As filed with the Securities and Exchange Commission on February 6, 1998
Registration Nos. 333-45227,
333-45227-01,
333-45227-02 and
333-45227-03
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
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Cendant Corporation Delaware 06-0918165
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Cendant Capital I Delaware Applied For
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Cendant Capital II Delaware Applied For
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Cendant Capital III Delaware Applied For
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(Exact name of the (State or other (I.R.S. Employer
registrants as specified Jurisdiction of Identification No.)
in their respective Incorporation or
charters) Organization)
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
FAX: (973) 496-5331
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES E. BUCKMAN, ESQ.
SENIOR EXECUTIVE VICE PRESIDENT
AND GENERAL COUNSEL
CENDANT CORPORATION
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
FAX: (973) 496-5331
(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 6 SYLVAN WAY
(212) 735-3000 PARSIPPANY, NEW JERSEY 07054
FAX: (212) 735-2000 (973) 428-9700
FAX: (973) 496-5331
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, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR
INTEREST REINVESTMENT PLANS,
CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [X]
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OF
TO BE REGISTERED REGISTERED SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------- ---------- ----------- ----------------- ----------------
Debt Securities(2)..........
Common Stock, $.01
par value..................
Preferred Stock,
par value $.01.............
Stock Purchase Units
of Cendant Corporation.....
Stock Purchase Contracts
of Cendant Corporation.....
Warrants of Cendant
Corporation................
Preferred Securities of
Cendant Capital I .........
Preferred Securities of
Cendant Capital II.........
Preferred Securities of
Cendant Capital III........
Guarantees and backup
Undertakings of Cendant
Corporation in connection
with Preferred Securities
of Cendant Capital I,
Cendant Capital II and
Cendant Capital III by
Cendant Corporation........
Total.................. $4,000,000,000(3) 100% $4,000,000,000(3)(4) $1,180,000(5)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i).
(2) Also includes such indeterminate number of Debt Securities, shares of
Common Stock, shares of Preferred Stock, Stock Purchase Units, Stock Purchase
Contracts, Guarantees and Warrants of Cendant Corporation, or Preferred
Securities of Cendant Capital I, Cendant Capital II and Cendant Capital III as
may be issued upon conversion or exchange of any of the Debt Securities or
Preferred Stock that provide for conversion or exchange into other securities.
(3) Such amount represents the principal amount of any Debt Securities issued
at their principal amount, the issue price rather than the principal amount of
any Debt Securities issued at original issue discount, the liquidation
preference of any Preferred Stock and the amount computed pursuant to Rule
457(i) for any Common Stock.
(4) No separate consideration will be received for Debt Securities, Preferred
Stock, Common Stock, Stock Purchase Units, Stock Purchase Contracts, Guarantees
and Warrants of Cendant Corporation, or Preferred Securities of Cendant Capital
I, Cendant Capital II and Cendant Capital III issuable upon conversion or
exchange of the Debt Securities or Preferred Stock.
(5) Of such amount $885,000 was previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
2
PROSPECTUS
$4,000,000,000
CENDANT CORPORATION
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
STOCK PURCHASE CONTRACTS, STOCK PURCHASE UNITS AND WARRANTS
CENDANT CAPITAL I
CENDANT CAPITAL II
CENDANT CAPITAL III
PREFERRED SECURITIES FULLY AND UNCONDONITIONALLY GUARANTEED
BY CENDANT CORPORATION
----------------
Cendant Corporation (the "Company"), directly or through such agents,
dealers or underwriters as may be designated from time to time, may offer,
issue and sell, together or separately, its (i) debt securities (the "Debt
Securities"), which may be senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (ii) shares of its preferred stock, par value $0.01 per share
(the "Preferred Stock"), (iii) shares of its common stock, par value $0.01 per
share (the "Common Stock"), (iv) Stock Purchase Contracts ("Stock Purchase
Contracts") to purchase shares of Common Stock, (v) Stock Purchase Units, each
representing ownership of a Stock Purchase Contract and Preferred Securities
(as defined herein) or debt obligations of third parties, including U.S.
Treasury securities, securing the holder's obligation to purchase Common Stock
under the Stock Purchase Contracts ("Stock Purchase Units") and (vi) warrants
to purchase Debt Securities, Preferred Stock, Common Stock or other securities
or rights ("Warrants").
Cendant Capital I, Cendant Capital II and Cendant Capital III (each, a
"Cendant Trust"), statutory business trusts formed under the laws of the State
of Delaware, may offer, from time to time, preferred securities, representing
preferred undivided beneficial interests in the assets of the respective
Cendant Trusts ("Preferred Securities"). The payment of periodic cash
distributions ("Distributions") with respect to Preferred Securities out of
moneys held by each of the Cendant Trusts, and payments on liquidation,
redemption or otherwise with respect to such Preferred Securities, will be
guaranteed by the Company to the extent described herein (each, a "Trust
Guarantee"). See "Description of Preferred Securities" and "Description of
Trust Guarantees." The Company's obligations under the Trust Guarantees will
rank junior and subordinate in right of payment to all other liabilities of the
Company and pari passu with its obligations under the senior most preferred or
preference stock of the Company. See "Description of Trust Guarantees -- Status
of the Trust Guarantees." Subordinated Debt Securities (as defined herein) may
be issued and sold by the Company in one or more series to a Cendant Trust or a
trustee of such Cendant Trust in connection with the investment of the proceeds
from the offering of Preferred Securities and Common Securities (as defined
herein) of such Cendant Trust. The Subordinated Debt Securities purchased by a
Cendant Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such
Cendant Trust. The Debt Securities, Preferred Stock, Common Stock, Stock
Purchase Contracts, Stock Purchase Units, Warrants and Preferred Securities are
herein collectively referred to as the "Securities," with an aggregate public
offering price of up to $4,000,000,000 (or its equivalent in foreign currencies
or foreign currency units based on the applicable exchange rate at the time of
offering) in amounts, at prices and on terms to be determined at the time of
sale.
The form in which the Securities are to be issued, their specific
designation, aggregate principal amount or aggregate initial offering price,
maturity, if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, and sinking fund terms, if any, voting or other rights,
if any, exercise price and detachability, if any, and other specific terms will
be set forth in a Prospectus Supplement (the "Prospectus Supplement"), together
with the terms of offering of such Securities. Any such Prospectus Supplement
will also contain information, as applicable, about certain material United
States Federal income tax considerations relating to the particular Securities
offered thereby.
The Declaration of Trust for each of such Trusts also provides that to
the full extent permitted by law, the Company shall indemnify 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 any such 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 such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of any such Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful. Each of the Declaration of Trusts also provides
that to the full extent permitted by law, the Company shall indemnify 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 any such trust to procure a judgment in its favor by reason of the fact that
such person is or was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of any such 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
any such 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. The Declaration of Trust for each such Trust further
provides that 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 the immediately
preceding two sentences shall be paid by the Company 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 Company as authorized in any such Declaration.
