institutional Trustee possessing the qualifications to
act as Institutional Trustee under Sections 5.2 and 5.3 (a
"Successor Institutional Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Institutional Trustee and delivered to the Regular
Trustees and the Sponsor; and
(ii) The Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee
under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has
been appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Regular Trustees and the Sponsor.
(e) A Trustee appointed to office shall hold office until such
Trustee's successor shall have been appointed or until such Trustee's
death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed
by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as
is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee
has been appointed and has accepted such appointment by
instrument executed by such Successor Institutional
Trustee and delivered to the Trust, the Sponsor and the
resigning Institutional Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof
distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use all reasonable
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee, as the case may be, if the Institutional Trustee or
the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in
this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or
Successor Delaware Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper and prescribe, appoint a
Successor Institutional Trustee or Successor Delaware Trustee, as the case
may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 9.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two Regular Trustees, a majority of the Regular
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.6.
SECTION 9.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties
of a Trustee shall not operate to annul the Trust. Whenever a vacancy among
the Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the
Regular Trustees in office, regardless of their number, shall have all the
powers granted to the Regular Trustees and shall discharge all the duties
imposed upon the Regular Trustees by this Declaration.
SECTION 9.9 MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours
before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute
a waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at (i) a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible
to vote with respect to such matter, provided that a Quorum is present, or
(ii) without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of
such Regular Trustee.
SECTION 9.10 DELEGATION OF POWER.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as
set forth herein.
SECTION 9.11 MERGER, CONVERSION. CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with
which either may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Institutional Trustee or the Delaware Trustee, as the case
may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
ARTICLE XI
DISTRIBUTIONS
SECTION 11.1 DISTRIBUTIONS.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or
principal on the Debentures held by the Institutional Trustee (the amount
of any such payment being a "Payment Amount"), the Institutional Trustee
shall and is directed, to the extent funds are available for that purpose,
to make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE XIII
ISSUANCE OF SECURITIES
SECTION 13.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of preferred securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Annex I
(the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust
having such terms as are set forth in Annex I (the "Common Securities").
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature
of any present or any future Regular Trustee. In case any Regular Trustee
who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the Trust,
such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at
the actual date of execution of such Certificate, shall be the Regular
Trustees of the Trust, although at the date of the execution and delivery
of the Declaration any such person was not such a Regular Trustee.
Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration.
SECTION 13.2 PAYING AGENT.
In the event that the Preferred Securities are not in book-entry
only form, the Trust shall maintain in the borough of Manhattan, City of
New York, State of New York, an office or agency where the Preferred
Securities may be presented for payment ("Paying Agent"), and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
The Trust may appoint the Paying Agent and may appoint one or more
additional paying agents in such other locations as it shall determine. The
term "Paying Agent" includes any additional paying agent. The Trust may
change any Paying Agent without prior notice to any Holder. The Trust shall
notify the Institutional Trustee of the name and address of any Paying
Agent not a party to this Declaration. If the Trust fails to appoint or
maintain another entity as Paying Agent, the Institutional Trustee shall
act as such. The Trust or any of its Affiliates (including the Sponsor) may
act as Paying Agent. The Institutional Trustee shall initially act as
Paying Agent for the Preferred Securities and the Common Securities.
ARTICLE XV
TERMINATION OF TRUST
SECTION 15.1 TERMINATION OF TRUST.
(a) The Trust shall terminate:
(i) upon a Termination Event;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Sponsor; or the revocation of
the Sponsor's charter and the expiration of 90 days after the
date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) upon the occurrence and continuation of an
Investment Company Event pursuant to which the Trust shall have
been dissolved in accordance with the terms of the Securities and
all of the Debentures endorsed thereon shall have been
distributed to the Holders of Securities in exchange for all of
the Securities;
(v) when all the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding-up of the
Trust and its termination, the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 4.4 and Article X shall survive the
termination of the Trust.
ARTICLE XVII
TRANSFER OF INTERESTS
SECTION 17.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and
in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 17.2 TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected
without charge but only upon payment (with such indemnity as the Regular
Trustees may require) in respect of any tax or other government charges
that may be imposed in relation to it. Upon surrender for registration of
transfer of any Certificate, the Regular Trustees shall cause one or more
new Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form
satisfactory to the Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer shall be canceled by the Regular Trustees. A
transferee of a Certificate shall be entitled to the rights and subject to
the obligations of a Holder hereunder upon the receipt by such transferee
of a Certificate. By acceptance of a Certificate, each transferee shall be
deemed to have agreed to be bound by this Declaration.
SECTION 17.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole
holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
SECTION 17.4 BOOK ENTRY INTERESTS.
The Preferred Securities Certificates, on original issuance, in
addition to being issued in the form of one or more definitive, fully
registered Preferred Securities Certificate (each a "Definitive Preferred
Securities Certificate") registered initially in the books and records of
the Trust in the name of [NAME], as Purchase Contract Agent, will be issued
in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificate(s) shall initially be registered on the books and records of
the Trust in the name of Cede & Co., the nominee of DTC, and no Preferred
Security Beneficial Owner will receive a definitive Preferred Security
Certificate representing such Preferred Security Beneficial Owner's
interests in such Global Certificate(s), except as provided in Section 9.7.
Except for the Definitive Preferred Security Certificates as specified
herein and the definitive, fully registered Preferred Securities
Certificates that have been issued to the Preferred Security Beneficial
Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Certificate(s) and receiving approvals,
votes or consents hereunder) as the Holder of the Preferred Securities and
the sole holder of the Global Certificate(s) and shall have no obligation
to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants to receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants; provided,
that, solely for the purposes of determining whether the Holders of the
requisite amount of Preferred Securities have voted on any matter provided
for in this Declaration, so long as Definitive Preferred Security
Certificates have not been issued, the Trustees may conclusively rely on,
and shall be protected in relying on, any written instrument (including a
proxy) delivered to the Trustees by the Clearing Agency setting forth the
Preferred Security Beneficial Owners' votes or assigning the right to vote
on any matter to any other Persons either in whole or in part.
SECTION 17.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until definitive
fully registered Preferred Security Certificates shall have been issued to
the Preferred Security Beneficial Owners pursuant to Section 9.7 or
otherwise, the Regular Trustees shall give all such notices and
communications specified herein to be given to the Preferred Security
Holders to the Clearing Agency, and shall have no notice obligations to the
Preferred Security Beneficial Owners.
SECTION 17.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 17.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with respect
to the Preferred Securities, then:
(c) definitive fully registered Preferred Security Certificates
shall be prepared by the Regular Trustees on behalf of the Trust with
respect to such Preferred Securities; and
(d) upon surrender of the Global Certificate(s) by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause definitive fully registered Preferred Securities Certificates
to be delivered to Preferred Security Beneficial Owners in accordance with
the instructions of the Clearing Agency. Neither the Trustees nor the Trust
shall be liable for any delay in delivery of such instructions and each of
them may conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency. The definitive fully registered
Preferred Security Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have
such letters, numbers or other marks of identification or designation and
such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
on which Preferred Securities may be listed, or to conform to usage.
SECTION 17.8 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificate should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them and the Trust
harmless, then, in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, any Regular Trustee on behalf of
the Trust shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under
this Section 9.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE XIX
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 19.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Debentures, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders
of the Securities, which shall be made solely from assets of the
Trust; or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or
otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware.
SECTION 19.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of
the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Securities
might properly be paid.
SECTION 19.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to
the Trust or to any other Covered Person, an Indemnified Person acting
under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the
parties hereto to replace such other duties and liabilities of such
Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that are,
fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider
such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust
or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 19.4 INDEMNIFICATION.
(a) (i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is
or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in
respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made
by the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular
Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion, or
(3) by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a)
shall be paid by the Debenture Issuer in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to
repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Debenture Issuer
as authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based upon
the facts known to the Regular Trustees, independent legal
counsel or Common Security Holder at the time such determination
is made, such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal
proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder
reasonably determine that such person deliberately breached such person's
duty to the Trust or its Common or Preferred Security Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights
to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of
shareholders or disinterested directors of the Sponsor or
Preferred Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office. All rights to indemnification
under this Section 10.4(a) shall be deemed to be provided by a
contract between the Sponsor and each Company Indemnified Person
who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not affect any rights or obligations then existing.
(vi) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Sponsor would have the power
to indemnify him against such liability under the provisions of
this Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references
to "the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as such
person would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the successors, heirs,
executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Institutional Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Institutional Trustee
or the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or
agents of the Institutional Trustee or the Delaware Trustee (each of the
Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless
against, any loss, liability or expense incurred without gross negligence
and, in the case of the Institutional Trustee, pursuant to Section 3.9,
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder. The provisions of this Section 10.4(b) shall
survive the satisfaction and discharge of this Declaration or the
resignation or removal of the Institutional Trustee or the Delaware
Trustee, as the case may be.
SECTION 19.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other
business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust
and the Holders of Securities shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive
with the business of the Trust, shall not be deemed wrongful or improper.
No Covered Person, the Sponsor, the Delaware Trustee or the Institutional
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered
Person, the Sponsor, the Delaware Trustee and the Institutional Trustee
shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person, the Delaware Trustee
and the Institutional Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or
may act as depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XXI
ACCOUNTING
SECTION 21.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 21.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Trust
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income tax purposes.
The books of account and the records of the Trust shall be examined by and
reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Regular Trustees.
(b) The Trust shall cause to be duly prepared and delivered to
each of the Holders of Securities, any annual United States federal income
tax information statement required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the
Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Trust shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal
Year of the Trust.
(c) The Trust shall cause to be duly prepared and filed with the
appropriate taxing authority an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be
filed by the Trust on behalf of the Trust with any state or local taxing
authority.
SECTION 21.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall
be made directly to the Institutional Trustee Account and no other funds of
the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
SECTION 21.4 WITHHOLDING.
The Trust shall comply with all withholding requirements under
United States federal, state and local law. The Trust shall request, and
the Holders shall provide to the Trust, such forms or certificates as are
necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested
by the Trust to assist it in determining the extent of, and in fulfilling,
its withholding obligations. The Trust shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect
to the Holder to applicable jurisdictions. To the extent that the Trust is
required to withhold and pay over any amounts to any authority with respect
to distributions or allocations to any Holder, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to
an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such withholding.
ARTICLE XXIII
AMENDMENTS AND MEETINGS
SECTION 23.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by
a written instrument approved and executed by the Regular Trustees (or, if
there are more than two Regular Trustees, a majority of the Regular
Trustees); and
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, also by
the Institutional Trustee; and
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, also
by the Delaware Trustee;
(b) no amendment shall be made:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officer's
Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee shall have
first received:
(A) an Officer's Certificate from each of the
Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(iii) to the extent the result of such amendment would
be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of
the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would materially and adversely
affect the rights, privileges or preferences of any Holder of Securities
may be effected only with such additional requirements as may be set
forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect
on the right, preferences or privileges of the Holders;
(v) to modify, eliminate and add to any provision of the
Declaration to such extent as may be necessary; and
(vi) cause the Trust to continue to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 23.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of
the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for trading. The
Regular Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in liquidation amount of
such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or
more calls in a writing stating that the signing Holders of Securities wish
to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting
shall specify in writing the Security Certificates held by the Holders of
Securities exercising the right to call a meeting and only those Securities
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities
is permitted or required under this Declaration, the terms of the
Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the
Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
the Holders of Securities owning not less than the minimum amount
of Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all Holders
of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who
have not consented in writing. The Regular Trustees may specify
that any written ballot submitted to the Security Holder for the
purpose of taking any action without a meeting shall be returned
to the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the
listing rules of any stock exchange on which the Preferred
Securities are then listed or trading otherwise provides, the
Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at
which any matter is to be voted on by any Holders of Securities,
waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XXV
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 25.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor
Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:
(a) the Institutional Trustee is a national banking association
with trust powers, duly organized, validly existing and in good standing
under the laws of the United States of America, with trust power and
authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the Institutional Trustee satisfies the requirements set forth
in Section 5.3(a);
(c) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law);
(d) the execution, delivery and performance of the Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Institutional Trustee; and
(e) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 25.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Delaware Trustee's acceptance
of its appointment as Delaware Trustee, that:
(a) The Delaware Trustee is a Delaware corporation, duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. The Declaration has
been duly executed and delivered by the Delaware Trustee, and it
constitutes a legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration; and
(d) the execution, delivery and performance of the Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Delaware Trustee; and
(e) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XXVII
MISCELLANEOUS
SECTION 27.1 NOTICES.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
Cendant Capital II
c/o Cendant Corporation
9 West 57th Street
New York, New York 10019
Attn:
(b) if given to the Institutional Trustee or Delaware Trustee, at
its Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional Trustee may give
notice of to the Holders of the Securities):
The Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn:
(c) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as
the Holder of the Common Securities may give notice to the Trust):
Cendant Corporation
9 West 57th Street
New York, New York 10019
Attn:
(d) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 27.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 27.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor
trust. The provisions of this Declaration shall be interpreted to further
this intention of the parties.
SECTION 27.4 HEADINGS.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 27.5 SUCCESSORS AND ASSIGNS.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 27.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to
persons or circumstances other than those to which it is held invalid,
shall not be affected thereby.
SECTION 27.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature
pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers
had signed a single signature page.
IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the day and year first above written.
------------------------------------
, as Regular Trustee
------------------------------------
, as Regular Trustee
THE WILMINGTON TRUST COMPANY
as Institutional and Delaware Trustee
By
-----------------------------------
Name
---------------------------------
Title
--------------------------------
CENDANT CORPORATION
as Sponsor
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
ANNEX I
ANNEX I
TERMS AND CONDITIONS OF
6.45% TRUST ORIGINATED PREFERRED SECURITIES
6.45% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and
the Common Securities are set out below (each capitalized term used but not
defined herein has the meaning set forth in the Declaration or, if not
defined in the Declaration, as defined in the Prospectus referred to
below):
1. Designation and Number.
(a) Preferred Securities. Preferred Securities of
the Trust, with an aggregate liquidation amount with respect to the assets
of the Trust of and a liquidation amount with respect to the
assets of the Trust of $50 per preferred security, are hereby designated
for the purposes of identification only as "6.45% Trust Originated
Preferred Securities" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in
the form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by applicable law or the
rules of any stock exchange on which the Preferred Securities are listed or
to conform to ordinary usage, custom or practice.
(b) Common Securities. Common Securities of the Trust,
with an aggregate liquidation amount with respect to the assets of the
Trust of [ ] Dollars ($__________) and a liquidation amount with respect to
the assets of the Trust of $50 per common security, are hereby designated
for the purposes of identification only as "6.45% Trust Originated Common
Securities" (the "Common Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially in the form of
Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by applicable law or to conform to
ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
initially at a rate per annum of 6.45% (the "Coupon Rate") of the stated
liquidation amount of $50 per Security until February 15, 2001, and at the
Reset Rate thereafter, such rates being the rates of interest payable on
the Debentures to be held by the Institutional Trustee. Distributions in
arrears for more than one quarter will bear interest thereon compounded
quarterly at the rate of 7.5% until February 15, 2001, and at the Reset
Rate thereafter (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held
by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the
basis of a 360-day year consisting of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of
the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative,
will accrue from , and will be payable quarterly in arrears, on
February 16, May 16, August 16 and November 16 of each year, commencing on
, except as otherwise described below. The Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Debentures for a period
not extending, in the aggregate, beyond the maturity date of the Debentures
(each an "Extension Period"). During such Extension Period no interest
shall be due and payable on the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon at
the rate of 7.5% until February 15, 2001, and at the Reset Rate thereafter,
compounded quarterly during any such Extension Period (to the extent
permitted by applicable law). Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed beyond the maturity date of the
Debentures.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust at
the close of business on the Business Day immediately preceding each of the
relevant payment dates on the Securities. Subject to any applicable laws
and regulations and the provisions of the Declaration, each such payment in
respect of the Preferred Securities will be made as described under the
heading "Description of the Trust Preferred Securities -- Book Entry Only
Issuance -The Depository Trust Company" in the Prospectus dated
, the "Prospectus") of the Trust relating to the Registration
Statement on Form S-3 (file no. 333-78447) of the Sponsor and the Trust.
The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities
shall not continue to remain in book-entry only form or are not in book-
entry only form at issuance, the relevant record dates for the Preferred
Securities, shall conform to the rules of any securities exchange on which
the securities are listed and, if none, as shall be selected by the Regular
Trustees, which dates shall be at least more than one, but less than 60
Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and
such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on
which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with the same force
and effect as if made on such date. So long as the Holder of any Preferred
Securities is the Collateral Agent, the payment of Distributions on such
Preferred Securities held by the Collateral Agent will be made at such
place and to such account as may be designated by the Collateral Agent.
(d) The Coupon Rate on the Securities (as well as the
interest rate on the Debentures) will be reset on the third Business Day
immediately preceding the Purchase Contract Settlement Date to the Reset
Rate (which reset Rate will be in effect on and after the Purchase Contract
Settlement Date). On the Reset Announcement Date, the Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Reset Rate will be
announced by the Sponsor. On the Business Day immediately following the
Reset Announcement Date, the Holders of Securities will be notified of such
Reset Spread and Two-Year Benchmark Treasury by the Sponsor. Such notice
shall be sufficiently given to Holders of Securities if published in an
Authorized Newspaper.
(e) Not later than 10 calendar days nor more than 15
calendar days prior to the Reset Announcement Date, the Sponsor will notify
DTC (as defined herein) or its nominee (or any successor Clearing Agency or
its nominee) by first-class mail, postage prepaid, to notify the Preferred
Security Beneficial Owner or Clearing Agency Participants holding Preferred
Securities, Income PRIDES or Growth PRIDES, of such Reset Announcement Date
and the procedures to be followed by such Holders of Income PRIDES who
intend to settle their obligation under the Purchase Contract with separate
cash.
(f) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the
Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution of the
Trust (unless a Tax Event Redemption has occurred), the Holders of the
Securities on the date of the dissolution will be entitled to receive out
of the assets of the Trust, after satisfaction of liabilities to creditors,
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Securities, with an interest rate equal to the
rate of 6.45%, if on or prior to February 15, 2001, and the Reset Rate
thereafter, and bearing accrued and unpaid interest in an amount equal to
the accrued and unpaid Distributions on such Securities and which shall be
distributed on a Pro Rata basis to the Holders of the Securities in
exchange for such Securities (such amount being "Liquidation
Distribution").
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the Securities shall be paid on a Pro Rata
basis.
4. Redemption and Distribution.
(a) Upon the redemption of the Debentures in whole (but
not in part), at maturity, the proceeds from such redemption shall, after
satisfaction of liabilities to creditors, be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed at a redemption
price of $50 per Security plus an amount equal to accrued and unpaid
Distributions thereon at the date of the repayment, payable in cash.
(b) If an Investment Company Event (as defined herein)
shall occur and be continuing the Regular Trustees shall dissolve the Trust
and, after satisfaction of liabilities to creditors, cause Debentures held
by the Institutional Trustee, having an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate the rate
of 6.45%, if on or prior to February 15, 2001, and the Reset Rate
thereafter, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the
Securities, to be distributed to the Holders of the Securities in
liquidation of such Holders' interests in the Trust on a Pro Rata basis,
within 90 days following the occurrence of such Investment Company Event
(the "90 Day Period"); provided, however, that, if at the time there is
available to the Trust the opportunity to eliminate, within the 90 Day
Period, the Investment Company Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure that will have no adverse effect on the Trust, the
Debenture Issuer, the Sponsor or the Holders of the Securities and will
involve no material cost ("Ministerial Action"), the Regular Trustees will
pursue such Ministerial Action in lieu of dissolution.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of independent counsel experienced in practice
under the Investment Company Act (an "Investment Company Event Opinion") to
the effect that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), which Change in 1940 Act
Law becomes effective on or after the date of the Prospectus, there is a
more than an insubstantial risk that the Trust is or will be considered an
Investment Company which is required to be registered under the Investment
Company Act.
(c) If a Tax Event shall occur and be continuing, the
Debentures are redeemable at the option of the Debenture Issuer, in whole
but not in part, on not less than 30 days nor more than 60 days notice
("Tax Event Redemption"). If the Debenture Issuer redeems the Debentures
upon the occurrence and continuance of a Tax Event, the proceeds from such
redemption shall simultaneously be applied by the Trust to redeem the
Securities having an aggregate stated liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed at a redemption
price (the "Redemption Price"), per Security, equal to the Redemption
Amount plus any accumulated and unpaid distributions thereon to the date of
such redemption. If, following the occurrence of a Tax Event, the Debenture
Issuer exercises its option to redeem the Debentures, the Debenture Issuer
shall appoint the Quotation Agent to assemble the Treasury Portfolio in
consultation with the Company. To the extent the Redemption Price is
received by the Institutional Trustee, the Institutional Trustee will
distribute, to the record Holder of the Securities the Redemption Price
payable in liquidation of such Holder's interests in the Trust.
"Tax Event" means the receipt by the Regular Trustees of an
opinion of a nationally recognized independent tax counsel experienced in
such matters to the effect that, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision
or taxing authority thereof or therein affecting taxation, (b) any
amendment to or change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or
regulatory authority or (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations that
differs from the generally accepted position on the date the Securities are
issued, which amendment or change is effective or which interpretation or
pronouncement is announced on or after the date of issuance of the
Securities under the Declaration, there is more than an insubstantial risk
that (i) interest payable by the Debenture Issuer on the Debentures would
not be deductible, in whole or in part, by the Debenture Issuer for federal
income tax purposes or (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Treasury Portfolio" means, with respect to the Applicable
Principal Amount of Debentures (a) if the Tax Event Redemption Date occurs
prior to February 16, 2001, a portfolio of zero-coupon U.S. Treasury
Securities consisting of (i) U.S. Treasury Securities each in the amount of
$1,000 payable on February 15, 2001 in an aggregate amount equal to the
Applicable Principal Amount and (ii) with respect to each scheduled
interest payment date on the Debentures that occurs after the Tax Event
Redemption Date, principal or interest strips of U.S. Treasury Securities
which mature on or prior to such date in an aggregate amount equal to the
aggregate interest payment that would be due on the Applicable Principal
Amount of the Debentures on such date, and (b) if the Tax Event Redemption
Date occurs after February 16, 2001, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) principal or interest strips of U.S.
Treasury Securities which mature on or prior to February 15, 2003 in an
aggregate amount equal to the Applicable Principal Amount and (ii) with
respect to each scheduled interest payment date on the Debentures that
occurs after the Tax Event Redemption Date, principal or interest strips of
such U.S. Treasury Securities which mature on or prior to such date in an
aggregate amount equal to the aggregate interest payment that would be due
on the Applicable Principal Amount of the Debentures on such date.
"Applicable Ownership Interest" means, with respect to an Income
PRIDES and the U.S. Treasury Securities in the Treasury Portfolio, (A) a
1/20, or 5%, undivided beneficial ownership interest in a U.S. Treasury
Security in the amount of $1,000 included in such Treasury Portfolio
payable on February 15, 2001 and (B) for each scheduled interest payment
date on the Debentures that occurs after the Tax Event Redemption Date, a
[5]% undivided beneficial ownership interest in a $1,000 face amount of
such U.S. Treasury Security which is a principal or interest strip maturing
on such date.
"Applicable Principal Amount" means either (i) if the Tax Event
Redemption Date occurs prior to February 16, 2001, the aggregate principal
amount of the Debentures corresponding to the aggregate stated liquidation
amount of the Preferred Securities which are components of Income PRIDES on
the Tax Event Redemption Date or (ii) if the Tax Event Redemption occurs on
or after February 16, 2001, the aggregate principal amount of the
Debentures corresponding to the aggregate stated liquidation amount of the
Preferred Securities outstanding on such Tax Event Redemption Date.
"Redemption Amount" means for each Debenture, the product of (i)
the principal amount of such Debenture and (ii) a fraction whose numerator
is the Treasury Portfolio Purchase Price and whose denominator is the
Applicable Principal Amount.
"Treasury Portfolio Purchase Price" means the lowest aggregate
price quoted by a primary U.S. government securities dealer in New York
City (a "Primary Treasury Dealer") to the Quotation Agent on the third
Business Day immediately preceding the Tax Event Redemption Date for the
purchase of the Treasury Portfolio for settlement on the Tax Event
Redemption Date.
"Quotation Agent" means (i) Merrill Lynch Government Securities,
Inc. and its respective successors, provided, however, that if the
foregoing shall cease to be a Primary Treasury Dealer, the Sponsor shall
substitute therefor another Primary Treasury Dealer and (ii) any other
Primary Treasury Dealer selected by the Sponsor.
On and from the date fixed by the Regular Trustees for a Tax Event
Redemption or any distribution of Debentures and dissolution of the Trust:
(i) the Securities will no longer be deemed to be outstanding, (ii) The
Depository Trust Company ("DTC") or its nominee (or any successor Clearing
Agency or its nominee) or the record Holder of the Preferred Securities,
will receive a registered global certificate or certificates representing
the Debentures to be delivered upon such distribution and any certificates
representing Securities, except for certificates representing Preferred
Securities held by DTC or its nominee (or any successor Clearing Agency or
its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate
stated liquidation amount of $50, with an interest rate of 6.45% if on or
prior to February 15, 2001, and at the Reset Rate thereafter, and accrued
and unpaid interest equal to accrued and unpaid Distributions on such
Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
5. Redemption or Distribution Procedures.
(a) Notice of any redemption (other then in connection
with the maturity of the Debentures) of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the Tax Event Redemption Date. For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 5(a), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first mailed
by first-class mail, postage prepaid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(b) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 5 (such notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided that the Debenture Issuer
has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures by
10:00 a.m. New York City time on such Redemption Date, the Institutional
Trustee will deposit irrevocably with DTC or its nominee (or any successor
Clearing Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Preferred Securities so called for redemption, and (B) with
respect to Preferred Securities issued in definitive form and Common
Securities, provided that the Debenture Issuer has paid the Institutional
Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will
pay the relevant Redemption Price to the Holders of such Securities by
check mailed to the address of the relevant Holder appearing on the books
and records of the Trust. Notwithstanding the foregoing, so long as the
Holder of any Preferred Securities is the Collateral Agent or the Purchase
Contract Agent, the payment of the Redemption Price in respect of such
Preferred Securities held by the Collateral Agent or the Purchase Contract
Agent shall be made no later than 12:00 noon, New York City time, on the
Tax Event Redemption Date by check or wire transfer in immediately
available funds at such place and to such account as may be designated by
the Collateral Agent or the Purchase Contract Agent. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on
the date of such deposit, or on the redemption date, as applicable,
distributions will cease to accrue on the Securities so redeemed and all
rights of Holders of such Securities so called for redemption will cease,
except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither
the Regular Trustees nor the Trust shall be required to register or cause
to be registered the transfer of any Securities that have been so called
for redemption. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (without any
interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for repayment. If payment of
the Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Institutional Trustee or by the Sponsor
as guarantor pursuant to the relevant Securities Guarantee, Distributions
on such Securities will continue to accrue from the original redemption
date to the actual date of payment, in which case the actual payment date
will be considered the date fixed for repayment for purposes of calculating
the Redemption Price and such Securities shall cease to be outstanding.
(c) Redemption/Distribution Notices shall be sent by the
Trust to (A) in respect of the Preferred Securities, the DTC or its nominee
(or any successor Clearing Agency or its nominee) if the Global
Certificates have been issued or, if Definitive Preferred Security
Certificates have been issued, to the Holder thereof, and (B) in respect of
the Common Securities, to the Holder thereof.
(d) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws) the
Sponsor or any of its subsidiaries may at any time and from time to time
purchase outstanding Preferred Securities by tender, in the open market or
by private agreement.
6. Repayment at Option of Holders.
(a) If a Failed Remarketing (as described in Section
5.4(b) of the Purchase Contract Agreement and incorporated herein by
reference) has occurred, each holder of Securities who holds such
Securities on the day immediately following the Purchase Contract
Settlement Date, shall have the right on or after the Business Day
immediately following February 16, 2001 to require the Trust to repay all
or a portion of such Securities owned by such holder (the "Put Option") on
March 2, 2001 (the "Put Option Exercise Date"), upon at least three
Business Days' prior notice, at a repayment price of $50 per Security plus
an amount equal to the accrued and unpaid Distributions (including deferred
distributions if any) thereon to the date of payment (the "Put Option
Repayment Price").
(b) The Trust shall obtain funds to pay the Put Option
Repayment Price of Securities being repaid under the Put Option through
presentation by the Institutional Trustee, on behalf of the Trust, to the
Debenture Issuer, pursuant to the right of the holder of the Debentures to
require the Debenture Issuer to repay all or a portion of the Debentures on
the Put Option Exercise Date, Debentures in an aggregate principal amount
equal to the aggregate stated liquidation amount of such Securities for
repayment on the Put Option Exercise Date at the Debenture Repayment Price.
(c) In order for the Securities to be repaid on the Put
Option Exercise Date, the Trust must receive on or prior to 4:00 p.m. on
the third Business Day immediately preceding the Put Option Exercise Date,
at the Corporate Trust Office of the Institutional Trustee, the Securities
to be repaid with the form entitled "Option to Elect Repayment" on the
reverse thereof or otherwise accompanying such Security duly completed. Any
such notice received by the Trust shall be irrevocable. All questions as to
the validity, eligibility (including time of receipt) and acceptance of the
Securities for repayment shall be determined by the Trust, whose
determination shall be final and binding.
(d) Payment of the Put Option Repayment Price to Holders
of Securities shall be made at the Corporate Trust Office of the
Institutional Trustee, provided that the Institutional Trustee has received
from the Debenture Issuer a sufficient amount of cash in connection with
the related repayment of the Debenture no later than 1:00 p.m., New York
City time, on the Put Option Exercise Date by check or wire transfer in
immediately available funds at such place and to such account as may be
designated by such Holders. If the Institutional Trustee holds immediately
available funds sufficient to pay the Put Option Repayment Price of such
Securities, then, immediately prior to the close of business on the Put
Option Exercise Date, such Securities will cease to be outstanding and
distributions thereon will cease to accrue, whether or not Securities are
delivered to the Institutional Trustee, and all other rights of the Holder
in respect of the Securities, including the Holder's right to require the
Trust to repay such Securities, shall terminate and lapse (other than the
right to receive the Put Option Repayment Price but without interest on
such Put Option Repayment Price). Neither the Regular Trustees nor the
Trust shall be required to register or cause to be registered the transfer
of any Securities for which repayment has been elected. If payment of the
Put Option Repayment Price in respect of Securities is (i) improperly
withheld or refused and not paid either by the Institutional Trustee or by
the Sponsor as guarantor pursuant to the Securities Guarantee, or (ii) not
paid by the Institutional Trustee as the result of an Event of Default with
respect to the Debentures presented for repayment as described in paragraph
6(b), Distributions on such Securities will continue to accrue, from the
original Put Option Exercise Date to the actual date of payment, in which
case the actual payment date will be considered the Put Option Exercise
Date for purposes of calculating the Put Option Repayment Price.
(e) The Debenture Issuer will request, not later than 10
nor more than 15 calendar days prior to February 13, 2001 (the date on
which some or all of the Preferred Securities could be remarketed in the
manner described in Section 5.4(b) of the Purchase Contract Agreement and
incorporated herein by reference) that DTC notify the Preferred Securities
Holders as well as the Income PRIDES and Growth PRIDES holders of such
remarketing and of the procedures that must be followed if a Holder of
Preferred Securities wishes to exercise such Holder's rights with respect
to the Put Option.
7. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 7(b) and 9 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or the exercise of any trust or power conferred upon
the Institutional Trustee under the Declaration, including (i) directing
the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii)
waiving any past default and its consequences that is waivable under the
Indenture, (iii) exercising any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable, or (iv)
consenting to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required, provided, however,
that, where a consent under the Indenture specifically would require the
consent or act of the Holders of greater than a majority of the Holders in
principal amount of Debentures affected thereby (a "Super Majority"), the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
The Institutional Trustee shall not revoke any action previously authorized
or approved by a vote of the Holders of the Preferred Securities. Other
than with respect to directing the time, method and place of conducting any
remedy available to the Institutional Trustee or the Debenture Trustee as
set forth above, the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Preferred Securities
under this paragraph unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Debentures after a Holder of Preferred
Securities has made a written request, such Holder of Preferred Securities
may, to the fullest extent permitted by applicable law, institute a legal
proceeding directly against the Debenture Issuer to enforce the
Institutional Trustee's rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any
other Person. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of
the Debenture Issuer to pay interest or principal on the Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such
Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder on or after the respective due date specified in
the Debentures. Except as provided in the preceding sentence, the Holders
of Preferred Securities shall not exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities may
be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the
Trust or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Preferred Securities are entitled
to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Preferred
Securities. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken, (ii)
a description of any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to repay and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms
of the Securities. Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above,
any of the Preferred Securities that are owned by the Sponsor or any
Affiliate of the Sponsor shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
8. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b) and (c) and
Section 9 and as otherwise required by law and the Declaration, the Holders
of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled,
in accordance with Article V of the Declaration, to vote to appoint, remove
or replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after any Event of Default with respect to the Preferred Securities has
been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority
in liquidation amount of the Common Securities, voting separately as a
class, may direct the time, method, and place of conducting any proceeding
for any remedy available to the Institutional Trustee, or exercising any
trust or power conferred upon the Institutional Trustee under the
Declaration, including (i) directing the time, method, and place of
conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, provided that, where a consent or
action under the Indenture specifically would require the consent or act of
the Holders of a Super Majority, the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities
which the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding. Pursuant to this Section 7(c), the
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities. Other than
with respect to directing the time, method and place of conducting any
remedy available to the Institutional Trustee or the Debenture Trustee as
set forth above, the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities
may institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Common Securities. Each
such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms
of the Securities.
9. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1
of the Declaration, if any proposed amendment to the Declaration provides
for, or the Regular Trustees otherwise propose to effect, (i) any action
that would materially adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities
as a class will be entitled to vote on such amendment or proposal (but not
on any other amendment or proposal) and such amendment or proposal shall
not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a
single class; provided, however, if any amendment or proposal referred to
in clause (i) above would adversely affect only the Preferred Securities or
only the Common Securities, then only the affected class will be entitled
to vote on such amendment or proposal and such amendment or proposal shall
not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.
(b) In the event the consent of the Institutional
Trustee as the holder of the Debentures is required under the Indenture
with respect to any amendment, modification or termination on the Indenture
or the Debentures, the Institutional Trustee shall request the written
direction of the Holders of the Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount
of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture specifically would require a Super
Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount
of the Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding; provided,
further, that the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Securities under this
Section 8(b) unless (i) the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust
on account of such action or (ii) such action would not reduce or otherwise
adversely affect powers of the Institutional Trustee or cause the Trust to
be deemed an "investment company" which is required to be registered under
the Investment Company Act of 1940.
10. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default under the Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each Holder of the Preferred Securities pro rata according to
the aggregate liquidation amount of Preferred Securities held by the
relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Preferred Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of
Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.
11. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
12. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively.
13. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
14. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered
in the name of a person other than the Depositary or its nominee only in
the limited circumstances described in the Declaration and no transfer of
this Preferred Security (other than a transfer of this Preferred Security
as a whole by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary)
may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the Trust or its agent for registration of transfer, exchange
or payment, and any Preferred Security issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative
of The Depository Trust Company and any payment hereon is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
Certificate Number Number of Preferred Securities
----------- ---------
CUSIP NO.
-------------
Certificate Evidencing Preferred Securities
of
Cendant Capital II
6.45% Trust Originated Preferred Securities
(liquidation amount $50 per Preferred Security)
Cendant Capital II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
(the "Holder") is the registered owner of preferred securities of
the Trust representing preferred undivided beneficial interests in the
assets of the Trust designated as the 6.45% Trust Originated Preferred
Securities (liquidation amount $50 per preferred security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities represented
hereby are issued and shall in all respects be subject to the provisions of
the Amended and Restated Agreement of Trust of the Trust dated as of
as the same may be amended from time to time (the "Declaration"), including
the designation of the terms of the Preferred Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Preferred Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Trust at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the
Preferred Securities as evidence of indirect beneficial ownership in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
.
CENDANT CAPITAL II
By:
-----------------------
Name:
---------------------
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at
a rate per annum of 6.45% (the "Coupon Rate") of the stated liquidation
amount of $50 per Preferred Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest
thereon compounded quarterly at the rate of 6.45% until February 15, 2001,
and at the Reset Rate thereafter (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has actually received and holds funds
available therefor. The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on the basis of a
360-day year consisting of twelve 30-day months, and for any period shorter
than a full quarterly Distribution period for which Distributions are
computed, Distributions will be computed on the basis of the actual number
of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the
Preferred Securities will be cumulative, will accrue from the date of
original issuance and will be payable quarterly in arrears, on February 16,
May 16, August 16 and November 16 of each year, commencing on , to
holders of record, if in book-entry only form, one Business Day prior to
such payment date, which payment dates shall correspond to the interest
payment dates on the Debentures. In the event that the Preferred Securities
are not in book-entry form, the Regular Trustees will have the right to
select relevant record dates, which will be more than one Business Day but
less than 60 Business Days prior to the relevant payment dates. The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding beyond the date of maturity of the
Debentures (each an "Extension Period") and, as a consequence of such
deferral, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon at
the rate of % until February 15, 2001, and at the Reset Rate thereafter,
compounded quarterly during any such Extension Period (to the extent
permitted by applicable law). Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed beyond the maturity date of the
Debenture.
The Preferred Securities shall be redeemable as provided in the
Declaration.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Trust to repay $ stated liquidation amount of the within Preferred
Security, pursuant to its terms, on the "Put Option Exercise Date,"
together with distributions thereon accrued but unpaid to the date of
repayment, to the undersigned at:
-----------------------------------------------------------
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Declaration,
a new Preferred Security or Preferred Securities representing the remaining
stated liquidation amount of this Preferred Security.
For this Option to Elect Repayment to be effective, the within Preferred
Security with this Option to Elect Repayment duly completed must be
received by the Trust at the Corporate Trust Office of the Institutional
Trustee at Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.
Dated: Signature:
-------------------------------
Signature Guarantee:
---------------------
Note: The signature to this Option to Elect Repayment must correspond with
the name as written upon the face of the within Preferred Security in every
particular without alternation or enlargement or any change whatsoever.
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
--------------
(Insert assignee's social security or tax identification number)
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
--------------
(Insert address and zip code of assignee)
and irrevocably appoints
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
-------------- agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for him or her.
Date:
---------------------------
Signature:
----------------------------------
Signature Guarantee:
-----------------------
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
The Common Securities may only be transferred by the
Debenture Issuer and any Related Party to the Debenture Issuer or a Related
Party of the Debenture Issuer; provided that, any such transfer is subject
to the condition precedent that the transferor obtain the written opinion
of nationally recognized independent counsel experienced in such matters
that such transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor Trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
Certificate Number Number of Common Securities
------------- ------
Certificate Evidencing Common Securities
of
Cendant Capital II
6.45% Trust Originated Common Securities
(liquidation amount $50 per Common Security)
Cendant Capital II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cendant
Corporation (the "Holder") is the registered owner of common securities of
the Trust representing common undivided beneficial interests in the assets
of the Trust designated as the 6.45% Trust Originated Common Securities
(liquidation amount $50 per common security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of , as the same may be
amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein.
The Sponsor will provide a copy of the Declaration, the Common Securities
Guarantee and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of .
CENDANT CAPITAL II
By:
--------------------------
Name:
------------------------
Title: Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of 6.45% (the "Coupon Rate") of the stated liquidation
amount of $50 per Common Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest
thereon compounded quarterly at the rate of 6.45% until February 15, 2001,
and at the Reset Rate thereafter (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has actually received and holds funds
available therefor. The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 30-day month.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on February 16, May 16,
August 16 and November 16 of each year, commencing on
, to Holders of record one Business Day prior to such payment dates, which
payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding beyond the date of
maturity of the Debentures (each an "Extension Period") and, as a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the rate of
7.5% until February 15, 2001, and at the Reset Rate thereafter, compounded
quarterly during any such Extension Period. Payments of accrued
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period; provided, that such Extension Period together with all
such previous and further extensions thereof may not exceed beyond the
maturity date of the Debentures.
The Common Securities shall be redeemable as provided in the
Declaration.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Trust to repay $ stated liquidation amount of the within Common
Security, pursuant to its terms, on the "Put Option Exercise Date,"
together with distributions thereon accrued and unpaid to the date of
repayment, to the undersigned at:
---------------------------------------------------------
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Declaration,
a new Common Security or Common Securities representing the remaining
stated liquidation amount of this Common Security.
For this Option to Elect Repayment to be effective, the within Common
Security with this Option to Elect Repayment duly completed must be
received by the Trust at the Corporate Trust Office of the Institutional
Trustee at Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.
Dated: Signature:
--------------------------
Signature Guarantee:
---------------
Note: The signature to this Option to Elect Repayment must correspond with
the name as written upon the face of the within Common Security in every
particular without alternation or enlargement or any change whatsoever.
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
--------------
(Insert assignee's social security or tax identification number)
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
--------------
(Insert address and zip code of assignee)
and irrevocably appoints
---------------------------------------------------------------------------
---- ----------------------------------------------------------------------
--------- -----------------------------------------------------------------
-------------- agent to transfer this Common Security Certificate on the
books of the Trust. The agent may substitute another to act for him or her.
Date:
--------------------------------
Signature:
---------------------------------
Signature Guarantee:
-----------------------
(Sign exactly as your name appears on the other side of this Common
Security Certificate)
Exhibit 4.7
-------------------------------------------
FORM OF
PREFERRED SECURITIES GUARANTEE AGREEMENT
CENDANT CAPITAL II
Dated as of [ ]
-------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1 Definitions and Interpretation.........................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application.......................4
SECTION 2.2 List of Holders of Securities..........................4
SECTION 2.3 Reports by the Preferred Guarantee Trustee.............5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee........5
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......5
SECTION 2.6 Events of Default; Waiver..............................5
SECTION 2.7 Event of Default; Notice...............................5
SECTION 2.8 Conflicting Interests..................................6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee...6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee..........7
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..9
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility...............9
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees..................................10
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.............................................10
SECTION 5.2 Waiver of Notice and Demand...........................10
SECTION 5.3 Obligations Not Affected..............................11
SECTION 5.4 Rights of Holders.....................................11
SECTION 5.5 Guarantee of Payment..................................12
SECTION 5.6 Subrogation...........................................12
SECTION 5.7 Independent Obligations...............................12
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................12
SECTION 6.2 Ranking...............................................13
ARTICLE VII
TERMINATION
SECTION 7.1 Termination...........................................13
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation...........................................14
SECTION 8.2 Indemnification.......................................14
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................15
SECTION 9.2 Amendments............................................15
SECTION 9.3 Notices...............................................15
SECTION 9.4 Benefit...............................................16
SECTION 9.5 Governing Law.........................................16
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of [DATE], is executed and delivered by CENDANT, Inc., a Delaware
corporation (the "Guarantor"), and The Wilmington Trust Company, as trustee
(the "Preferred Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Cendant Capital II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of [ ], among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time
of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof [ ] preferred securities, liquidation amount
$[ ] per preferred security, having an aggregate liquidation amount of [ ]
designated the [ ] Trust Originated Preferred Securities (the "Preferred
Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Preferred Securities Guarantee, to pay to
the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of
the holders of the Common Securities (as defined herein), except that if an
Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are subordinated
to the rights of Holders of Preferred Securities to receive Guarantee
Payments under this Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all reference to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this
Preferred Securities Guarantee as modified, supplemented
or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of
this Preferred Securities Guarantee, unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Preferred Securities Guarantee,
unless otherwise defined in this Preferred Securities
Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than Saturday, Sunday or any
day on which banking institutions in the City of New York, New York are
authorized or required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is
located at The Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware, 19890.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt
securities of the Guarantor or designated the [ ] Junior Subordinated
Debentures due [ ] held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Direction" by a person means a written direction signed: (a) if
the Person is a natural person, by that Person; or (b) in any other case in
the name of such Person by one or more Authorized Officers of that Person.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accrued
and unpaid Distributions (as defined in the Declaration) that are required
to be paid on such Preferred Securities to the extent the Issuer shall have
funds available therefor, (ii) the redemption price, including all accrued
and unpaid distributions to the date of redemption (the "Repayment Price")
with respect to Preferred Securities in respect of which the related
Debentures have been redeemed by the Company upon the occurrence of a Tax
Event Redemption, to the extent the Issuer has funds available therefor,
and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution
of Debentures to the Holders in exchange for Preferred Securities as
provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an event of
default under the Indenture has occurred and is continuing, the rights of
holders of the Common Securities to receive payments under the Common
Securities Guarantee Agreement are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that,
in determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of [DATE], among the
Guarantor (the "Debenture Issuer") and The Wilmington Trust Company, as
trustee, and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to
the Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than [ ]% of the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or
covenant provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Preferred Guarantee Trustee" means The Wilmington Trust Company,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Preferred
Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as
Preferred Guarantee Trustee under Section 4.1.
"Tax Event Redemption" has the same meaning as defined in Annex I
to the Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed
by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2 List of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 1 Business Day
after [DATE] and [DATE] of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to
the Preferred Guarantee Trustee provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after [DATE] of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any)
and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided
for in this Preferred Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving
of such notice, provided, that, the Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible
Officer of the Preferred Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee
shall have received written notice, or of which a Responsible Officer of
the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration and the Indenture shall be deemed to be
specifically described in this Preferred Securities Guarantee for the
purposes of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor
Preferred Guarantee Trustee. The right, title and interest of the Preferred
Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guarantee
Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities
Guarantee for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing or waiver of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee,
the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Preferred Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of such Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required
to be furnished to the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible
Officer of the Preferred Guarantee Trustee, unless it shall be
proved that the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Holders
of not less than a Majority in liquidation amount of the
Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of
its rights or powers, if the Preferred Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from
acting upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated
by this Preferred Securities Guarantee shall be sufficiently
evidenced by a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem
it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Preferred
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or reregistration thereof).
(v) The Preferred Guarantee Trustee may consult with
competent legal counsel, and the written advice or opinion of
such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include
any of its employees. The Preferred Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any
court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Preferred Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have provided
to the Preferred Guarantee Trustee such Security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustees,
agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided that, nothing contained in
this Section 3.2 (a) (vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by
this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Preferred Guarantee Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters
as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee
or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as
to the authority of the Preferred Guarantee Trustee to so act or
as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be
conclusively evidenced by the Preferred Guarantee Trustee's or
its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem
it desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting
in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee
to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such act
or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Preferred Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a)There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least [
] U.S. dollars ($[ ]), and subject to supervision or examination
by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for
the purposes of this Section 4.1 (a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee
Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and
the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any,
as it may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Repayment Price, Liquidation Distribution
or any other sums payable under the terms of the Preferred Securities or
the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities (other than
an extension of time for payment of Distributions, Repayment Price,
Liquidation Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting
a legal proceeding against the Issuer, the Preferred Guarantee Trustee or
any other Person. Notwithstanding the foregoing, if the Guarantor has
failed to make a Guarantee Payment, a holder of Preferred Securities may
directly institute a proceeding against the Guarantor for enforcement of
the Preferred Security Guarantee for such payment. The Guarantor waives any
right or remedy to require that any action on this Preferred Securities
Guarantee be brought first against the Issuer or any other person or entity
before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all rights, if any, of the
Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred
Securities Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled
to enforce or exercise any right that it may acquire by way of subrogation
or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Preferred Securities Guarantee, if, at the
time of any such payment, any amounts are due and unpaid under this
Preferred Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to
the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred an Event of Default or an Event of Default under the
Declaration and written notice of such Event of Default has been given to
the Guarantor, then (a) the Guarantor shall not declare or pay dividends or
make any distribution with respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock (other than
(i) purchases or acquisitions of capital stock of the Guarantor in
connection with the satisfaction by the Guarantor of its obligations under
any employee or agent benefit plans or the satisfaction by the Guarantor of
its obligations pursuant to any contract or security outstanding on the
date of such event requiring the Guarantor to purchase capital stock of the
Guarantor, (ii) as a result of a reclassification of the Guarantor's
capital stock or the exchange or conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's
capital stock, (iii) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Guarantor (or rights to
acquire capital stock) or repurchases or redemptions of capital stock
solely from the issuance or exchange of capital stock or (v) redemptions or
purchases of any rights outstanding under a shareholder rights plan), (b)
the Guarantor shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by the
Guarantor that rank junior to the Debentures to the extent appropriate
notice has been given to the holders thereof effectively blocking such
payment or to the extent the failure to make any such payment is otherwise
authorized under the agreements governing such debt securities, and (c) the
Guarantor shall not make any guarantee payments with respect to the
foregoing (other than payments pursuant to the Guarantee or the Common
Securities Guarantee) to the extent appropriate notice has been given to
the beneficiaries thereof effectively blocking such payment or to the
extent the failure to make any such payment is otherwise authorized under
the agreements governing such guarantee payments.
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and, at all times when an Event of Default has
occurred and is continuing under the Declaration, will rank:
(i) subordinate and junior in right of payment to, and
shall not be paid until the prior payment in full of, all
liabilities of the Guarantor except those liabilities of the
Guarantor made pari passu herewith or subordinate hereto by their
terms;
(ii) pari passu with, and shall be paid ratably in any
bankruptcy, liquidation or dissolution of the Guarantor with, the
most senior preferred or preference stock now or hereafter issued
by the Guarantor and with any guarantee now or hereafter entered
into by the Guarantor in respect of any preferred or preference
stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Repayment Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance
with the Declaration upon liquidation of the Issuer. Notwithstanding the
foregoing, this Preferred Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under
the Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance
with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Preferred Securities
Guarantee or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Preferred
Securities might properly be paid.
SECTION 8.2 Indemnification
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from
and against any loss, damage or claim incurred by such Indemnified Person
by reason of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Guarantee Agreement and in a
manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by this Guarantee
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, reasonable
out-of-pocket expenses (including legal fees) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Guarantor prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt
by the Guarantor of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized in Section 8.2(a).
(c) The provisions set forth in this Section 8.2 shall survive the
termination of the Preferred Securities Guarantee or the resignation or
removal of the Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation
or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) of all the outstanding Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect
to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall
be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address
as the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of
to the Holders of the Preferred Securities):
CENDANT CORPORATION
9 West 57th Street
New York, New York 10019
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
CENDANT CORPORATION, as Guarantor
By:
---------------------------------------------
Name:
Title:
THE WILMINGTON TRUST COMPANY, as Preferred
Guarantee Trustee
By:
---------------------------------------------
Name:
Title:
Exhibit 4.8
CENDANT CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS PURCHASE CONTRACT AGENT
--------------------
FORM OF PURCHASE CONTRACT AGREEMENT
--------------------
DATED AS OF ________ ___,
TABLE OF CONTENTS
Page
RECITALS...................................................................
ARTICLE I
Definitions and Other Provisions of
General Applications.......................................................
Section 1.1. Definitions..............................................
Section 1.2. Compliance Certificates and Opinions.....................
Section 1.3. Form of Documents Delivered to Agent.....................
Section 1.4. Acts of Holders; Record Dates............................
Section 1.5. Notices..................................................
Section 1.6. Notice to Holders; Waiver................................
Section 1.7. Effect of Headings and Table of Contents.................
Section 1.8. Successors and Assigns...................................
Section 1.9. Separability Clause......................................
Section 1.10. Benefits of Agreement....................................
Section 1.11. Governing Law............................................
Section 1.12. Legal Holidays...........................................
Section 1.13. Counterparts.............................................
Section 1.14. Inspection of Agreement..................................
ARTICLE II
Certificate Forms..........................................................
Section 2.1. Forms of Certificates Generally..........................
Section 2.2. Form of Agent's Certificate of Authentication............
ARTICLE III
The Securities.............................................................
Section 3.1. Title and Terms; Denominations...........................
Section 3.2. Rights and Obligations Evidenced by the Certificates.....
Section 3.3. Execution, Authentication, Delivery and Dating...........
Section 3.4. Temporary Certificates...................................
Section 3.5. Registration; Registration of Transfer and Exchange......
Section 3.6. Book-Entry Interests.....................................
Section 3.7. Notices to Holders.......................................
Section 3.8. Appointment of Successor Clearing Agency.................
Section 3.9. Definitive Certificates..................................
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.......
Section 3.11. Persons Deemed Owners....................................
Section 3.12. Cancellation.............................................
Section 3.14. Establishment or Reestablishment of Income PRIDES........
Section 3.15. Transfer of Collateral upon
Occurrence of Termination Event...... ...................
Section 3.16. No Consent toAssumption..................................
ARTICLE IV
The Preferred Securities.............. ....................................
Section 4.1. Payment of Distribution;
Rights to Distributions Preserved;
Distribution Rate Reset; Notice..........................
Section 4.2. Notice and Voting........................................
Section 4.3. Distribution of Debentures; Tax Event Redemption.........
ARTICLE V
The Purchase Contracts.....................................................
Section 5.1. Purchase of Shares of Common Stock.......................
Section 5.2. Contract Adjustment Payments.............................
Section 5.3. Deferral of Payment Dates For
Contract Adjustment Payments.............................
Section 5.4. Payment of Purchase Price................................
Section 5.5. Issuance of Shares of Common Stock.......................
Section 5.6. Adjustment of Settlement Rate............................
Section 5.7. Notice of Adjustments and Certain Other Events...........
Section 5.8. Termination Event; Notice................................
Section 5.9. Early Settlement.........................................
Section 5.10. No Fractional Shares.....................................
Section 5.11. Charges and Taxes........................................
ARTICLE VI
Remedies...................................................................
Section 6.1. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Common Stock.........
Section 6.2. Restoration of Rights and Remedies.......................
Section 6.3. Rights and Remedies Cumulative...........................
Section 6.4. Delay or Omission Not Waiver.............................
Section 6.5. Undertaking for Costs....................................
Section 6.6. Waiver of Stay or Extension Laws.........................
ARTICLE VII
The Agent..................................................................
Section 7.1. Certain Duties and Responsibilities......................
Section 7.2. Notice of Default........................................
Section 7.3. Certain Rights of Agent..................................
Section 7.4. Not Responsible for Recitals or Issuance of Securities...
Section 7.5. May Hold Securities......................................
Section 7.6. Money Held in Custody....................................
Section 7.7. Compensation and Reimbursement...........................
Section 7.8. Corporate Agent Required; Eligibility....................
Section 7.9. Resignation and Removal; Appointment of Successor........
Section 7.10. Acceptance of Appointment by Successor...................
Section 7.11. Merger, Conversion, Consolidation
or Succession to Business................................
Section 7.12. Preservation of Information; Communications to Holders...
Section 7.13. No Obligations of Agent..................................
Section 7.14. Tax Compliance...........................................
ARTICLE VIII
Supplemental Agreements....................................................
Section 8.1. Supplemental Agreements Without Consent of Holders.......
Section 8.2. Supplemental Agreements with Consent of Holders..........
Section 8.3. Execution of Supplemental Agreements.....................
Section 8.4. Effect of Supplemental Agreements........................
Section 8.5. Reference to Supplemental Agreements.....................
ARTICLE IX
Consolidation, Merger, Sale or Conveyance..................................
Section 9.1. Covenant Not to Merge, Consolidate,
Sell or Convey Property Except
Under Certain Conditions.................................
Section 9.2. Rights and Duties of Successor Corporation...............
Section 9.3. Opinion of Counsel Given to Agent........................
ARTICLE X
Covenants..................................................................
Section 10.1. Performance Under Purchase Contracts.....................
Section 10.2. Maintenance of Office or Agency..........................
Section 10.3. Company to Reserve Common Stock..........................
Section 10.4. Covenants as to Common Stock.............................
Section 10.5. Statements of Officer of the Company as to Default.......
EXHIBIT A Form of Income PRIDES Certificate
EXHIBIT B Form of Growth PRIDES Certificate
EXHIBIT C Instruction to Collateral Agent
EXHIBIT D Instruction to Purchase Contract Agent
EXHIBIT E Notice to Settle with Separate Cash
PURCHASE CONTRACT AGREEMENT, dated as of _______ ___,
between Cendant Corporation, a Delaware corporation (the "Company"), and
The First National Bank of Chicago, a national banking association, acting
as purchase contract agent for the Holders of Securities from time to time
(the "Agent").
RECITALS
The Company has duly authorized the execution and delivery
of this Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when
the Certificates are executed by the Company and authenticated, executed on
behalf of the Holders and delivered by the Agent, as provided in this
Agreement, the valid obligations of the Company, and to constitute these
presents a valid agreement of the Company, in accordance with its terms,
have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well as
the singular; and nouns and pronouns of the masculine gender include the
feminine and neuter genders;
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(d) the following terms have the meanings given to
them in the Declaration: (i) Applicable Ownership Interest; (ii) Applicable
Principal Amount; (iii) Authorized Newspaper; (iv) Indenture, (v)
Investment Company Event; (vi) Liquidation Distribution; (vii) Preferred
Securities Guarantee; (viii) Primary Treasury Dealer; (ix) Quotation Agent;
(x) Redemption Amount; (xi) Redemption Price; (xii) Reset Agent; (xiii)
Reset Announcement Date; (xiv) Reset Rate; (xv) Reset Spread; (xvi) Tax
Event; (xvii) Tax Event Redemption; (xviii) Tax Event Redemption Date;
(xix) Two-Year Benchmark Treasury; (xx) Treasury Portfolio; and (xxi)
Treasury Portfolio Purchase Price; and
(e) the following terms have the meanings given to
them in this Section 1.1(e).
"Act" when used with respect to any Holder, has the meaning
specified in Section 1.4.
"Affiliate"has the same meaning as given to that term in
Rule 405 of the Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first
paragraph of this instrument until a successor Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Agent" shall mean such Person.
"Agreement" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more
agreements supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Applicable Market Value" has the meaning specified in
Section 5.1.
"Bankruptcy Code" means title 11 of the United States Code,
or any other law of the United States that from time to time provides a
uniform system of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry Interest
as reflected on the books of the Clearing Agency or on the books of a
Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Board of Directors" means the board of directors of the
Company or a duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the
Board of Directors, a copy of which has been certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Agent.
"Book-Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described in Section
3.6.
"Business Day" means any day other than a Saturday, Sunday
or any other day on which banking institutions in New York City (in the
State of New York) are permitted or required by any applicable law to
close.
"Cash Settlement" has the meaning set forth in Section
5.4(a)(i).
"Certificate" means an Income PRIDES Certificate or a Growth
PRIDES Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is
acting as a depositary for the Securities and in whose name, or in the name
of a nominee of that organization, shall be registered a Global Certificate
and which shall undertake to effect book entry transfers and pledges of the
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1.
"Collateral" has the meaning specified in Section 2.1 of the
Pledge Agreement.
"Collateral Agent" means The Chase Manhattan Bank, as
Collateral Agent under the Pledge Agreement until a successor Collateral
Agent shall have become such pursuant to the applicable provisions of the
Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person
who is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in
Section 3.13.
"Common Stock" means the Common Stock, par value $0.01, of
the Company.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor shall have become such
pursuant to the applicable provision of this Agreement, and thereafter
"Company" shall mean such successor.
"Contract Adjustment Payments" means the fee payable by the
Company in respect of each Purchase Contract, equal to % per annum of the
Stated Amount in the case of Income PRIDES and % per annum of the Stated
Amount in the case of Growth PRIDES, computed on the basis of a 360 day
year of twelve 30 day months, plus any Deferred Contract Adjustment
Payments accrued pursuant to Section 5.2.
"Corporate Trust Office" means the principal corporate trust
office of the Agent at which, at any particular time, its corporate trust
business shall be administered, which office at the date hereof is located
at One First National Plaza, Suite 0126, Chicago, IL 60670-0126, Attention:
Corporate Trust Services Division, except that for purposes of Section
10.2, such term shall mean the office or agency of the Agent in the Borough
of Manhattan, the City of New York, which office at the date hereof is
located at 14 Wall Street, Eighth Floor, New York, NY 10005.
"Coupon Rate" means the percentage rate per annum at which
each Debenture will bear interest initially.
"Current Market Price" has the meaning specified in Section
5.6(a)(8).
"Debentures" means the series of debentures of the Company
designated the ____% Debentures due February 16, 2003, to be issued under
the Indenture as of the date hereof.
"Declaration" means the Amended and Restated Agreement of
Trust of Cendant Capital II, dated ________ ___, _______, among the
Company, as the sponsor, the trustees named therein and the holders from
time to time of individual beneficial interests in the assets of the Trust.
"Deferred Contract Adjustment Payments" has the meaning
specified in Section 5.3.
"Depositary" means, initially, DTC until another Clearing
Agency becomes its successor.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Early Settlement" has the meaning specified in Section
5.9(a).
"Early Settlement Amount" has the meaning specified in
Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section
5.9(a).
"Early Settlement Rate" has the meaning specified in Section
5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and
any statute successor thereto, in each case as amended from time to time,
and the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section
5.6(a)(6).
"Global Certificate" means a Certificate that evidences all
or part of the Securities and is registered in the name of a Depositary or
a nominee thereof.
"Global Preferred Security Certificate" means a certificate
evidencing the rights and obligations of a Holder in respect of the number
of Preferred Securities specified on such certificate and which is
registered in the name of a Clearing Agency or a nominee thereof.
"Growth PRIDES" means, following the substitution of one or
more Treasury Securities for Preferred Securities or for the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, as
collateral to secure a holder's obligations under a Purchase Contract, the
collective rights and obligations of a holder of a Growth PRIDES
Certificate in respect of such Treasury Securities, subject in each case to
the Pledge thereof, and the related Purchase Contract.
"Growth PRIDES Certificate" means a certificate evidencing
the rights and obligations of a Holder in respect of the number of Growth
PRIDES specified on such certificate.
"Growth PRIDES Register" and "Growth PRIDES Registrar" have
the respective meanings specified in Section 3.5.
"Holder," when used with respect to a Security, means the
Person in whose name the Security evidenced by an Income PRIDES Certificate
and/or a Growth PRIDES Certificate is registered in the related Income
PRIDES Register and/or the Growth PRIDES Register, as the case may be.
"Income PRIDES" means the collective rights and obligations
of a Holder of an Income PRIDES Certificate in respect of a Preferred
Security or an appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, subject in each case to the Pledge thereof,
and the related Purchase Contract.
"Income PRIDES Certificate" means a certificate evidencing
the rights and obligations of a Holder in respect of the number of Income
PRIDES specified on such certificate.
"Income PRIDES Register" and "Income PRIDES Registrar" have
the respective meanings specified in Section 3.5.
"Indenture" has the meaning set forth in Section 1.1 of the
Declaration.
"Indenture Trustee" means The Bank of Nova Scotia Trust
Company of New York, a national banking association, as trustee under the
Indenture, or any successor thereto.
"Institutional Trustee" means Wilmington Trust Company, as
institutional trustee under the Declaration, or any successor thereto that
is a financial institution unaffiliated with the Company.
"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Company by its Chairman of the Board, any
Vice Chairman, its President or a Vice President and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"Officer's Certificate" means a certificate signed by the
Chairman of the Board, any Vice Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company or an
Affiliate and who shall be reasonably acceptable to the Agent.
"Outstanding Securities," with respect to any Income PRIDES
or Growth PRIDES, means, as of the date of determination, all Income PRIDES
or Growth PRIDES evidenced by Certificates theretofore authenticated,
executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A)
Growth PRIDES and (B) Income PRIDES for which the Stated Amount of
the related Preferred Security or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, or a Liquidation
Distribution in respect of such Preferred Security, as the case may
be, has been theretofore deposited with the Agent in trust for the
Holders of such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced
by Certificates theretofore cancelled by the Agent or delivered to
the Agent for cancellation or deemed cancelled pursuant to the
provisions of this Agreement; and
(iii) Income PRIDES and Growth PRIDES
evidenced by Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on behalf of the
Holder and delivered pursuant to this Agreement, other than any
such Certificate in respect of which there shall have been
presented to the Agent proof satisfactory to it that such
Certificate is held by a bona fide purchaser in whose hands the
Income PRIDES or
Growth PRIDES evidenced by such Certificate are valid
obligations of the Company; provided, however, that in determining whether
the Holders of the requisite number of the Income PRIDES or Growth PRIDES
have given any request, demand, authorization, direction, notice, consent
or waiver hereunder, Income PRIDES or Growth PRIDES owned by the Company or
any Affiliate of the Company shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Agent shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Income PRIDES or Growth PRIDES
which a Responsible Officer of the Agent knows to be so owned shall be so
disregarded. Income PRIDES or Growth PRIDES so owned which have been
pledged in good faith may be regarded as Outstanding Securities if the
pledgee establishes to the satisfaction of the Agent the pledgee's right so
to act with respect to such Income PRIDES or Growth PRIDES and that the
pledgee is not the Company or any Affiliate of the Company.
"Payment Date" means each February 16, May 16, August 16 and
November 16, commencing , .
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Permitted Investments" has the meaning set forth in Section
1 of the Pledge Agreement.
"Pledge" means the pledge under the Pledge Agreement of the
Preferred Securities, the Treasury Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, in each case constituting a
part of the Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of
the date hereof, by and among the Company, the Collateral Agent and the
Agent, on its own behalf and as attorney-in-fact for the Holders from time
to time of the Securities.
"Predecessor Certificate" means a Predecessor Income PRIDES
Certificate or a Predecessor Growth PRIDES Certificate.
"Predecessor Growth PRIDES Certificate" of any particular
Growth PRIDES Certificate means every previous Growth PRIDES Certificate
evidencing all or a portion of the rights and obligations of the Company
and the Holder under the Growth PRIDES evidenced thereby; and, for the
purposes of this definition, any Growth PRIDES Certificate authenticated
and delivered under Section 3.10 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Growth PRIDES Certificate shall be deemed to
evidence the same rights and obligations of the Company and the Holder as
the mutilated, destroyed, lost or stolen Growth PRIDES Certificate.
"Predecessor Income PRIDES Certificate" of any particular
Income PRIDES Certificate means every previous Income PRIDES Certificate
evidencing all or a portion of the rights and obligations of the Company
and the Holder under the Income PRIDES evidenced thereby; and, for the
purposes of this definition, any Income PRIDES Certificate authenticated
and delivered under Section 3.10 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Income PRIDES Certificate shall be deemed to
evidence the same rights and obligations of the Company and the Holder as
the mutilated, destroyed, lost or stolen Income PRIDES Certificate.
"Preferred Securities" means the ____% Trust Originated
Preferred Securities of the Trust, each having a stated liquidation amount
of $50, representing preferred undivided beneficial interests in the assets
of the Trust.
"Proceeds" has the meaning set forth in Section 1 of the
Pledge Agreement.
"Purchase Contract," when used with respect to any Security,
means the contract forming a part of such Security and obligating the
Company to (i) sell and the Holder of such Security to purchase Common
Stock and (ii) pay the Holder Contract Adjustment Payments, if any, on the
terms and subject to the conditions set forth in Article Five hereof.
"Purchase Contract Settlement Date" means February 16, 2001.
"Purchase Contract Settlement Fund" has the meaning
specified in Section 5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section
5.6(a)(6).
"Record Date" for the distribution and Contract Adjustment
Payments payable on any Payment Date means, as to any Global Certificate,
the Business Day next preceding such Payment Date, and as to any other
Certificate, a day selected by the Company which shall be more than one
Business Day but less than 60 Business Days prior to such Payment Date.
"Register" means the Income PRIDES Register and the Growth
PRIDES Register.
"Registrar" means the Income PRIDES Registrar and the Growth
PRIDES Registrar.
"Remarketing Agent" has the meaning specified in Section 5.4.
"Remarketing Agreement" means the Remarketing Agreement
dated _______ ___, _______ by and between the Company, the Trust, the
Remarketing Agent and the Purchase Contract Agent.
"Remarketing Fee" has the meaning specified in Section 5.4.
"Remarketing Purchase Agreement" has the meaning specified
in the Remarketing Agreement.
"Reorganization Event" has the meaning specified in Section
5.6(b).
"Responsible Officer," when used with respect to the Agent,
means any officer of the Agent assigned by the Agent to administer its
corporate trust matters.
"Security" means an Income PRIDES or a Growth PRIDES.
"Senior Indebtedness" means indebtedness of any kind of the
Company unless the instrument under which such indebtedness is incurred
expressly provides that it is on parity with or subordinated in right of
payment to the Contract Adjustment Payments.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $50.
"Termination Date" means the date, if any, on which a
Termination Event occurs.
"Termination Event" means the occurrence of any of the
following events: (i) at any time on or prior to the Purchase Contract
Settlement Date, a judgment, decree or court order shall have been entered
granting relief under the Bankruptcy Code, adjudicating the Company to be
insolvent, or approving as properly filed a petition seeking reorganization
or liquidation of the Company or any other similar applicable Federal or
State law, and, unless such judgment, decree or order shall have been
entered within 60 days prior to the Purchase Contract Settlement Date, such
decree or order shall have continued undischarged and unstayed for a period
of 60 days; or (ii) a judgment, decree or court order for the appointment
of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and, unless such
judgment, decree or order shall have been entered within 60 days prior to
the Purchase Contract Settlement Date, such judgment, decree or order shall
have continued undischarged and unstayed for a period of 60 days, or (iii)
at any time on or prior to the Purchase Contract Settlement Date the
Company shall file a petition for relief under the Bankruptcy Code, or
shall consent to the filing of a bankruptcy proceeding against it, or shall
file a petition or answer or consent seeking reorganization or liquidation
under the Bankruptcy Code or any other similar applicable Federal or State
law, or shall consent to the filing of any such petition, or shall consent
to the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in
Section 5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or
any successor statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Security" means a 1/2 undivided beneficial
interest in a zero-coupon U.S. Treasury Securities (Cusip Number ) with a
principal amount of maturity equal to $1000 which mature on February 15,
2001.
"Trust" means Cendant Capital II, a statutory business trust
formed under the laws of the State of Delaware, or any successor thereto by
merger or consolidation.
"Underwriting Agreement" means the Underwriting Agreement
dated ________ ___, _____ between the Company, the Trust, and Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Chase Securities Inc.
"Vice President" means any vice president, whether or not
designated by a number or a word or words added before or after the title
"vice president".
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement,
upon any application or request by the Company to the Agent to take any
action under any provision of this Agreement, the Company shall furnish to
the Agent an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Agreement relating to the proposed action have
been complied with and, if requested by the Agent, an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation as
is necessary to enable such individual to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions
or other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to
Section 7.1) conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any manner which the Agent
deems sufficient.
(c) The ownership of Securities shall be proved by the
Income PRIDES Register or the Growth PRIDES Register, as the case may be.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Certificate shall bind
every future Holder of the same Certificate and the Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(e) The Company may set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Agreement to
be given, made or taken by Holders of Securities. If any record date is set
pursuant to this paragraph, the Holders of the Outstanding Income PRIDES
and the Outstanding Growth PRIDES, as the case may be, on such record date,
and no other Holders, shall be entitled to take the relevant action with
respect to the Income PRIDES or the Growth PRIDES, as the case may be,
whether or not such Holders remain Holders after such record date; provided
that no such action shall be effective hereunder unless taken on or prior
to the applicable Expiration Date by Holders of the requisite number of
Outstanding Securities on such record date. Nothing in this paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite number of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Agent in writing and to each Holder of Securities
in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this
Section, the Company may designate any date as the "Expiration Date" and
from time to time may change the Expiration Date to any earlier or later
day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the Agent in writing, and to each
Holder of Securities in the manner set forth in Section 1.6, on or prior to
the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the Company shall
be deemed to have initially designated the 180th day after such record date
as the Expiration Date with respect thereto, subject to its right to change
the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date.
Section 1.5. Notices.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted
by this Agreement to be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing
and personally delivered or mailed, first-class postage prepaid, to
the Agent at The First National Bank of Chicago, One First National
Plaza, Suite 0126, Chicago, IL 60670-0126, Attention: Corporate
Trust Services Division, or at any other address previously
furnished in writing by the Agent to the Holders and the Company;
or
(2) the Company by the Agent or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing
and personally delivered or mailed, first-class postage prepaid, to
the Company at Cendant Corporation, 9 West 57th Street, New York,
NY 10019, Attention: Corporate Secretary, or at any other address
previously furnished in writing to the Agent by the Company; or
(3) the Collateral Agent by the Agent, the Company or
any Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or
filed in writing and personally delivered or mailed, first-class
postage prepaid, addressed to the Collateral Agent at The Chase
Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, NY
10001, Attention: Corporate Trust Administration, or at any other
address previously furnished in writing by the Collateral Agent to the
Agent, the Company and the Holders; or
(4) the Institutional Trustee by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing
and personally delivered or mailed, first-class postage prepaid,
addressed to the Institutional Trustee at Wilmington Trust Company
[ ], Attention: Corporate Trust Services Division, or at any other
address previously furnished in writing by the Institutional
Trustee to the Company; or
(5) the Indenture Trustee by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing
and personally delivered or mailed, first-class postage prepaid,
addressed to the Indenture Trustee at [ ] or at any other address
previously furnished in writing by the Indenture Trustee to the
Company.