The Declaration of Trust for each Trust also provides that the Company
shall indemnify each Fiduciary Indemnified Person 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 the trust or trusts
under any such Trust, 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 thereunder.
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol "CD". On February 4, 1998, the last reported sale price of the
Common Stock on the New York Stock Exchange was $37.50 per share. Any
Prospectus Supplement will also contain information, where applicable, as to
any other listing on a securities exchange of the Securities covered by such
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. The
Company reserves the sole right to accept, and together with its agents, from
time to time, to reject in whole or in part any proposed purchase of Securities
to be made directly or through agents. If any agents or underwriters are
involved in the sale of any Securities, the names of such agents or
underwriters and any applicable fees, commissions or discounts will be set
forth in the applicable Prospectus Supplement. See "Plan of Distribution."
This Prospectus may not be used to consummate any sale of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is February 6, 1998
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER, DEALER OR AGENT INVOLVED IN THE OFFERING DESCRIBED HEREIN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration
Statement on Form S-3 (together with all the amendments and exhibits thereto,
the "Registration Statement") filed by the Company and the Cendant Trusts with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. This Prospectus does not contain all of the information set forth
in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, although it does
include a summary of the material terms of the Indenture and the Declaration
of Trust (each as defined herein). Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company, the Cendant Trusts and the Securities. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission or
incorporated by reference herein are not necessarily complete, and, in each
instance, reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified
in its entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, 13th Floor,
New York, New York 10048. The Commission also maintains a website that
contains reports, proxy and information statements and other information.
The website address is http.//www.sec.gov. In addition, such material can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
No separate financial statements of the Cendant Trusts have been
included or incorporated by reference herein. The Company does not consider
that such financial statements would be material to holders of the Preferred
Securities because (i) all of the voting securities of the Cendant Trusts will
be owned, directly or indirectly, by the Company, a reporting company under the
Exchange Act, (ii) the Cendant Trusts have and will have no independent
operations but exist for the sole purpose of issuing securities representing
undivided beneficial interests in their assets and investing the proceeds
thereof in Subordinated Debt Securities issued by the Company, and (iii) the
Company's obligations described herein and in any accompanying Prospectus
Supplement, under the Declaration (as defined herein)(including the obligation
to pay expenses of the Cendant Trusts), the Subordinated Indenture and any
supplemental indentures thereto, the Subordinated Debt Securities issued to the
Cendant Trust and the Trust Guarantees taken together, constitute a full and
unconditional guarantee by the Company of payments due on the Preferred
Securities. See "Description of Preferred Securities of the Cendant Trusts" and
"Description of Trust Guarantees."
The Cendant Trusts are not currently subject to the information
reporting requirements of the Exchange Act. The Cendant Trusts will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
(i) Annual Report on Form 10-K for the fiscal year ended January 31, 1997
(the "1997 Form 10-K"); (ii) Quarterly Reports on Form 10-Q for the fiscal
quarters ended April 30, 1997, July 31, 1997 and October 31, 1997 (the "1997
Form 10-Qs"); (iii) Current Reports on Form 8-K dated January 22, 1997,
February 4, 1997, February 13, 1997, February 26, 1997, March 17, 1997,
May 29, 1997, August 15, 1997, October 31, 1997, November 4, 1997, December
18, 1997, January 14, 1998, January 22, 1998, January 27, 1998, January 29,
1998, February 4, 1998 and February 6, 1998; and (iv) description of the
common stock of the Company which is contained in the Registration Statements
on Form 8-A of the Company dated July 27, 1984 and August 15, 1989.
The financial statements filed as part of the Current Report on
Form 8-K dated January 29, 1998 are now the historical financial statements of
the Company (the "Historical Financial Statements"). The Historical Financial
Statements supercede the financial statements appearing in the 1997 Form 10-K
and the 1997 Form 10-Qs.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to
be incorporated herein by reference and to be a part hereof from the date of
filing of such documents. Any statement contained in this Prospectus or in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference or
in any Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to James E.
Buckman, Esq., Senior Executive Vice President and General Counsel, Cendant
Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054, (973) 428-9700.
2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES OFFERED HEREBY,
INCLUDING STABILIZING TRANSACTIONS, THE PURCHASE OF SHARES TO COVER SYNDICATE
SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS.
3
THE COMPANY
The Company is one of the foremost consumer and business services
companies in the world. The Company was created through the merger (the
"Merger") of CUC International Inc. ("CUC") and HFS Incorporated ("HFS") in
December 1997 and provides all of the services formerly provided by each of
CUC and HFS, including technology-driven, membership-based consumer services,
travel services and real estate services.
Membership Services. The Company's membership-based consumer services
provide more than 63.5 million members with access to a variety of goods and
services worldwide. These memberships include such components as shopping,
travel, auto, dining, home improvement, lifestyle, vacation exchange, credit
card and checking account enhancement packages, financial products and discount
programs. The Company also administers insurance package programs which are
generally combined with discount shopping and travel for credit union members,
distributes welcoming packages which provide new homeowners with discounts for
local merchants, and provides travelers with value-added tax refunds. The
Company believes that it is the leading provider of membership-based consumer
services of these types in the United States. The Company's membership
activities are conducted principally through its Comp-U-Card division and
certain of the Company's wholly-owned subsidiaries, FISI*Madison Financial
Corporation, Benefit Consultants, Inc., Entertainment Publications, Inc. and
SafeCard Services, Inc.
Travel Services. The Company also provides services to consumers
through intermediaries in the travel and real estate industries. In the travel
industry, the Company, through certain of its subsidiaries, franchises hotels
primarily in the mid-priced and economy markets. It is the world's largest
hotel franchisor, operating the Days Inn(R), Ramada(R) (in the United States),
Howard Johnson(R), Super 8(R), Travelodge(R) (in North America), Villager
Lodge(R), Knights Inn(R) and Wingate Inn(R) franchise systems. Additionally,
the Company owns the Avis worldwide vehicle rental system, which is operated
through its franchisees and is the second-largest car rental system in the
world (based on total revenues and volume of rental transactions). The Company
currently owns approximately 27.5% of the capital stock of the world's largest
Avis franchisee, Avis Rent A Car, Inc. The Company also owns Resort
Condominiums International, Inc., a leading timeshare exchange organization.
The Company also operates the second largest provider in North America of
comprehensive vehicle management services and is the market leader in the
United Kingdom among the four nationwide providers of fuel card services and
the six nationwide providers of vehicle management services.