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at its address as it appears in the
applicable Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Agent, but
such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval
of the Agent shall constitute a sufficient notification for every purpose
hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the
Company shall bind its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof and thereof shall not in
any way be affected or impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this
Agreement. The Holders from time to time shall be beneficiaries of this
Agreement and shall be bound by all of the terms and conditions hereof and
of the Securities evidenced by their Certificates by their acceptance of
delivery of such Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business
Day, then (notwithstanding any other provision of this Agreement or the
Income PRIDES Certificates or the Growth PRIDES Certificates) payment of
the Contract Adjustment Payments, if any, shall not be made on such date,
but such payments shall be made on the next succeeding Business Day with
the same force and effect as if made on such Payment Date, provided that no
interest shall accrue or be payable by the Company or any Holder for the
period from and after any such Payment Date, except that, if such next
succeeding Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day with the
same force and effect as if made on such Payment Date.
In any case where any Purchase Contract Settlement Date
shall not be a Business Day, then (notwithstanding any other provision of
this Agreement, the Income PRIDES Certificates or the Growth PRIDES
Certificates), the Purchase Contracts shall not be performed on such date,
but the Purchase Contracts shall be performed on the immediately following
Business Day with the same force and effect as if performed on the Purchase
Contract Settlement Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts
by the parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all
reasonable times during normal business hours at the Corporate Trust Office
for inspection by any Holder.
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
The Income PRIDES Certificates (including the form of
Purchase Contract forming part of the Income PRIDES evidenced thereby)
shall be in substantially the form set forth in Exhibit A hereto, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Income PRIDES
are listed or any depositary therefor, or as may, consistently herewith, be
determined by the officers of the Company executing such Income PRIDES
Certificates, as evidenced by their execution of the Income PRIDES
Certificates.
The definitive Income PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in
any other manner, all as determined by the officers of the Company
executing the Income PRIDES evidenced by such Income PRIDES Certificates,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
The Growth PRIDES Certificates (including the form of
Purchase Contracts forming part of the Growth PRIDES evidenced thereby)
shall be in substantially the form set forth in Exhibit B hereto, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Growth PRIDES
may be listed or any depositary therefor, or as may, consistently herewith,
be determined by the officers of the Company executing such Growth PRIDES
Certificates, as evidenced by their execution of the Growth PRIDES
Certificates.
The definitive Growth PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in
any other manner, all as determined by the officers of the Company
executing the Growth PRIDES evidenced by such Growth PRIDES Certificates,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Certificate authenticated, executed on behalf
of the Holders and delivered hereunder shall bear a legend in substantially
the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS
REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT.
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the
Income PRIDES shall be in substantially the form set forth on the form of
the Income PRIDES Certificates.
The form of the Agent's certificate of authentication of the
Growth PRIDES shall be in substantially the form set forth on the form of
the Growth PRIDES Certificates.
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations.
The aggregate number of Income PRIDES evidenced by
Certificates authenticated, executed on behalf of the Holders and delivered
hereunder is limited to except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or
8.5.
The Certificates shall be issuable only in registered form
and only in denominations of a single Income PRIDES or Growth PRIDES and
any integral multiple thereof.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Income PRIDES Certificate shall evidence the number of
Income PRIDES specified therein, with each such Income PRIDES representing
the ownership by the Holder thereof of a beneficial interest in a Preferred
Security or the Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, subject to the Pledge of such Preferred Security or the
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, by such Holder pursuant to the Pledge Agreement, and the rights and
obligations of the Holder thereof and the Company under one Purchase
Contract. The Agent as attorney-in-fact for, and on behalf of, the Holder
of each Income PRIDES shall pledge, pursuant to the Pledge Agreement, the
Preferred Security or the Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, forming a part of such Income PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security interest in
the right, title, and interest of such Holder in such Preferred Security or
the Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, for the benefit of the Company, to secure the obligation of the
Holder under each Purchase Contract to purchase the Common Stock of the
Company. Prior to the purchase of shares of Common Stock under each
Purchase Contract, such Purchase Contracts shall not entitle the Holder of
an Income PRIDES Certificates to any of the rights of a holder of shares of
Common Stock, including, without limitation, the right to vote or receive
any dividends or other payments or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or for the election
of directors of the Company or for any other matter, or any other rights
whatsoever as stockholders of the Company.
Each Growth PRIDES Certificate shall evidence the number of
Growth PRIDES specified therein, with each such Growth PRIDES representing
the ownership by the Holder thereof of a 1/20 undivided beneficial interest
in a Treasury Security with a principal amount equal to $1,000 subject to
the Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the
Company under one Purchase Contract. Prior to the purchase, if any, of
shares of Common Stock under the Purchase Contracts, such Growth PRIDES
Certificates shall not entitle the Holders of Growth PRIDES Certificates to
any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or
to consent or to receive notice as stockholders in respect of the meetings
of stockholders or for the election of directors of the Company or for any
other matter, or any other rights whatsoever as stockholders of the
Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof,
upon the execution and delivery of this Agreement, and at any time and from
time to time thereafter, the Company may deliver Certificates executed by
the Company to the Agent for authentication, execution on behalf of the
Holders and delivery, together with its Issuer Order for authentication of
such Certificates, and the Agent in accordance with such Issuer Order shall
authenticate, execute on behalf of the Holders and deliver such
Certificates.
The Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Vice Chairman of the Board, its President
or one of its Vice Presidents or Treasurer. The signature of any of these
officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Certificates or did not hold such offices at the date of such
Certificates.
No Purchase Contract evidenced by a Certificate shall be
valid until such Certificate has been executed on behalf of the Holder by
the manual signature of an authorized signatory of the Agent, as such
Holder's attorney-in-fact. Such signature by an authorized signatory of the
Agent shall be conclusive evidence that the Holder of such Certificate has
entered into the Purchase Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its
authentication.
No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of the Agent by
manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holders, and deliver, in lieu of
such definitive Certificates, temporary Certificates which are in
substantially the form set forth in Exhibit A or Exhibit B hereto, as the
case may be, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or
engraved thereon as may be required by the rules of any securities exchange
on which the Income PRIDES or Growth PRIDES are listed, or as may,
consistently herewith, be determined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.
If temporary Certificates are issued, the Company will cause
definitive Certificates to be prepared without unreasonable delay. After
the preparation of definitive Certificates, the temporary Certificates
shall be exchangeable for definitive Certificates upon surrender of the
temporary Certificates at the Corporate Trust Office, at the expense of the
Company and without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Certificates, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf
of the Holder, and deliver in exchange therefor, one or more definitive
Certificates of like tenor and denominations and evidencing a like number
of Income PRIDES or Growth PRIDES, as the case may be, as the temporary
Certificate or Certificates so surrendered. Until so exchanged, the
temporary Certificates shall in all respects evidence the same benefits and
the same obligations with respect to the Income PRIDES or Growth PRIDES, as
the case may be, evidenced thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a
register (the "Income PRIDES Register") in which, subject to such
reasonable regulations as it may prescribe, the Agent shall provide for the
registration of Income PRIDES Certificates and of transfers of Income
PRIDES Certificates (the Agent, in such capacity, the "Income PRIDES
Registrar") and a Register (the "Growth PRIDES Register") in which, subject
to such reasonable regulations as it may prescribe, the Agent shall provide
for the registration of the Growth PRIDES Certificates and transfers of
Growth PRIDES Certificates (the Agent, in such capacity, the "Growth PRIDES
Registrar").
Upon surrender for registration of transfer of any
Certificate at the Corporate Trust Office, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf
of the designated transferee or transferees, and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of
any authorized denominations, like tenor, and evidencing a like number of
Income PRIDES or Growth PRIDES, as the case may be.
At the option of the Holder, Certificates may be exchanged
for other Certificates, of any authorized denominations and evidencing a
like number of Income PRIDES or Growth PRIDES, as the case may be, upon
surrender of the Certificates to be exchanged at the Corporate Trust
Office. Whenever any Certificates are so surrendered for exchange, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates
which the Holder making the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or
exchange of a Certificate shall evidence the ownership of the same number
of Income PRIDES or Growth PRIDES, as the case may be, and be entitled to
the same benefits and subject to the same obligations, under this Agreement
as the Income PRIDES or Growth PRIDES, as the case may be, evidenced by the
Certificate surrendered upon such registration of transfer or exchange.
Every Certificate presented or surrendered for registration
of transfer or for exchange shall (if so required by the Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Agent duly executed, by the Holder
thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of a Certificate, but the Company and the Agent may
require payment from the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Certificates, other than any
exchanges pursuant to Sections 3.6 and 8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver any
Certificate presented or surrendered for registration of transfer or for
exchange on or after the Business Day immediately preceding the earlier of
the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall (i)
if the Purchase Contract Settlement Date has occurred, deliver the shares
of Common Stock issuable in respect of the Purchase Contracts forming a
part of the Securities evidenced by such Certificate, (ii) in the case of
Income PRIDES, if a Termination Event shall have occurred prior to the
Purchase Contract Settlement Date, transfer the aggregate Stated Amount of
the Preferred Securities or the Treasury Portfolio, as applicable,
evidenced thereby, or (iii) in the case of Growth PRIDES, if a Termination
Event shall have occurred prior to the Purchase Contract Settlement Date,
transfer the Treasury Securities evidenced thereby, in each case subject to
the applicable conditions and in accordance with the applicable provisions
of Article Five hereof.
Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in
the form of one or more, fully registered Global Certificates, to be
delivered to the Depositary by, or on behalf of, the Company. Such Global
Certificate shall initially be registered on the books and records of the
Company in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner's interest in such Global Certificate, except as provided
in Section 3.9. The Agent shall enter into an agreement with the Depositary
if so requested by the Company. Unless and until definitive, fully
registered Certificates have been issued to Beneficial Owners pursuant to
Section 3.9:
(a) the provisions of this Section 3.6 shall be in full
force and effect;
(b) the Company shall be entitled to deal with the Clearing
Agency for all purposes of this Agreement (including the payment of
Contract Adjustment Payments, if any, and receiving approvals, votes or
consents hereunder) as the Holder of the Securities and the sole holder of
the Global Certificate(s) and shall have no obligation to the Beneficial
Owners;
(c) to the extent that the provisions of this Section 3.6
conflict with any other provisions of this Agreement, the provisions of
this Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants. The Clearing
Agency will make book entry transfers among Clearing Agency Participants
and receive and transmit payments of Contract Adjustment Payments to such
Clearing Agency Participants.
Section 3.7. Notices to Holders.
Whenever a notice or other communication to the Holders is
required to be given under this Agreement, the Company or the Company's
agent shall give such notices and communications to the Holders and, with
respect to any Securities registered in the name of a Clearing Agency or
the nominee of a Clearing Agency, the Company or the Company's agent shall,
except as set forth herein, have no obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities, the Company may, in
its sole discretion, appoint a successor Clearing Agency with respect to
the Securities.
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 3.8, (ii) the Company elects to terminate the
book-entry system through the Clearing Agency with respect to the
Securities, or (iii) there shall have occurred and be continuing a default
by the Company in respect of its obligations under one or more Purchase
Contracts, then upon surrender of the Global Certificates representing the
Book-Entry Interests with respect to the Securities by the Clearing Agency,
accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in accordance
with the instructions of the Clearing Agency. The Company shall not be
liable for any delay in delivery of such instructions and may conclusively
rely on and shall be protected in relying on, such instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, a new Certificate at the cost of the Holder, evidencing the same
number of Income PRIDES or Growth PRIDES, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i)
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) such security or indemnity at the cost of the Holder
as may be required by them to hold each of them and any agent of any of
them harmless, then, in the absence of notice to the Company or the Agent
that such Certificate has been acquired by a bona fide purchaser, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver to the Holder,
in lieu of any such destroyed, lost or stolen Certificate, a new
Certificate, evidencing the same number of Income PRIDES or Growth PRIDES,
as the case may be, and bearing a Certificate number not contemporaneously
outstanding.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder, and deliver to
the Holder, a Certificate on or after the Business Day immediately
preceding the earlier of the Purchase Contract Settlement Date or the
Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this Section
and receipt of appropriate registration or transfer instructions from such
Holder, the Agent shall (i) if the Purchase Contract Settlement Date has
occurred, deliver the shares of Common Stock issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate, or (ii) if a Termination Event shall have occurred prior to
the Purchase Contract Settlement Date, transfer the Preferred Securities,
the appropriate Applicable Ownership Interest of the Treasury Portfolio or
the Treasury Securities, as the case may be, evidenced thereby, in each
case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section,
the Company and the Agent may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Agent) connected therewith.
Every new Certificate issued pursuant to this Section in
lieu of any destroyed, lost or stolen Certificate shall constitute an
original additional contractual obligation of the Company and of the Holder
in respect of the Security evidenced thereby, whether or not the destroyed,
lost or stolen Certificate (and the Securities evidenced thereby) shall be
at any time enforceable by anyone, and shall be entitled to all the
benefits and be subject to all the obligations of this Agreement equally
and proportionately with any and all other Certificates delivered
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration
of transfer, the Company and the Agent, and any agent of the Company or the
Agent, may treat the Person in whose name such Certificate is registered as
the owner of the Income PRIDES or Growth PRIDES evidenced thereby, for the
purpose of receiving distributions on the Preferred Securities or on the
maturing quarterly interest strips of the Treasury Portfolio, as
applicable, receiving payments of Contract Adjustment Payments, performance
of the Purchase Contracts and for all other purposes whatsoever, whether or
not any distributions on the Preferred Securities or the Contract
Adjustment Payments payable in respect of the Purchase Contracts
constituting a part of the Income PRIDES or Growth PRIDES evidenced thereby
shall be overdue and notwithstanding any notice to the contrary, and
neither the Company nor the Agent, nor any agent of the Company or the
Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global
Certificate, nothing herein shall prevent the Company, the Agent or any
agent of the Company or the Agent, from giving effect to any written
certification, proxy or other authorization furnished by any Clearing
Agency (or its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Clearing Agency and owners of
beneficial interests in such Global Certificate, the operation of customary
practices governing the exercise of rights of such Clearing Agency (or its
nominee) as Holder of such Global Certificate.
Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of
Common Stock on or after the Purchase Contract Settlement Date, upon the
transfer of Preferred Securities, the appropriate Applicable Ownership
Interest of the Treasury Portfolio or Treasury Securities, as the case may
be, after the occurrence of a Termination Event or pursuant to an Early
Settlement, or upon the registration of a transfer or exchange of a
Security, or a Collateral Substitution or the re-establishment of an Income
PRIDES shall, if surrendered to any Person other than the Agent, be
delivered to the Agent and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the Agent for
cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange
for any Certificates cancelled as provided in this Section, except as
expressly permitted by this Agreement. All cancelled Certificates held by
the Agent shall be destroyed by the Agent unless otherwise directed by
Issuer Order.
If the Company or any Affiliate of the Company shall acquire
any Certificate, such acquisition shall not operate as a cancellation of
such Certificate unless and until such Certificate is delivered to the
Agent cancelled or for cancellation.
Section 3.13. Establishment or Reestablishment of Growth PRIDES
A Holder may separate the Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as
applicable, from the related Purchase Contracts in respect of an Income
PRIDES by substituting for such Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, Treasury Securities in an aggregate principal amount equal to the
aggregate Stated Amount of such Preferred Securities or for the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, as applicable (a "Collateral
Substitution"), at any time from and after the date of this Agreement and
on or prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date in the case of the Preferred Securities and on or
prior to the second Business Day immediately preceding the Purchase
Contract Settlement Date in the case of the appropriate Applicable
Ownership Interest of the Treasury Portfolio, in each case by (a)
depositing with the Collateral Agent Treasury Securities having an
aggregate principal amount equal to the aggregate Stated Amount of the
Preferred Securities comprising part of such Income PRIDES or for the
appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio comprising part of
such Income PRIDES, as the case may be, and (b) (i) in the event that
Contract Adjustment Payments are at a higher rate for Income PRIDES than
for Growth PRIDES, by delivering cash in an amount equal to the excess of
the Contract Adjustment Payments that would have accrued since the last
Payment Date through the date of substitution on the Growth PRIDES being
created by the holder, over the Contract Adjustment Payments that have
accrued over the same time period on the related Income PRIDES, which
amount the Agent shall promptly remit to the Company, and (ii) transferring
the related Income PRIDES to the Agent accompanied by a notice to the
Agent, substantially in the form of Exhibit D hereto, stating that the
Holder has transferred the relevant amount of Treasury Securities to the
Collateral Agent and requesting that the Agent instruct the Collateral
Agent to release the Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
underlying such Income PRIDES, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the form of Exhibit C
hereto. Upon receipt of the Treasury Securities described in clause (a)
above and the instruction described in clause (b) above, in accordance with
the terms of the Pledge Agreement, the Collateral Agent will release to the
Agent, on behalf of the Holder, Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, having a corresponding aggregate Stated Amount of such Preferred
Securities or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio, as
the case may be, from the Pledge, free and clear of the Company's security
interest therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES;
(ii) transfer the Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, to the Holder; and
(iii) authenticate, execute on behalf
of such Holder and deliver a Growth PRIDES Certificate executed by
the Company in accordance with Section 3.3 evidencing the same
number of Purchase Contracts as were evidenced by the cancelled
Income PRIDES.
Holders who elect to separate the Preferred Securities or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, from the related Purchase Contract and to substitute
Treasury Securities for such Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, shall be responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in respect of the substitution,
and the Company shall not be responsible for any such fees or expenses.
Holders may make Collateral Substitutions (i) only in
integral multiples of 20 Income PRIDES if Preferred Securities are being
substituted by Treasury Securities, or (ii) only in integral multiples of
160,000 Income PRIDES if the appropriate Applicable Ownership Interests of
the Treasury Portfolio are being substituted by Treasury Securities.
In the event a Holder making a Collateral Substitution
pursuant to this Section 3.13 fails to effect a book-entry transfer of the
Income PRIDES or fails to deliver an Income PRIDES Certificate(s) to the
Agent after depositing Treasury Securities with the Collateral Agent, the
Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, constituting a part of such
Income PRIDES, and any distributions on such Preferred Security or the
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, shall be held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until such Income PRIDES is so transferred or the
Income PRIDES Certificate is so delivered, as the case may be, or, with
respect to an Income PRIDES Certificate, such Holder provides evidence
satisfactory to the Company and the Agent that such Income PRIDES
Certificate has been destroyed, lost or stolen, together with any indemnity
that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long as the
Purchase Contract underlying an Income PRIDES remains in effect, such
Income PRIDES shall not be separable into its constituent parts, and the
rights and obligations of the Holder in respect of the Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, and Purchase Contract comprising such Income PRIDES may
be acquired, and may be transferred and exchanged, only as an Income
PRIDES.
Section 3.14. Establishment or Reestablishment of Income PRIDES.
A Holder of a Growth PRIDES may create or recreate Income
PRIDES at any time (i) on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, if a Tax Event Redemption
has not occurred, and (ii) on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, if a Tax Event
Redemption has occurred, in each case by (a) depositing with the Collateral
Agent Preferred Securities or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, having an aggregate Stated
Amount in the case of the Preferred Securities, or an appropriate
Applicable Ownership Interest (as defined in clause (A) of the definition
of such term) of the Treasury Portfolio, as the case may be, equal to the
aggregate principal amount of the Treasury Securities comprising part of
the Growth PRIDES and (b) (i) in the event that Contract Adjustment
Payments are at a higher rate for Income PRIDES than for Growth PRIDES, by
delivering to the Agent cash in an amount equal to the excess of the
Contract Adjustment Payments that would have accrued since the last payment
date through the date of substitution on the Income PRIDES being created or
recreated by such holders, over the Contract Adjustment Payments that have
accrued over the same time period on the related Growth PRIDES transferring
the related Growth PRIDES to the Agent accompanied by a notice to the
Agent, substantially in the form of Exhibit D hereto, stating that the
Holder has transferred the relevant amount of Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, to the Collateral Agent and requesting that the Agent instruct
the Collateral Agent to release the Treasury Securities underlying such
Growth PRIDES, whereupon the Agent shall promptly give such instruction to
the Collateral Agent, substantially in the form of Exhibit C hereto. Upon
receipt of the Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, described in clause
(a) above and the instruction described in clause (b) above, in accordance
with the terms of the Pledge Agreement, the Collateral Agent will effect
the release of the Treasury Securities having a corresponding aggregate
principal amount from the Pledge to the Agent free and clear of the
Company's security interest therein, and upon receipt thereof the Agent
shall promptly:
(i) cancel the related Growth PRIDES;
(ii) transfer the Treasury Securities
to the Holder; and
(iii) authenticate, execute on behalf
of such Holder and deliver an Income PRIDES Certificate executed by
the Company in accordance with Section 3.3 evidencing the same
number of Purchase Contracts as were evidenced by the cancelled
Growth PRIDES.
Holders of Growth PRIDES may establish or reestablish Income
PRIDES in integral multiples of 20 Growth PRIDES for 20 Income PRIDES if a
Tax Event Redemption has not occurred, and in integral multiples of 160,000
Growth PRIDES for 160,000 Income PRIDES if a Tax Event Redemption has
occurred.
Except as provided in this Section 3.14, for so long as the
Purchase Contract underlying a Growth PRIDES remains in effect, such Growth
PRIDES shall not be separable into its constituent parts and the rights and
obligations of the Holder of such Growth PRIDES in respect of the Treasury
Security and Purchase Contract comprising such Growth PRIDES may be
acquired, and may be transferred and exchanged only as a Growth PRIDES.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer
to the Agent of the Preferred Securities, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or the Treasury Securities, as
the case may be, underlying the Income PRIDES and the Growth PRIDES
pursuant to the terms of the Pledge Agreement, the Agent shall request
transfer instructions with respect to such Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, from each Holder by written
request mailed to such Holder at its address as it appears in the Income
PRIDES Register or the Growth PRIDES Register, as the case may be. Upon
book-entry transfer of the Income PRIDES or Growth PRIDES or delivery of an
Income PRIDES Certificate or Growth PRIDES Certificate to the Agent with
such transfer instructions, the Agent shall transfer the Preferred
Securities, the Treasury Portfolio or Treasury Securities, as the case may
be, underlying such Income PRIDES or Growth PRIDES, as the case may be, to
such Holder by book-entry transfer, or other appropriate procedures, in
accordance with such instructions. In the event a Holder of Income PRIDES
or Growth PRIDES fails to effect such transfer or delivery, the Preferred
Securities, the appropriate Applicable Ownership Interest of the Treasury
Portfolio or Treasury Securities, as the case may be, underlying such
Income PRIDES or Growth PRIDES, as the case may be, and any distributions
thereon, shall be held in the name of the Agent or its nominee in trust for
the benefit of such Holder, until such Income PRIDES or Growth PRIDES are
transferred or the Income PRIDES Certificate or Growth PRIDES Certificate
is surrendered or such Holder provides satisfactory evidence that such
Income PRIDES Certificate or Growth PRIDES Certificate has been destroyed,
lost or stolen, together with any indemnity that may be required by the
Agent and the Company.
Section 3.16. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be
deemed expressly to have withheld any consent to the assumption under
Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract
by the Company, receiver, liquidator or a person or entity performing
similar functions, its trustee in the event that the Company becomes the
debtor under the Bankruptcy Code or subject to other similar state or
federal law providing for reorganization or liquidation.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset; Notice.
A distribution on any Preferred Security or on the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, which is paid on any Payment Date shall, subject to receipt
thereof by the Agent from the Collateral Agent as provided by the terms of
the Pledge Agreement, be paid to the Person in whose name the Income PRIDES
Certificate (or one or more Predecessor Income PRIDES Certificates) of
which such Preferred Security or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, is a part is
registered at the close of business on the Record Date for such Payment
Date.
Each Income PRIDES Certificate evidencing Preferred
Securities delivered under this Agreement upon registration of transfer of
or in exchange for or in lieu of any other Income PRIDES Certificate shall
carry the rights to distributions accrued and unpaid, and to accrue
distributions, which were carried by the Preferred Securities underlying
such other Income PRIDES Certificate.
In the case of any Income PRIDES with respect to which Cash
Settlement of the underlying Purchase Contract is effected on the Business
Day immediately preceding the Purchase Contract Settlement Date pursuant to
prior notice, or with respect to which Early Settlement of the underlying
Purchase Contract is effected on a Early Settlement Date, or with respect
to which a Collateral Substitution is effected, in each case on a date that
is after any Record Date and on or prior to the next succeeding Payment
Date, distributions on the Preferred Securities or on the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, underlying such Income PRIDES otherwise payable on such Payment Date
shall be payable on such Payment Date notwithstanding such Cash Settlement
or Early Settlement or Collateral Substitution, and such distributions
shall, subject to receipt thereof by the Agent, be payable to the Person in
whose name the Income PRIDES Certificate (or one or more Predecessor Income
PRIDES Certificates) was registered at the close of business on the Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Income PRIDES with respect to which Cash
Settlement or Early Settlement of the underlying Purchase Contract is
effected on the Business Day immediately preceding the Purchase Contract
Settlement Date or an Early Settlement Date, as the case may be, or with
respect to which a Collateral Substitution has been effected, distributions
on the related Preferred Securities or on the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, that
would otherwise be payable after the Purchase Contract Settlement Date or
Early Settlement Date shall not be payable hereunder to the Holder of such
Income PRIDES; provided, however, that to the extent that such Holder
continues to hold the separated Preferred Securities that formerly
comprised a part of such Holder's Income PRIDES, such Holder shall be
entitled to receive the distributions on such separated Preferred
Securities.
The applicable Coupon Rate on the Preferred Securities on
and after the Purchase Contract Settlement Date will be reset on the third
Business Day immediately preceding the Purchase Contract Settlement Date to
the Reset Rate (such Reset Rate to be in effect on and after the purchase
Contract Settlement Date). On the Reset Announcement Date the Reset Spread
and the Two-Year Benchmark Treasury to be used to determine the Reset Rate
will be announced by the Company. On the Business Day immediately following
the Reset Announcement Date, the Preferred Securities Holders will be
notified of such Reset Spread and Two-Year Benchmark Treasury by the
Company. Such notice shall be sufficiently given to Holders of Preferred
Securities if published in an Authorized Newspaper in The City of New York.
Not later than 10 calendar days nor more than 15 calendar
days prior to the Reset Announcement Date, the Company will notify the DTC
or its nominee (or any successor Clearing Agency or its nominee) by
first-class mail, postage prepaid, to notify the Beneficial Owners or
Clearing Agency Participants holding Income PRIDES or Growth PRIDES, of
such Reset Announcement Date and the procedures to be followed by such
Holders of Income PRIDES who intend to settle their obligation under the
Purchase Contract with separate cash on the Purchase Contract Settlement
Date.
Section 4.2. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be
entitled to exercise the voting and any other consensual rights pertaining
to the Preferred Securities pledged with the Collateral Agent but only to
the extent instructed by the Holders as described below. Upon receipt of
notice of any meeting at which holders of Preferred Securities are entitled
to vote or upon any solicitation of consents, waivers or proxies of holders
of Preferred Securities, the Agent shall, as soon as practicable
thereafter, mail to the Holders of Income PRIDES a notice (a) containing
such information as is contained in the notice or solicitation, (b) stating
that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for
determining the holders of Preferred Securities entitled to vote) shall be
entitled to instruct the Agent as to the exercise of the voting rights
pertaining to the Preferred Securities underlying their Income PRIDES and
(c) stating the manner in which such instructions may be given. Upon the
written request of the Holders of Income PRIDES on such record date, the
Agent shall endeavor insofar as practicable to vote or cause to be voted,
in accordance with the instructions set forth in such requests, the maximum
number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the
Preferred Security underlying such Income PRIDES. The Company hereby
agrees, if applicable, to solicit Holders of Income PRIDES to timely
instruct the Agent in order to enable the Agent to vote such Preferred
Securities and the Trust shall covenant to such effect in the Declaration.
Section 4.3. Distribution of Debentures; Tax Event Redemption
Upon the occurrence of an Investment Company Event or a
liquidation of the Trust in accordance with the Declaration, a principal
amount of Debentures constituting the assets of the Trust and underlying
the Preferred Securities equal to the aggregate Stated Amount of the
Pledged Preferred Securities shall be delivered to the Collateral Agent in
exchange for the Pledged Preferred Securities. Thereafter, the Debentures
will be substituted for the Pledged Preferred Securities, and will be held
by the Collateral Agent in accordance with the terms of the Pledge
Agreement to secure the obligations of each Holder of an Income PRIDES to
purchase the Common Stock of the Company under the Purchase Contracts
constituting a part of such Income PRIDES. Following the occurrence of an
Investment Company Event or a liquidation of the Trust, the Holders and the
Collateral Agent shall have such security interests, rights and obligations
with respect to the Debentures as the Holders and the Collateral Agent had
in respect of the Preferred Securities subject to the Pledge thereof as
provided in Articles II, III, IV, V and VI of the Pledge Agreement, and any
reference herein to the Preferred Securities shall be deemed to be a
reference to such Debentures. The Company may cause to be made in any
Income PRIDES Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to
reflect the liquidation of the Trust and the substitution of Debentures for
Preferred Securities as Collateral.
Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the Tax
Event Redemption Date with respect to the Applicable Principle Amount of
Debentures shall be delivered to the Collateral Agent in exchange for the
Pledged Preferred Securities. Thereafter, pursuant to the terms of the
Pledge Agreement, the Collateral Agent will apply an amount equal to the
Redemption Amount of such Redemption Price to purchase on behalf of the
Holders of Income PRIDES the Treasury Portfolio and promptly remit the
remaining portion of such Redemption Price to the Agent for payment to the
Holders of such Income PRIDES. The Treasury Portfolio will be substituted
for the Pledged Preferred Securities, and will be held by the Collateral
Agent in accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of an Income PRIDES to purchase the Common Stock
of the Company under the Purchase Contract constituting a part of such
Income PRIDES. Following the occurrence of a Tax Event Redemption prior to
the Purchase Contract Settlement Date, the Holders of Income PRIDES and the
Collateral Agent shall have such security interests, rights and obligations
with respect to the Treasury Portfolio as the Holder of Income PRIDES and
the Collateral Agent had in respect of the Preferred Security or
Debentures, as the case may be, subject to the Pledge thereof as provided
in Articles II, III, IV, V, and VI of the Pledge Agreement, and any
reference herein to the Preferred Security or the Debenture shall be deemed
to be reference to such Treasury Portfolio. The Company may cause to be
made in any Income PRIDES Certificates thereafter to be issued such change
in phraseology and form (but not in substance) as may be appropriate to
reflect the liquidation of the Trust and the substitution of the Treasury
Portfolio for Preferred Securities or Debentures as collateral.
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall, unless an Early Settlement has
occurred in accordance with Section 5.9 hereof, obligate the Holder of the
related Security to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the
"Purchase Price"), a number of newly issued shares of Common Stock equal to
the Settlement Rate unless, on or prior to the Purchase Contract Settlement
Date, there shall have occurred a Termination Event with respect to the
Security of which such Purchase Contract is a part. The "Settlement Rate"
is equal to (a) if the Applicable Market Value (as defined below) is equal
to or greater than $_____ (the "Threshold Appreciation Price"), _____
shares of Common Stock per Purchase Contract, (b) if the Applicable Market
Value is less than the Threshold Appreciation Price, but is greater than
$_____, the number of shares of Common Stock equal to the Stated Amount
divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to $_____, _____ shares of Common Stock per
Purchase Contract, in each case subject to adjustment as provided in
Section 5.6 (and in each case rounded upward or downward to the nearest
1/10,000th of a share). As provided in Section 5.10, no fractional shares
of Common Stock will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the
Closing Price per share of Common Stock on each of the 20 consecutive
Trading Days ending on the third Trading Day immediately preceding the
Purchase Contract Settlement Date. The "Closing Price" of the Common Stock
on any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common
Stock on the New York Stock Exchange (the "NYSE") on such date or, if the
Common Stock is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or regional
securities exchange, as reported by The Nasdaq Stock Market, or, if the
Common Stock is not so reported, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock (A) is
not suspended from trading on any national or regional securities exchange
or association or over-the-counter market at the close of business and (B)
has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
Each Holder of an Income PRIDES or a Growth PRIDES, by its
acceptance thereof, irrevocably authorizes the Agent to enter into and
perform the related Purchase Contract on its behalf as its attorney-in-fact
(including the execution of Certificates on behalf of such Holder), agrees
to be bound by the terms and provisions thereof, covenants and agrees to
perform its obligations under such Purchase Contracts, and consents to the
provisions hereof, irrevocably authorizes the Agent as its attorney-in-fact
to enter into and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to and agrees to be bound by the Pledge of
the Preferred Securities, the Treasury Portfolio or the Treasury Securities
pursuant to the Pledge Agreement; provided that upon a Termination Event,
the rights of the Holder of such Security under the Purchase Contract may
be enforced without regard to any other rights or obligations. Each Holder
of an Income PRIDES or a Growth PRIDES, by its acceptance thereof, further
covenants and agrees, that, to the extent and in the manner provided in
Section 5.4 and the Pledge Agreement, but subject to the terms thereof,
payments in respect of the Stated Amount of the Preferred Securities or the
Proceeds of the Treasury Securities or the Treasury Portfolio on the
Purchase Contract Settlement Date shall be paid by the Collateral Agent to
the Company in satisfaction of such Holder's obligations under such
Purchase Contract and such Holder shall acquire no right, title or interest
in such payments.
Upon registration of transfer of a Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee), under the terms of this Agreement, the Purchase
Contracts underlying such Certificate and the Pledge Agreement and the
transferor shall be released from the obligations under this Agreement, the
Purchase Contracts underlying the Certificates so transferred and the
Pledge Agreement. The Company covenants and agrees, and each Holder of a
Certificate, by its acceptance thereof, likewise covenants and agrees, to
be bound by the provisions of this paragraph.
Section 5.2. Contract Adjustment Payments.
Subject to Section 5.3 herein, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments payable in respect of
each Purchase Contract to the Person in whose name a Certificate (or one or
more Predecessor Certificates) is registered at the close of business on
the Record Date next preceding such Payment Date. The Contract Adjustment
Payments will be payable at the office of the Agent in The City of New York
maintained for that purpose or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such Person's
address as it appears on the Income PRIDES Register or Growth PRIDES
Register.
Upon the occurrence of a Termination Event, the Company's
obligation to pay Contract Adjustment Payments (including any accrued or
Deferred Contract Adjustment Payments) shall cease.
Each Certificate delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of (including as
a result of a Collateral Substitution or the re-establishment of an Income
PRIDES) any other Certificate shall carry the rights to Contract Adjustment
Payments accrued and unpaid, and to accrue Contract Adjustment Payments,
which were carried by the Purchase Contracts underlying such other
Certificates.
Subject to Section 5.9, in the case of any Security with
respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date that is after any Record Date and on
or prior to the next succeeding Payment Date, Contract Adjustment Payments,
if any, otherwise payable on such Payment Date shall be payable on such
Payment Date notwithstanding such Early Settlement, and such Contract
Adjustment Payments shall be paid to the Person in whose name the
Certificate evidencing such Security (or one or more Predecessor
Certificates) is registered at the close of business on such Record Date.
Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, Contract Adjustment Payments that would otherwise be
payable after the Early Settlement Date with respect to such Purchase
Contract shall not be payable.
The Company's obligations with respect to Contract
Adjustment Payments, will be subordinated and junior in right of payment to
the Company's obligations under any Senior Indebtedness.
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments.
The Company shall have the right, at any time prior to the
Purchase Contract Settlement Date, to defer the payment of any or all of
the Contract Adjustment Payments otherwise payable on any Payment Date, but
only if the Company shall give the Holders and the Agent written notice of
its election to defer such payment (specifying the amount to be deferred)
at least ten Business Days prior to the earlier of (i) the next succeeding
Payment Date or (ii) the date the Company is required to give notice of the
Record Date or Payment Date with respect to payment of such Contract
Adjustment Payments to the New York Stock Exchange or other applicable
self-regulatory organization or to Holders of the Securities, but in any
event not less than one Business Day prior to such Record Date. Any
Contract Adjustment Payments so deferred shall bear additional Contract
Adjustment Payments thereon at the rate of ____% per annum (computed on the
basis of 360 day year of twelve 30 day months), compounding on each
succeeding Payment Date, until paid in full (such deferred installments of
Contract Adjustment Payments together with the additional Contract
Adjustment Payments accrued thereon, being referred to herein as the
"Deferred Contract Adjustment Payments"). Deferred Contract Adjustment
Payments shall be due on the next succeeding Payment Date except to the
extent that payment is deferred pursuant to this Section. No Contract
Adjustment Payments may be deferred to a date that is after the Purchase
Contract Settlement Date. If the Purchase Contracts are terminated upon the
occurrence of a Termination Event, the Holder's right to receive Contract
Adjustment Payments and Deferred Contract Adjustment Payments will
terminate.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the Purchase
Contract Settlement Date, each Holder will receive on the Purchase Contract
Settlement Date in lieu of a cash payment a number of shares of Common
Stock (in addition to a number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to such Holder divided by (y) the Applicable
Market Value.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock or make guarantee payments with respect to the foregoing (other than
(i) purchases or acquisitions of shares of capital stock of the Company in
connection with the satisfaction by the Company of its obligations under
any employee or agent benefit plans or the satisfaction by the Company of
its obligations pursuant to any contract or security outstanding on the
date of such event requiring the Company to purchase capital stock of the
Company, (ii) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock,
(iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company (or rights to acquire
capital stock) or repurchases or redemptions of capital stock solely from
the issuance or exchange of capital stock or (v) redemptions or repurchases
of any rights outstanding under a shareholder rights plan and the
declaration thereunder of a dividend of rights in the future).
No fractional shares of Common Stock will be issued by the
Company with respect to the payment of Deferred Contract Adjustment
Payments on the Purchase Contract Settlement Date. In lieu of fractional
shares otherwise issuable with respect to such payment of Deferred Contract
Adjustment Payments, the Holder will be entitled to receive an amount in
cash as provided in Section 5.10.
Section 5.4. Payment of Purchase Price.
(a) (i) Unless a Tax Event Redemption has occurred or a
Holder settles the underlying Purchase Contract through the early delivery
of cash to the Purchase Contract Agent in the manner described in Section
5.9, each Holder of an Income PRIDES must notify the Agent by use of a
notice in substantially the form of Exhibit E hereto of its intention to
pay in cash ("Cash Settlement") the Purchase Price for the shares of Common
Stock to be purchased pursuant to a Purchase Contract. Such notice shall be
made on or prior to 5:00 p.m., New York City time, on the fifth Business
Day immediately preceding the Purchase Contract Settlement Date. The Agent
shall promptly notify the Collateral Agent of the receipt of such a notice
from a Holder intending to make a Cash Settlement.
(ii) A Holder of an Income PRIDES who
has so notified the Agent of its intention to make a Cash
Settlement is required to pay the Purchase Price to the Collateral
Agent prior to 5:00 p.m., New York City time, on the Business Day
immediately preceding the Purchase Contract Settlement Date in
lawful money of the United States by certified or cashiers' check
or wire transfer, in each case in immediately available funds
payable to or upon the order of the Company. Any cash received by
the Collateral Agent will be invested promptly by the Collateral
Agent in Permitted Investments and paid to the Company on the
Purchase Contract Settlement Date in settlement of the Purchase
Contract in accordance with the terms of this Agreement and the
Pledge Agreement. Any funds received by the Collateral Agent in
respect of the investment earnings from the investment in such
Permitted Investments, will be distributed to the Agent when
received for payment to the Holder.
(iii) If a Holder of an Income PRIDES
fails to notify the Agent of its intention to make a Cash
Settlement in accordance with paragraph (a)(i) above, such failure
shall constitute an event of default and the Holder shall be deemed
to have consented to the disposition of the pledged Preferred
Securities pursuant to the Remarketing as described in paragraph
(b) below. If a Holder of an Income PRIDES does notify the Agent as
provided in paragraph (a)(i) above of its intention to pay the
Purchase Price in cash, but fails to make such payment as required
by paragraph (a)(ii) above, such failure shall also constitute a
default; however, the Preferred Securities of such a Holder will
not be remarketed but instead the Collateral Agent, for the benefit
of the Company, will exercise its rights as a secured party with
respect to such Preferred Securities, including those rights
specified in paragraph (c) below.
(b) In order to dispose of the Preferred Securities of
Income PRIDES Holders who have not notified the Agent of their intention to
effect a Cash Settlement as provided in paragraph (a)(i) above, the Company
shall engage a nationally recognized investment bank (the "Remarketing
Agent") pursuant to the Remarketing Agreement to sell such Preferred
Securities. In order to facilitate the remarketing, the Agent shall notify,
by 10:00 a.m., New York City time, on the fourth Business Day immediately
preceding the Purchase Contract Settlement Date, the Remarketing Agent of
the aggregate number of Preferred Securities to be remarketed.
Concurrently, the Collateral Agent, pursuant to the terms of the Pledge
Agreement, will present for remarketing such Preferred Securities to the
Remarketing Agent. Upon receipt of such notice from the Agent and such
Preferred Securities from the Collateral Agent, the Remarketing Agent will,
on the third Business Day immediately preceding the Purchase Contract
Settlement Date, use its reasonable efforts to remarket such Preferred
Securities on such date at a price of approximately 100.5% (but not less
than 100%) of the aggregate stated liquidation amount of such Preferred
Securities, plus accrued and unpaid distributions (including deferred
distributions), if any, thereon. After deducting as the remarketing fee
("Remarketing Fee") an amount not exceeding 25 basis points (.25%) of the
aggregate stated liquidation amount of the remarketed Preferred Securities
from any amount of such proceeds in excess of the aggregate stated
liquidation amount of the remarketed Preferred Securities plus accrued and
unpaid distributions (including any deferred distributions), if any, then
the Remarketing Agent will remit the entire amount of the proceeds from
such remarketing to the Collateral Agent. Such portion of the proceeds,
equal to the aggregate stated liquidation amount of such Preferred
Securities, will automatically be applied by the Collateral Agent, in
accordance with the Pledge Agreement to satisfy in full such Income PRIDES
holders' obligations to pay the Purchase Price for the Common Stock under
the related Purchase Contracts on the Purchase Contract Settlement Date.
Any proceeds in excess of those required to pay the Purchase Price and the
Remarketing Fee will be remitted to the Agent for payment to the Holders of
the related Income PRIDES. Income PRIDES Holders whose Preferred Securities
are so remarketed will not otherwise be responsible for the payment of any
Remarketing Fee in connection therewith. If, in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket the related
Preferred Securities of such Holders of Income PRIDES at a price not less
then 100% of the aggregate stated liquidation amount of such Preferred
Securities plus accrued and unpaid distributions (including deferred
distributions), if any, the remarketing will be deemed to have failed (a
"Failed Remarketing") and in accordance with the terms of the Pledge
Agreement the Collateral Agent for the benefit of the Company will exercise
its rights as a secured party with respect to such Preferred Securities,
including those actions specified in paragraph (c) below; provided, that if
upon a Failed Remarketing the Collateral Agent exercises such rights for
the benefit of the Company with respect to such Preferred Securities, any
accrued and unpaid distributions (including any deferred distributions) on
such Preferred Securities will become payable by the Company to the Agent
for payment to the Beneficial Owner of the Income PRIDES to which such
Preferred Securities relates. Such payment will be made by the Company on
or prior to 11 a.m. New York City time on the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers' check
or wire transfer in immediately available funds payable to or upon the
order of the Agent. The Company will cause a notice of such Failed
Remarketing to be published on the Second Business Day immediately
preceding the Purchase Contract Settlement Date in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal.
(c) With respect to any Preferred Securities beneficially
owned by Holders who have elected Cash Settlement but failed to deliver
cash as required in (a)(ii) above, or with respect to Preferred Securities
which are subject to a Failed Remarketing, the Collateral Agent for the
benefit of the Company reserves all of its rights as a secured party with
respect thereto and, subject to applicable law and paragraph (h) below,
may, among other things, (i) retain the Preferred Securities in full
satisfaction of the Holders obligations under the Purchase Contracts or
(ii) sell the Preferred Securities in one or more public or private sales.
(d) (i) Unless a Holder of Growth PRIDES or Income PRIDES
(if a Tax Event Redemption has occurred) settles the underlying Purchase
Contract through the early delivery of cash to the Purchase Contract Agent
in the manner described in Section 5.9, each Holder of a Growth PRIDES or
Income PRIDES (if a Tax Event Redemption has occurred) must notify the
Agent by use of a notice in substantially the form of Exhibit E hereto of
its intention to pay in cash the Purchase Price for the shares of Common
Stock to be purchased pursuant to a Purchase Contract on or prior to 5:00
p.m., New York City time, on the second Business Day immediately preceding
the Purchase Contract Settlement Date.
(ii) A Holder of a Growth PRIDES
or Income PRIDES (if a Tax Event Redemption has occurred) who has
so notified the Agent of its intention to make a Cash Settlement in
accordance with paragraph (d)(i) above is required to pay the
Purchase Price to the Collateral Agent prior to 11:00 a.m., New
York City time, on the Business Day immediately preceding the
Purchase Contract Settlement Date in lawful money of the United
States by certified or cashiers' check or wire transfer, in each
case in immediately available funds payable to or upon the order of
the Company. Any cash received by the Collateral Agent will be
invested promptly by the Collateral Agent in Permitted Investments
and paid to the Company on the Purchase Contract Settlement Date in
settlement of the Purchase Contract in accordance with the terms of
this Agreement and the Pledge Agreement. Any funds received by the
Collateral Agent in respect of the investment earnings from the
investment in such Permitted Investments will be distributed to the
Agent when received for payment to the Holder.
(iii) If a Holder of a Growth PRIDES
fails to notify the Agent of its intention to make a Cash
Settlement in accordance with paragraph (d)(i) above, or if a
Holder of an Income PRIDES (if a Tax Event Redemption has occurred)
does notify the Agent as provided in paragraph (d)(i) above its
intention to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph (d)(ii) above, then upon the
maturity of the Pledged Treasury Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, held by the Collateral Agent on the Business Day
immediately prior to the Purchase Contract Settlement Date, the
principal amount of the Treasury Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, received by the Collateral Agent will be invested
promptly in overnight Permitted Investments. On the Purchase
Contract Settlement Date an amount equal to the Purchase Price will
be remitted to the Company as payment thereof without receiving any
instructions from the Holder. In the event the sum of the proceeds
from the related Pledged Treasury Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent will
distribute such excess to the Agent for the benefit of the Holder
of the related Growth PRIDES or Income PRIDES when received.
(e) Any distribution to Holders of excess funds and interest
described above, shall be payable at the office of the Agent in The City of
New York maintained for that purpose or, at the option of the Holder, by
check mailed to the address of the Person entitled thereto at such address
as it appears on the Register.
(f) Unless a Holder settles the underlying Purchase Contract
through the early delivery of cash to the Collateral Agent in the manner
described herein, the Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificate
therefor to the Holder unless it shall have received payment in full of the
Purchase Price for the shares of Common Stock to be purchased thereunder in
the manner herein set forth.
(g) Upon Cash Settlement of any Purchase Contract, (i) the
Collateral Agent will in accordance with the terms of the Pledge Agreement
cause the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, or the
Pledged Treasury Securities underlying the relevant Security to be released
from the Pledge by the Collateral Agent free and clear of any security
interest of the Company and transferred to the Agent for delivery to the
Holder thereof or its designee as soon as practicable and (ii) subject to
the receipt thereof from the Collateral Agent, the Agent shall, by
book-entry transfer, or other appropriate procedures, in accordance with
instructions provided by the Holder thereof, transfer such Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, or such Treasury Securities (or, if no such
instructions are given to the Agent by the Holder, the Agent shall hold
such Preferred Securities or the Treasury Portfolio, as the case may be, or
such Treasury Securities, and any distribution thereon, in the name of the
Agent or its nominee in trust for the benefit of such Holder).
(h) The obligations of the Holders to pay the Purchase Price
are non-recourse obligations and are payable solely out of any Cash
Settlement or the proceeds of any Collateral Pledged to secure the
obligations of the Holders and in no event will Holders be liable for any
deficiency between the proceeds of Collateral disposition and the Purchase
Price.
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior
to the Purchase Contract Settlement Date or an Early Settlement shall have
occurred, on the Purchase Contract Settlement Date, upon its receipt of
payment in full of the Purchase Price for the shares of Common Stock
purchased by the Holders pursuant to the foregoing provisions of this
Article and subject to Section 5.6(b), the Company shall issue and deposit
with the Agent, for the benefit of the Holders of the Outstanding
Securities, one or more certificates representing the newly issued shares
of Common Stock registered in the name of the Agent (or its nominee) as
custodian for the Holders (such certificates for shares of Common Stock,
together with any dividends or distributions for which a record date and
payment date for such dividend or distribution has occurred after the
Purchase Contract Settlement Date, being hereinafter referred to as the
"Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of
such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Common Stock which
such Holder is entitled to receive pursuant to the provisions of this
Article Five (after taking into account all Securities then held by such
Holder) together with cash in lieu of fractional shares as provided in
Section 5.10 and any dividends or distributions with respect to such shares
constituting part of the Purchase Contract Settlement Fund, but without any
interest thereon, and the Certificate so surrendered shall forthwith be
cancelled. Such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the settlement instructions provided by
the Holder to the Agent. If any shares of Common Stock issued in respect of
a Purchase Contract are to be registered to a Person other than the Person
in whose name the Certificate evidencing such Purchase Contract is
registered, no such registration shall be made unless the Person requesting
such registration has paid any transfer and other taxes required by reason
of such registration in a name other than that of the registered Holder of
the Certificate evidencing such Purchase Contract or has established to the
satisfaction of the Company that such tax either has been paid or is not
payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits,
Etc.
(1) In case the Company shall pay or make a dividend
or other distribution on the Common Stock in Common Stock, the
Settlement Rate, as in effect at the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number
of shares and the total number of shares constituting such dividend
or other distribution, such 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
paragraph (1), the number of shares of Common Stock at time
outstanding shall not include shares held in the treasury of the
Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(2) In case the Company shall issue rights, options
or warrants to all holders of its Common Stock (not being available
on an equivalent basis to Holders of the Securities upon settlement
of the Purchase Contracts underlying such Securities) entitling
them, for a period expiring within 45 days after the record date
for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of
Common Stock at a price per share less than the Current Market
Price per share of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights,
options or warrants (other than pursuant to a dividend reinvestment
plan), the Settlement Rate, in effect at the opening of business on
the day following the date fixed for such determination shall be
increased by dividing such Settlement Rate, by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase
at such Current Market Price and the denominator shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase,
such 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 paragraph (2), the number
of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any
shares issuable in respect of any scrip certificates issued in lieu
of fractions of shares of Common Stock. The Company shall not issue
any such rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall
be subdivided or split into a greater number of shares of Common
Stock, the Settlement Rate, in effect at the opening of business on
the day following the day upon which such subdivision or split
becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the
Settlement Rate, in effect at the opening of business on the day
following the day upon which such combination becomes effective
shall be proportionately reduced, such increase or reduction, as
the case may be, to become effective immediately after the opening
of business on the day following the day upon which such
subdivision, split or combination becomes effective.
(4) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences
of its indebtedness or assets (including securities, but excluding
any rights or warrants referred to in paragraph (2) of this
Section, any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in paragraph (1) of this
Section), the Settlement Rate, shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed
for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on the date
fixed for such determination less the then fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution filed with the
Agent) of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price per share of the
Common Stock, such adjustment to become effective immediately prior
to the opening of business on the day following the date fixed for
the determination of stockholders entitled to receive such
distribution. In any case in which this paragraph (4) is
applicable, paragraph (2) of this Section shall not be applicable.
(5) In case the Company shall, (I) by dividend or
otherwise, distribute to all holders of its Common Stock cash
(excluding any cash that is distributed in a Reorganization Event
to which Section 5.6(b) applies or as part of a distribution
referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (II) the aggregate amount of
any other distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this Section has
been made and (III) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) of
consideration payable in respect of any tender or exchange offer by
the Company or any of its subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date
of payment of the distribution described in clause (I) above and in
respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made, exceeds 15% of the
product of the Current Market Price per share of the Common Stock
on the date for the determination of holders of shares of Common
Stock entitled to receive such distribution times the number of
shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date for
determination, the Settlement Rate, shall be increased so that the
same shall equal the rate determined by dividing the Settlement
Rate in effect immediately prior to the close of business on the
date fixed for determination of the stockholders entitled to
receive such distribution by a fraction (i) the numerator of which
shall be equal to the Current Market Price per share of the Common
Stock on the date fixed for such determination less an amount equal
to the quotient of (x) the combined amount distributed or payable
in the transactions described in clauses (I), (II) and (III) above
and (y) the number of shares of Common Stock outstanding on such
date for determination and (ii) the denominator of which shall be
equal to the Current Market Price per share of the Common Stock on
such date for determination.
(6) In case (I) a tender or exchange offer made by
the Company or any subsidiary of the Company for all or any portion
of the Common Stock shall expire and such tender or exchange offer
(as amended upon the expiration thereof) shall require the payment
to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) that combined together with (II) the aggregate of the
cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in
a Board Resolution), as of the expiration of such tender or
exchange offer, of consideration payable in respect of any other
tender or exchange offer, by the Company or any subsidiary of the
Company for all or any portion of the Common Stock expiring within
the 12 months preceding the expiration of such tender or exchange
offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made and (III)
the aggregate amount of any distributions to all holders of the
Company's Common Stock made exclusively in cash within the 12
months preceding the expiration of such tender or exchange offer
and in respect of which no adjustment pursuant to paragraph (5) of
this Section or this paragraph (6) has been made, exceeds 15% of
the product of the Current Market Price per share of the Common
Stock as of the last time (the "Expiration Time") tenders could
have been made pursuant to such tender or exchange offer (as it may
be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and
in each such case, immediately prior to the opening of business on
the day after the date of the Expiration Time, the Settlement Rate,
shall be adjusted so that the same shall equal the rate determined
by dividing the Settlement Rate immediately prior to the close of
business on the date of the Expiration Time by a fraction (i) the
numerator of which shall be equal to (A) the product of (I) the
Current Market Price per share of the Common Stock on the date of
the Expiration Time and (II) the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time
less (B) the amount of cash plus the fair market value (determined
as aforesaid) of the aggregate consideration payable to
stockholders based on the transactions described in clauses (I),
(II) and (III) above (assuming in the case of clause (I) the
acceptance, up to any maximum specified in the terms of the tender
or exchange offer, of Purchased Shares), and (ii) the denominator
of which shall be equal to the product of (A) the Current Market
Price per share of the Common Stock as of the Expiration Time and
(B) the number of shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into
securities including securities other than Common Stock (other than
any reclassification upon a Reorganization Event to which Section
5.6(b) applies) shall be deemed to involve (a) a distribution of
such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders
entitled to receive such distribution" and the "date fixed for such
determination" within the meaning of paragraph (4) of this
Section), and (b) a subdivision, split or combination, as the case
may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the
day upon which such subdivision or split becomes effective" or "the
day upon which such combination becomes effective", as the case may
be, and "the day upon which such subdivision, split or combination
becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per share of Common
Stock on any day means the average of the daily Closing Prices for
the 5 consecutive Trading Days selected by the Company commencing
not more than 30 Trading Days before, and ending not later than,
the earlier of the day in question and the day before the "ex date"
with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date",
when used with respect to any issuance or distribution, shall mean
the first date on which the Common Stock trades regular way on such
exchange or in such market without the right to receive such
issuance or distribution.
(9) All adjustments to the Settlement Rate, shall be
calculated to the nearest 1/10,000th of a share of Common Stock (or
if there is not a nearest 1/10,000th of a share to the next lower
1/10,000th of a share). No adjustment in the Settlement Rate shall
be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. If an adjustment is made to the
Settlement Rate pursuant to paragraph (1), (2), (3), (4), (5), (6),
(7) or (10) of this Section 5.6(a), an adjustment shall also be
made to the Applicable Market Value solely to determine which of
clauses (a), (b) or (c) of the definition of Settlement Rate in
Section 5.1 will apply on the Purchase Contract Settlement Date.
Such adjustment shall be made by multiplying the Applicable Market
Value by a fraction of which the numerator shall be the Settlement
Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the
denominator shall be the Settlement Rate immediately before such
adjustment; provided, however, that if such adjustment to the
Settlement Rate is required to be made pursuant to the occurrence
of any of the events contemplated by paragraph (1) (2) (3) (4) (5)
(7) or (10) of this Section 5.6(a) during the period taken into
consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the
Settlement Rate.
(10) The Company may make such increases in the
Settlement Rate, in addition to those required by this Section, as
it considers to be advisable in order to avoid or diminish any
income tax to any holders of shares of Common Stock resulting from
any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other
Reorganization Event. In the event of (i) any consolidation or merger of
the Company with or into another Person (other than a merger or
consolidation in which the Company is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of
the Company or another corporation), (ii) any sale, transfer, lease or
conveyance to another Person of the property of the Company as an entirety
or substantially as an entirety, (iii) any statutory exchange of securities
of the Company with another Person (other than in connection with a merger
or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a Termination
Event (any such event, a "Reorganization Event"), the Settlement Rate will
be adjusted to provide that each Holder of Securities will receive on the
Purchase Contract Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities, cash and other
property receivable upon such Reorganization Event (without any interest
thereon, and without any right to dividends or distribution thereon which
have a record date that is prior to the Purchase Contract Settlement Date)
by a Holder of the number of shares of Common Stock issuable on account of
each Purchase Contract if the Purchase Contract Settlement Date had
occurred immediately prior to such Reorganization Event assuming such
Holder of Common Stock is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to
which such sale or transfer was made, as the case may be (any such Person,
a "Constituent Person"), or an Affiliate of a Constituent Person to the
extent such Reorganization Event provides for different treatment of common
Stock held by Affiliates of the Company and non-affiliates and such Holder
failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such Reorganization
Event (provided that if the kind or amount of securities, cash and other
property receivable upon such Reorganization Event is not the same for each
share of Common Stock held immediately prior to such Reorganization Event
by other than a Constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
Reorganization Event by 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). In the event of such a Reorganization Event, the Person formed by
such consolidation, merger or exchange or the Person which acquires the
assets of the Company or, in the event of a liquidation or dissolution of
the Company, the Company or a liquidating trust created in connection
therewith, shall execute and deliver to the Agent an agreement supplemental
hereto providing that the Holders of each Outstanding Security shall have
the rights provided by this Section 5.6. Such supplemental agreement shall
provide for adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The above
provisions of this Section shall similarly apply to successive
Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein
provided, the Company shall:
(i) forthwith compute the Settlement
Rate in accordance with Section 5.6 and prepare and transmit to the
Agent an Officer's Certificate setting forth the Settlement Rate,
the method of calculation thereof in reasonable detail, and the
facts requiring suchadjustment and upon which such adjustment is
based; and
(ii) within 10 Business Days following
the occurrence of an event that requires an adjustment to the
Settlement Rate pursuant to Section 5.6 (or if the Company is not
aware of such occurrence, as soon as practicable after becoming so
aware), provide a written notice to the Holders of the Securities
of the occurrence of such event and a statement in reasonable
detail setting forth the method by which the adjustment to the
Settlement Rate was determined and setting forth the adjusted
Settlement Rate.
(b) The Agent shall not at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts
exist which may require any adjustment of the Settlement Rate, or with
respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed in making the same. The Agent
shall not be accountable with respect to the validity or value (or the kind
or amount) of any shares of Common Stock, or of any securities or property,
which may at the time be issued or delivered with respect to any Purchase
Contract; and the Agent makes no representation with respect thereto. The
Agent shall not be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock pursuant to a Purchase
Contract or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without limitation, the
rights of the Holders to receive and the obligation of the Company to pay
any Contract Adjustment Payments or Deferred Contract Adjustment Payments,
if the Company shall have such obligation, and the rights and obligations
of Holders to purchase Common Stock, shall immediately and automatically
terminate, without the necessity of any notice or action by any Holder, the
Agent or the Company, if, on or prior to the Purchase Contract Settlement
Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall thereafter
represent the right to receive the Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, forming a part of such Securities in the case of Income PRIDES, or
Treasury Securities in the case of Growth PRIDES, in accordance with the
provisions of Section 4.3 of the Pledge Agreement. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event later than
two Business Days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in
the Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of
this Section 5.9, at the option of the Holder thereof, Purchase Contracts
underlying Securities, having an aggregate Stated Amount equal to $1,000 or
an integral multiple thereof, may be settled early ("Early Settlement") in
the case of Income PRIDES (unless a Tax Event Redemption has occurred) on
or prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date and in the case of Growth PRIDES on or prior to
the second Business Day immediately preceding the Purchase Contract
Settlement Date, in each case, as provided herein; provided however, that
if a Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Income PRIDES Purchase Contracts, underlying
Income PRIDES may be settled early, on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, but only in an
aggregate amount of $160,000 or in an integral multiple thereof. In order
to exercise the right to effect Early Settlement with respect to any
Purchase Contracts, the Holder of the Certificate evidencing Securities
shall deliver such Certificate to the Agent at the Corporate Trust Office
duly endorsed for transfer to the Company or in blank with the form of
Election to Settle Early on the reverse thereof duly completed and
accompanied by payment (payable to the Company in immediately available
funds in an amount (the "Early Settlement Amount") equal to (i) the product
of (A) the Stated Amount times (B) the number of Purchase Contracts with
respect to which the Holder has elected to effect Early Settlement plus
(ii) if such delivery is made with respect to any Purchase Contracts during
the period from the close of business on any Record Date next preceding any
Payment Date to the opening of business on such Payment Date, an amount
equal to the sum of (x) the Contract Adjustment Payments payable on such
Payment Date with respect to such Purchase Contracts plus (y) in the case
of Income PRIDES Certificate, the distributions on the related Preferred
Securities payable on such Payment Date. Except as provided in the
immediately preceding sentence and subject to the second to last paragraph
of Section 5.2, no payment or adjustment shall be made upon Early
Settlement of any Purchase Contract on account of any Contract Adjustment
Payments accrued on such Purchase Contract or on account of any dividends
on the Common Stock issued upon such Early Settlement. If the foregoing
requirements are first satisfied with respect to Purchase Contracts
underlying any Securities at or prior to 5:00 p.m., New York City time, on
a Business Day, such day shall be the "Early Settlement Date" with respect
to such Securities and if such requirements are first satisfied after 5:00
p.m., New York City time, on a Business Day or on a day that is not a
Business Day, the "Early Settlement Date" with respect to such Securities
shall be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder
of the related Securities, the Company shall issue, and the Holder shall be
entitled to receive, _____ shares of Common Stock on account of each
Purchase Contract as to which Early Settlement is effected (the "Early
Settlement Rate"); provided, however, that upon the Early Settlement of the
Purchase Contracts, the Holder of such related Securities will forfeit the
right to receive any Deferred Contract Adjustment Payments. The Early
Settlement Rate shall be adjusted in the same manner and at the same time
as the Settlement Rate is adjusted. As promptly as practicable after Early
Settlement of Purchase Contracts in accordance with the provisions of this
Section 5.9, the Company shall issue and shall deliver to the Agent at the
Corporate Trust Office a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement together with
payment in lieu of any fraction of a share, as provided in Section 5.10.
(c) No later than the third Business Day after the
applicable Early Settlement Date the Company shall cause (i) the shares of
Common Stock issuable upon Early Settlement of Purchase Contracts to be
issued and delivered, and (ii) the related Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, in the
case of Income PRIDES, or the related Treasury Securities, in the case of
Growth PRIDES, to be released from the Pledge by the Collateral Agent and
transferred, in each case to the Agent for delivery to the Holder thereof
or its designee.
(d) Upon Early Settlement of any Purchase Contracts, and
subject to receipt of shares of Common Stock from the Company and the
Preferred Securities, the appropriate Applicable Ownership Interest of the
Treasury Portfolio or Treasury Securities, as the case may be, from the
Collateral Agent, as applicable, the Agent shall, in accordance with the
instructions provided by the Holder thereof on the applicable form of
Election to Settle Early on the reverse of the Certificate evidencing the
related Securities, (i) transfer to the Holder the Preferred Securities,
Treasury Portfolio or Treasury Securities, as the case may be, forming a
part of such Securities, and (ii) deliver to the Holder a certificate or
certificates for the full number of shares of Common Stock issuable upon
such Early Settlement together with payment in lieu of any fraction of a
share, as provided in Section 5.10.
(e) In the event that Early Settlement is effected with
respect to Purchase Contracts underlying less than all the Securities
evidenced by a Certificate, upon such Early Settlement the Company shall
execute and the Agent shall authenticate, countersign and deliver to the
Holder thereof, at the expense of the Company, a Certificate evidencing the
Securities as to which Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares
of Common Stock shall be issued or delivered upon settlement on the
Purchase Contract Settlement Date or upon Early Settlement of any Purchase
Contracts. If Certificates evidencing more than one Purchase Contract shall
be surrendered for settlement at one time by the same Holder, the number of
full shares of Common Stock which shall be delivered upon settlement shall
be computed on the basis of the aggregate number of Purchase Contracts
evidenced by the Certificates so surrendered. Instead of any fractional
share of Common Stock which would otherwise be deliverable upon settlement
of any Purchase Contracts on the Purchase Contract Settlement Date or upon
Early Settlement, the Company, through the Agent, shall make a cash payment
in respect of such fractional interest in an amount equal to the value of
such fractional shares times the Applicable Market Value. The Company shall
provide the Agent from time to time with sufficient funds to permit the
Agent to make all cash payments required by this Section 5.10 in a timely
manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes
attributable to the initial issuance and delivery of the shares of Common
Stock pursuant to the Purchase Contracts and in payment of any Deferred
Contract Adjustment Payments; provided, however, that the Company shall not
be required to pay any such tax or taxes which may be payable in respect of
any exchange of or substitution for a Certificate evidencing a Security or
any issuance of a share of Common Stock in a name other than that of the
registered Holder of a Certificate surrendered in respect of the Securities
evidenced thereby, other than in the name of the Agent, as custodian for
such Holder, and the Company shall not be required to issue or deliver such
share certificates or Certificates unless or until the Person or Persons
requesting the transfer or issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Common Stock.
In the event that Contract Adjustment Payments shall
constitute a component of Income PRIDES or Growth PRIDES, the Holder of any
Income PRIDES or Growth PRIDES shall have the right, which is absolute and
unconditional (subject to the right of the Company to defer payment thereof
pursuant to Section 5.3, the prepayment of Contract Adjustment Payments
pursuant to Section 5.9(a) and to the forfeiture of any Deferred Contract
Adjustment Payments upon Early Settlement pursuant to Section 5.9(b) or
upon the occurrence of a Termination Event), to receive payment of each
installment of the Contract Adjustment Payments with respect to the
Purchase Contract constituting a part of such Security on the respective
Payment Date for such Security and to purchase Common Stock pursuant to
such Purchase Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common Stock, and
such rights shall not be impaired without the consent of such Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any
right or remedy under this Agreement and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely
to such Holder, then and in every such case, subject to any determination
in such proceeding, the Company and such Holder shall be restored severally
and respectively to their former positions hereunder and thereafter all
rights and remedies of such Holder shall continue as though no such
proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates in the last
paragraph of Section 3.10, no right or remedy herein conferred upon or
reserved to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or
remedy upon a default shall impair any such right or remedy or constitute a
waiver of any such right. Every right and remedy given by this Article or
by law to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of
Income PRIDES or Growth PRIDES, by its acceptance of such Income PRIDES or
Growth PRIDES shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Agreement, or in any suit against the Agent for any action
taken, suffered or omitted by it as Agent, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; provided that the provisions of this Section shall not apply to
any suit instituted by the Company, to any suit instituted by the Agent, to
any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit
instituted by any Holder for the enforcement of distributions on any
Preferred Securities or Contract Adjustment Payments, if any, on any
Purchase Contract on or after the respective Payment Date therefor in
respect of any Security held by such Holder, or for enforcement of the
right to purchase shares of Common Stock under the Purchase Contracts
constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Agreement; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Agent or
the Holders, but will suffer and permit the execution of every such power
as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect
to the Securities, such duties and only such duties as are specifically set
forth in this Agreement and the Pledge Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its
part, the Agent may, with respect to the Securities, conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished
to the Agent and conforming to the requirements of this Agreement,
but in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Agent, the Agent shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to
relieve the Agent from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that:
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Agent was negligent in ascertaining the
pertinent facts; and
(3) no provision of this Agreement shall require the
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
adequate indemnity is not provided to it.
(c) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Agent shall be subject to the
provisions of this Section.
(d) The Agent is authorized to execute and deliver the
Pledge Agreement in its capacity as Agent.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the
Company hereunder of which a Responsible Officer of the Agent has actual
knowledge, the Agent shall transmit by mail to the Company and the Holders
of Securities, as their names and addresses appear in the Register, notice
of such default hereunder, unless such default shall have been cured or
waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by an Officer's Certificate, Issuer Order
or Issuer Request, and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the
Agent shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Agent (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate of the Company;
(d) the Agent may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Agent, in its discretion, may make reasonable further
inquiry or investigation into such facts or matters related to the
execution, delivery and performance of the Purchase Contracts as it may see
fit, and, if the Agent shall determine to make such further inquiry or
investigation, it shall be given a reasonable opportunity to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(f) the Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or an Affiliate and the Agent shall not be responsible for any
misconduct or negligence on the part of any agent or attorney or an
Affiliate appointed with due care by it hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall
be taken as the statements of the Company and the Agent assumes no
responsibility for their accuracy. The Agent makes no representations as to
the validity or sufficiency of either this Agreement or of the Securities,
or of the Pledge Agreement or the Pledge. The Agent shall not be
accountable for the use or application by the Company of the proceeds in
respect of the Purchase Contracts.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the
Agent and its Affiliates, in their individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with the
Company, the Collateral Agent or any other Person with the same rights it
would have if it were not Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be
segregated from the other funds except to the extent required by law or
provided herein. The Agent shall be under no obligation to invest or pay
interest on any money received by it hereunder except as otherwise agreed
in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable
compensation for all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Agent in
accordance with any provision of this Agreement (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent
for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or
administration of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having (or
being a member of a bank holding company having) a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or State authority and having a Corporate Trust Office in the
Borough of Manhattan, The City of New York, if there be such a corporation
in the Borough of Manhattan, The City of New York, qualified and eligible
under this Article and willing to act on reasonable terms. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time
the Agent shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no
appointment of a successor Agent pursuant to this Article shall become
effective until the acceptance of appointment by the successor Agent in
accordance with the applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written
notice thereof to the Company 60 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Agent required
by Section 7.10 shall not have been delivered to the Agent within 30 days
after the giving of such notice of resignation, the resigning Agent may
petition any court of competent jurisdiction for the appointment of a
successor Agent.
(c) The Agent may be removed at any time by Act of the
Holders of a majority in number of the Outstanding Securities delivered to
the Agent and the Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b) of
the TIA, as if the Agent were an indenture trustee under an
indenture qualified under the TIA, after written request therefor
by the Company or by any Holder who has been a bona fide Holder of
a Security for at least six months, or
(2) the Agent shall cease to be eligible under
Section 7.8 and shall fail to resign after written request therefor
by the Company or by any such Holder, or
(3) the Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Agent or of its property shall be appointed or any public officer
shall take charge or control of the Agent or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove
the Agent, or (ii) any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Agent and the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Agent for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Agent and shall comply with the applicable requirements of
Section 7.10. If no successor Agent shall have been so appointed by the
Company and accepted appointment in the manner required by Section 7.10,
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Agent.