Real Estate Services. In the residential real estate industry, the
Company, through certain of its subsidiaries, franchises real estate brokerage
offices under the Century 21(R), Coldwell Banker(R) and Electronic Realty
Associates(R) (ERA(R)) real estate brokerage franchise systems and is the
world's largest real estate brokerage franchisor. Additionally, the Company,
through Cendant Mobility Services Corporation, is the largest provider of
corporate relocation services in the United States, offering relocation
clients a variety of services in connection with the transfer of a client's
employees. Through Cendant Mortgage Corporation, the Company originates, sells
and services residential mortgage loans in the United States, marketing such
services to consumers through relationships with corporations, affinity
groups, financial institutions, real estate brokerage firms and other mortgage
banks.
As a franchisor of hotels, residential real estate brokerage offices
and car rental operations, the Company licenses the owners and operators of
independent businesses to use the Company's brand names. The Company does not
own or operate hotels or real estate brokerage offices. Instead, the Company
provides its franchisee customers with services designed to increase their
revenue and profitability.
Other. The Company also offers consumer software in various multimedia
forms. During 1996, the Company acquired Davidson & Associates, Inc.,
Sierra On-Line, Inc. and Knowledge Adventure, Inc. These companies develop,
publish, manufacture and distribute educational, entertainment and personal
productivity interactive multimedia products for home and school use.
The Company from time to time explores and conducts discussions with
regard to acquisitions and other strategic corporate transactions in its
industries and in other businesses. Historically, the Company has been involved
in numerous transactions of various magnitudes, for consideration which
included cash or securities (including Common Stock) or combinations thereof.
The Company will evaluate and pursue appropriate acquisition and combination
opportunities as they arise. No assurance can be given with respect to the
timing, likelihood or financial or business effect of any possible transaction.
In the past, acquisitions by the Company have involved both relatively small
acquisitions and acquisitions which have been significant.
As part of its regular on-going evaluation of acquisition
opportunities, the Company is currently engaged in a number of separate and
unrelated preliminary discussions concerning possible acquisitions. The Company
is in the early stages of such discussions and has not entered into any
agreement in principle with respect to any of these possible acquisitions. The
purchase price for
4
the possible acquisitions may be paid in cash, through the issuance of Common
Stock (which would increase the number of shares of Common Stock outstanding)
Preferred Stock, Debt Securities or other securities of the Company,
borrowings, or a combination thereof. Prior to consummating any such possible
acquisitions, the Company, among other things, will have to initiate and
satisfactorily complete its due diligence investigation; negotiate the
financial and other terms (including price) and conditions of such
acquisitions; obtain appropriate Board of Directors, regulatory and other
necessary consents and approvals; and secure financing. The Company cannot
predict whether any such acquisitions will be consummated or, if consummated,
will result in a financial or other benefit to the Company.
The Company's principal executive offices are located at 6 Sylvan Way,
Parsippany, New Jersey 07054 (telephone number: (973) 428-9700).
THE CENDANT TRUSTS
Each of the Cendant Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust (each a "Declaration")
executed by the Company as sponsor for such trust (the "Sponsor"), and the
Cendant Trustees (as defined herein) of such trust and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
February 5, 1998. Each Cendant Trust exists for the exclusive purposes of
(i) issuing and selling the Preferred Securities and common securities
representing common undivided beneficial interests in the assets of such
Cendant Trust (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities"), (ii) using the gross proceeds from the
sale of the Trust Securities to acquire the Subordinated Debt Securities and
(iii) engaging in only those other activities necessary, appropriate,
convenient or incidental thereto. All of the Common Securities will be directly
or indirectly owned by the Company. The Common Securities will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities,
except that, if an event of default under the Declaration has occurred and is
continuing, the rights of the holders of the Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Company will directly or indirectly acquire Common Securities
in an aggregate liquidation amount equal to at least 3% of the total capital of
each Cendant Trust.
Unless otherwise specified in the applicable Prospectus Supplement,
each Cendant Trust has a term of up to 55 years but may terminate earlier, as
provided in the Declaration. Each Cendant Trust's business and affairs will be
conducted by the trustees (the "Cendant Trustees") appointed by the Company as
the direct or indirect holder of all of the Common Securities. The holder of
the Common Securities will be entitled to appoint, remove or replace any of, or
increase or reduce the number of, the Cendant Trustees of each Cendant Trust.
The duties and obligations of the Cendant Trustees shall be governed by the
Declaration of such Cendant Trust. A majority of the Cendant Trustees (the
"Regular Trustees") of each Cendant Trust will be persons who are employees or
officers of or who are affiliated with the Company. One Cendant Trustee of each
Cendant Trust will be a financial institution (the "Institutional Trustee")
that is not affiliated with the Company and has a minimum amount of combined
capital and surplus of not less than $50,000,000, which shall act as property
trustee and as indenture trustee for the purposes of compliance with the
provisions of Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), pursuant to the terms set forth in the applicable Prospectus Supplement.
In addition, unless the Institutional Trustee maintains a principal place of
business in the State of Delaware and otherwise meets the requirements of
applicable law, one Cendant Trustee of each Cendant Trust will be an entity
having a principal place of business in, or a natural person resident of, the
State of Delaware (the "Delaware Trustee"). The Company will pay all fees and
expenses related to the Cendant Trust and the offering of the Trust Securities.
Unless otherwise specified in the applicable Prospectus Supplement,
the Institutional Trustee and Delaware Trustee for each Cendant Trust shall be
Wilmington Trust Company, and its address in the State of Delaware is Rodney
Square, North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of each Cendant Trust shall be c/o Cendant
Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054, telephone (973)
428-9700.
RECENT DEVELOPMENTS
1997 FINANCIAL RESULTS. On February 4, 1998, the Company announced
its financial results for the year ended December 31, 1997. The Company
reported diluted earnings per share of $1.00 for 1997, a 49% increase
compared to $.67 earnings per share reported for 1996, excluding one-time
charges recognized in both 1997 and 1996. The Company had revenues of $5.3
billion for 1997 compared with $3.9 billion for 1996, an increase of 36%,
and net income of $872.2 million for 1997, excluding one-time charges,
compared with $542.3 million of 1996, excluding one-time charges, an increase
of 61%. On a pro forma basis, which assumes that the financial results
include all of the Company's 1996 acquisitions, accounted for under the
purchase method, as if they had occurred as of January 1, 1996, earnings
per share for the year ended December 31, 1997, excluding one-time charges,
was $1.00 representing a 43% increase over pro forma $.70 per share for the
year ended December 31, 1996.
When giving effect to one-time charges, the Company reported $.06
diluted earnings per share for the year ended December 31, 1997 and net income
of $55.4 million for 1997 compared to $423.6 million for 1996. In 1997,
one-time charges totaled $1.1 billion ($816.8 million after-tax, or $.94 per
share) for merger related costs and unusual charges coincident with the Merger,
as well as the merger of HFS and PHH Corporation which was consummated in
April 1997. In 1996, one-time charges totaled $179.9 million ($118.7 million
after-tax, or $.15 per share) related to three CUC mergers.