(f) The Company shall give, or shall cause such successor
Agent to give, notice of each resignation and each removal of the Agent and
each appointment of a successor Agent by mailing written notice of such
event by first-class mail, postage prepaid, to all Holders as their names
and addresses appear in the applicable Register. Each notice shall include
the name of the successor Agent and the address of its Corporate Trust
Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Agent, every such successor Agent so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Agent an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Agent shall become effective and such successor Agent, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, agencies and duties of the retiring Agent; but, on the request of
the Company or the successor Agent, such retiring Agent shall, upon payment
of its charges, execute and deliver an instrument transferring to such
successor Agent all the rights, powers and trusts of the retiring Agent and
shall duly assign, transfer and deliver to such successor Agent all
property and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company
shall execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Agent all such rights, powers and
agencies referred to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless
at the time of such acceptance such successor Agent shall be qualified and
eligible under this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Agent
shall be a party, or any corporation succeeding to all or substantially all
the corporate trust business of the Agent, shall be the successor of the
Agent hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case any
Certificates shall have been authenticated and executed on behalf of the
Holders, but not delivered, by the Agent then in office, any successor by
merger, conversion or consolidation to such Agent may adopt such
authentication and execution and deliver the Certificates so authenticated
and executed with the same effect as if such successor Agent had itself
authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Agent in its capacity as Registrar.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Agent, and furnish to the Agent
reasonable proof that each such applicant has owned a Security for a period
of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other
Holders with respect to their rights under this Agreement or under the
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Agent
shall, mail to all the Holders copies of the form of proxy or other
communication which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to be mailed and of
payment, or provision for the payment, of the reasonable expenses of such
mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement,
the Agent assumes no obligations and shall not be subject to any liability
under this Agreement, the Pledge Agreement or any Purchase Contract in
respect of the obligations of the Holder of any Security thereunder. The
Company agrees, and each Holder of a Certificate, by his acceptance
thereof, shall be deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Agent shall have no
obligation to perform such Purchase Contracts on behalf of the Holders,
except to the extent expressly provided in Article Five hereof.
Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the
Company, will comply with all applicable certification, information
reporting and withholding (including "backup" withholding) requirements
imposed by applicable tax laws, regulations or administrative practice with
respect to (i) any payments made with respect to the Securities or (ii) the
issuance, delivery, holding, transfer, redemption or exercise of rights
under the Securities. Such compliance shall include, without limitation,
the preparation and timely filing of required returns and the timely
payment of all amounts required to be withheld to the appropriate taxing
authority or its designated agent.
(b) The Agent shall comply with any written direction
received from the Company with respect to the application of such
requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement rely on any such
direction in accordance with the provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or its authorized
representative within a reasonable period of time after receipt of such
request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the
Agent, at any time and from time to time, may enter into one or more
agreements supplemental hereto, in form satisfactory to the Company and the
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to
the Company, and the assumption by any such successor of the
covenants of the Company herein and in the Certificates; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to evidence and provide for the acceptance of
appointment hereunder by a successor Agent; or
(4) to make provision with respect to the rights of
Holders pursuant to the requirements of Section 5.6(b); or
(5) to cure any ambiguity, to correct or supplement
any provisions herein which may be inconsistent with any other
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided
such action shall not
adversely affect the interests of the Holders.
Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority
of the outstanding Purchase Contracts voting together as one Class, by Act
of said Holders delivered to the Company and the Agent, the Company, when
authorized by a Board Resolution, and the Agent may enter into an agreement
or agreements supplemental hereto for the purpose of modifying in any
manner the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities;
provided, however, that, except as contemplated herein, no such
supplemental agreement shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral
required to be Pledged to secure a Holder's Obligations under the
Purchase Contract, impair the right of the Holder of any Purchase
Contract to receive distributions on the related Collateral (except
for the rights of Holders of Income PRIDES to substitute the
Treasury Securities for the Pledge Preferred Securities or the
rights of holders of Growth PRIDES to substitute Preferred
Securities for the Pledged Treasury Securities) or otherwise
adversely affect the Holder's rights in or to such Collateral or
adversely alter the rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments or any
Deferred Contract Adjustment Payment, or change any place where, or
the coin or currency in which, any Contract Adjustment Payments is
payable;
(4) impair the right to institute suit for the
enforcement of any Purchase Contract;
(5) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the price to
purchase shares of Common Stock upon settlement of any Purchase
Contract, change the Purchase Contract Settlement Date or otherwise
adversely affect the Holder's rights under any Purchase Contract;
or
(6) reduce the percentage of the outstanding Purchase
Contracts the consent of whose Holders is required for any such
supplemental agreement;
provided, that if any amendment or proposal referred to above would
adversely affect only the Income PRIDES or the Growth PRIDES, then only the
affected class of Holder as of the record date for the Holders entitled to
vote thereon will be entitled to vote on such amendment or proposal, and
such amendment or proposal shall not be effective except with the consent
of Holders of not less than a majority of such class.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the
substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created
by, any supplemental agreement permitted by this Article or the
modifications thereby of the agencies created by this Agreement, the Agent
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of such supplemental agreement is authorized or permitted by this
Agreement. The Agent may, but shall not be obligated to, enter into any
such supplemental agreement which affects the Agent's own rights, duties or
immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this
Article, this Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered hereunder
shall be bound thereby.
Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the
Holders and delivered after the execution of any supplemental agreement
pursuant to this Article may, and shall if required by the Agent, bear a
notation in form approved by the Agent as to any matter provided for in
such supplemental agreement. If the Company shall so determine, new
Certificates so modified as to conform, in the opinion of the Agent and the
Company, to any such supplemental agreement may be prepared and executed by
the Company and authenticated, executed on behalf of the Holders and
delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate
with any other Person or sell, assign, transfer, lease or convey all or
substantially all of its properties and assets to any Person or group of
affiliated Persons in one transaction or a series of related transactions,
unless (i) either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof
or the District of Columbia and such corporation shall expressly assume all
the obligations of the Company under the Purchase Contracts, this Agreement
and the Pledge Agreement by one or more supplemental agreements in form
reasonably satisfactory to the Agent and the Collateral Agent, executed and
delivered to the Agent and the Collateral Agent by such corporation, and
(ii) the Company or such successor corporation, as the case may be, shall
not, immediately after such merger or consolidation, or such sale,
assignment, transfer, lease or conveyance, be in default in the performance
of any covenant or condition hereunder, under any of the Securities or
under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance and upon any such assumption by a successor
corporation in accordance with Section 9.1, such successor corporation
shall succeed to and be substituted for the Company with the same effect as
if it had been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or
in the name of Cendant Corporation any or all of the Certificates
evidencing Securities issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Agent; and, upon the order
of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Agreement prescribed, the
Agent shall authenticate and execute on behalf of the Holders and deliver
any Certificates which previously shall have been signed and delivered by
the officers of the Company to the Agent for authentication and execution,
and any Certificate evidencing Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Agent for that
purpose. All the Certificates so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Certificates theretofore
or thereafter issued in accordance with the terms of this Agreement as
though all of such Certificates had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance such change in phraseology and form (but not
in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.
Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an
Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale, assignment, transfer, lease or conveyance, and any such
assumption, complies with the provisions of this Article and that all
conditions precedent to the consummation of any such consolidation, merger,
sale, assignment, transfer, lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the
Holders from time to time of the Securities that it will duly and
punctually perform its obligations under the Purchase Contracts in
accordance with the terms of the Purchase Contracts and this Agreement.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The
City of New York an office or agency where Certificates may be presented or
surrendered for acquisition of shares of Common Stock upon settlement of
the Purchase Contracts on the Purchase Contract Settlement Date or Early
Settlement and for transfer of Collateral upon occurrence of a Termination
Event, where Certificates may be surrendered for registration of transfer
or exchange, for a Collateral Substitution or re-establishment of an Income
PRIDES and where notices and demands to or upon the Company in respect of
the Securities and this Agreement may be served. The Company will give
prompt written notice to the Agent of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Agent with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the
Company hereby appoints the Agent as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where Certificates may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, The City of New
York for such purposes. The Company will give prompt written notice to the
Agent of any such designation or rescission and of any change in the
location of any such other office or agency. The Company hereby designates
as the place of payment for the Securities the Corporate Trust Office and
appoints the Agent at its Corporate Trust Office as paying agent in such
city.
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase
Contract Settlement Date reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common Stock the full number of
shares of Common Stock issuable against tender of payment in respect of all
Purchase Contracts constituting a part of the Securities evidenced by
Outstanding Certificates.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which
may be issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable.
Section 10.5. Statements of Officer of the Company as to Default.
The Company will deliver to the Agent, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officer's Certificate, stating whether or not to the best knowledge of the
signer thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions hereof, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which such Officer may have knowledge.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
CENDANT CORPORATION
By:_______________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Purchase Contract Agent
By:________________________________
Name:
Title:
EXHIBIT A
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS
REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the Company or its agent for registration of transfer,
exchange or payment, and any Certificate issued is registered in the name
of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company, and any payment hereon is
made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.
No. _____
Cusip No. Number of Income PRIDES _______
Form of Face of Income PRIDES Certificate
____% Income PRIDES
This Income PRIDES Certificate certifies that ___________ is
the registered Holder of the number of Income PRIDES set forth above. Each
Income PRIDES represents (i) either (a) beneficial ownership by the Holder
of one ____% Trust Originated Preferred Security (the "Preferred Security")
of Cendant Capital II, a Delaware statutory business trust (the "Trust"),
having a stated liquidation amount of $50, subject to the Pledge of such
Preferred Security by such Holder pursuant to the Pledge Agreement or (b)
upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the appropriate Applicable Ownership Interest of
the Treasury Portfolio, subject to the Pledge of such Applicable Ownership
Interest of the Treasury Portfolio by such Holder pursuant to the Pledge
Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with Cendant Corporation, a Delaware corporation (the
"Company"). All capitalized terms used herein which are defined in the
Purchase Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, constituting part of each Income PRIDES evidenced
hereby have been pledged to the Collateral Agent, for the benefit of the
Company, to secure the obligations of the Holder under the Purchase
Contract comprising a portion of such Income PRIDES.
The Pledge Agreement provides that all payments of the
Stated Amount of or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) in the Treasury
Portfolio, as the case may be, or cash distributions on, any Pledged
Preferred Securities (as defined in the Pledge Agreement) or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, constituting part of the Income PRIDES received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in
same day funds (i) in the case of (A) cash distributions with respect to
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio, as the case may be, and (B) any payments of the Stated
Amount or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such terms) of the Treasury Portfolio, as
the case may be, with respect to any Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, that have been released from the Pledge pursuant to the Pledge
Agreement, to the Agent to the account designated by the Agent, no later
than 2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such payment
is received by the Collateral Agent on a day that is not a Business Day or
after 12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day) and (ii) in the case of payments of the Stated
Amount or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) in the Treasury Portfolio, as
the case may be, of any Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) in the Treasury Portfolio, as the case may be, to the Company
on the Purchase Contract Settlement Date (as defined herein) in accordance
with the terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Income PRIDES of which such
Pledged Preferred Securities or the Treasury Portfolio, as the case may be,
are a part under the Purchase Contracts forming a part of such Income
PRIDES. Distributions on any Preferred Security or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition
of such term) of the Treasury Portfolio, as the case may be, forming part
of an Income PRIDES evidenced hereby which are payable quarterly in arrears
on February 16, May 16, August 16 and November 16 each year, commencing
______________, (a "Payment Date"), shall, subject to receipt thereof by
the Agent from the Collateral Agent, be paid to the Person in whose name
this Income PRIDES Certificate (or a Predecessor Income PRIDES Certificate)
is registered at the close of business on the Record Date for such Payment
Date.
Each Purchase Contract evidenced hereby obligates the Holder
of this Income PRIDES Certificate to purchase, and the Company to sell, on
____________, 2001 (the "Purchase Contract Settlement Date"), at a price
equal to $50 (the "Stated Amount"), a number of shares of Common Stock, no
par value ("Common Stock"), of the Company, equal to the Settlement Rate,
unless on or prior to the Purchase Contract Settlement Date there shall
have occurred a Termination Event or an Early Settlement with respect to
the Income PRIDES of which such Purchase Contract is a part, all as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. The purchase price (the "Purchase Price") for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby,
if not paid earlier, shall be paid on the Purchase Contract Settlement Date
by application of payment received in respect of the Stated Amount or the
appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case may be,
of the Pledged Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, pledged to secure
the obligations under such Purchase Contract of the Holder of the Income
PRIDES of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of
each Purchase Contract forming part of an Income PRIDES evidenced hereby an
amount (the "Contract Adjustment Payments") equal to % per annum of the
Stated Amount, computed on the basis of a 360 day year of twelve 30 day
months, subject to deferral at the option of the Company as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof.
Such Contract Adjustment Payments shall be payable to the Person in whose
name this Income PRIDES Certificate (or a Predecessor Income PRIDES
Certificate) is registered at the close of business on the Record Date for
such Payment Date.
Distributions on the Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition
of such term) of the Treasury Portfolio, as the case may be, and Contract
Adjustment Payments will be payable at the office of the Agent in The City
of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on the
Income PRIDES Register.
Reference is hereby made to the further provisions set forth
on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Income PRIDES Certificate
shall not be entitled to any benefit under the Pledge Agreement or the
Purchase Contract Agreement or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
CENDANT CORPORATION
By:_________________________________
Name:
Title:
By:__________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE FIRST NATIONAL BANK OF
CHICAGO, not individually but solely
as Attorney-in-Fact of such Holder
By:_________________________________
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificates referred to in
the within mentioned Purchase Contract Agreement.
By: THE FIRST NATIONAL BANK OF
CHICAGO, as Purchase Contract Agent
By: ____________________________________
Authorized Officer
(Form of Reverse of Income PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of _______ ___, (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between
the Company and The First National Bank of Chicago, as Purchase Contract
Agent (herein called the "Agent"), to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Agent, the Company, and the Holders and of the
terms upon which the Income PRIDES Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder
of this Income PRIDES Certificate to purchase, and the Company to sell, on
the Purchase Contract Settlement Date at a price equal to the Stated Amount
(the "Purchase Price"), a number of shares of Common Stock of the Company
equal to the Settlement Rate, unless, on or prior to the Purchase Contract
Settlement Date, there shall have occurred a Termination Event with respect
to the Security of which such Purchase Contract is a part or an Early
Settlement shall have occurred. The "Settlement Rate" is equal to (a) if
the Applicable Market Value (as defined below) is equal to or greater than
$ (the "Threshold Appreciation Price"), shares of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $ , the number of shares of Common
Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value and (c) if the Applicable Market Amount is less
than or equal to $ , shares of Common Stock per Purchase Contract, in each
case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall obligate the
Holder of the related Income PRIDES to purchase at the Purchase Price, and
the Company to sell, a number of newly issued shares of Common Stock equal
to the Early Settlement Rate or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the
Closing Price per share of Common Stock on each of the 20 consecutive
Trading Days ending on the third Trading Day immediately preceding the
Purchase Contract Settlement Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so
listed on a United States national or regional securities exchange, as
reported by The Nasdaq Stock Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock (A) is
not suspended from trading on any national or regional securities exchange
or association or over-the-counter market at the close of business and (B)
has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Income PRIDES Certificate shall pay the
Purchase Price for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby by effecting a Cash Settlement, or an
Early Settlement or from the proceeds of a remarketing of the related
Pledged Preferred Securities of such holders. A Holder of Income PRIDES who
does not elect, on or prior to 5:00 p.m. New York City time on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date,
to make an effective Cash Settlement or an Early Settlement, shall pay the
Purchase Price for the shares of Common Stock to be issued under the
related Purchase Contract from the Proceeds of the sale of the related
Pledged Preferred Securities held by the Collateral Agent. Such sale will
be made by the Remarketing Agent pursuant to the terms of the Remarketing
Agreement and the Remarketing Underwriting Agreement on the third Business
Day immediately preceding the Purchase Contract Settlement Date. If, as
provided in the Purchase Contract Agreement, upon the occurrence of a
Failed Remarketing the Collateral Agent, for the benefit of the Company,
exercises its rights as a secured creditor with respect to the Pledged
Preferred Securities related to this Income PRIDES certificate, any accrued
and unpaid distributions (including deferred distributions) on such Pledged
Preferred Securities will become payable by the Company to the holder of
this Income PRIDES Certificate in the manner provided for in the Purchase
Contract Agreement.
The Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificates
therefor to the Holder unless it shall have received payment in full of the
aggregate purchase price for the shares of Common Stock to be purchased
thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and all obligations
and rights of the Company and the Holder thereunder shall terminate if a
Termination Event shall have occurred. Upon the occurrence of a Termination
Event, the Company shall give written notice to the Agent and to the
Holders, at their addresses as they appear in the Income PRIDES Register.
Upon and after the occurrence of a Termination Event, the Collateral Agent
shall release the Pledged Preferred Security (as defined in the Pledge
Agreement) or the appropriate Applicable Ownership Interest of the Treasury
Portfolio forming a part of each Income PRIDES, or the Liquidation
Distribution received in respect of such Pledged Preferred Security, from
the Pledge. An Income PRIDES shall thereafter represent the right to
receive the Preferred Security or the appropriate Applicable Ownership
Interest of the Treasury Portfolio forming a part of such Income PRIDES, or
the Liquidation Distribution received in respect of such Preferred
Security, in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement.
Under the terms of the Pledge Agreement, the Agent will be
entitled to exercise the voting and any other consensual rights pertaining
to the Pledged Preferred Securities. Upon receipt of notice of any meeting
at which holders of Preferred Securities are entitled to vote or upon the
solicitation of consents, waivers or proxies of holders of Preferred
Securities, the Agent shall, as soon as practicable thereafter, mail to the
Income PRIDES holders a notice (a) containing such information as is
contained in the notice or solicitation, (b) stating that each Income
PRIDES holder on the record date set by the Agent therefor (which, to the
extent possible, shall be the same date as the record date for determining
the holders of Preferred Securities entitled to vote) shall be entitled to
instruct the Agent as to the exercise of the voting rights pertaining to
the Preferred Securities constituting a part of such holder's Income PRIDES
and (c) stating the manner in which such instructions may be given. Upon
the written request of the Income PRIDES Holders on such record date, the
Agent shall endeavor insofar as practicable to vote or cause to be voted,
in accordance with the instructions set forth in such requests, the maximum
number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the
Preferred Security evidenced by such Income PRIDES.
Upon the occurrence of an Investment Company Event or
liquidation of the Trust, a principal amount of the Debentures constituting
the assets of the Trust and underlying the Preferred Securities equal to
the aggregate Stated Amount of the Pledged Preferred Securities shall be
delivered to the Collateral Agent in exchange for Pledged Preferred
Securities. Thereafter, the Debentures shall be held by the Collateral
Agent to secure the obligations of each Holder of Income PRIDES to purchase
shares of Common Stock under the Purchase Contracts constituting a part of
such Income PRIDES. Following the liquidation of the Trust, the Holders and
the Collateral Agent shall have such security interests, rights and
obligations with respect to the Debentures as the Holders and the
Collateral Agent had in respect of the Pledged Preferred Securities, and
any reference in the Purchase Contract Agreement or Pledge Agreement to the
Preferred Securities shall be deemed to be a reference to the Debentures.
Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the Tax
Event Redemption Date with respect to the Applicable Principal Amount of
Debentures shall be delivered to the Collateral Agent in exchange for the
Pledged Preferred Securities. Thereafter, pursuant to the terms of the
Pledge Agreement, the Collateral Agent for the benefit of the Company will
apply an amount equal to the Redemption Amount of such Redemption Price to
purchase, the Treasury Portfolio and promptly remit the remaining portion
of such Redemption Price to the Agent for payment to the Holders of such
Income PRIDES.
Following the occurrence of a Tax Event Redemption prior to
the Purchase Contract Settlement Date, the Holders of Income PRIDES and the
Collateral Agent shall have such security interests rights and obligations
with respect to the Treasury Portfolio as the Holder of Income PRIDES and
the Collateral Agent had in respect of the Preferred Security or
Debentures, as the case may be, subject to the Pledge thereof as provided
in Articles II, III, IV, V and VI, of the Pledge Agreement and any
reference herein to the Preferred Security or the Debenture shall be deemed
to be reference to such Treasury Portfolio.
The Income PRIDES Certificates are issuable only in
registered form and only in denominations of a single Income PRIDES and any
integral multiple thereof. The transfer of any Income PRIDES Certificate
will be registered and Income PRIDES Certificates may be exchanged as
provided in the Purchase Contract Agreement. The Income PRIDES Registrar
may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Purchase Contract
Agreement. No service charge shall be required for any such registration of
transfer or exchange, but the Company and the Agent may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. A holder who elects to substitute a Treasury Security
for Preferred Securities or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, thereby creating Growth PRIDES, shall be
responsible for any fees or expenses payable in connection therewith.
Except as provided in the Purchase Contract Agreement, for so long as the
Purchase Contract underlying an Income PRIDES remains in effect, such
Income PRIDES shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Income PRIDES in respect of
the Preferred Security or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, and Purchase Contract
constituting such Income PRIDES may be transferred and exchanged only as an
Income PRIDES. The holder of an Income PRIDES may substitute for the
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio securing its obligation under the
related Purchase Contract Treasury Securities in an aggregate principal
amount equal to the aggregate Stated Amount of the Pledged Preferred
Securities or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) in the Treasury Portfolio in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement. From and after such Collateral Substitution, the Security for
which such Pledged Treasury Securities secures the holder's obligation
under the Purchase Contract shall be referred to as a "Growth PRIDES." A
Holder may make such Collateral Substitution only in integral multiples of
20 Income PRIDES for 20 Growth PRIDES; provided, however, that if a Tax
Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, a Holder may make such Collateral
Substitutions only in integral multiples of 160,000 Income PRIDES for
160,000 Growth PRIDES. Such Collateral Substitution may cause the
equivalent aggregate principal amount of this Certificate to be increased
or decreased; provided, however, the equivalent aggregate principal amount
outstanding under this Income PRIDES Certificate shall not exceed
$200,000,000. All such adjustments to the equivalent aggregate principal
amount of this Income PRIDES Certificate shall be duly recorded by placing
an appropriate notation on the Schedule attached hereto.
A Holder of Growth PRIDES may create or recreate Income
PRIDES by delivering to the Collateral Agent Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, with a
Stated Amount, in the case of such Preferred Securities, or with the
appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, in the case of such
appropriate Applicable Ownership Interest of the Treasury Portfolio, equal
to the aggregate principal amount of the Pledged Treasury Securities in
exchange for the release of such Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall
pay, on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Income
PRIDES Certificate evidencing such Purchase Contract is registered at the
close of business on the Record Date for such Payment Date. Contract
Adjustment Payments will be payable at the office of the Agent in The City
of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto at such address as it appears on the
Income PRIDES Register.
The Company shall have the right, at any time prior to the
Purchase Contract Settlement Date, to defer the payment of any or all of
the Contract Adjustment Payments otherwise payable on any Payment Date, but
only if the Company shall give the Holders and the Agent written notice of
its election to defer such payment (specifying the amount to be deferred)
as provided in the Purchase Contract Agreement. Any Contract Adjustment
Payments so deferred shall bear additional Contract Adjustment Payments
thereon at the rate of ____% per annum (computed on the basis of a 360 day
year of twelve 30 day months), compounding on each succeeding Payment Date,
until paid in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract Adjustment Payments
accrued thereon, are referred to herein as the "Deferred Contract
Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall
be due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the Purchase
Contract Settlement Date, the Holder of this Income PRIDES Certificate will
receive on the Purchase Contract Settlement Date, in lieu of a cash
payment, a number of shares of Common Stock equal to (x) the aggregate
amount of Deferred Contract Adjustment Payments payable to the Holder of
this Income PRIDES Certificate divided by (y) the Applicable Market Value.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock or make guarantee payments with respect to the foregoing (other than
(i) purchases or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any employee
or agent benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of
such event requiring the Company to purchase capital stock of the Company,
(ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (iv) dividends or distributions
in capital stock of the Company (or rights to acquire capital stock) or
repurchases or redemptions of capital stock solely from the issuance or
exchange of capital stock or (v) redemptions or repurchases of any rights
outstanding under a shareholder rights plan and a declaration thereunder of
a dividend of rights in the future).
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without limitation, the
rights of the Holders to receive and the obligation of the Company to pay
any Contract Adjustment Payments or any Deferred Contract Adjustment
Payments, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company,
if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Agent, the Collateral Agent and to
the Holders, at their addresses as they appear in the Income PRIDES
Register. Upon and after the occurrence of a Termination Event, the
Collateral Agent shall release the Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, from the Pledge in accordance with the provisions of the Pledge
Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, at the option of the Holder thereof, Purchase
Contracts underlying Securities having an aggregate amount equal to $1,000
or an integral multiple thereof may be settled early ("Early Settlement")
as provided in the Purchase Contract Agreement; provided, however, that if
a Tax Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, Holders may early settle Income PRIDES only
in integral multiples of 160,000 Income PRIDES. In order to exercise the
right to effect Early Settlement with respect to any Purchase Contracts
evidenced by this Income PRIDES Certificate, the Holder of this Income
PRIDES Certificate shall deliver this Income PRIDES Certificate to the
Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early set forth
below duly completed and accompanied by payment in the form of immediately
available funds payable to the order of the Company in an amount (the
"Early Settlement Amount") equal to (i) the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement, plus (ii) if such delivery
is made with respect to any Purchase Contracts during the period from the
close of business on any Record Date for any Payment Date to the opening of
business on such Payment Date, an amount equal to the Contract Adjustment
Payments payable on such Payment Date with respect to such Purchase
Contracts. Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio underlying such
Securities shall be released from the Pledge as provided in the Pledge
Agreement and the Holder shall be entitled to receive a number of shares of
Common Stock on account of each Purchase Contract forming part of a Income
PRIDES as to which Early Settlement is effected equal to the Early
Settlement Rate; provided however, that upon the Early Settlement of the
Purchase Contracts, the Holder thereof will forfeit the right to receive
any Deferred Contract Adjustment Payments, if any, on such Purchase
Contracts. The Early Settlement Rate shall initially be equal to shares of
Common Stock and shall be adjusted in the same manner and at the same time
as the Settlement Rate is adjusted as provided in the Purchase Contract
Agreement.
Upon registration of transfer of this Income PRIDES
Certificate, the transferee shall be bound (without the necessity of any
other action on the part of such transferee, except as may be required by
the Agent pursuant to the Purchase Contract Agreement), under the terms of
the Purchase Contract Agreement and the Purchase Contracts evidenced hereby
and the transferor shall be released from the obligations under the
Purchase Contracts evidenced by this Income PRIDES Certificate. The Company
covenants and agrees, and the Holder, by its acceptance hereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform the
related Purchase Contracts forming part of the Income PRIDES evidenced
hereby on his behalf as his attorney-in-fact, expressly withholds any
consent to the assumption (i.e., affirmance) of the Purchase Contracts by
the Company or its trustee in the event that the Company becomes the
subject of a case under the Bankruptcy Code, agrees to be bound by the
terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions of
the Purchase Contract Agreement, authorizes the Agent to enter into and
perform the Pledge Agreement on his behalf as its attorney-in-fact, and
consents to the Pledge of the Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, underlying this Income PRIDES Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees, that, to the extent and
in the manner provided in the Purchase Contract Agreement and the Pledge
Agreement, but subject to the terms thereof, payments in respect to the
Stated Amount of the Pledged Preferred Securities, or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of the Holders
of a majority of the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of
the Company or the Agent may treat the Person in whose name this Income
PRIDES Certificate is registered as the owner of the Income PRIDES
evidenced hereby for the purpose of receiving payments of distributions
payable quarterly on the Preferred Securities, receiving payments of
Contract Adjustment Payments and any Deferred Contract Adjustment Payments,
performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Agent nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof, entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ___________ Custodian ____________
(cust) (minor)
Under Uniform Gifts to Minors Act
__________________________________
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in
common
Additional abbreviations may also be used though not in the above list.
_______________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto _________________________________________________________
______________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of
Assignee) the within Income PRIDES Certificates and all rights thereunder,
hereby irrevocably constituting and appointing
______________________________________________________________________________
attorney to transfer said Income PRIDES Certificates on the books of CENDANT
Inc. with full power of substitution in the premises.
Dated: _________________ ________________________________
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Income PRIDES
Certificates in every particular,
without alteration or enlargement
or any change whatsoever.
Signature Guarantee: ______________
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the Purchase
Contract Settlement Date of the Purchase Contracts underlying the number of
Income PRIDES evidenced by this Income PRIDES Certificate be registered in
the name of, and delivered, together with a check in payment for any
fractional share, to the undersigned at the address indicated below unless
a different name and address have been indicated below. If shares are to be
registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ___________________ ______________________________
Signature
Signature Guarantee:__________________
(if assigned to another person)
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER a Person
other than the Holder, please
(i) print such Person's name
and address and (ii) provide a
guarantee of your signature:
Please print name
and address of
Registered
Holder:
______________________________ ____________________________________
Name Name
______________________________ ____________________________________
Address Address
_____________________________ ____________________________________
_____________________________ ____________________________________
_____________________________ ____________________________________
Social Security or other
Taxpayer Identification
Number, if any ____________________________________
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate
hereby irrevocably exercises the option to effect Early Settlement in
accordance with the terms of the Purchase Contract Agreement with respect
to the Purchase Contracts underlying the number of Income PRIDES evidenced
by this Income PRIDES Certificate specified below. The option to effect
Early Settlement may be exercised only with respect to Purchase Contracts
underlying Growth PRIDES with an aggregate Stated Amount equal to $1,000 or
an integral multiple thereof. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early
Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Income PRIDES Certificate
representing any Income PRIDES evidenced hereby as to which Early
Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and
address have been indicated below. Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: _________________ ___________________________
Signature
Signature Guarantee:___________________
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock or Income REGISTERED HOLDER
PRIDES Certificates are to be regis-
tered in the name of and delivered to
and Pledged Preferred Securities, or
the Treasury Portfolio, as the case may
be, are to be transferred to a Person
other than the Holder, please print such
Person's name and address:
Please print name
and address of
Registered
Holder:
_____________________________ _______________________________
Name Name
_____________________________ _______________________________
Address Address
_____________________________ _______________________________
_____________________________ _______________________________
_____________________________ _______________________________
Social Security or other
Taxpayer Identification
Number, if any _______________________________
Transfer Instructions for Pledged Preferred Securities, or the Treasury
Portfolio, as the case may be, Transferable Upon Early Settlement or a
Termination Event:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
Principal Amount of
Amount of Amount of this Global Certificate Signature of
decrease in Principal increase in Principal following such decrease authorized officer of
Amount of the Global Amount of the Global or Trustee or Securities
Date Certificate Certificate increase Custodian
EXHIBIT B
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS
REGISTERED IN THE NAME OF A CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the Company or its agent for registration of transfer,
exchange or payment, and any Certificate issued is registered in the name
of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company, and any payment hereon is
made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.
No._____________ Number of Growth PRIDES____________ Cusip No.
Form of Face of Growth PRIDES Certificate
This Growth PRIDES Certificate certifies that __________ is
the registered Holder of the number of Growth PRIDES set forth above. Each
Growth PRIDES represents (i) a 1/20 undivided beneficial ownership
interest, of a Treasury Security having a principal amount at maturity
equal to $1,000, subject to the Pledge of such Treasury Security by such
Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with Cendant
Corporation, a Delaware corporation (the "Company"). All capitalized terms
used herein which are defined in the Purchase Contract Agreement have the
meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Securities
constituting part of each Growth PRIDES evidenced hereby have been pledged
to the Collateral Agent, for the benefit of the Company, to secure the
obligations of the Holder under the Purchase Contract comprising a portion
of such Growth PRIDES.
Each Purchase Contract evidenced hereby obligates the Holder
of this Growth PRIDES Certificate to purchase, and the Company, to sell, on
February 16, 2001 (the "Purchase Contract Settlement Date"), at a price
equal to $50 (the "Stated Amount"), a number of shares of Common stock, no
par value per share ("Common Stock"), of the Company equal to the
Settlement Rate, unless on or prior to the Purchase Contract Settlement
Date there shall have occurred a Termination Event or an Early Settlement
with respect to the Growth PRIDES of which such Purchase Contract is a
part, all as provided in the Purchase Contract Agreement and more fully
described on the reverse hereof. The purchase price for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby
will be paid by application of the Proceeds from the Treasury Securities
pledged to secure the obligations under such Purchase Contract in
accordance with the terms of the Pledge Agreement.
The Company shall pay on each Payment Date in respect of
each Purchase Contract evidenced hereby an amount (the "Contract Adjustment
Payments") equal to __% per annum of the Stated Amount, computed on the
basis of the actual number of days elapsed in a year of 360 day year of
twelve 30 day months, as the case may be, subject to deferral at the option
of the Company as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof. Such Contract Adjustment Payments
shall be payable to the Person in whose name this Growth PRIDES Certificate
(or a Predecessor Growth PRIDES Certificate) is registered at the close of
business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office
of the Agent in The City of New York or, at the option of the Company, by
check mailed to the address of the Person entitled thereto as such address
appears on the Growth PRIDES Register.
Reference is hereby made to the further provisions set forth
on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Growth PRIDES Certificate
shall not be entitled to any benefit under the Pledge Agreement or the
Purchase Contract Agreement or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
CENDANT CORPORATION
By: _______________________________
Name:
Title:
By:________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under
the Purchase Contracts)
By: THE FIRST NATIONAL BANK OF
CHICAGO, not individually but
solely as Attorney-in-Fact of
such Holder
By: __________________________________
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificates referred to in
the within mentioned Purchase Contract Agreement.
By: THE FIRST NATIONAL BANK OF
CHICAGO, as Purchase Contract Agent
By: ___________________________________
Authorized Officer
(Form of Reverse of Income PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of _______ ___, (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between
the Company and The First National Bank of Chicago, as Purchase Contract
Agent (herein called the "Agent"), to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Agent, the Company, and the Holders and of the
terms upon which the Income PRIDES Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder
of this Income PRIDES Certificate to purchase, and the Company to sell, on
the Purchase Contract Settlement Date at a price equal to the Stated Amount
(the "Purchase Price"), a number of shares of Common Stock of the Company
equal to the Settlement Rate, unless, on or prior to the Purchase Contract
Settlement Date, there shall have occurred a Termination Event with respect
to the Security of which such Purchase Contract is a part or an Early
Settlement shall have occurred. The "Settlement Rate" is equal to (a) if
the Applicable Market Value (as defined below) is equal to or greater than
$ (the "Threshold Appreciation Price"), shares of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $ , the number of shares of Common
Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value and (c) if the Applicable Market Amount is less
than or equal to $ , shares of Common Stock per Purchase Contract, in each
case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall obligate the
Holder of the related Income PRIDES to purchase at the Purchase Price, and
the Company to sell, a number of newly issued shares of Common Stock equal
to the Early Settlement Rate or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the
Closing Price per share of Common Stock on each of the 20 consecutive
Trading Days ending on the third Trading Day immediately preceding the
Purchase Contract Settlement Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so
listed on a United States national or regional securities exchange, as
reported by The Nasdaq Stock Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock (A) is
not suspended from trading on any national or regional securities exchange
or association or over-the-counter market at the close of business and (B)
has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Income PRIDES Certificate shall pay the
Purchase Price for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby by effecting a Cash Settlement, or an
Early Settlement or from the proceeds of a remarketing of the related
Pledged Preferred Securities of such holders. A Holder of Income PRIDES who
does not elect, on or prior to 5:00 p.m. New York City time on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date,
to make an effective Cash Settlement or an Early Settlement, shall pay the
Purchase Price for the shares of Common Stock to be issued under the
related Purchase Contract from the Proceeds of the sale of the related
Pledged Preferred Securities held by the Collateral Agent. Such sale will
be made by the Remarketing Agent pursuant to the terms of the Remarketing
Agreement and the Remarketing Underwriting Agreement on the third Business
Day immediately preceding the Purchase Contract Settlement Date. If, as
provided in the Purchase Contract Agreement, upon the occurrence of a
Failed Remarketing the Collateral Agent, for the benefit of the Company,
exercises its rights as a secured creditor with respect to the Pledged
Preferred Securities related to this Income PRIDES certificate, any accrued
and unpaid distributions (including deferred distributions) on such Pledged
Preferred Securities will become payable by the Company to the holder of
this Income PRIDES Certificate in the manner provided for in the Purchase
Contract Agreement.
The Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificates
therefor to the Holder unless it shall have received payment in full of the
aggregate purchase price for the shares of Common Stock to be purchased
thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and all obligations
and rights of the Company and the Holder thereunder shall terminate if a
Termination Event shall have occurred. Upon the occurrence of a Termination
Event, the Company shall give written notice to the Agent and to the
Holders, at their addresses as they appear in the Income PRIDES Register.
Upon and after the occurrence of a Termination Event, the Collateral Agent
shall release the Pledged Preferred Security (as defined in the Pledge
Agreement) or the appropriate Applicable Ownership Interest of the Treasury
Portfolio forming a part of each Income PRIDES, or the Liquidation
Distribution received in respect of such Pledged Preferred Security, from
the Pledge. An Income PRIDES shall thereafter represent the right to
receive the Preferred Security or the appropriate Applicable Ownership
Interest of the Treasury Portfolio forming a part of such Income PRIDES, or
the Liquidation Distribution received in respect of such Preferred
Security, in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement.
Under the terms of the Pledge Agreement, the Agent will be
entitled to exercise the voting and any other consensual rights pertaining
to the Pledged Preferred Securities. Upon receipt of notice of any meeting
at which holders of Preferred Securities are entitled to vote or upon the
solicitation of consents, waivers or proxies of holders of Preferred
Securities, the Agent shall, as soon as practicable thereafter, mail to the
Income PRIDES holders a notice (a) containing such information as is
contained in the notice or solicitation, (b) stating that each Income
PRIDES holder on the record date set by the Agent therefor (which, to the
extent possible, shall be the same date as the record date for determining
the holders of Preferred Securities entitled to vote) shall be entitled to
instruct the Agent as to the exercise of the voting rights pertaining to
the Preferred Securities constituting a part of such holder's Income PRIDES
and (c) stating the manner in which such instructions may be given. Upon
the written request of the Income PRIDES Holders on such record date, the
Agent shall endeavor insofar as practicable to vote or cause to be voted,
in accordance with the instructions set forth in such requests, the maximum
number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the
Preferred Security evidenced by such Income PRIDES.
Upon the occurrence of an Investment Company Event or
liquidation of the Trust, a principal amount of the Debentures constituting
the assets of the Trust and underlying the Preferred Securities equal to
the aggregate Stated Amount of the Pledged Preferred Securities shall be
delivered to the Collateral Agent in exchange for Pledged Preferred
Securities. Thereafter, the Debentures shall be held by the Collateral
Agent to secure the obligations of each Holder of Income PRIDES to purchase
shares of Common Stock under the Purchase Contracts constituting a part of
such Income PRIDES. Following the liquidation of the Trust, the Holders and
the Collateral Agent shall have such security interests, rights and
obligations with respect to the Debentures as the Holders and the
Collateral Agent had in respect of the Pledged Preferred Securities, and
any reference in the Purchase Contract Agreement or Pledge Agreement to the
Preferred Securities shall be deemed to be a reference to the Debentures.
Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the Tax
Event Redemption Date with respect to the Applicable Principal Amount of
Debentures shall be delivered to the Collateral Agent in exchange for the
Pledged Preferred Securities. Thereafter, pursuant to the terms of the
Pledge Agreement, the Collateral Agent for the benefit of the Company will
apply an amount equal to the Redemption Amount of such Redemption Price to
purchase, the Treasury Portfolio and promptly remit the remaining portion
of such Redemption Price to the Agent for payment to the Holders of such
Income PRIDES.
Following the occurrence of a Tax Event Redemption prior to
the Purchase Contract Settlement Date, the Holders of Income PRIDES and the
Collateral Agent shall have such security interests rights and obligations
with respect to the Treasury Portfolio as the Holder of Income PRIDES and
the Collateral Agent had in respect of the Preferred Security or
Debentures, as the case may be, subject to the Pledge thereof as provided
in Articles II, III, IV, V and VI, of the Pledge Agreement and any
reference herein to the Preferred Security or the Debenture shall be deemed
to be reference to such Treasury Portfolio.
The Income PRIDES Certificates are issuable only in
registered form and only in denominations of a single Income PRIDES and any
integral multiple thereof. The transfer of any Income PRIDES Certificate
will be registered and Income PRIDES Certificates may be exchanged as
provided in the Purchase Contract Agreement. The Income PRIDES Registrar
may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Purchase Contract
Agreement. No service charge shall be required for any such registration of
transfer or exchange, but the Company and the Agent may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. A holder who elects to substitute a Treasury Security
for Preferred Securities or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, thereby creating Growth PRIDES, shall be
responsible for any fees or expenses payable in connection therewith.
Except as provided in the Purchase Contract Agreement, for so long as the
Purchase Contract underlying an Income PRIDES remains in effect, such
Income PRIDES shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Income PRIDES in respect of
the Preferred Security or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, and Purchase Contract
constituting such Income PRIDES may be transferred and exchanged only as an
Income PRIDES. The holder of an Income PRIDES may substitute for the
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio securing its obligation under the
related Purchase Contract Treasury Securities in an aggregate principal
amount equal to the aggregate Stated Amount of the Pledged Preferred
Securities or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) in the Treasury Portfolio in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement. From and after such Collateral Substitution, the Security for
which such Pledged Treasury Securities secures the holder's obligation
under the Purchase Contract shall be referred to as a "Growth PRIDES." A
Holder may make such Collateral Substitution only in integral multiples of
20 Income PRIDES for 20 Growth PRIDES; provided, however, that if a Tax
Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, a Holder may make such Collateral
Substitutions only in integral multiples of 160,000 Income PRIDES for
160,000 Growth PRIDES. Such Collateral Substitution may cause the
equivalent aggregate principal amount of this Certificate to be increased
or decreased; provided, however, the equivalent aggregate principal amount
outstanding under this Income PRIDES Certificate shall not exceed
$200,000,000. All such adjustments to the equivalent aggregate principal
amount of this Income PRIDES Certificate shall be duly recorded by placing
an appropriate notation on the Schedule attached hereto.
A Holder of Growth PRIDES may create or recreate Income
PRIDES by delivering to the Collateral Agent Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, with a
Stated Amount, in the case of such Preferred Securities, or with the
appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, in the case of such
appropriate Applicable Ownership Interest of the Treasury Portfolio, equal
to the aggregate principal amount of the Pledged Treasury Securities in
exchange for the release of such Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall
pay, on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Income
PRIDES Certificate evidencing such Purchase Contract is registered at the
close of business on the Record Date for such Payment Date. Contract
Adjustment Payments will be payable at the office of the Agent in The City
of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto at such address as it appears on the
Income PRIDES Register.
The Company shall have the right, at any time prior to the
Purchase Contract Settlement Date, to defer the payment of any or all of
the Contract Adjustment Payments otherwise payable on any Payment Date, but
only if the Company shall give the Holders and the Agent written notice of
its election to defer such payment (specifying the amount to be deferred)
as provided in the Purchase Contract Agreement. Any Contract Adjustment
Payments so deferred shall bear additional Contract Adjustment Payments
thereon at the rate of ____% per annum (computed on the basis of a 360 day
year of twelve 30 day months), compounding on each succeeding Payment Date,
until paid in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract Adjustment Payments
accrued thereon, are referred to herein as the "Deferred Contract
Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall
be due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the Purchase
Contract Settlement Date, the Holder of this Income PRIDES Certificate will
receive on the Purchase Contract Settlement Date, in lieu of a cash
payment, a number of shares of Common Stock equal to (x) the aggregate
amount of Deferred Contract Adjustment Payments payable to the Holder of
this Income PRIDES Certificate divided by (y) the Applicable Market Value.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock or make guarantee payments with respect to the foregoing (other than
(i) purchases or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any employee
or agent benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of
such event requiring the Company to purchase capital stock of the Company,
(ii) as a result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (iv) dividends or distributions
in capital stock of the Company (or rights to acquire capital stock) or
repurchases or redemptions of capital stock solely from the issuance or
exchange of capital stock or (v) redemptions or repurchases of any rights
outstanding under a shareholder rights plan and a declaration thereunder of
a dividend of rights in the future).
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without limitation, the
rights of the Holders to receive and the obligation of the Company to pay
any Contract Adjustment Payments or any Deferred Contract Adjustment
Payments, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company,
if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Agent, the Collateral Agent and to
the Holders, at their addresses as they appear in the Income PRIDES
Register. Upon and after the occurrence of a Termination Event, the
Collateral Agent shall release the Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, from the Pledge in accordance with the provisions of the Pledge
Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, at the option of the Holder thereof, Purchase
Contracts underlying Securities having an aggregate amount equal to $1,000
or an integral multiple thereof may be settled early ("Early Settlement")
as provided in the Purchase Contract Agreement; provided, however, that if
a Tax Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, Holders may early settle Income PRIDES only
in integral multiples of 160,000 Income PRIDES. In order to exercise the
right to effect Early Settlement with respect to any Purchase Contracts
evidenced by this Income PRIDES Certificate, the Holder of this Income
PRIDES Certificate shall deliver this Income PRIDES Certificate to the
Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early set forth
below duly completed and accompanied by payment in the form of immediately
available funds payable to the order of the Company in an amount (the
"Early Settlement Amount") equal to (i) the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement, plus (ii) if such delivery
is made with respect to any Purchase Contracts during the period from the
close of business on any Record Date for any Payment Date to the opening of
business on such Payment Date, an amount equal to the Contract Adjustment
Payments payable on such Payment Date with respect to such Purchase
Contracts. Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio underlying such
Securities shall be released from the Pledge as provided in the Pledge
Agreement and the Holder shall be entitled to receive a number of shares of
Common Stock on account of each Purchase Contract forming part of a Income
PRIDES as to which Early Settlement is effected equal to the Early
Settlement Rate; provided however, that upon the Early Settlement of the
Purchase Contracts, the Holder thereof will forfeit the right to receive
any Deferred Contract Adjustment Payments, if any, on such Purchase
Contracts. The Early Settlement Rate shall initially be equal to shares of
Common Stock and shall be adjusted in the same manner and at the same time
as the Settlement Rate is adjusted as provided in the Purchase Contract
Agreement.
Upon registration of transfer of this Income PRIDES
Certificate, the transferee shall be bound (without the necessity of any
other action on the part of such transferee, except as may be required by
the Agent pursuant to the Purchase Contract Agreement), under the terms of
the Purchase Contract Agreement and the Purchase Contracts evidenced hereby
and the transferor shall be released from the obligations under the
Purchase Contracts evidenced by this Income PRIDES Certificate. The Company
covenants and agrees, and the Holder, by its acceptance hereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform the
related Purchase Contracts forming part of the Income PRIDES evidenced
hereby on his behalf as his attorney-in-fact, expressly withholds any
consent to the assumption (i.e., affirmance) of the Purchase Contracts by
the Company or its trustee in the event that the Company becomes the
subject of a case under the Bankruptcy Code, agrees to be bound by the
terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions of
the Purchase Contract Agreement, authorizes the Agent to enter into and
perform the Pledge Agreement on his behalf as its attorney-in-fact, and
consents to the Pledge of the Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, underlying this Income PRIDES Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees, that, to the extent and
in the manner provided in the Purchase Contract Agreement and the Pledge
Agreement, but subject to the terms thereof, payments in respect to the
Stated Amount of the Pledged Preferred Securities, or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of the Holders
of a majority of the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of
the Company or the Agent may treat the Person in whose name this Income
PRIDES Certificate is registered as the owner of the Income PRIDES
evidenced hereby for the purpose of receiving payments of distributions
payable quarterly on the Preferred Securities, receiving payments of
Contract Adjustment Payments and any Deferred Contract Adjustment Payments,
performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Agent nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof, entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ______________ Custodian____________
(cust) (minor)
Under Uniform Gifts to Minors Act
____________________________________
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in
common
Additional abbreviations may also be used though not in the above list.
______________________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ________________________________________________________
_____________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of
Assignee) the within Income PRIDES Certificates and all rights thereunder,
hereby irrevocably constituting and appointing
______________________________________________________________________________
attorney to transfer said Income PRIDES Certificates on the books of CENDANT
Inc. with full power of substitution in the premises.
Dated:
-------------- --------------------------------
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Income PRIDES
Certificates in every particular,
without alteration or enlargement
or any change whatsoever.
Signature Guarantee:________________
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the Purchase
Contract Settlement Date of the Purchase Contracts underlying the number of
Income PRIDES evidenced by this Income PRIDES Certificate be registered in
the name of, and delivered, together with a check in payment for any
fractional share, to the undersigned at the address indicated below unless
a different name and address have been indicated below. If shares are to be
registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated:___________________ ____________________________________
Signature
Signature Guarantee:________________
(if assigned to another person)
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER a Person
other than the Holder, please
(i) print such Person's name and
address and (ii) provide a
guarantee of your signature:
Please print name
and address of
Registered
Holder:
_____________________________ _______________________________
Name Name
_____________________________ _______________________________
Address Address
_____________________________ _______________________________
_____________________________ _______________________________
_____________________________ _______________________________
Social Security or other
Taxpayer Identification
Number, if any _______________________________
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate
hereby irrevocably exercises the option to effect Early Settlement in
accordance with the terms of the Purchase Contract Agreement with respect
to the Purchase Contracts underlying the number of Income PRIDES evidenced
by this Income PRIDES Certificate specified below. The option to effect
Early Settlement may be exercised only with respect to Purchase Contracts
underlying Growth PRIDES with an aggregate Stated Amount equal to $1,000 or
an integral multiple thereof. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early
Settlement be registered in the name of, and delivered, together with a
check in payment for any fractional share and any Income PRIDES Certificate
representing any Income PRIDES evidenced hereby as to which Early
Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and
address have been indicated below. Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ________________________ ______________________________
Signature
Signature Guarantee:____________________
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock or Income REGISTERED HOLDER
PRIDES Certificates are to be regis-
tered in the name of and delivered to
and Pledged Preferred Securities, or
the Treasury Portfolio, as the case may
be, are to be transferred to a Person
other than the Holder, please print such
Person's name and address:
Please print name
and address of
Registered
Holder:
________________________________ _____________________________
Name Name
________________________________ _____________________________
Address Address
________________________________ _____________________________
________________________________ _____________________________
________________________________ _____________________________
Social Security or other
Taxpayer Identification
Number, if any ___________________________
Transfer Instructions for Pledged Preferred Securities, or the Treasury
Portfolio, as the case may be, Transferable Upon Early Settlement or a
Termination Event:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
Principal Amount of
Amount of Amount of this Global Certificate Signature of
decrease in Principal increase in Principal following such decrease authorized officer of
Amount of the Global Amount of the Global or Trustee or Securities
Date Certificate Certificate increase Custodian
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10010-2697
Attention: Corporate Trust Administration Department
Re: FELINE PRIDES of Cendant Corporation (the "Company"),
and Cendant Capital I
We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of _______ ___, , among the Company, yourselves,
as Collateral Agent, and ourselves, as Purchase Contract Agent and as
attorney-in-fact for the holders of [Income PRIDES] [Growth PRIDES] from
time to time, that the holder of securities listed below (the "Holder") has
elected to substitute [$_____ aggregate [principal amount] of Treasury
Securities] [$_______ Stated Amount of Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be,] in exchange for the [Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be,] [Pledged Treasury Securities] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating that the
Holder has Transferred [Treasury Securities] [Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be,] to you, as Collateral Agent. We hereby instruct you, upon
receipt of such [Pledged Treasury Securities] [Pledged Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be], and upon the payment by such Holder of any applicable
fees, to release the [Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,]
[Treasury Securities] related to such [Income PRIDES] [Growth PRIDES] to us
in accordance with the Holder's instructions.
Date: _________________________ _________________________________
By: _____________________________
Name:
Title:
Signature Guarantee:_____________
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,] for the
[Pledged Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] [Pledged Treasury
Securities]:
__________________________________ _____________________________ Name
Social Security or other Taxpayer
Identification Number, if any
__________________________________
Address
__________________________________
__________________________________
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: FELINE PRIDES of Cendant Corporation (the "Company"),
and Cendant Capital I
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent, $_______
aggregate principal amount of [Treasury Securities] [Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be,] in exchange for the [Pledged Preferred Securities or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be,] [Pledged Treasury Securities] held by the Collateral
Agent, in accordance with Section 4.1 of the Pledge Agreement, dated
_______ ___, , between you, the Company and the Collateral Agent. The
undersigned Holder has paid the Collateral Agent all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the
undersigned Holder the [Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be,] [Pledged Treasury Securities] related to such [Income PRIDES] [Growth
PRIDES].
Date:______________________ _________________________________
By: ____________________________
Signature Guarantee: ___________
Dated:
Please print name and address of Registered Holder:
____________________________ _________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
___________________________
___________________________
___________________________
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: FELINE PRIDES of Cendant Corporation (the "Company"),
and Cendant Capital I
The undersigned Holder hereby irrevocably notifies you in
accordance with Section 5.4 of the Purchase Contract Agreement, dated as of
______ ___, among the Company, yourselves, as Purchase Contract Agent and
as Attorney-in-Fact for the Holders of the Purchase Contracts, that such
Holder has elected to pay to the Collateral Agent, on or prior to 5:00 p.m.
New York City time, on the Business Day immediately preceding the Purchase
Contract Settlement Date, (in lawful money of the United States by
[certified or cashiers check or] wire transfer, in each case in immediately
available funds), $_________ as the Purchase Price for the shares of Common
Stock issuable to such Holder by the Company under the related Purchase
Contract on the Purchase Contract Settlement Date. The undersigned Holder
hereby instructs you to notify promptly the Collateral Agent of the
undersigned Holders election to make such cash settlement with respect to
the Purchase Contracts related to such Holder's [Income PRIDES] [Growth
PRIDES].
Date:______________________ __________________________________
By: ______________________________
Signature Guarantee: _____________
Dated:
Please print name and address of Registered Holder:
__________________________ __________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
__________________________
__________________________
__________________________
Exhibit 4.9
CENDANT CORPORATION,
THE CHASE MANHATTAN BANK,
as Collateral Agent
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent
FORM OF PLEDGE AGREEMENT
Dated as of
TABLE OF CONTENTS
Page
Section 1. Definitions.............................................2
Section 2. Pledge; Control and Perfection..........................6
Section 2.1 The Pledge.......................................6
Section 2.2 Control and Perfection...........................8
Section 3. Distributions on Pledged Collateral.....................9
Section 4. Substitution, Release, Repledge and Settlement of
Preferred Securities.................................10
Section 4.1 Substitution of Preferred Securities and the
Creation of Growth PRIDES or Income PRIDES....10
Section 4.2 Pledge of Preferred Securities and
Reestablishment of Income PRIDES or
Growth PRIDES.................................12
Section 4.3 Termination Event...............................14
Section 4.4 Cash Settlement.................................15
Section 4.5 Early Settlement................................16
Section 4.6 Application of Proceeds Settlement..............17
Section 5. Voting Rights - Preferred Securities...................19
Section 6. Rights and Remedies; Distribution of the Debentures;
Tax Event Redemption.................................20
Section 6.1 Rights and Remedies of the Collateral Agent.....20
Section 6.2 Distribution of the Debentures; Tax Event
Redemption....................................21
Section 6.3 Substitutions...................................22
Section 7. Representations and Warranties; Covenants..............22
Section 7.1 Representations and Warranties..................22
Section 7.2 Covenants.......................................23
Section 8. The Collateral Agent...................................24
Section 8.1 Appointment, Powers and Immunities..............24
Section 8.2 Instructions of the Company.....................24
Section 8.3 Reliance by Collateral Agent. ..................25
Section 8.4 Rights in Other Capacities......................25
Section 8.5 Non-Reliance on Collateral Agent................25
Section 8.6 Compensation and Indemnity......................26
Section 8.7 Failure to Act..................................26
Section 8.8 Resignation of Collateral Agent.................27
Section 8.9 Right to Appoint Agent or Advisor...............27
Section 8.10 Survival.......................................28
Section 8.11 Exculpation....................................28
Section 9. Amendment..............................................28
Section 9.1 Amendment Without Consent of Holders............28
Section 9.2 Amendment with Consent of Holders...............29
Section 9.3 Execution of Amendments.........................29
Section 9.4 Effect of Amendments............................30
Section 9.5 Reference to Amendments.........................30
Section 10. Miscellaneous.........................................30
Section 10.1 No Waiver......................................30
Section 10.2 Governing Law..................................30
Section 10.3 Notices........................................31
Section 10.4 Successors and Assigns.........................31
Section 10.5 Counterparts...................................31
Section 10.6 Severability...................................31
Section 10.7 Expenses, etc..................................32
Section 10.8 Security Interest Absolute.....................32
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
PLEDGE AGREEMENT
FORM OF PLEDGE AGREEMENT, dated as of ____________ (this
"Agreement"), among Cendant Corporation, a Delaware corporation (the
"Company"), The Chase Manhattan Bank, a New York banking corporation, not
individually but solely as collateral agent (in such capacity, together
with its successors in such capacity, the "Collateral Agent") and in its
capacity as a "securities intermediary" as defined in Section 8-102(a)(14)
of the Code (as defined herein) (in such capacity, together with its
successors in such capacity, the "Securities Intermediary"), and The First
National Bank of Chicago, not individually but solely as purchase contract
agent and as attorney-in-fact of the Holders (as defined in the Purchase
Contract Agreement) from time to time of the Securities (as hereinafter
defined) (in such capacity, together with its successors in such capacity,
the "Purchase Contract Agent") under the Purchase Contract Agreement (as
hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued up to FELINE PRIDES and
___% Trust Originated Preferred Securities (the "Preferred Securities" and,
together with the FELINE PRIDES, the "Securities").
The FELINE PRIDES will initially consist of (A) ____________ units
(referred to as "Income PRIDES") with a Stated Amount, per Income PRIDES,
of $50 (the "Stated Amount") and (B) at least ____________ units (referred
to as "Growth PRIDES") with a face amount, per Growth PRIDES, equal to the
Stated Amount. Each Income PRIDES will initially consist of a unit
comprised of (a) a stock purchase contract (a "Purchase Contract") under
which (i) the holder will purchase from the Company on ________, 2001 (the
"Purchase Contract Settlement Date"), for an amount of cash equal to the
Stated Amount, a number of newly issued shares of common stock, $0.01 par
value per share (the "Common Stock"), of the Company equal to the
Settlement Rate and (ii) the Company will pay the holder Contract
Adjustment Payments at the rate of ____% of the Stated Amount per annum and
(b) either beneficial ownership of a Trust Preferred Security or upon the
occurrence of a Tax Event Redemption the Applicable Ownership Interest of
the Treasury Portfolio. Each Growth PRIDES will initially consist of a unit
comprised of (a) a Purchase Contract under which (i) the holder will
purchase from the Company on the Purchase Contract Settlement Date, for an
amount in cash equal to the Stated Amount, a number of newly issued shares
of Common Stock of the Company, equal to the Settlement Rate, and (ii) the
Company will pay the holder Contract Adjustment Payments, at the rate of %
of the Stated Amount per annum, and (b) a 1/20 undivided beneficial
interest in a % zero-coupon U.S. Treasury Security (CUSIP No. ___) having a
principal amount equal to $1,000 and maturing on _______, 2001 (the
"Treasury Securities").
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of
such Holders, among other things, to execute and deliver this Agreement on
behalf of such Holders and to grant the pledge provided hereby of the
Preferred Securities and any Treasury Securities delivered in exchange
therefor to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof. Upon such
pledge, the Preferred Securities will be beneficially owned by the Holders
but will be owned of record by the Purchase Contract Agent subject to the
Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree
as follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them in
the Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board
Resolution, (iv) Cash Settlement, (v) Certificate, (vi) Common Stock,
(vii) Contract Adjustment Payments, (viii) Debentures, (ix) Early
Settlement, (x) Early Settlement Amount, (xi) Early Settlement Date,
(xii) Failed Remarketing, (xiii) Holder, (xiv) Opinion of Counsel,
(xv) Outstanding Securities, (xvi) Purchase Agreement, (xvii)
Purchase Contract, (xviii) Purchase Contract Settlement Date, (xix)
Purchase Price, (xx) Remarketing Agent, (xxi) Remarketing Agreement,
(xxii) Remarketing Underwriting Agreement, (xxiii) Settlement Rate,
and (xxiv) Termination Event; and
(d) the following terms have the meanings assigned to them in
the Declaration: (i) Applicable Ownership Interest (ii) Applicable
Principal Amount, (iii) Institutional Trustee, (iv) Investment
Company Event,(v) Primary Treasury Dealer, (vi) Quotation Agent,
(vii) Redemption Amount, (viii) Redemption Price, (ix) Tax Event, (x)
Tax Event Redemption, (xi) Tax Event Redemption Date, (xii) Treasury
Portfolio, (xiii) Treasury Portfolio Purchase Price.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of New York (in the
State of New York) are permitted or required by any applicable law to
close.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the trust account (number ___) maintained
at The Chase Manhattan Bank in the name "The First National Bank of
Chicago", as Purchase Contract Agent on behalf of the holders of certain
securities of Cendant Capital II, Collateral Account subject to the
security interest of The Chase Manhattan Bank, as Collateral Agent, for the
benefit of Cendant Corporation, as pledgee and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph
of this instrument.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Debenture Trustee" means The Bank of Nova Scotia Trust Company of
New York, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of , ______, among the Company as sponsor, the trustees named
therein and the holders from time to time of undivided beneficial interests
in the assets of the Trust.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or
directly and fully guaranteed or insured, by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof or
such indebtedness constitutes a general obligation of it); (ii) deposits,
certificates of deposit or acceptances with an original maturity of 365
days or less of any institution which is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not
less than US$ 200.0 million at the time of deposit; (iii) investments with
an original maturity of 365 days or less of any Person that is fully and
unconditionally guaranteed by a bank referred to in clause (ii); (iv)
repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the
United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States Government; (v) investments in
commercial paper, other than commercial paper issued by the Company or its
affiliates, of any corporation incorporated under the laws of the United
States or any State thereof, which commercial paper has a rating at the
time of purchase at least equal to "A-1" by Standard & Poor's Ratings
Services or at least equal to "P-1" by Moody's Investors Service, Inc.; and
(vi) investments in money market funds registered under the Investment
Company Act of 1940, as amended, rated in the highest applicable rating
category by S&P or Moody's.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Securities" has the meaning specified in
Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in
Section 2.1 hereof.
"Preferred Securities" has the meaning specified in the
Recitals.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in ss. 8-102(a)(9) of the Code)
and other property from time to time received, receivable or otherwise
distributed upon the sale, exchange, collection or disposition of the
Collateral or any proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the Code.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended
from time to time. Unless otherwise defined herein, all terms defined in
the TRADES Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance
with the instructions of the Collateral Agent, the Purchase Contract Agent
or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties agree are to
be delivered in physical form, delivery in appropriate physical form
to the recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer to the
recipient;
(ii) in the case of Collateral consisting of securities
maintained in book-entry form by causing a "securities intermediary"
(as defined in Section 8-102(a)(14) of the Code) to (i) credit a
"securities entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities account" (as
defined in Section 8-501(a) of the Code) maintained by or on behalf
of the recipient and (ii) to issue a confirmation to the recipient
with respect to such credit.
"Treasury Security" means a 1/20 undivided beneficial interest in a
zero-coupon U.S. Treasury Security (Cusip Number ________) with a principal
amount at maturity equal to $1,000 which mature on February 15, 2001.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as
to (i) a Preferred Security, the Stated Amount, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal amount
thereof at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1 The Pledge. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and
grant to the Collateral Agent, for the benefit of the Company, as
collateral security for the performance when due by such Holders of their
respective obligations under the related Purchase Contracts, a security
interest in (i) all of the right, title and interest of such Holders (a) in
the Preferred Securities constituting a part of the Securities and all
Proceeds thereof and any Treasury Securities delivered in exchange for such
Preferred Securities in accordance with Section 4 hereof, in each case that
have been Transferred to or received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the provisions of
this Agreement (the "Collateral"); (b) in payments made by Holders pursuant
to Section 4.4; (c) in the Collateral Account and all securities, financial
assets and other property credited thereto and all Security Entitlements
related thereto; (d) in any Debentures delivered to the Collateral Agent
upon the occurrence of an Investment Company Event or a liquidation of the
Trust as provided in Section 6.2; (e) in the Treasury Portfolio purchased
on behalf of the Holders of Income PRIDES by the Collateral Agent upon the
occurrence of a Tax Event Redemption as provided in Section 6.2 and (f) all
proceeds of the foregoing. Prior to or concurrently with the execution and
delivery of this Agreement, the Purchase Contract Agent, on behalf of the
initial Holders of the Income PRIDES, shall cause the Preferred Securities
comprising a part of the Income PRIDES to be delivered to the Collateral
Agent for the benefit of the Company by physically delivering such
securities to the Collateral Agent endorsed in blank and the Collateral
Agent delivering such securities to the Securities Intermediary and causing
the Securities Intermediary to credit the Collateral Account with such
securities and send the Collateral Agent a confirmation of the deposit of
such securities. In the event a Holder of Income PRIDES so elects, such
Holder may Transfer Treasury Securities to the Collateral Agent for the
benefit of the Company in exchange for the release by the Collateral Agent
on behalf of the Company of Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, with an aggregate stated liquidation amount equal to the aggregate
principal amount of the Treasury Securities so Transferred, in the case of
Preferred Securities, or with an appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio equal to the aggregate principal amount of the Treasury
Securities so transferred, in the event that a Tax Event Redemption has
occurred, to the Purchase Contract Agent on behalf of such Holder. Treasury
Securities and the Treasury Portfolio, as applicable, shall be Transferred
to the Collateral Account maintained by the Collateral Agent at the
Securities Intermediary by book-entry transfer to the Collateral Account in
accordance with the TRADES Regulations and other applicable law and by the
notation by the Securities Intermediary on its books that a Security
Entitlement with respect to such Treasury Securities or Treasury Portfolio,
has been credited to the Collateral Account. For purposes of perfecting the
Pledge under applicable law, including, to the extent applicable, the
TRADES Regulations or the Uniform Commercial Code as adopted and in effect
in any applicable jurisdiction, the Collateral Agent shall be the agent of
the Company as provided herein. The pledge provided in this Section 2.1 is
herein referred to as the "Pledge" and the Preferred Securities (or the
Debentures that are delivered pursuant to Section 6.2 hereof) or Treasury
Securities subject to the Pledge, excluding any Preferred Securities (or
the Debentures that are delivered pursuant to Section 6.2 hereof) or
Treasury Securities released from the Pledge as provided in Section 4
hereof, are hereinafter referred to as "Pledged Preferred Securities" or
the "Pledged Treasury Securities," respectively. Subject to the Pledge and
the provisions of Section 2.2 hereof, the Holders from time to time shall
have full beneficial ownership of the Collateral. Whenever directed by the
Collateral Agent acting on behalf of the Company, the Securities
Intermediary shall have the right to reregister the Preferred Securities or
any other securities held in physical form in its name.
Except as may be required in order to release Preferred Securities in
connection with a Holder's election to convert its investment from an
Income PRIDES to a Growth PRIDES, or except as otherwise required to
release securities as specified herein, neither the Collateral Agent nor
the Securities Intermediary shall relinquish physical possession of any
certificate evidencing a Preferred Security prior to the termination of
this Agreement. If it becomes necessary for the Securities Intermediary to
relinquish physical possession of a certificate in order to release a
portion of the Preferred Securities evidenced thereby from the Pledge, the
Securities Intermediary shall use its best efforts to obtain physical
possession of a replacement certificate evidencing any Preferred Securities
remaining subject to the Pledge hereunder registered to it or endorsed in
blank within fifteen days of the date it relinquished possession. The
Securities Intermediary shall promptly notify the Company and the
Collateral Agent of the Securities Intermediary's failure to obtain
possession of any such replacement certificate as required hereby.
Section 2.2 Control and Perfection. In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this
Agreement, the Holders from time to time acting through the Purchase
Contract Agent, as their attorney-in-fact, hereby authorize and direct the
Securities Intermediary (without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions
and entitlement orders (as defined in ss. 8-102(a)(8) of the Code) that the
Collateral Agent on behalf of the Company may give in writing with respect
to the Collateral Account, the Collateral credited thereto and any security
entitlements with respect to any thereof. Such instructions and entitlement
orders may, without limitation, direct the Securities Intermediary to
transfer, redeem, sell, liquidate, assign, deliver or otherwise dispose of
the Preferred Securities, the Treasury Securities, the Treasury Portfolio,
and any Security Entitlements with respect thereto and to pay and deliver
any income, proceeds or other funds derived therefrom to the Company. The
Holders from time to time acting through the Purchase Contract Agent hereby
further authorize and direct the Collateral Agent, as agent of the Company,
to itself issue instructions and entitlement orders, and to otherwise take
action, with respect to the Collateral Account, the Collateral credited
thereto and any security entitlements with respect thereto, pursuant to the
terms and provisions hereof, all without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders. The
Collateral Agent shall be the Agent of the Company and shall act as
directed in writing by the Company. Without limiting the generality of the
foregoing, the Collateral Agent shall issue entitlement orders to the
Securities Intermediary when and as directed by the Company.
Section 3. Distributions on Pledged Collateral. So long as the
Purchase Contract Agent is the registered owner of the Pledged Preferred
Securities, it shall receive all payments thereon. If the Pledged Preferred
Securities are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of the Stated Amount of or, if applicable,
the appropriate Applicable Ownership Interest (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio, or cash
distributions on, the Pledged Preferred Securities or on the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition
of such term) of the Treasury Portfolio, as the case may be, and all
payments of the principal of, or cash distributions on, any Pledged
Treasury Securities received by the Collateral Agent that are properly
payable hereunder shall be paid by the Collateral Agent by wire transfer in
same day funds:
(i) In the case of (A) cash distributions with respect to the
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and (B) any payments
of the Stated Amount or, if applicable, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio with respect to any Preferred
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that have been released from
the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract
Agent, for the benefit of the relevant Holders of Securities, to the
account designated by the Purchase Contract Agent for such purpose,
no later than 2:00 p.m., New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the
event such payment is received by the Collateral Agent on a day that
is not a Business Day or after 12:30 p.m., New York City time, on a
Business Day, then such payment shall be made no later than 10:30
a.m., New York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant
to Section 4.3 hereof, to the Holders of the Growth PRIDES to the
accounts designated by them in writing for such purpose no later than
2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, or the principal of
any Pledged Treasury Securities, to the Company on the Purchase
Contract Settlement Date in accordance with the procedure set forth
in Section 4.6(a) or 4.6(b) hereof, in full satisfaction of the
respective obligations of the Holders under the related Purchase
Contracts.
All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions
of the Purchase Contract Agreement. If, notwithstanding the foregoing, the
Purchase Contract Agent shall receive any payments of the Stated Amount or,
if applicable, the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) on account of any Preferred
Security or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as applicable that, at the time of such payment, is a Pledged
Preferred Security or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, or a Holder of a Growth PRIDES
shall receive any payments of principal on account of any Treasury
Securities that, at the time of such payment, are Pledged Treasury
Securities, the Purchase Contract Agent or such Holder shall hold the same
as trustee of an express trust for the benefit of the Company (and promptly
deliver the same over to the Company) for application to the obligations of
the Holders under the related Purchase Contracts, and the Holders shall
acquire no right, title or interest in any such payments of Stated Amount
or principal so received.
Section 4. Substitution, Release, Repledge and Settlement of
Preferred Securities.
Section 4.1 Substitution of Preferred Securities and the Creation of
Growth PRIDES or Income PRIDES.
At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), a Holder of Income PRIDES shall have the right to
substitute Treasury Securities for the Pledged Preferred Securities
securing such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of 20 Income
PRIDES by (a) Transferring to the Collateral Agent Treasury Securities
having a Value equal to the Stated Amount of the Pledged Preferred
Securities to be released and (b)(i) in the event that Contract Adjustment
Payments are at a higher rate for Growth PRIDES than for Income PRIDES,
delivering cash in an amount equal to the excess of the Contract Adjustment
Payments that would have accrued since the last Payment Date through the
date of substitution on the Growth PRIDES being created by the holder, over
the Contract Adjustment Payments that have accrued over the same time
period on the related Income PRIDES, which amount the Purchase Contract
Agent shall promptly remit to the Company, and (ii) delivering the related
Income PRIDES to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase Contract
Agent stating that such Holder has Transferred Treasury Securities to the
Collateral Agent pursuant to clause (a) above (stating the Value of the
Treasury Securities Transferred by such Holder) and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Securities related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A; provided, however, that if a Tax Event Redemption
has occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Income PRIDES may make such substitution only in
integral multiples of 160,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement
Date. Upon receipt of Treasury Securities from a Holder of Income PRIDES
and the related instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, and shall promptly Transfer such Pledged Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.