Proposed Acquisition of American Bankers. On January 27, 1998, the
Company made a proposal to acquire American Bankers Insurance Group Inc.
("American Bankers") for $58 per share in cash and stock, for an aggregate
purchase price of approximately $2.7 billion on a fully diluted basis. On
January 28, 1998, the Company commenced a tender offer to purchase
approximately 23.5 million of American Bankers' common shares at a price of
$58 per share in cash, which together with shares the Company owns will
equal approximately 51% of the fully diluted shares of American Bankers. The
Company proposes to exchange, on a tax free basis, shares of its common
stock with a fixed value of $58 per share for the balance of American
Bankers' common stock. The tender offer is subject to customary conditions
and there can be no assurance that the Company will be successful in its
proposal to acquire American Bankers.
In connection with the Company's proposal to acquire American
Bankers, the Company entered into a commitment letter, dated January 23, 1998,
with The Chase Manhattan Bank and Chase Securities Inc. to provide a $1.5
billion 364-Day revolving credit facility (the "New Facility") which will
mature 364 days after the execution of the definitive documentation relating
thereto. The New Facility will bear interest, at the option of the Company,
at rates based on competitive bids of lenders participating in such
facilities at a prime rate or at LIBOR plus an applicable variable margin
based on the Company's senior unsecured long-term debt rating.
Harpur Acquisition. On January 20, 1998, the Company completed the
acquisition of Harpur Group, Ltd., a leading fuel card and vehicle management
company in the United Kingdom, from H-G Holdings, Inc. for approximately $186
million in cash plus future contingent payments of up to $20 million over the
next two years.
Jackson Hewitt Acquisition. On January 7, 1998, the Company completed
the acquisition of Jackson Hewitt Inc. ("Jackson Hewitt"), for approximately
$480 million in cash, or $68 per share of common stock of Jackson Hewitt.
Jackson Hewitt is the second largest tax preparation service system in the
United States with locations in 41 states. Jackson Hewitt franchises a system
of approximately 2,050 offices that specialize in computerized preparation of
federal and state individual income tax returns.
Interval Divestiture. On December 17, 1997, in connection with the
merger with HFS, the Company completed the divestiture of its timeshare
exchange subsidiary, Interval International Inc., as contemplated by the
consent decree with the Federal Trade Commission.
Providian Acquisition. On December 10, 1997, the Company announced
that it had entered into a definitive agreement to acquire Providian Auto and
Home Insurance Company ("Providian") and its subsidiaries from an Aegon N.V.
subsidiary for approximately $219 million in cash. Providian sells automobile
insurance to consumers through direct response marketing in 45 states and the
District of Columbia. The closing of this transaction is subject to customary
conditions, including regulatory approval and is anticipated to occur in the
spring of 1998.
Hebdo Mag Acquisition. On October 3, 1997, the Company completed the
acquisition of all of the outstanding capital stock of Hebdo Mag International
Inc. ("Hebdo Mag") in exchange for the issuance of shares of preferred stock of
Getting to Know You of Canada Ltd., an indirect wholly-owned subsidiary of the
Company, exchangeable for shares of Common Stock (the "Hebdo Acquisition
Shares") and the assumption of certain options of Hebdo Mag exchanged for
options to acquire shares of Common Stock, such Hebdo Acquisition Shares or
options having an aggregate value of approximately $440 million. Based in
Paris, France, Hebdo Mag is an international publisher of over 150 titles and
distributor of classified advertising information with operations in twelve
countries, including Canada, France, Sweden, Hungary, the United States, Italy,
Russia and Holland. The Hebdo Mag Acquisition was accounted for in accordance
with the pooling-of-interests method of accounting.
USE OF PROCEEDS
Unless otherwise set forth in a Prospectus Supplement, the net
proceeds from the offering of the Securities will be used for general corporate
purposes, which may include acquisitions, repayment of other debt, working
capital and capital expenditures. When a particular series of Securities is
offered, the Prospectus Supplement relating thereto will set forth the
Company's intended use for the net proceeds received from the sale of such
Securities. Pending application for specific purposes, the net proceeds may be
invested in short-term marketable securities.
5
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited consolidated ratio of earnings to
fixed charges of the Company for the periods indicated.
HISTORICAL
----------
YEAR ENDED DECEMBER 31,
-----------------------
Nine Months
Ended
September 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
Ratio of Earnings to 3.48x 3.06x 2.70x 2.94x 2.68x 1.99x
Fixed Charges (1)
(1) The ratio of earnings to fixed charges is computed by dividing income
before income taxes and extraordinary items plus fixed charges, less
capitalized interest by fixed charges. Fixed charges consist of interest
expense on all indebtedness (including amortization of deferred financing
costs) and the portion of operating lease rental expense that is representative
of the interest factor (deemed to be one-third of operating lease rentals).
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities may be offered from time to time by the Company as
Senior Debt Securities and/or as Subordinated Debt Securities. The Senior Debt
Securities will be issued under an Indenture, as it may be supplemented from
time to time (the "Senior Indenture"), between the Company and The Bank of Nova
Scotia Trust Company of New York, as trustee (the "Senior Trustee"). The
Subordinated Debt Securities will be issued under an Indenture, as it may be
supplemented from time to time (the "Subordinated Indenture"), between the
Company and The Bank of Nova Scotia Trust Company of New York, as trustee (the
"Subordinated Trustee"). The term "Trustee", as used herein, refers to either
the Senior Trustee or the Subordinated Trustee, as appropriate. The forms of
the Senior Indenture and the Subordinated Indenture (being sometimes referred
to herein collectively as the "Indentures" and individually as an "Indenture")
have been filed as exhibits to the Registration Statement. The terms of the
Indentures are also governed by certain provisions of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The following summary of
certain material provisions of the Debt Securities does not purport to be
complete and is qualified in its entirety by reference to the Indentures. All
capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Indentures. For a summary of certain definitions
used in this section, see "Certain Definitions" below.
6
GENERAL
The Indentures will provide for the issuance of Debt Securities in
series up to the aggregate amount from time to time authorized by the Company
for each series. A Prospectus Supplement will set forth the following terms (to
the extent such terms are applicable to such Debt Securities) of and
information relating to the Debt Securities in respect of which this Prospectus
is delivered: (1) the designation of such Debt Securities; (2) classification
as Senior or Subordinated Debt Securities; (3) the aggregate principal amount
of such Debt Securities; (4) the percentage of their principal amount at which
such Debt Securities will be issued; (5) the date or dates on which such Debt
Securities will mature; (6) the rate or rates, if any, per annum, at which such
Debt Securities will bear interest, or the method of determination of such rate
or rates; (7) the times and places at which such interest, if any, will be
payable; (8) provisions for sinking, purchase or other analogous fund, if any;
(9) the date or dates, if any, after which such Debt Securities may be redeemed
at the option of the Company or of the holder and the redemption price or
prices; (10) the date or the dates, if any, after which such Debt Securities
may be converted or exchanged at the option of the holder into or for shares of
Common Stock or Preferred Stock of the Company and the terms for any such
conversion or exchange; and (11) any other specific terms of the Debt
Securities. Principal, premium, if any, and interest, if any, will be payable
and the Debt Securities offered hereby will be transferable, at the corporate
trust office of the Trustee's agent in the borough of Manhattan, City of New
York, provided that payment of interest, if any, may be made at the option of
the Company by check mailed to the address of the person entitled thereto as it
appears in the Security Register. (Section 301 of each Indenture)
If a Prospectus Supplement specifies that a series of Debt Securities
is denominated in a currency or currency unit other than United States dollars,
such Prospectus Supplement shall also specify the denomination in which such
Debt Securities will be issued and the coin or currency in which the principal,
premium, if any, and interest, if any, on such Debt Securities will be payable,
which may be United States dollars based upon the exchange rate for such other
currency or currency unit existing on or about the time a payment is due.
Special United States federal income tax considerations applicable to any Debt
Securities so denominated are also described in the applicable Prospectus
Supplement.
The Debt Securities may be issued in registered or bearer form and,
unless otherwise specified in a Prospectus Supplement, in denominations of
$1,000 and integral multiples thereof. Debt Securities may be issued in
book-entry form, without certificates. Any such issue will be described in the
Prospectus Supplement relating to such Debt Securities. No service charge will
be made for any transfer or exchange of the Debt Securities, but the Company or
the Trustee may require payment of a sum sufficient to cover any tax or other
government charge payable in connection therewith.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount from their stated
principal amount. United States Federal income tax consequences and other
considerations applicable thereto will be described in the Prospectus
Supplement relating to such Debt Securities.
MERGER, CONSOLIDATION AND SALE OF ASSETS
The Indentures will provide that the Company shall not consolidate
with or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless: (1)
the corporation formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety (A) shall
be a corporation, partnership, limited liability company or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the Company's obligation for the due and punctual
payment of the principal of (and premium, if any, on) and interest on all the
Debt Securities and the performance and observance of every covenant of the
Indentures on the part of the Company to be performed or observed; (2)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (3) the Company or such
Person shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with this "Merger,
Consolidation and Sale of Assets" section and that all conditions precedent
herein provided for relating to such transaction have been complied with. This
paragraph shall apply only to a merger or consolidation in which the Company is
not the surviving corporation and to conveyances, leases and transfers by the
Company as transferor or lessor. (Section 801 of each Indenture)
The Indentures will further provide that upon any consolidation by the
Company with or merger by the Company into any other corporation or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety to any Person in accordance with the preceding
paragraph, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right
7
and power of, the Company under the Indentures with the same effect as if such
successor Person had been named as the Company therein, and in the event of any
such conveyance or transfer, the Company (which term shall for this purpose
mean Cendant Corporation or any successor Person which shall theretofore become
such in the manner described in the preceding paragraph), except in the case of
a lease, shall be discharged of all obligations and covenants under the
Indentures and the Debt Securities and the coupons and may be dissolved and
liquidated. (Section 802 of each Indenture)
EVENTS OF DEFAULT
The following will be "Events of Default" under the Indentures with respect to
Debt Securities of any series:
(1) default in the payment of any interest on any Debt Securities of that
series or any related coupon, when such interest or coupon becomes due and
payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any, on) any
Debt Securities of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment when and as due
pursuant to the terms of the Debt Securities of that series and Article
Twelve of the Indentures; or
(4) default in the performance, or breach, of any covenant or warranty of
the Company in the Indentures (other than a default in the performance, or
breach, of a covenant or warranty which is specifically dealt with
elsewhere under this "Events of Default" section), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of all Outstanding Debt Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" thereunder; or
(5) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company under the Federal Bankruptcy
Code or any other applicable federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the institution by the Company of proceedings to be adjudicated
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code or any other applicable federal or state law, or
the consent by it to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due; or
(7) (A) there shall have occurred one or more defaults by the Company in
the payment of the principal of (or premium, if any, on) Debt aggregating
$50 million or more, when the same becomes due and payable at the stated
maturity thereof, and such default or defaults shall have continued after
any applicable grace period and shall not have been cured or waived, or (B)
Debt of the Company aggregating $50 million or more shall have been
accelerated or otherwise declared due and payable, or required to be
prepaid or repurchased (other than by regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(8) any other Event of Default provided with respect to Debt Securities of
that series.
If an Event of Default described in clause (1), (2), (3), (4), (7) or
(8) above with respect to Debt Securities of any series at the time Outstanding
occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms of that
series) of all of the Debt Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
portion thereof) shall become immediately due and payable. If an Event of
Default described in clause (5) or (6) above occurs and is continuing, then the
principal amount of all the Debt Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
8
At any time after a declaration of acceleration with respect to Debt
Securities of any series (or of all series, as the case may be) has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as provided in Article Five of the Indentures, the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series
(or of all series, as the case may be), by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay in the Currency in which the Debt Securities of such series are payable
(except as otherwise specified pursuant to Section 301 of the Indentures
for the Debt Securities of such series and except, if applicable, as
provided in certain provisions of Section 312 of the Indentures):
(A) all overdue interest on all Outstanding Debt Securities of that
series (or of all series, as the case may be) and any related coupons;
(B) all unpaid principal of (and premium, if any, on) any Outstanding
Debt Securities of that series (or of all series, as the case may be)
which has become due otherwise than by such declaration of
acceleration, and interest on such unpaid principal at the rate or
rates prescribed therefor in such Debt Securities;
(C) to the extent that payment of such interest is lawful, interest on
overdue interest at the rate or rates prescribed therefor in such Debt
Securities; and
(D) all sums paid or advanced by the Trustee thereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Debt Securities of that series
(or of all series, as the case may be), other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on Debt
Securities of that series (or of all series, as the case may be) which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513 of the Indentures.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Debt Securities because of an Event of
Default specified in clause (7) of the first paragraph of this section shall
have occurred and be continuing, such declaration of acceleration shall be
automatically annulled if the Debt that is the subject of such Event of Default
has been discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Debt, and written notice of such discharge or