(B) At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), a Holder of Growth PRIDES shall have the right to
establish or reestablish Income PRIDES consisting of the Purchase Contracts
and Preferred Securities in integral multiples of 20 Income PRIDES by (a)
Transferring to the Collateral Agent Preferred Securities having a Stated
Amount equal to the Stated Amount of the Pledged Treasury Securities to be
released and (b)(i) in the event that Contract Adjustment Payments are at a
higher rate for Income PRIDES than for Growth PRIDES, holders of Growth
PRIDES wishing to recreate Income PRIDES will also be required to deliver
cash in an amount equal to the excess of the Contract Adjustment Payments
that would have accrued since the last payment date through the date of
substitution on the Income PRIDES being recreated by such holders, over the
Contract Adjustment Payments that have accrued over the same time period on
the related Growth PRIDES and (ii) delivering the related Growth PRIDES to
the Purchase Contract Agent, accompanied by a notice, substantially in the
form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has transferred Preferred Securities to the Collateral Agent
pursuant to clause (a) above and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release from the Pledge the Pledged
Treasury Securities related to such Growth PRIDES. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in Exhibit
A; provided, however, that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES, Holders of
Growth PRIDES may make such substitution only in integral multiples of
160,000 Growth PRIDES, at any time on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date. Upon receipt
of the Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from such Holder
and the instruction from the Purchase Contract Agent, the Collateral Agent
shall release the Treasury Securities and shall promptly Transfer such
Treasury Securities, free and clear of any lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
Section 4.2 Pledge of Preferred Securities and Reestablishment of
Income PRIDES or Growth PRIDES.
At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), a Holder of Income PRIDES shall have the right to
substitute Treasury Securities for the Pledged Preferred Securities
securing such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of 20 Income
PRIDES by (a) Transferring to the Collateral Agent Treasury Securities
having a Value equal to the Stated Amount of the Pledged Preferred
Securities to be released and (b)(i) in the event that Contract Adjustment
Payments are at a higher rate for Growth PRIDES than for Income PRIDES,
delivering cash in an amount equal to the excess of the Contract Adjustment
Payments that would have accrued since the last Payment Date through the
date of substitution on the Growth PRIDES being created by the holder, over
the Contract Adjustment Payments that have accrued over the same time
period on the related Income PRIDES, which amount the Purchase Contract
Agent shall promptly remit to the Company, and (ii) delivering the related
Income PRIDES to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase Contract
Agent stating that such Holder has Transferred Treasury Securities to the
Collateral Agent pursuant to clause (a) above (stating the Value of the
Treasury Securities Transferred by such Holder) and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Securities related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A; provided, however, that if a Tax Event Redemption
has occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Income PRIDES may make such substitution only in
integral multiples of 160,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement
Date. Upon receipt of Treasury Securities from a Holder of Income PRIDES
and the related instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, and shall promptly Transfer such Pledged Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.
(B) At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), a Holder of Growth PRIDES shall have the right to
establish or reestablish Income PRIDES consisting of the Purchase Contracts
and Preferred Securities in integral multiples of 20 Income PRIDES by (a)
Transferring to the Collateral Agent Preferred Securities having a Stated
Amount equal to the Stated Amount of the Pledged Treasury Securities to be
released and (b) (i) in the event that Contract Adjustment Payments are at
a higher rate for Income PRIDES than for Growth PRIDES, holders of Growth
PRIDES wishing to recreate Income PRIDES will also be required to deliver
cash in an amount equal to the excess of the Contract Adjustment Payments
that would have accrued since the last payment date through the date of
substitution on the Income PRIDES being recreated by such holders, over the
Contract Adjustment Payments that have accrued over the same time period on
the related Growth PRIDES and (ii) delivering the related Growth PRIDES to
the Purchase Contract Agent, accompanied by a notice, substantially in the
form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has transferred Preferred Securities to the Collateral Agent
pursuant to clause (a) above and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release from the Pledge the Pledged
Treasury Securities related to such Growth PRIDES. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in Exhibit
A; provided, however, that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES, Holders of
Growth PRIDES may make such substitution only in integral multiples of
160,000 Growth PRIDES, at any time on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date. Upon receipt
of the Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from such Holder
and the instruction from the Purchase Contract Agent, the Collateral Agent
shall release the Treasury Securities and shall promptly Transfer such
Treasury Securities, free and clear of any lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
Section 4.3 Termination Event. Upon receipt by the Collateral Agent
of written notice from the Company or the Purchase Contract Agent that
there has occurred a Termination Event, the Collateral Agent shall release
all Collateral from the Pledge and shall promptly Transfer any Pledged
Preferred Securities (or the Applicable Ownership Interest of the Treasury
Portfolio if a Tax Event Redemption has occurred) and Pledged Treasury
Securities to the Purchase Contract Agent for the benefit of the Holders of
the Income PRIDES and the Growth PRIDES, respectively, free and clear of
any lien, pledge or security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities, the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the
Purchase Contract Agent shall (i) use its best efforts to obtain an opinion
of a nationally recognized law firm reasonably acceptable to the Collateral
Agent to the effect that, as a result of the Company's being the debtor in
such a bankruptcy case, the Collateral Agent will not be prohibited from
releasing or Transferring the Collateral as provided in this Section 4.3,
and shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (y) the Purchase
Contract Agent shall be unable to obtain such opinion within ten days after
the occurrence of such Termination Event or (z) the Collateral Agent shall
continue, after delivery of such opinion, to refuse to effectuate the
release and Transfer of all Pledged Preferred Securities, of the Treasury
Portfolio or of the Pledged Treasury Securities, as the case may be, as
provided in this Section 4.3, then the Purchase Contract Agent shall within
fifteen days after the occurrence of such Termination Event commence an
action or proceeding in the court with jurisdiction of the Company's case
under the Bankruptcy Code seeking an order requiring the Collateral Agent
to effectuate the release and transfer of all Pledged Preferred Securities,
of the Treasury Portfolio or of the Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3 or (ii) commence an action or
proceeding like that described in subsection (i)(z) hereof within ten days
after the occurrence of such Termination Event.
Section 4.4 Cash Settlement. (a) Upon receipt by the Collateral Agent
of (i) a notice from the Purchase Contract Agent promptly after the receipt
by the Purchase Contract Agent of such notice that a Holder of an Income
PRIDES or Growth PRIDES has elected, in accordance with the procedures
specified in Section 5.4(a)(i) or (d)(i) of the Purchase Contract
Agreement, respectively, to settle its Purchase Contract with cash and (ii)
payment by such Holder on or prior to 11:00 a.m., New York City time, on
the Business Day immediately preceding the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers' check
or wire transfer in immediately available funds payable to or upon the
order of the Company, then the Collateral Agent shall, upon the written
direction of the Purchase Contract Agent, promptly invest any Cash received
from a Holder in connection with a Cash Settlement in Permitted
Investments. Upon receipt of the proceeds upon the maturity of the
Permitted Investments on the Purchase Contract Settlement Date, the
Collateral Agent shall pay the portion of such proceeds and deliver any
certified or cashiers' checks received, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date,
and shall distribute any funds in respect of the interest earned from the
Permitted Investments to the Purchase Contract Agent for payment to the
relevant Holders.
(b) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph 5.4(a)(i)
of the Purchase Contract Agreement, such failure shall constitute an event
of default under the Purchase Contract Agreement and hereunder, and the
Holder shall be deemed to have consented to the disposition of the pledged
Preferred Securities pursuant to the remarketing as described in paragraph
5.4(b) of the Purchase Contract Agreement, which is incorporated herein by
reference. If a Holder of an Income PRIDES does notify the Agent as
provided in paragraph 5.4(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment
as required by paragraph 5.4(a)(ii) of the Purchase Contract Agreement, the
Preferred Securities of such a Holder will not be remarketed but instead
the Collateral Agent, for the benefit of the Company, will exercise its
rights as a secured party with respect to such Preferred Securities at the
direction of the Company to retain or dispose of the Collateral in
accordance with applicable law. In addition, in the event of a Failed
Remarketing as described in paragraph 5.4(b) of the Purchase Contract
Agreement, such Failed Remarketing shall constitute an event of default
hereunder by such Holder and the Collateral Agent, for the benefit of the
Company, will also exercise its rights as a secured party with respect to
such Preferred Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase
Contract Agent of such Holder's intention to make a Cash Settlement in
accordance with paragraph 5.4(d)(i) of the Purchase Contract Agreement, or
if a Holder of an Income PRIDES does notify the Agent as provided in
paragraph (d)(i) of the Purchase Contract Agreement of its intention to pay
the Purchase Price in cash, but fails to make such payment as required by
paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such failure shall
constitute an event of default hereunder by such Holder and upon the
maturity of any Pledged Treasury Securities or the Treasury Portfolio, if
any, held by the Collateral Agent on the Business Day immediately preceding
the Purchase Contract Settlement Date, the principal amount of the Pledged
Treasury Securities or the Treasury Portfolio received by the Collateral
Agent shall, upon written direction of the Purchase Contract Agent, be
invested promptly in Permitted Investments. On the Purchase Contract
Settlement Date, an amount equal to the Purchase Price will be remitted to
the Company as payment thereof. In the event the sum of the proceeds from
the related Pledged Treasury Securities or the Treasury Portfolio, as the
case may be, and the investment earnings earned from such investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent will distribute such excess to the
Purchase Contract Agent for the benefit of the Holder of the related Growth
PRIDES or Income PRIDES when received.
Section 4.5 Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities
have elected to effect Early Settlement of their respective obligations
under the Purchase Contracts forming a part of such Securities in
accordance with the terms of the Purchase Contracts and the Purchase
Contract Agreement (setting forth the number of such Purchase Contracts as
to which such Holders have elected to effect Early Settlement), and that
the Purchase Contract Agent has received from such Holders, and paid to the
Company as confirmed in writing by the Company, the related Early
Settlement Amounts pursuant to the terms of the Purchase Contracts and the
Purchase Contract Agreement and that all conditions to such Early
Settlement have been satisfied, then the Collateral Agent shall release
from the Pledge, (a) Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio in the case of a
Holder of Income PRIDES or (b) Pledged Treasury Securities in the case of a
Holder of Growth PRIDES, as the case may be, with a principal amount equal
to the product of (i) the Stated Amount times (ii) the number of such
Purchase Contracts as to which such Holders have elected to effect Early
Settlement and shall Transfer all such Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Pledged Treasury Securities, as the case may be, free and clear of the
Pledge created hereby, to the Purchase Contract Agent for the benefit of
the Holders.
Section 4.6 Application of Proceeds Settlement. (a) In the event a
Holder of Income PRIDES (if a Tax Event Redemption has not occurred) has
not elected to make an effective Cash Settlement by notifying the Purchase
Contract Agent in the manner provided for in paragraph 5.4(a)(i) in the
Purchase Contract Agreement or has not made an Early Settlement of the
Purchase Contract(s) underlying its Income PRIDES, such Holder shall be
deemed to have elected to pay for the shares of Common Stock to be issued
under such Purchase Contract(s) from the Proceeds of the related Pledged
Preferred Securities. The Collateral Agent shall, by 10:00 a.m., New York
City time, on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date, without any instruction from such Holder of
Income PRIDES, present the related Pledged Preferred Securities to the
Remarketing Agent for remarketing. Upon receiving such Pledged Preferred
Securities, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement and the Remarketing Underwriting Agreement, will use its
reasonable efforts to remarket such Pledged Preferred Securities on such
date at a price not less than approximately 100.5% of the aggregate Stated
Amount of such Pledged Preferred Securities, plus accrued and unpaid
distributions (including deferred distributions), if any, thereon. After
deducting as the Remarketing Fee an amount not exceeding 25 basis points
(.25%) of the aggregate Stated Amount of the Pledged Preferred Securities
from any amount of such Proceeds in excess of the aggregate Stated Amount,
plus such accrued and unpaid distributions (including deferred
distributions) of the remarketed Pledged Preferred Securities, the
Remarketing Agent will remit the entire amount of the Proceeds of such
remarketing to the Collateral Agent. On the Purchase Contract Settlement
Date, the Collateral Agent shall apply that portion of the Proceeds from
such remarketing equal to the aggregate Stated Amount, plus such accrued
and unpaid distributions (including deferred distributions) of such Pledged
Preferred Securities, to satisfy in full the obligations of such Holders of
Income PRIDES to pay the Purchase Price to purchase the Common Stock under
the related Purchase Contracts. The remaining portion of such Proceeds, if
any, shall be distributed by the Collateral Agent to the Purchase Contract
Agent for payment to the Holders. If the Remarketing Agent advises the
Collateral Agent in writing that it cannot remarket the related Pledged
Preferred Securities of such Holders of Income PRIDES at a price not less
than 100% of the aggregate Stated Amount of such Pledged Preferred
Securities plus any accrued and unpaid distributions (including deferred
distributions), thus resulting in a Failed Remarketing and an event of
default under the Purchase Contract Agreement and hereunder, the Collateral
Agent, for the benefit of the Company will, at the written direction of the
Company, retain or dispose of the Pledged Preferred Securities in
accordance with applicable law and satisfy in full, from any such
disposition or retention, such Holder's obligation to pay the Purchase
Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES (if a Tax
Event Redemption has occurred) has not made an Early Settlement of the
Purchase Contract(s) underlying its Growth PRIDES or Income PRIDES, such
Holder shall be deemed to have elected to pay for the shares of Common
Stock to be issued under such Purchase Contract(s) from the Proceeds of the
related Pledged Treasury Securities or the Treasury Portfolio, as the case
may be. On the Business Day immediately prior to the Purchase Contract
Settlement Date, the Collateral Agent shall, at the written direction of
the Purchase Contract Agent, invest the Cash proceeds of the maturing
Pledged Treasury Securities or the Treasury Portfolio, as the case may be,
in overnight Permitted Investments. Without receiving any instruction from
any such Holder of Growth PRIDES or Income PRIDES, the Collateral Agent
shall apply the Proceeds of the related Pledged Treasury Securities or
Treasury Portfolio to the settlement of such Purchase Contracts on the
Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged
Treasury Securities or Treasury Portfolio and the investment earnings from
the investment in overnight Permitted Investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby,
the Collateral Agent shall distribute such excess, when received, to the
Purchase Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier
than the Business Day immediately preceding the Purchase Contract
Settlement Date, holders of separate Preferred Securities which are not
components of Income PRIDES may elect to have their Preferred Securities
remarketed by delivering their Preferred Securities along with a notice of
such election to the Collateral Agent. The Collateral Agent will hold such
Preferred Securities in an account separate from the collateral account in
which the Pledged Securities will be held. Holders of Preferred Securities
electing to have their Preferred Securities remarketed will also have the
right to withdraw such election by written notice to the Collateral Agent
on or prior to the Business Day immediately preceding the Purchase Contract
Settlement Date, upon which notice the Collateral Agent will return such
Preferred Securities to such holders. On the fourth Business Day
immediately preceding the Purchase Contract Settlement Date, the Collateral
Agent will deliver the Preferred Securities to the Remarketing Agent for
remarketing. The Remarketing Agent will use its reasonable efforts to
remarket such Preferred Securities on such date at a price of approximately
100.5% of the aggregate stated liquidation amount of such Preferred
Securities, plus accrued and unpaid distributions (including deferred
distributions), if any, thereon. The portion of the proceeds from such
remarketing equal to the aggregate stated liquidation amount of such
Preferred Securities will automatically be remitted by the Remarketing
Agent to the Collateral Agent for the benefit of such Preferred Securities
holders. In addition, after deducting as the Remarketing Fee an amount not
exceeding 25 basis points (.25%) of the aggregate stated liquidation amount
of the remarketed securities, from any amount of such proceeds in excess of
the aggregate stated liquidation amount of the remarketed Trust Preferred
Securities plus any accrued and unpaid distributions (including deferred
distributions, if any), the Remarketing Agent will remit to the Collateral
Agent the remaining portion of the proceeds, if any, for the benefit of
such holder. If, despite using its reasonable efforts, the Remarketing
Agent advises the Collateral Agent in writing that it cannot remarket the
related Preferred Securities of such holders at a price not less than 100%
of the aggregate stated liquidation amount of such Preferred Securities
plus accrued and unpaid distributions (including deferred distributions)
and thus resulting in a Failed Remarketing, the Remarketing Agent will
promptly return such Trust Preferred Securities to the Collateral Agent to
release to such holders.
Section 5. Voting Rights - Preferred Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting
and other consensual rights pertaining to the Pledged Preferred Securities
or any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract
Agreement; provided, that the Purchase Contract Agent shall not exercise
or, as the case may be, shall not refrain from exercising such right if, in
the judgment of the Company, such action would impair or otherwise have a
material adverse effect on the value of all or any of the Pledged Preferred
Securities; and provided, further, that the Purchase Contract Agent shall
give the Company and the Collateral Agent at least five days' prior written
notice of the manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any notices and
other communications in respect of any Pledged Preferred Securities,
including notice of any meeting at which holders of Preferred Securities
are entitled to vote or solicitation of consents, waivers or proxies of
holders of Preferred Securities, the Collateral Agent shall use reasonable
efforts to send promptly to the Purchase Contract Agent such notice or
communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and
deliver to the Purchase Contract Agent such proxies and other instruments
in respect of such Pledged Preferred Securities (in form and substance
satisfactory to the Collateral Agent) as are prepared by the Purchase
Contract Agent with respect to the Pledged Preferred Securities.
Section 6. Rights and Remedies; Distribution of the Debentures; Tax
Event Redemption
Section 6.1 Rights and Remedies of the Collateral Agent. (a) In
addition to the rights and remedies specified in Section 4.4 hereof or
otherwise available at law or in equity, after an event of default
hereunder, the Collateral Agent shall have all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New York (the "Code") (whether
or not the Code is in effect in the jurisdiction where the rights and
remedies are asserted) and the TRADES Regulations and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted. Without limiting the generality of the foregoing, such remedies
may include, to the extent permitted by applicable law, (i) retention of
the Pledged Preferred Securities or other Collateral in full satisfaction
of the Holders obligations under the Purchase Contracts or (ii) sale of the
Pledged Preferred Securities or other Collateral in one or more public or
private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio or on account of principal payments
of any Pledged Treasury Securities as provided in Section 3 hereof in
satisfaction of the obligations of the Holder of the Securities of which
such Pledged Treasury Securities, or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as applicable, is a part under the related Purchase
Contracts, the inability to make such payments shall constitute an event of
default hereunder and the Collateral Agent shall have and may exercise,
with reference to such Pledged Treasury Securities, or such appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, as applicable, and such
obligations of such Holder, any and all of the rights and remedies
available to a secured party under the Code and the TRADES Regulations
after default by a debtor, and as otherwise granted herein or under any
other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby
irrevocably authorized to receive and collect all payments of (i) the
Stated Amount of or, cash distributions on, the Pledged Preferred
Securities, (ii) the principal amount of the Pledged Treasury Securities,
or (iii) the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio,
subject, in each case, to the provisions of Section 3, and as otherwise
granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the Holder of a Growth PRIDES, agrees that, from
time to time, upon the written request of the Collateral Agent, the
Purchase Contract Agent or such Holder shall execute and deliver such
further documents and do such other acts and things as the Collateral Agent
may reasonably request in order to maintain the Pledge, and the perfection
and priority thereof, and to confirm the rights of the Collateral Agent
hereunder. The Purchase Contract Agent shall have no liability to any
Holder for executing any documents or taking any such acts requested by the
Collateral Agent hereunder, except for liability for its own negligent act,
its own negligent failure to act or its own willful misconduct.
Section 6.2 Distribution of the Debentures; Tax Event Redemption.
Upon the occurrence of an Investment Company Event or a liquidation of the
Trust, a principal amount of the Debentures constituting the assets of the
Trust and underlying the Preferred Securities equal to the aggregate Stated
Amount of the Pledged Preferred Securities shall be delivered to the
Collateral Agent in exchange for the Pledged Preferred Securities. In the
event the Collateral Agent receives such Debentures in respect of Pledged
Preferred Securities upon the occurrence of an Investment Company Event or
liquidation of the Trust, the Collateral Agent shall Transfer the
Debentures to the Collateral Account in the manner specified herein for
Pledged Preferred Securities to secure the obligations of the Holders of
Income PRIDES to purchase the Company's Common Stock under the related
Purchase Contracts. Thereafter, the Collateral Agent shall have such
security interests, rights and obligations with respect to the Debentures
as it had in respect of the Pledged Preferred Securities as provided in
Articles II, III, IV, V and VI hereof, and any reference herein to the
Pledged Preferred Securities shall be deemed to be referring to such
Debentures.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of
Debentures shall be delivered to the Collateral Agent by the Institutional
Trustee or upon a dissolution of the Trust and the distribution of the
related Debentures by the Debenture Trustee on or prior to 12:30 p.m., New
York City time, by check or wire transfer in immediately available funds at
such place and at such account as may be designated by the Collateral Agent
in exchange for the Pledged Preferred Securities or Debentures, as the case
may be. In the event the Collateral Agent receives such Redemption Price,
the Collateral Agent will, at the written direction of the Company, apply
an amount equal to the Redemption Amount of such Redemption Price to
purchase from the Quotation Agent, the Treasury Portfolio and promptly
remit the remaining portion of such Redemption Price to the Purchase
Contract Agent for payment to the Holders of Income PRIDES. The Collateral
Agent shall Transfer the Treasury Portfolio to the Collateral Account in
the manner specified herein for Pledged Preferred Securities to secure the
obligation of all Holders of Income PRIDES to purchase Common Stock of the
Company under the Purchase Contracts constituting a part of such Income
PRIDES, in substitution for the Pledged Preferred Securities. Thereafter
the Collateral Agent shall have such security interests, rights and
obligations with respect to the Treasury Portfolio as it had in respect of
the Pledged Preferred Securities or Debentures, as the case may be, as
provided in Articles II, III, IV, V, and VI, and any reference herein to
the Pledged Preferred Securities or the Debentures shall be deemed to be
reference to such Treasury Portfolio.
Section 6.3 Substitutions. Whenever a Holder has the right to
substitute Treasury Securities, Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, for Collateral held by the Collateral Agent, such substitution shall
not constitute a novation of the security interest created hereby.
Section 7. Representations and Warranties; Covenants.
Section 7.1 Representations and Warranties. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact
(it being understood that the Purchase Contract Agent shall not be liable
for any representation or warranty made by or on behalf of a Holder),
hereby represent and warrant to the Collateral Agent, which representations
and warranties shall be deemed repeated on each day a Holder Transfers
Collateral that:
(a) such Holder has the power to grant a security interest in
and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form, is the
sole holder of such Collateral and is the sole beneficial owner of,
or has the right to Transfer, the Collateral it Transfers to the
Collateral Agent, free and clear of any security interest, lien,
encumbrance, call, liability to pay money or other restriction other
than the security interest and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account, the Collateral Agent, for the benefit of the Company, will
have a valid and perfected first priority security interest therein
(assuming that any central clearing operation or any Intermediary or
other entity not within the control of the Holder involved in the
Transfer of the Collateral, including the Collateral Agent, gives the
notices and takes the action required of it hereunder and under
applicable law for perfection of that interest and assuming the
establishment and exercise of control pursuant to Section 2.2
hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in the creation of
any security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under Section 2
hereof or violate any provision of any existing law or regulation
applicable to it or of any mortgage, charge, pledge, indenture,
contract or undertaking to which it is a party or which is binding on
it or any of its assets.
Section 7.2 Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood
that the Purchase Contract Agent shall not be liable for any covenant made
by or on behalf of a Holder), hereby covenant to the Collateral Agent that
for so long as the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage, charge,
lien, pledge or any other security interest whatsoever over the
Collateral or any part of it other than pursuant to this Agreement;
and
(b) neither the Purchase Contract Agent nor such Holders will
sell or otherwise dispose (or attempt to dispose) of the Collateral
or any part of it except for the beneficial interest therein, subject
to the pledge hereunder, transferred in connection with the Transfer
of the Securities.
Section 8. The Collateral Agent. It is hereby agreed as
follows:
Section 8.1 Appointment, Powers and Immunities. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or
obligations shall be inferred from this Agreement against the Collateral
Agent, nor shall the Collateral Agent be bound by the provisions of any
agreement by any party hereto beyond the specific terms hereof; (b) shall
not be responsible for any recitals contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received
by it under, this Agreement, the Securities or the Purchase Contract
Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement (other than as against the
Collateral Agent), the Securities or the Purchase Contract Agreement or any
other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent) to
perform any of its obligations hereunder or thereunder or for the
perfection, priority or, except as expressly required hereby, maintenance
of any security interest created hereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder
(except pursuant to directions furnished under Section 8.2 hereof, subject
to Section 8.6 hereof); (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e)
shall not be required to advise any party as to selling or retaining, or
taking or refraining from taking any action with respect to, any securities
or other property deposited hereunder. Subject to the foregoing, during the
term of this Agreement, the Collateral Agent shall take all reasonable
action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder. In no event shall the
Collateral Agent be liable for any amount in excess of the Value of the
Collateral. Notwithstanding the foregoing, the Collateral Agent and
Securities Intermediary in its individual capacity hereby waive any right
of setoff, bankers lien, liens or perfection rights as securities
intermediary or any counterclaim with respect to any of the Collateral.
Section 8.2 Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral
Agent, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction
shall not conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent shall be adequately indemnified as provided
herein. Nothing in this Section 8.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any
action which it deems proper and which is not inconsistent with such
direction.
Section 8.3 Reliance by Collateral Agent. Each of the Securities
Intermediary and the Collateral Agent shall be entitled to rely upon any
certification, order, judgment, opinion, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex
or facsimile) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons (without
being required to determine the correctness of any fact stated therein),
and upon advice and statements of legal counsel and other experts selected
by the Collateral Agent and the Securities Intermediary. As to any matters
not expressly provided for by this Agreement, the Collateral Agent and the
Securities Intermediary shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions given
by the Company in accordance with this Agreement.
Section 8.4 Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent and any Holder of Securities (and
any of their respective subsidiaries or affiliates) as if it were not
acting as the Collateral Agent, and the Collateral Agent and its affiliates
may accept fees and other consideration from the Purchase Contract Agent
and any Holder of Securities without having to account for the same to the
Company; provided that each of the Securities Intermediary and the
Collateral Agent covenants and agrees with the Company that it shall not
accept, receive or permit there to be created in favor of itself and shall
take no affirmative action to permit there to be created in favor of any
other Person, any security interest, lien or other encumbrance of any kind
in or upon the Collateral.
Section 8.5 Non-Reliance on Collateral Agent. Neither the Securities
Intermediary nor the Collateral Agent shall be required to keep itself
informed as to the performance or observance by the Purchase Contract Agent
or any Holder of Securities of this Agreement, the Purchase Contract
Agreement, the Securities or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Securities. The Collateral Agent shall not
have any duty or responsibility to provide the Company with any
credit or other information concerning the affairs, financial condition or
business of the Purchase Contract Agent or any Holder of Securities (or any
of their respective affiliates) that may come into the possession of the
Collateral Agent or the Securities Intermediary or any of their respective
affiliates.
Section 8.6 Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time to time such compensation as shall be
agreed in writing between the Company and the Collateral Agent for all
services rendered by it hereunder and (ii) to indemnify the Collateral
Agent and the Securities Intermediary for, and to hold each of them
harmless from and against, any loss, liability or reasonable out-of-pocket
expense incurred without negligence, willful misconduct or bad faith on its
part, arising out of or in connection with the acceptance or administration
of its powers and duties under this Agreement, including the reasonable
out-of-pocket costs and expenses (including reasonable fees and expenses of
counsel) of defending itself against any claim or liability in connection
with the exercise or performance of such powers and duties.
Section 8.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims
by or among the parties hereto or any other Person with respect to any
funds or property deposited hereunder, the Collateral Agent shall be
entitled, after prompt notice to the Company and the Purchase Contract
Agent, at its sole option, to refuse to comply with any and all claims,
demands or instructions with respect to such property or funds so long as
such dispute or conflict shall continue, and the Collateral Agent shall not
be or become liable in any way to any of the parties hereto for its failure
or refusal to comply with such conflicting claims, demands or instructions.
The Collateral Agent shall be entitled to refuse to act until either (i)
such conflicting or adverse claims or demands shall have been finally
determined by a court of competent jurisdiction or settled by agreement
between the conflicting parties as evidenced in a writing, satisfactory to
the Collateral Agent or (ii) the Collateral Agent shall have received
security or an indemnity satisfactory to the Collateral Agent sufficient to
save the Collateral Agent harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral Agent
may incur by reason of its acting. The Collateral Agent may in addition
elect to commence an interpleader action or seek other judicial relief or
orders as the Collateral Agent may deem necessary. Notwithstanding anything
contained herein to the contrary, the Collateral Agent shall not be
required to take any action that is in its opinion contrary to law or to
the terms of this Agreement, or which would in its opinion subject it or
any of its officers, employees or directors to liability.
Section 8.8 Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided
below, (a) the Collateral Agent may resign at any time by giving notice
thereof to the Company and the Purchase Contract Agent as attorney-in-fact
for the Holders of Securities, (b) the Collateral Agent may be removed at
any time by the Company and (c) if the Collateral Agent fails to perform
any of its material obligations hereunder in any material respect for a
period of not less than 20 days after receiving written notice of such
failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent may be removed by the Purchase Contract
Agent. The Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent pursuant to clause (c) of the immediately
preceding sentence. Upon any such resignation or removal, the Company shall
have the right to appoint a successor Collateral Agent. If no successor
Collateral Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation or such removal, then the retiring Collateral Agent
may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent. The Collateral Agent shall be a bank which has
an office in New York, New York with a combined capital and surplus of at
least $750,000,000. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor Collateral
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to such
successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral
Agent hereunder. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Section 8 shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Collateral Agent.
Section 8.9 Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any
of its duties hereunder, and the Collateral Agent shall not be liable for
any action taken or omitted by, or in reliance upon the advice of, such
agents or advisors selected in good faith. The appointment of agents
pursuant to this Section 8.9 shall be subject to prior consent of the
Company, which consent shall not be unreasonably withheld.
Section 8.10 Survival. The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of the
Collateral Agent.
Section 8.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost
profits, whether or not the likelihood of such loss or damage was known to
the Collateral Agent or the Securities Intermediary, or any of them,
incurred without any act or deed that is found to be attributable to gross
negligence or willful misconduct on the part of the Collateral Agent or the
Securities Intermediary.
Section 9. Amendment.
Section 9.1 Amendment Without Consent of Holders. Without the consent
of any Holders, the Company, the Collateral Agent and the Purchase Contract
Agent, at any time and from time to time, may amend this Agreement, in form
satisfactory to the Company, the Collateral Agent and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) provisions herein which may be inconsistent with any other
such provisions herein, or to make any other provisions with respect
to such matters or questions arising under this Agreement, provided
such action shall not adversely affect the interests of the Holders.
Section 9.2 Amendment with Consent of Holders. With the consent of
the Holders of not less than a majority of the Purchase Contracts at the
time outstanding, by Act of said Holders delivered to the Company, the
Purchase Contract Agent or the Collateral Agent, as the case may be, the
Company, when duly authorized, the Purchase Contract Agent and the
Collateral Agent may amend this Agreement for the purpose of modifying in
any manner the provisions of this Agreement or the rights of the Holders in
respect of the Securities; provided, however, that no such supplemental
agreement shall, without the consent of the Holder of each Outstanding
Security adversely affected thereby,
(1) change the amount or type of Collateral underlying a
Security (except for the rights of holders of Income PRIDES to
substitute the Treasury Securities for the Pledged Preferred
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, or the rights of Holders of
Growth PRIDES to substitute Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as
applicable, for the Pledged Treasury Securities), impair the right of
the Holder of any Security to receive distributions on the underlying
Collateral or otherwise adversely affect the Holder's rights in or to
such Collateral; or
(2) otherwise effect any action that would require the consent
of the Holder of each Outstanding Security affected thereby pursuant
to the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent and the Purchase Contract
Agent shall be entitled to receive and (subject to Section 6.1 hereof, with
respect to the Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of such amendment is authorized or permitted by this Agreement and that all
conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied.
Section 9.4 Effect of Amendments. Upon the execution of any amendment
under this Section, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.
Section 9.5 Reference to Amendments. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if
required by the Collateral Agent or the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent and the Collateral
Agent as to any matter provided for in such amendment. If the Company shall
so determine, new Security Certificates so modified as to conform, in the
opinion of the Collateral Agent, the Purchase Contract Agent and the
Company, to any such amendment may be prepared and executed by the Company
and authenticated, executed on behalf of the Holders and delivered by the
Purchase Contract Agent in accordance with the Purchase Contract Agreement
in exchange for Outstanding Security Certificates.
Section 10. Miscellaneous.
Section 10.1 No Waiver. No failure on the part of the Collateral
Agent or any of its agents to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by the Collateral Agent or any of its agents of any right,
power or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
Section 10.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by
the Securities Intermediary, the Collateral Agent and the Holders from time
to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of
the Collateral Account. The Company, the Collateral Agent and the Holders
from time to time of the Securities, acting through the Purchase Contract
Agent as their attorney-in-fact, hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District
of New York and of any New York state court sitting in New York City for
the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the Securities,
acting through the Purchase Contract Agent as their attorney-in-fact,
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.
Section 10.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or, as to any party, at such
other address as shall be designated by such party in a notice to the other
parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section 10.4 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of
the Company, the Collateral Agent and the Purchase Contract Agent, and the
Holders from time to time of the Securities, by their acceptance of the
same, shall be deemed to have agreed to be bound by the provisions hereof
and to have ratified the agreements of, and the grant of the Pledge
hereunder by, the Purchase Contract Agent.
Section 10.5 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
Section 10.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in order to carry out
the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
Section 10.7 Expenses, etc. The Company agrees to reimburse the
Collateral Agent for: (a) all reasonable out-of-pocket costs and expenses
of the Collateral Agent (including, without limitation, the reasonable fees
and expenses of counsel to the Collateral Agent), in connection with (i)
the negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the
terms of this Agreement; (b) all reasonable costs and expenses of the
Collateral Agent (including, without limitation, reasonable fees and
expenses of counsel) in connection with (i) any enforcement or proceedings
resulting or incurred in connection with causing any Holder of Securities
to satisfy its obligations under the Purchase Contracts forming a part of
the Securities and (ii) the enforcement of this Section 10.7; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this
Agreement or any other document referred to herein and all costs, expenses,
taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated hereby.
Section 10.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders
from time to time hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of
the obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement or
instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CENDANT CORPORATION
By: _____________________________
Name:
Title:
Address for Notices:
CENDANT CORPORATION
9 West 57th Street
New York, NY 10019
Attention:
Telecopy:
THE FIRST NATIONAL BANK OF CHICAGO, as
Purchase Contract Agent and as
attorney-in-fact of the Holders from time to
time of the Securities
By: _____________________________
Name:
Title:
Address for Notices:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Administration
Telecopy: (312) 407-1708
THE CHASE MANHATTAN BANK,
as Collateral Agent and as
Securities Intermediary
By: _____________________________
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001-2697
Attention: Corporate Trust
Administration Department
Telecopy: (212) 946-8160
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10010-2697
Attention: Corporate Trust Administration Department
Re: FELINE PRIDES of Cendant Corporation (the "Company"),
and Cendant Capital II
We hereby notify you in accordance with Section 4.1 of the Pledge
Agreement, dated as of _____, ____, (the "Pledge Agreement") among the
Company, yourselves, as Collateral Agent, and ourselves, as Purchase
Contract Agent and as attorney-in-fact for the holders of [Income PRIDES]
[Growth PRIDES] from time to time, that the holder of securities listed
below (the "Holder") has elected to substitute [$_____ aggregate principal
amount of Treasury Securities] [$_______Stated Amount of Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio] in exchange for an equal Value of [Pledged Preferred Securities
or the appropriate Applicable Ownership Interest of the Treasury Portfolio]
[Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio], to release the
[Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio] [Treasury Securities] related to such [Income
PRIDES] [Growth PRIDES] to us in accordance with the Holder's instructions.