rescission, as the case may be, shall have been given to the Trustee by the
Company and countersigned by the holders of such Debt or a trustee, fiduciary
or agent for such holders, within 30 days after such declaration of
acceleration in respect of the Debt Securities, and no other Event of Default
has occurred during such 30-day period which has not been cured or waived
during such period. (Section 502 of each Indenture)
Subject to Section 502 of each Indenture, the Holders of not less than
a majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all the Debt Securities of such series waive
any past default described in clause (1), (2), (3), (4), (7), or (8) of the
first paragraph of this section (or, in the case of a default described in
clause (5) or (6) of the first paragraph of this section, the Holders of not
less than a majority in principal amount of all Outstanding Debt Securities may
waive any such past default), and its consequences, except a default (i) in
respect of the payment of the principal of (or premium, if any, on) or interest
on any Debt Security or any related coupon, or (ii) in respect of a covenant or
provision which under the Indentures cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 513 of each Indenture)
Upon any such waiver, any such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of the Indentures; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. (Section 513 of each Indenture)
No Holder of any Debt Security of any series or any related coupons
shall have any right to institute any proceeding, judicial or otherwise, with
respect to the Indentures, or for the appointment of a receiver or trustee, or
for any other remedy thereunder, unless (i) such Holder has previously given
written notice to the Trustee of a continuing Event of Default with respect to
the Debt Securities of that series; (ii) the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series
9
in the case of any Event of Default under clause (1), (2), (3), (4), (7) or (8)
of the first paragraph of this section, or, in the case of any Event of Default
described in clause (5) or (6) of the first paragraph of this section, the
Holders of not less than 25% in principal amount of all Outstanding Debt
Securities, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
under each of the Indentures; (iii) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request; (iv) the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding; and (v) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority or more in principal amount of the Outstanding Debt
Securities of that series in the case of any Event of Default described in
clause (1), (2), (3), (4), (7) or (8) of the first paragraph of this section,
or, in the case of any Event of Default described in clause (5) or (6) of the
first paragraph of this section, by the Holders of a majority or more in
principal amount of all Outstanding Debt Securities. (Section 507 of each
Indenture)
During the existence of an Event of Default, the Trustee is required
to exercise such rights and powers vested in it under either Indenture in good
faith. Subject to the provisions of the Indentures relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee under the Indentures is not under any obligation to exercise any of its
rights or powers under the Indentures at the request or direction of any of the
Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, with respect to the Debt Securities of any series, the Holders of
not less than a majority in principal amount of the Outstanding Debt Securities
of such series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under the Indentures.
Within 90 days after the occurrence of any Default with respect to
Debt Securities of any series, the Trustee shall transmit in the manner and to
the extent provided in TIA Section 313(c), notice of such Default known to the
Trustee, unless such Default shall have been cured or waived; provided,
however, that, except 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 such series,
or in the payment of any sinking fund installment with respect to Debt
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders of Debt Securities of such series and any related coupons; and provided
further that, in the case of any Default of the character specified in clause
(7) of the first paragraph of this section with respect to Debt Securities of
such series, no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
The Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a brief certificate of the Company's
compliance with all of the conditions and covenants under the Indentures.
DEFEASANCE OR COVENANT DEFEASANCE OF THE INDENTURES
The Indentures will provide that the Company may, at its option and at
any time, terminate the obligations of the Company with respect to the
Outstanding Debt Securities of any series ("defeasance"). Such defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Debt Securities and any related
coupons, except for the following which shall survive until otherwise
terminated or discharged under the Indentures: (A) the rights of Holders of
such Outstanding Debt Securities and any related coupons (i) to receive, solely
from the trust fund described in the Indentures, payments in respect of the
principal of (and premium, if any, on) and interest on such Debt Securities and
any related coupons when such payments are due, and (ii) to receive shares of
common stock or other Securities from the Company upon conversion of any
convertible Debt Securities issued thereunder, (B) the Company's obligations to
issue temporary Debt Securities, register the transfer or exchange of any Debt
Securities, replace mutilated, destroyed, lost or stolen Debt Securities,
maintain an office or agency for payments in respect of the Debt Securities
and, if the Company acts as its own Paying Agent, hold in trust, money to be
paid to such Persons entitled to payment, and with respect to Additional
Amounts, if any, on such Debt Securities as contemplated in the Indentures, (C)
the rights, powers, trusts, duties and immunities of the Trustee under the
Indentures and (D) the defeasance provisions of the Indentures. With respect to
Subordinated Debt Securities, money and securities held in trust pursuant to
the Defeasance and Covenant Defeasance provisions described herein, shall not
be subject to the subordination provisions of the Subordinated Indenture. In
addition, the Company may, at its option and at any time, elect to terminate
the obligations of the Company with respect to certain covenants that are set
forth in the Indentures, some of which are described in the "Certain Covenants"
section above, and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Debt Securities
("covenant defeasance"). (Section 1403 of each Indenture)
In order to exercise either defeasance or covenant defeasance:
10
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee, in trust, for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Debt Securities and any related coupons, (A)
money in an amount (in such Currency in which such Debt Securities and any
related coupons are then specified as payable at Stated Maturity), or (B)
Government Obligations applicable to such Debt Securities (determined on the
basis of the Currency in which such Debt Securities are then specified as
payable at Stated Maturity) which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment of principal
(including any premium) and interest, if any, under such Debt Securities and
any related coupons, money in an amount or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants to pay and discharge (i) the principal of (and premium, if
any, on) and interest on the Outstanding Debt Securities and any related
coupons on the Stated Maturity (or Redemption Date, if applicable) of such
principal (and premium, if any) or installment or interest and (ii) any
mandatory sinking fund payments or analogous payments applicable to the
Outstanding Debt Securities and any related coupons on the day on which such
payments are due and payable in accordance with the terms of the Indentures and
of such Debt Securities and any related coupons; provided that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds of
such Government Obligations to said payments with respect to such Debt
Securities and any related coupons. Before such a deposit, the Company may give
to the Trustee, in accordance with certain redemption provisions in the
Indentures, a notice of its election to redeem all or any portion of such
Outstanding Debt Securities at a future date in accordance with the terms of
the Debt Securities of such series and the redemption provisions of the
Indentures, which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing; and
(2) no Default or Event of Default with respect to the Debt Securities
and any related coupons shall have occurred and be continuing on the date of
such deposit or, insofar as the Event of Default described in clauses (5) and
(6) of the Events of Default section above are concerned, at any time during
the period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period); (3) such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a default under, the
Indentures or any other material agreement or instrument to which the Company
is a party or by which it is bound; (4) in the case of a defeasance, the
Company shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (y) since the Issue Date, there has been a change
in the applicable federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of the
Outstanding Debt Securities and any related coupons will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had not
occurred; (5) in the case of a covenant defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders
of the Outstanding Debt Securities and any related coupons will not recognize
income, gain or loss for federal income tax purposes as a result of such
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such covenant defeasance had not occurred; (6) notwithstanding any other
provisions of the defeasance and covenant defeasance provisions of the
Indentures, such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or limitations
in connection therewith pursuant to Section 301 of the Indentures; and (7) the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent under the
Indentures to either defeasance or covenant defeasance, as the case may be,
have been complied with. (Section 1404 of each Indenture)
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SATISFACTION AND DISCHARGE
The Indentures shall upon Company Request cease to be of further
effect with respect to any series of Debt Securities (except as to any
surviving rights of registration of transfer or exchange of Debt Securities of
such series herein expressly provided for and the obligation of the Company to
pay any Additional Amounts as contemplated by Section 1005 of each Indenture)
and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such Indenture as to
such series when (1) either (A) all Debt Securities of such series theretofore
authenticated and delivered and all coupons, if any, appertaining thereto
(other than (i) coupons appertaining to Bearer Securities surrendered for
exchange for Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section 305 of the
Indentures, (ii) Debt Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 306 of the Indentures, (iii) coupons appertaining to Debt Securities
called for redemption and maturing after the relevant Redemption Date, whose
surrender has been waived as provided in Section 1106 of the Indentures, and
(iv) Debt Securities and coupons of such series for whose payment money has
theretofore been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 1003 of the Indentures) have been delivered to
the Trustee for cancellation; or (B) all Debt Securities of such series and, in
the case of (i) or (ii) below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) if redeemable at the option of the Company, are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company, and the Company, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount, in the Currency in which the
Debt Securities of such series are payable, sufficient to pay and discharge the
entire indebtedness on such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Debt Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder
by the Company; and (3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of the
Indentures as to such series have been complied with. (Section 401 of each
Indenture)
AMENDMENTS AND WAIVERS
The Indentures will provide that at any time and from time to time,
the Company and the Trustee may, without the consent of any holder of Debt
Securities, enter into one or more indentures supplemental thereto for certain
specified purposes, including, among other things, (i) to cure ambiguities,
defects or inconsistencies, or to make any other provisions with respect to
questions or matters arising under the Indentures (provided that such action
shall not adversely affect the interests of the Holders in any material
respect), (ii) to effect or maintain the qualification of the Indentures under
the Trust Indenture Act, or (iii) to evidence the succession of another person
to the Company and the assumption by any such successor of the obligations of
the Company in accordance with the Indentures and the Debt Securities. (Section
901 of each Indenture). Other amendments and modifications of the Indentures or
the Debt Securities may be made by the Company and the Trustee with the consent
of the holders of not less than a majority of the aggregate principal amount of
all of the then Outstanding Debt Securities of any Series; provided, however,
that no such modification or amendment may, without the consent of the holder
of each Outstanding Debt Security affected thereby, (1) change the Stated
Maturity of the principal of, or any installment of interest on, any Debt
Security or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or change any obligation of
the Company to pay Additional Amounts contemplated by Section 1005 of each
Indenture (except as contemplated and permitted by certain provisions of the
Indentures), or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 of the Indentures
of the amount thereof provable in bankruptcy pursuant to Section 504 of the
Indentures, or adversely affect any right of repayment at the option of any
Holder of any Debt Security, or change any Place of Payment where, or the
Currency in which, any Debt Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption
or repayment at the option of the Holder, on or after the Redemption Date or
Repayment Date, as the case may be), or adversely affect any right to convert
or manage any Debt Securities as may be provided pursuant to Section 301 of the
Indentures, or (2) reduce the percent in principal amount of the Outstanding
Debt Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, for any waiver of compliance with certain
provisions of the Indentures or certain defaults thereunder and their
consequences provided for in the Indentures, or reduce the requirements for
quorum or voting.
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GOVERNING LAW
The Indentures and the Debt Securities will be governed by and
construed in accordance with the laws of the State of New York. The Indentures
are subject to the provisions of the Trust Indenture Act that are required to
be a part thereof and shall, to the extent applicable, be governed by such
provisions.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indentures.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Capital Stock" means any and all shares, interests, participations, rights or
equivalents (however designated) of corporate stock of the Company or any
Principal Subsidiary.
"Company Request" or "Company Order" means a written request or order signed in
the name of the Company by its Chairman, its President, any Vice President, its
Treasurer or an Assistant Treasurer, and delivered to the Trustee.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.
"Fair Market Value" means the fair market value of the item in question as
determined by the Board of Directors acting in good faith and in exercise of
its fiduciary duties.
"Holder" means a Person in whose name a Debt Security is registered in the
Security Register.
"Interest Payment Date" means the Stated Maturity of an installment of interest
on the Debt Securities.
"Issue Date" means the date of first issuance of the Debt Securities under
either Indenture.
"Maturity", when used with respect to any Debt Securities, means the date on
which the principal of such Debt Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for
the Company, including an employee of the Company, and who shall be acceptable
to the Trustee.
"Original Issue Discount Security" means any Debt Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 of
the Indentures.
"Outstanding", when used with respect to Debt Securities, means, as of the date
of determination, all Debt Securities theretofore authenticated and delivered
under the Indentures, except:
(i) Debt Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Debt Securities, or portions thereof, for whose payment, money in
the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Debt Securities;
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(iii) Debt Securities, except to the extent provided in the
"Defeasance or Covenant Defeasance of the Indentures" section, with
respect to which the Company has effected defeasance and/or covenant
defeasance as provided in the Indenture; and
(iv) Mutilated, destroyed, lost or stolen Debt Securities which have
become or are about to become due and payable which have been paid
pursuant to Section 306 of the Indentures or in exchange for or in
lieu of which other Debt Securities have been authenticated and
delivered pursuant to the Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are held by
a bona fide purchaser in whose hands the Debt Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Debt Securities have given any request, demand,
authorization, direction, notice, consent or waiver under the Indentures, and
for the purpose of making the calculations required by TIA Section 313, Debt
Securities owned by the Company or any other obligor upon the Debt Securities
or any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in making such calculation or in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Debt
Securities which the Trustee knows to be so owned shall be so disregarded. Debt
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debt Securities and that the
pledgee is not the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person (including the Company acting as Paying Agent)
authorized by the Company to pay the principal of (and premium, if any, on) or
interest on any Debt Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Rolling Period" shall mean with respect to any fiscal quarter, such fiscal
quarter and the three immediately preceding fiscal quarters considered as a
single accounting period.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305 of the Indenture.
"Stated Maturity", when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date specified
in such Debt Security as the fixed date on which the principal of such Debt
Security or such installment of principal or interest is due and payable.
"Subsidiary" means any corporation of which at the time of determination the
Company, directly and/or indirectly through one or more Subsidiaries, owns more
than 50% of the Voting Stock.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which the Indentures were executed, except that any
supplemental indenture executed pursuant to the Indentures shall conform to the
requirements of the Trust Indenture Act as in effect on the date of execution
thereof.
"Trustee" means The Bank of Nova Scotia Trust Company of New York until a
successor Trustee shall have become such pursuant to the applicable provisions
of the Indentures, and thereafter "Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company or the Trustee, means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or
not at the time stock of any other class or
14
classes shall have or might have voting power by reason of the happening of any
contingency).
GENERAL DESCRIPTION OF CAPITAL STOCK
The following description of the Company's capital stock does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the more complete descriptions thereof set forth in the Company's
Amended and Restated Certificate of Incorporation (the "Certificate"), and
Amended and Restated By-laws (the "By-laws") which documents are exhibits to
this Registration Statement.
The Company is authorized to issue up to 2,000,000,000 shares of
Common Stock, par value $.01 per share, and up to 10,000,000 shares of
Preferred Stock, par value $1.00 per share. As of January 15, 1998, there were
839,992,974 shares of Common Stock and no shares of Preferred Stock outstanding.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The following summary contains a description of certain general terms
of the Company's Preferred Stock. The particular terms of any series of
Preferred Stock that may be offered will be described in the applicable
Prospectus Supplement. If so indicated in a Prospectus Supplement, the terms of
any such series may differ from the terms set forth below. The summary of terms
of the Preferred Stock does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the Certificate and
the Certificate of Designation (the "Certificate of Designation") relating to a
particular series of offered Preferred Stock which is or will be in the form
filed or incorporated by reference as an exhibit to the Registration Statement
of which this Prospectus is a part at or prior to the time of the issuance of
such series of Preferred Stock.
The Board of Directors of the Company has the power, without further
action by the shareholders, to issue Preferred Stock in one or more series,
with such designations of series, dividend rates, redemption provisions,
special or relative rights in the event of liquidation, dissolution,
distribution or winding up of the Company, sinking fund provisions, conversion
or exchange provisions, voting rights thereof and other preferences,
privileges, powers, rights, qualifications, limitations and restrictions, as
shall be set forth as and when established by the Board of Directors of the
Company. The shares of any series of Preferred Stock will be, when issued,
fully paid and non-assessable and holders thereof will have no preemptive
rights in connection therewith.
RANK
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Preferred Stock, each series of Preferred Stock will rank
on parity as to dividends and liquidation rights in all respects with each
other series of Preferred Stock.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefor, cash dividends at such rates and on such
dates as are set forth in the Prospectus Supplement relating to such series of
Preferred Stock. Different series of the Preferred Stock may be entitled to
dividends at different rates or based upon different methods of determination.
Such rates may be fixed or variable or both. Each such dividend will be payable
to the holders of record as they appear on the stock books of the Company on
such record dates as will be fixed by the Board of Directors of the Company or
a duly authorized committee thereof. Dividends on any series of the Preferred
Stock may be cumulative or noncumulative, as provided in the Prospectus
Supplement relating thereto.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the holders of each series of Preferred Stock
will be entitled to receive out of assets of the Company available for
distribution to stockholders, before any distribution of assets is made to
holders of Common Stock or any other class of stock ranking junior to such
series of the Preferred Stock upon liquidation, liquidating distributions in
the amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock plus an amount equal to accrued and unpaid dividends for the
then current dividend period and, if such series of the Preferred Stock is
cumulative, for all dividend periods prior thereto, all as set forth in the
Prospectus Supplement with respect to such series of Preferred Stock.
15
REDEMPTION
The terms, if any, on which shares of a series of Preferred Stock may
be subject to optional or mandatory redemption, in whole or in part, will be
set forth in the Prospectus Supplement relating to such series.
CONVERSION AND EXCHANGE
The terms, if any, on which shares of a series of Preferred Stock are
convertible into another series of Preferred Stock or Common Stock or
exchangeable for another series of Preferred Stock or Common Stock will be set
forth in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion, either mandatory, at the option of the holder, or at
the option of the Company, in which case the number of shares of another series
of Preferred Stock or Common Stock to be received by the holders of such series
of Preferred Stock would be calculated as of a time and in the manner stated in
such Prospectus Supplement.
TRANSFER AGENT AND REGISTRAR
The transfer agent, registrar and dividend disbursement agent for each
series of Preferred Stock will be designate in the applicable Prospectus
Supplement. The registrar for shares of each series of Preferred Stock will
send notices to shareholders of any meetings at which holders of the Preferred
Stock have the right to elect directors of the Company or to vote on any other
matter.
VOTING RIGHTS
The holders of Preferred Stock of a series offered hereby will not be
entitled to vote except as indicated in the Prospectus Supplement relating to
such series of Preferred Stock or as required by applicable law.
DESCRIPTION OF COMMON STOCK
GENERAL
Subject to the rights of the holders of any shares of the Company's
Preferred Stock which may at the time be outstanding, holders of Common Stock
are entitled to such dividends as the Board of Directors may declare out of
funds legally available therefor. The holders of Common Stock will possess
exclusive voting rights in the Company, except to the extent the Board of
Directors specifies voting power with respect to any Preferred Stock issued.
Except as hereinafter described, holders of Common Stock are entitled to one
vote for each share of Common Stock, but will not have any right to cumulate
votes in the election of directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to receive,
after payment of all of the Company's debts and liabilities and of all sums to
which holders of any Preferred Stock may be entitled, the distribution of any
remaining assets of the Company. Holders of the Common Stock will not be
entitled to preemptive rights with respect to any shares which may be issued.
Any shares of Common Stock sold hereunder will be fully paid and non-assessable
upon issuance against full payment of the purchase price therefor. The Common
Stock is listed on the New York Stock Exchange under the symbol "CD."
CERTAIN PROVISIONS
The provisions of the Company's Certificate and By-Laws which are
summarized below may be deemed to have an anti-takeover effect and may delay,
defer or prevent a tender offer or takeover attempt that a stockholder might
consider in such stockholder's best interest, including those attempts that
might result in a premium over the market price for the shares held by
stockholders.
CLASSIFIED BOARD
The Board of Directors is divided into three classes that are elected
for staggered three-year terms. A director may be removed by the stockholders
without cause only by the affirmative vote of the holders, voting as a single
class, of 80% or more of the total number of votes entitled to be cast by all
holders of the voting stock, which shall include all capital stock of the
Company which by its terms may vote on all matters submitted to stockholders of
the Company generally. The size of the Board of Directors was set by resolution
at 30 and pursuant to the By-Laws (i) until the third anniversary of the
consummation of the merger of HFS and CUC (the "Effective Time"), an
affirmative vote of 80% of the entire Board of Directors will be required in
order to change the number of directors, and (ii) a quorum, at any meeting of
the Board of Directors, shall consist of a majority of the entire Board of
Directors.
16
COMMITTEES OF THE BOARD OF DIRECTORS
Pursuant to the Certificate, the Board of Director's authority to
designate committees shall be subject to the provisions of the By-Laws.
Pursuant to the By-Laws, the Board of Directors shall have the following
committees: (i) an Executive Committee consisting of four CUC Directors (as