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Date:_____________ ___________________________
By:______________________
Name:
Title:
Signature Guarantee: __________________
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] for the [Pledged Preferred
Securities or the Treasury Portfolio] [Pledged Treasury Securities]:
- -------------------------------- -------------------------------------
Name Social Security or other
Taxpayer Identification Number, if any
- --------------------------------
Address
- --------------------------------
- --------------------------------
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: FELINE PRIDES of Cendant Corporation (the "Company"),
and Cendant Capital II
The undersigned Holder hereby notifies you that it has delivered to
The Chase Manhattan Bank, as Collateral Agent, [$_______ aggregate
principal amount of Treasury Securities] [$ aggregate Stated Amount of
Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio of the appropriate Applicable Ownership Interest of
the Treasury Portfolio] in exchange for an equal Value of [Pledged
Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio] [Pledged Treasury Securities] held by the
Collateral Agent (the "Pledge Agreement"), in accordance with Section 4.1
of the Pledge Agreement, dated ________, ____, between you, the Company and
the Collateral Agent. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the
undersigned Holder the [Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] [Pledged Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES]. Capitalized
terms used herein but not defined shall have the meaning set forth in the
Pledge Agreement.
Dated:_____________ _________________________
Signature
Signature Guarantee: _______________
Please print name and address of Registered Holder:
- -------------------------------- ---------------------------------------
Name Social Security or other
Taxpayer Identification Number, if any
- --------------------------------
Address
- --------------------------------
- --------------------------------
Exhibit 4.10
FORM OF FIRST SUPPLEMENTAL INDENTURE
Dated as of ,
between
CENDANT CORPORATION,
AS ISSUER
and
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,
AS TRUSTEE
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS...........................................................1
SECTION 1.1. Definition of Terms......................................1
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES.............................3
SECTION 2.1. Designation and Principal Amount.........................3
SECTION 2.2. Maturity.................................................3
SECTION 2.3. Form and Payment.........................................3
SECTION 2.4. Global Debenture.........................................4
SECTION 2.5. Interest.................................................5
ARTICLE III
REDEMPTION OF THE DEBENTURES..............................................5
SECTION 3.1. Tax Event Redemption....................................6
SECTION 3.2. Redemption Procedure for Debentures.....................6
SECTION 3.3. No Sinking Fund.........................................6
SECTION 3.4. Option to Put Debentures................................6
SECTION 3.5. Repurchase Procedure for Debentures.....................6
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD.......................................7
SECTION 4.1. Extension of Interest Payment Period.....................7
SECTION 4.2. Notice of Extension......................................8
SECTION 4.3. Limitation of Transactions...............................8
ARTICLE V
EXPENSES.............................................................8
SECTION 5.1. Payment of Expenses......................................8
SECTION 5.2. Payment Upon Resignation or Removal......................9
ARTICLE VI
NOTICE.....................................................................9
SECTION 6.1. Notice by the Company....................................9
ARTICLE VII
FORM OF DEBENTURE.....................................................10
SECTION 7.1. Form of Debenture.......................................10
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES.............................................18
SECTION 8.1. Original Issue of Debentures............................18
ARTICLE IX
MISCELLANEOUS........................................................18
SECTION 9.1. Ratification of Indenture...............................18
SECTION 9.2. Trustee Not Responsible for Recitals....................18
SECTION 9.3. Governing Law...........................................18
SECTION 9.4. Separability............................................18
SECTION 9.5. Counterparts............................................18
SECTION 9.6. Preferred Securities Guarantee and Declaration..........18
FORM OF FIRST SUPPLEMENTAL INDENTURE, dated as of (the
"First Supplemental Indenture"), between CENDANT CORPORATION, a corporation
duly organized and existing under the laws of the State of Delaware, (the
"Company"), and The Bank of Nova Scotia Trust Company of New York, as
trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture dated as
of
(the "Base Indenture"), to the Trustee to provide for the
future issuance of the Company's Senior unsecured debentures, notes or
other evidence of indebtedness (the "Securities"), to be issued from time
to time in one or more series as might be determined by the Company under
the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a new series of its Securities
to be known as its ___% Debentures due , 2003 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Base
Indenture and this First Supplemental Indenture (together, the
"Indenture");
WHEREAS, Cendant Capital, a Delaware statutory business trust (the
"Trust"), has offered to the public its ___% Trust Originated Preferred
Securities (the "Preferred Securities"), representing preferred, undivided
beneficial interests in the assets of the Trust, and proposes to invest the
proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Company of its ___% Trust Originated Common
Securities (the "Common Securities" and together with the Preferred
Securities, the "Trust Securities"), in the Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture and all requirements necessary to
make this First Supplemental Indenture a valid instrument in accordance
with its terms, and to make the Debentures, when executed by the Company
and authenticated and delivered by the Trustee, the valid obligations of
the Company and all acts and things necessary have been done and performed
to make this First Supplemental Indenture enforceable in accordance with
its terms, and the execution and delivery of this First Supplemental
Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of
the Debentures by the Holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used
in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not
affect interpretation;
(e) the following terms have the meanings given to them in the
Declaration: (i) Authorized Newspaper; (ii) Business Day; (iii) Clearing
Agency; (iv) Delaware Trustee; (v) DTC; (vi) FELINE PRIDES; (vii) Growth
PRIDES; (viii) Income PRIDES; (xix) Institutional Trustee; (x) Investment
Company Event; (xi) Preferred Security Certificate; (xii) Pricing
Agreement; (xiii) Purchase Agreement; (xiv) Regular Trustees; (xv) Reset
Agent; (xvi) Reset Announcement Date; (xvii) Reset Spread; (xviii) Two-Year
Benchmark Treasury; and (xix) Treasury Securities.
(f) the following terms have the meanings given to them in this
Section 1.11(f):
"Applicable Principal Amount" means either (i) if the Tax Event
Redemption Date occurs prior to February 16, 2001, the aggregate principal
amount of the Debentures corresponding to the aggregate stated liquidation
amount of the Preferred Securities which are components of Income PRIDES on
the Tax Event Redemption Date or (ii) if the Tax Event Redemption occurs on
or after February 16, 2001, the aggregate principal amount of the
Debentures corresponding to the aggregate stated liquidation amount of the
Preferred Securities outstanding on such Tax Event Redemption Date.
"Compounded Interest" shall have the meaning set forth in Section
4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Debentures Redemption Price" shall have the meaning set forth in
Section 3.4.
"Declaration" means the Amended and Restated Declaration of Trust
of Cendant Capital II, a Delaware statutory business trust, dated as of
, .
"Deferred Interest" shall have the meaning set forth in Section
4.1 hereof.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Tax Event, an Investment Company Event or otherwise, the
Trust is to be dissolved in accordance with the Declaration, and, except in
the case of a Tax Event Redemption, the Debentures held by the
Institutional Trustee are to be distributed to the holders of the Trust
Securities issued by the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 4.1.
"Failed Remarketing" shall have the meaning set forth in Section
5.4(b) of the Purchase Contract Agreement.
"Global Debentures" shall have the meaning set forth in Section
2.4.
"Non Book-Entry Preferred Securities" shall have the meaning set
forth in Section 2.4 .
"Purchase Contract" shall have the meaning set forth in the
Purchase Contract Agreement, dated as of , , between the
Company and The First National Bank of Chicago, as purchase contract agent.
"Purchase Contract Settlement Date" means , 2001.
"Put Option" shall have the meaning set forth in Section 3.4.
"Quotation Agent" means (i) Merrill Lynch Government Securities,
Inc. and its respective successors, provided, however, that if the
foregoing shall cease to be a Primary Treasury Dealer, the Company shall
substitute therefor another Primary Treasury Dealer, and (ii) any other
Primary Treasury Dealer selected by the Company.
"Redemption Amount" means for each Debenture, the product of (i)
the principal amount of such Debenture and (ii) a fraction whose numerator
is the Treasury Portfolio Purchase Price and whose denominator is the
Applicable Principal Amount of the Treasury Portfolio.
"Tax Event" means the receipt by the Trust of an opinion of a
nationally recognized independent tax counsel experienced in such matters
to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision
or taxing authority thereof or therein affecting taxation, (b) any
amendment to or change in an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or
regulatory authority or (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations that
differs from the generally accepted position on the date the Trust
Securities are issued, which amendment or change is effective or which
interpretation or pronouncement is announced on or after the date of
issuance of the Trust Securities under the Declaration, there is more than
an insubstantial risk that (i) interest payable by the Company on the
Debentures would not be deductible, in whole or in part, by the Company for
federal income tax purposes or (ii) the Trust would be subject to more than
a de minimis amount of other taxes, duties or other governmental charges.
"Tax Event Redemption Date" shall have the meaning set forth in
Section 3.1 hereof.
"Treasury Portfolio" means with respect to the Applicable
Principal Amount of Debentures (a) if the Tax Event Redemption Date occurs
prior to February 16, 2001, a portfolio of zero-coupon U.S. Treasury
Securities consisting of (i) principal or interest strips of U.S. Treasury
Securities which mature on or prior to February 15, 2001 in an aggregate
amount equal to the Applicable Principal Amount and (ii) with respect to
each scheduled interest payment date on the Debentures that occurs after
the Tax Event Redemption Date principal or interest strips of U.S. Treasury
Securities which mature on or prior to such date in an aggregate amount
equal to the aggregate interest payment that would be due on the Applicable
Principal Amount of the Debentures on such date, and (b) if the Tax Event
Redemption Date occurs after February 16, 2001, a portfolio of zero-coupon
U.S. Treasury Securities consisting of (i) principal or interest strips of
U.S. Treasury Securities which mature on or prior to February 15, 2003 in
an aggregate amount equal to the Applicable Principal Amount and (ii) with
respect to each scheduled interest payment date on the Debentures that
occurs after the Tax Event Redemption Date interest or principal strips of
such U.S. Treasury Securities which mature on or prior to such date in an
aggregate amount equal to the aggregate interest payment that would be due
on the Applicable Principal Amount of the Debentures on such date.
"Treasury Portfolio Purchase Price" means the lowest aggregate
price quoted by a primary U.S. government securities dealer in New York
City (a "Primary Treasury Dealer") to the Quotation Agent on the third
Business Day immediately preceding the Tax Event Redemption Date for the
purchase of the Treasury Portfolio for settlement on the Tax Event
Redemption Date.
(g) the following terms shall have the meanings given to them in
the Purchase Contract: Collateral Agent.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the
___% Debentures (the "Debentures") due , 2003, limited in
aggregate principal amount to $ , which amount shall be as set forth
in any written order of the Company for the authentication and delivery of
Debentures pursuant to Section of the Base Indenture.
SECTION 2.2. Maturity. The Maturity Date will be .
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Debentures shall be issued
in fully registered certificated form without interest coupons bearing
identical terms. Principal and interest on the Debentures issued in
certificated form will be payable, the transfer of such Debentures will be
registrable and such Debentures will be exchangeable for Debentures bearing
identical terms and provisions at the office or agency of the Institutional
Trustee; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the Holder at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so
long as the Holder of any Debentures is the Institutional Trustee, the
payment of the principal of and interest (including Compounded Interest and
expenses and taxes of the Trust set forth in Section 4.1 hereof, if any) on
such Debentures held by the Institutional Trustee will be made at such
place and to such account as may be designated by the Institutional
Trustee.
SECTION 2.4. Global Debenture.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented
to the Trustee by the Institutional Trustee in exchange for a global
Debenture in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Debentures (a "Global Debenture"), to be
registered in the name of the Clearing Agency, or its nominee, and
delivered by the Institutional Trustee to the Clearing Agency for crediting
to the accounts of its participants pursuant to the instructions of the
Regular Trustees. The Company upon any such presentation shall execute a
Global Debenture in such aggregate principal amount and deliver the same to
the Trustee for authentication and delivery in accordance with the
Indenture. Payments on the Debentures issued as a Global Debenture will be
made to the Clearing Agency; and
(ii) if any Preferred Securities are held in non book-
entry certificated form, the Debentures in certificated form may be
presented to the Trustee by the Institutional Trustee and any Preferred
Security Certificate which represents Preferred Securities other than
Preferred Securities held by the Clearing Agency or its nominee ("Non Book-
Entry Preferred Securities") will be deemed to represent beneficial
interests in the Debentures presented to the Trustee by the Institutional
Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities until such
Preferred Security Certificates are presented to the Security Registrar for
transfer or reissuance at which time such Preferred Security Certificates
will be cancelled and a Debenture, registered in the name of the holder of
the Preferred Security Certificate or the transferee of the holder of such
Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Security Certificate cancelled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with
the Indenture to such holder. On issue of such Debentures, Debentures with
an equivalent aggregate principal amount that were presented by the
Institutional Trustee to the Trustee will be deemed to have been cancelled.
(b) Unless and until it is exchanged for the Debentures in
registered form, a Global Debenture may be transferred, in whole but not in
part, only to another nominee of the Clearing Agency, or to a successor
Clearing Agency selected or approved by the Company or to a nominee of such
successor Clearing Agency.
(c) If at any time the Clearing Agency notifies the Company that
it is unwilling or unable to continue as a Clearing Agency or if at any
time the Clearing Agency for such series shall no longer be registered or
in good standing under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation, and a successor Clearing Agency for
such series is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the
case may be, the Company will execute, and, subject to Article III of the
Indenture, the Trustee, upon written notice from the Company, will
authenticate and deliver the Debentures in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Debenture in exchange
for such Global Debenture. In addition, the Company may at any time
determine that the Debentures shall no longer be represented by Global
Debenture. In such event the Company will execute, and subject to Section
3.3 of the Base Indenture, the Trustee, upon receipt of an Officer's
Certificate evidencing such determination by the Company, will authenticate
and deliver the Debentures in definitive registered form without coupons,
in authorized denominations, and in an aggregate principal amount equal to
the principal amount of the Global Debenture in exchange for such Global
Debenture. Upon the exchange of the Global Debenture for such Debentures in
definitive registered form without coupons, in authorized denominations,
the Global Debenture shall be cancelled by the Trustee. Such Debentures in
definitive registered form issued in exchange for the Global Debenture
shall be registered in such names and in such authorized denominations as
the Clearing Agency, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Securities to the Clearing Agency for delivery to the Persons
in whose names such Securities are so registered.
SECTION 2.5. Interest.
(a) Each Debenture will bear interest initially at the rate of
___% per annum (the "Coupon Rate") from the original date of issuance until
February 15, 2001, and at the Reset Rate thereafter until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the rate of ___% until February
15, 2001 and at the Reset Rate thereafter, compounded quarterly, payable
(subject to the provisions of Article IV herein) quarterly in arrears on
February 16, May 16, August 16 and November 16 of each year (each, an
"Interest Payment Date") commencing on , to the Person in whose
name such Debenture or any predecessor Debenture is registered, at the
close of business on the Regular Record Date for such interest installment,
which, in respect of (i) Debentures of which the Institutional Trustee is
the Holder and the Preferred Securities are in book-entry only form or (ii)
a Global Debenture, shall be the close of business on the Business Day next
preceding that Interest Payment Date. Notwithstanding the foregoing
sentence, if (i) the Debentures are held by the Institutional Trustee and
the Preferred Securities are no longer in book-entry only form or (ii) the
Debentures are not represented by a Global Debenture, the Company may
select a Regular Record Date for such interest installment which shall be
more than one Business Day but less than 60 Business Days prior to an
Interest Payment Date.
(b) The Coupon Rate on the Debentures will be reset on the third
Business Day immediately preceding the Purchase Contract Settlement Date to
the Reset Rate (which Reset Rate will become effective on and after the
Purchase Contract Settlement Date). On the tenth (10) Business Day
immediately preceding the Purchase Contract Settlement Date, the Reset
Announcement Date, the Reset Spread and the relevant Two-Year Benchmark
Treasury will be announced by the Company. On the Business Day immediately
following such Reset Announcement Date, the Holders of Debentures will be
notified of such Reset Spread and Two-Year Benchmark Treasury by the
Company. Such notice shall be sufficiently given to such Holders of
Debentures if published in an Authorized Newspaper.
(c) Not later than 10 calendar days nor more than 15 calendar days
immediately preceding the Reset Announcement Date, the Company will request
that the Clearing Agency or its nominee (or any successor Clearing Agency
or its nominee) or the Institutional Trustee, notify the Holders of
Debentures of such Reset Announcement Date and the procedures to be
followed by such holders of Debentures wishing to settle the related
Purchase Contract with separate cash on the Business Day immediately
preceding the Purchase Contract Settlement Date.
(d) The amount of interest payable for any period will be computed
on the basis of a 360-day year consisting of twelve 30-day months. Except
as provided in the following sentence, the amount of interest payable for
any period shorter than a full quarterly period for which interest is
computed, will be computed on the basis of the actual number of days
elapsed in such a 90-day period. In the event that any date on which
interest is payable on the Debentures is not a Business Day, then payment
of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1. Tax Event Redemption.
If a Tax Event shall occur and be continuing, the Company may, at
its option, redeem the Debentures in whole (but not in part) at any time at
a Redemption Price per Debenture equal to the Redemption Amount plus
accrued and unpaid interest thereon, including Compounded Interest and the
expenses and taxes of the Trust set forth in Section 4.1 hereof, if any, to
the date of such redemption (the "Tax Event Redemption Date"). If,
following the occurrence of a Tax Event, the Company exercises its option
to redeem the Debentures, then the proceeds of such redemption, if
distributed to the Institutional Trustee as the sole Holder of such
Debentures, will be applied by the Institutional Trustee to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so redeemed, at the Redemption Price.
If, following the occurrence of a Tax Event, the Company exercises its
option to redeem the Debentures, the Company shall appoint the Quotation
Agent to assemble the Treasury Portfolio in consultation with the Company.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Tax Event Redemption Date to each registered Holder of
the Debentures to be prepaid at its registered address. Unless the Company
defaults in payment of the Redemption Price, on and after the redemption
date interest shall cease to accrue on such Debentures.
SECTION 3.2. Redemption Procedure for Debentures.
Payment of the Redemption Price to each Holder of Debentures shall
be made by the Paying Agent, no later than 12:00 noon, New York City time,
on the Tax Event Redemption Date, by check or wire transfer in immediately
available funds at such place and to such account as may be designated by
each such Holder of Debentures, including the Institutional Trustee or the
Collateral Agent, as the case may be. If the Trustee holds immediately
available funds sufficient to pay the Redemption Price of the Debentures
(or, if the Company is acting as Paying Agent or the Institutional Trustee
has received the Redemption Price), then, on such Tax Event Redemption
Date, such Debentures will cease to be outstanding and interest thereon
will cease to accrue, whether or not such Debentures have been received by
the Company, and all other rights of the Holder in respect of the
Debentures shall terminate and lapse (other than the right to receive the
Redemption Price upon delivery of such Debentures but without interest on
such Redemption Price).
SECTION 3.3. No Sinking Fund.
The Debentures are not entitled to the benefit of any sinking
fund.
SECTION 3.4. Option to Put Debentures.
If a Failed Remarketing has occurred, each Holder of Debentures
who holds such Debentures on the day immediately following the Purchase
Contract Settlement Date shall have the right (the "Put Option") on or
after the Business Day immediately following the Purchase Contract
Settlement Date, upon at least three Business Days' prior notice, to
require the Company to repurchase such Holder's Debentures on March 2, 2001
(the "Put Option Exercise Date"), either in whole or in part, at a
repayment price per Debenture equal to $50, plus accrued and unpaid
interest, if any, thereon to the date of payment including deferred
interest, if any (the "Debenture Repayment Price").
SECTION 3.5. Repurchase Procedure for Debentures.
(a) In order for the Debentures to be repurchased on the
Put Option Exercise Date, the Company must receive on or prior to 5:00 p.m.
New York City time on the third Business Day immediately preceding the Put
Option Exercise Date, at the principal executive offices of Cendant
Corporation in New York, New York, the Debentures to be repurchased with
the form entitled "Option to Elect Repayment" on the reverse of or
otherwise accompanying such Debentures duly completed. Any such notice
received by the Trustee shall be irrevocable. All questions as to the
validity, eligibility (including time of receipt) and acceptance of the
Debentures for repayment shall be determined by the Company, whose
determination shall be final and binding.
(b) Payment of the Debentures Repayment Price to Holders
of Debentures shall be made through the Trustee, subject to the Trustee's
receipt of payment from the Company in accordance with the terms of the
Indenture either through the Trustee or the Company acting as Paying Agent,
no later than 12:00 noon, New York City time, on the Put Option Exercise
Date, and to such account as may be designated by such Holders. If the
Trustee holds immediately available funds sufficient to pay the Debentures
Repayment Price of the Debentures presented for repayment (or, if the
Company is acting as Paying Agent and the Institutional Trustee has
received the Debentures Repayment Price), then, immediately prior to the
close of business on the Business Day immediately preceding the Put Option
Exercise Date, such Debentures will cease to be outstanding and interest
thereon will cease to accrue, whether or not such Debentures have been
received by the Company, and all other rights of the Holder in respect of
the Debentures, including the Holder's right to require the Company to
repay such Debentures, shall terminate and lapse (other than the right to
receive the Debentures Repayment Price upon delivery of such Debentures but
without interest on such Debentures Repayment Price). Neither the Trustee
nor the Company will be required to register or cease to be registered the
transfer of any Debentures for which repayment has been elected.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Company shall have the right at any time, and from time to
time, during the term of the Debentures, to defer payments of interest by
extending the interest payment period of such Debentures for a period not
extending, in the aggregate, beyond the Maturity Date of the Debentures
(the "Extended Interest Payment Period"), during which Extended Interest
Payment Period no interest shall be due and payable. To the extent
permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant
to this Section 4.1, will bear interest thereon at the rate of ___% until
February 15, 2001, and at the Reset Rate thereafter compounded quarterly
for each quarter of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Debentures, including any
expenses and taxes of the Trust set forth in Section 5.1 hereof and
Compounded Interest (together, "Deferred Interest") that shall be payable
to the Holders of the Debentures in whose names the Debentures are
registered in the Security Register on the first record date after the end
of the Extended Interest Payment Period; provided, however, that during any
such Extended Interest Payment Period, (a) the Company shall not declare or
pay dividends on or make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of capital stock of
the Company in connection with the satisfaction by the Company of its
obligations under any employee or agent benefit plans or the satisfaction
by the Company of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Company to purchase
capital stock of the Company, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or
series of the Company's capital stock for another class or series of the
Company capital stock, (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the Company
(or rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital stock or (v)
redemptions or repurchases of any rights outstanding under a shareholder
rights plan and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities
issued by the Company that rank junior to the Debentures, and (c) the
Company shall not make any guarantee payments with respect to the foregoing
(other than payments pursuant to the Guarantee or the Common Securities
Guarantee). Prior to the termination of any Extended Interest Payment
Period, the Company may further extend such period, provided that such
period together with all such previous and further extensions thereof shall
not extend beyond the Maturity Date of the Debentures. Upon the termination
of any Extended Interest Payment Period and the payment of all Deferred
Interest then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end
thereof, but the Company, at its option, may prepay on any Interest Payment
Date all or any portion of the interest accrued during the then elapsed
portion of an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Institutional Trustee is the only registered Holder of
the Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Regular Trustees, the
Institutional Trustee and the Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by
the Trust are payable, or (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are payable, to
the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities issued by the Trust,
but in any event at least one Business Day before such record date.
(b) If the Institutional Trustee is not the only Holder of the
Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give the Holders of the Debentures and the
Trustee written notice of its selection of such Extended Interest Payment
Period at least 10 Business Days before the earlier of (i) the next
succeeding Interest Payment Date, or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to
the New York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Debentures.
SECTION 4.3. Limitation of Transactions.
If (i) the Company shall exercise its right to defer payment of
interest as provided in Section 4.1, or (ii) there shall have occurred any
Event of Default, as defined in the Indenture, then (a) the Company shall
not declare or pay dividends or make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of
capital stock of the Company in connection with the satisfaction by the
Company of its obligations under any employee or agent benefit plans or the
satisfaction by the Company of its obligations pursuant to any contract or
security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for
another class or series of the Company capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (iv) dividends or distributions in capital
stock of the Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock and (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan and the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Company that rank junior to the
Debentures, and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than payments pursuant to the Guarantee or
the Common Securities Guarantee).
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Institutional Trustee and in connection with the sale of
the Trust Securities by the Trust, the Company, in its capacity as borrower
with respect to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters
payable pursuant to any Underwriting Agreement and the Pricing Agreement
and compensation of the Trustee under the Indenture in accordance with the
provisions of Section ___ of the Base Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including
commissions to the underwriters in connection therewith), the fees and
expenses of the Institutional Trustee and the Delaware Trustee, the costs
and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing,
and disposition of Trust assets) to which the Trust might become subject;
(c) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust.
SECTION 5.2. Payment Upon Resignation or Removal.
Upon termination of this First Supplemental Indenture or the Base
Indenture or the removal or resignation of the Trustee pursuant to this
Section 5.2, the Company shall pay to the Trustee all amounts accrued to
the date of such termination, removal or resignation. Upon termination of
the Declaration or the removal or resignation of the Delaware Trustee or
the Institutional Trustee, as the case may be, pursuant to Section 5.6 of
the Declaration, the Company shall pay to the Delaware Trustee or the
Institutional Trustee, as the case may be, all amounts accrued to the date
of such termination, removal or resignation.
ARTICLE VI
NOTICE
SECTION 6.1. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article VI. Notwithstanding
any of the provisions of the Base Indenture and this First Supplemental
Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment of monies to or
by the Trustee in respect of the Debentures pursuant to the provisions of
the Base Indenture, unless and until a Responsible Officer of the Trustee
shall have received written notice thereof from the Company or a holder or
holders of Senior Indebtedness or from any trustee therefor and before the
receipt of any such written notice, the Trustee, subject to the provisions
of the Base Indenture, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Article VI at least two Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest on any Debenture), then,
anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the
same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within
two Business Days prior to such date.
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Global Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of the Clearing
Agency or a nominee of the Clearing Agency. This Debenture is exchangeable
for Debentures registered in the name of a person other than the Clearing
Agency or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Debenture (other than a transfer of this
Debenture as a whole by the Clearing Agency to a nominee of the Clearing
Agency or by a nominee of the Clearing Agency to the Clearing Agency or
another nominee of the Clearing Agency) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) to
the issuer or its agent for registration of transfer, exchange or payment,
and any Debenture issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein.]
No.
$
CUSIP No.
CENDANT CORPORATION
___% DEBENTURE
DUE FEBRUARY 16, 2003
CENDANT CORPORATION, a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
, the principal sum of ($______________) on February 16,
2003 (such date is hereinafter referred to as the "Maturity Date"), and to
pay interest on said principal sum from , , or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral
as set forth herein) in arrears on February 16, May 16, August 16 and
November 16 of each year, commencing on , initially at the
rate of ___% per annum until February 15, 2001, and at the Reset Rate
thereafter until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (without duplication
and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the rate of ___%
until February 15, 2001, and at the Reset Date thereafter, compounded
quarterly. The interest rate will be reset on the third business day
preceding February 16, 2001 to the Reset Rate (as determined by the Reset
Agent). The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months. In the event that any date on which interest is payable on this
Debenture is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Debenture (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment which in the case of a
Global Debenture shall be the close of business on the business day next
preceding such Interest Payment Date; provided, however, if pursuant to the
terms of the indenture the Debentures are no longer represented by a Global
Debenture, the Company may select such regular record date for such
interest installment which shall be more than one Business Day but less
than 60 Business Days prior to an Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall forthwith cease
to be payable to the registered Holders on such regular record date and may
be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of this
series of Debentures not less than 10 days prior to such special record
date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is
legal tender for payment of public and private debts; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the registered Holder at such address as shall appear in the
Security Register or by wire transfer to an account appropriately
designated by the Holder entitled thereto. Notwithstanding the foregoing,
so long as the Holder of this Debenture is the Institutional Trustee or the
Collateral Agent, the payment of the principal of (and premium, if any) and
interest on this Debenture will be made at such place and to such account
as may be designated in writing by the Institutional Trustee or the
Collateral Agent.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, senior and unsecured and will rank in right of
payment on parity with all other senior unsecured obligations of the
Company.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been
signed by or on behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated
CENDANT CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
By:
--------------------------------
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
Dated
-----------------------
---------------------------
as Trustee
By
---------------------------
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Securities"), specified in
the Indenture, all issued or to be issued in one or more series under and
pursuant to an Indenture dated as of , (the "Base Indenture"), duly
executed and delivered between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee") (as supplemented by a First
Supplemental Indenture, dated , ), (the Base Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the Holders of the Securities.
By the terms of the Indenture, the Securities are issuable in series that
may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Securities is limited
in aggregate principal amount as specified in said First Supplemental
Indenture.
If a Tax Event shall occur and be continuing, the Company may, at its
option, redeem Debentures in whole (but not in part) at any time at a
Redemption Price per Debenture equal to the Redemption Amount plus accrued
and unpaid interest thereon, including Compounded Interest and expenses and
taxes of the Trust (each as defined herein), if any, to the Tax Event
Redemption Date. The Redemption Price shall be paid to each Holder of the
Debenture by the Company, no later than 12:00 noon, New York City time, on
the Tax Event Redemption Date, by check or wire transfer in immediately
available funds, at such place and to such account as may be designated by
each such Holder.
The Debentures are not entitled to the benefit of any sinking fund.
If a Failed Remarketing has occurred, each Holder of this Debenture who
holds this Debenture on the day immediately following the Purchase Contract
Settlement Date shall have the right (the "Put Option") on or after the
Business Day immediately following the Purchase Contract Settlement Date,
upon at least three Business Days' prior notice, to require the Company to
repurchase such Holder's Debentures on March 2, 2001 (the "Put Option
Exercise Date"), either in whole or in part, at a repayment price per
Debenture equal to $50, plus accrued and unpaid interest, if any, thereon
to the date of payment including deferred interest, if any (the "Debenture
Repayment Price"). In order for the Debentures to be so repurchased, the
Company must receive, on or prior to 5:00 p.m. New York City Time on the
third Business Day immediately preceding the Put Option Exercise Date, at
the principal executive offices of Cendant Corporation in New York, New
York, the Debentures to be repurchased with the form entitled "Option to
Elect Repayment" on the reverse of or otherwise accompanying such
Debentures duly completed. Any such notice received by the Trustee shall be
irrevocable. All questions as to the validity, eligibility (including time
of receipt) and acceptance of the Debentures for repayment shall be
determined by the Company, whose determination shall be final and binding.
The payment of the Debentures Repayment Price in respect of such Debentures
shall be made, either through the Trustee or the Company acting as Paying
Agent, no later than 12:00 noon, New York City time, on the Put Option
Exercise Date.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the
time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of, among other things, adding any provisions to
or changing or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying the rights of the Holders of the
Debentures; provided, however, that, among other things, no such
supplemental indenture shall (i) reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (subject
to the Company's right to defer such payments in the manner set forth
herein), or reduce any premium payable upon the redemption thereof, without
the consent of the Holder of each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debentures, the Holders of which are required to
consent to any such supplemental indenture, without the consent of the
Holders of each Debenture then outstanding and affected thereby. The
Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Securities of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the
Debentures of such series, to waive a Default or Event of Default with
respect to such series, and its consequences, except a Default or Event of
Default in the payment of the principal of or premium, if any, or interest
on any of the Securities of such series. Any such consent or waiver by the
registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture issued in
exchange for or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and premium,
if any, and interest on this Debenture at the time and place and at the
rate and in the money herein prescribed.
So long as the Company is not in default in the payment of interest on
the Debenture, the Company shall have the right at any time during the term
of the Debentures from time to time to extend the interest payment period
of such Debentures for a period not extending, in the aggregate, beyond the
Maturity Date of the Debentures (an "Extended Interest Payment Period"). At
the end of an Extended Interest Payment Period, the Company shall pay all
interest then accrued and unpaid (together with the interest thereon at the
rate of ___% until February 15, 2001 and at the Reset Rate thereafter to
the extent that payment of such interest is enforceable under applicable
law). In the event that the Company exercises this right, then (a) the
Company shall not declare or pay dividends or make any distribution with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or
acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee or agent
benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such event
requiring the Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or the exchange
or conversion of one class or series of the Company's capital stock for
another class or series of the Company capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (iv) dividends or distributions in capital
stock of the Company (or rights to acquire capital stock) or repurchases or
redemptions of capital stock solely from the issuance or exchange of
capital stock or (v) redemptions or purchases of any rights outstanding
under a shareholder rights plan and the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any
payment of interest, principal or premium, if any, or repay, repurchase or
redeem any debt securities issued by the Company that rank junior to the
Debentures, and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than payments pursuant to the Guarantee or
the Common Securities Guarantee). Prior to the termination of any such
Extended Interest Payment Period, the Company may further extend the
interest payment period; provided, that such Extended Interest Payment
Period, together with all such previous and further extensions thereof, may
not extend beyond the Maturity Date of the Debenture. At the termination of
any such Extended Interest Payment Period and upon the payment of all
accrued and unpaid interest and any additional amount then due, the Company
may commence a new Extended Interest Payment Period, subject to the above
requirements.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof
on the Security Register of the Company, upon surrender of this Debenture
for registration of transfer at the office or agency of the Trustee in the
City of Chicago and State of Illinois accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount and
series will be issued to the designated transferee or transferees. No
service charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Paying Agent and the Security
Registrar may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone
other than the Security Registrar) for the purpose of receiving payment of
or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee
nor any Paying Agent nor any Security Registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Indenture imposes certain limitations on the ability of the Company
to, among other things, merge or consolidate with any other Person or sell,
assign, transfer or lease all or substantially all of its properties or
assets. All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report
periodically to the Trustee on compliance with the covenants in the
Indenture.
The Debentures of this series are issuable only in registered form
without coupons in denominations of $50 and any integral multiple thereof.
This Global Debenture is exchangeable for Debentures in definitive form
only under certain limited circumstances set forth in the Indenture. As
provided in the Indenture and subject to certain limitations therein set
forth, Debentures of this series so issued are exchangeable for a like
aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Company to repay $_____ principal amount of the within Debenture, pursuant
to its terms, on the "Put Option Exercise Date," together with any interest
thereon accrued but unpaid to the date of repayment, to the undersigned at:
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a
new Debenture or Debentures representing the remaining aggregate principal
amount of this Debenture.
For this Option to Elect Repayment to be effective, this Indenture with the
Option to Elect Repayment duly completed must be received by the Company at
Cendant Corporation, Attn: Corporate Secretary, 9 West 57th Street, New
York, New York 10019, no later than 5:00 p.m. on February 27, 2001.
Dated: Signature: ________________________________
Signature Guarantee: _____________________
Note: The signature to this Option to Elect Repayment must correspond with
the name as written upon the face of the within Debenture in every
particular without alternation or enlargement or any change whatsoever.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture
to:
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(Insert assignee's social security or tax identification number)
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(Insert address and zip code of assignee)
and irrevocably appoints
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agent to transfer this Debenture on the books of the Trust. The agent may
substitute another to act for him or her.
Date: ____________________________________
Signature: ________________________________
Signature Guarantee: ______________________
(Sign exactly as your name appears on the other side of this Debenture)
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1. Original Issue of Debentures.
Debentures in the aggregate principal amount of $ may, upon
execution of this First Supplemental Indenture, be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written
order of the Company, signed by its Chairman, its Vice Chairman, its
President, or any Vice President and its Treasurer or an Assistant
Treasurer, without any further action by the Company.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Ratification of Indenture.
The Indenture as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner
and to the extent herein and therein provided.
SECTION 9.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by
the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.
SECTION 9.3. Governing Law.
This First Supplemental Indenture and each Debenture shall be
deemed to be a contract made under the internal laws of the State of New
York, and for all purposes shall be construed in accordance with the laws
of said State.
SECTION 9.4. Separability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to
be invalid illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of
this First Supplemental Indenture or of the Debentures, but this First
Supplemental Indenture and the Debentures shall be construed as if such
invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 9.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
SECTION 9.6. Preferred Securities Guarantee and Declaration.
The Preferred Securities Guarantee and the Declaration shall be
deemed to be specifically described in this First Supplemental Indenture
for purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
CENDANT CORPORATION,
as Issuer
By:
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Name:
Title:
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK ,
as Trustee
By:
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Name:
Title:
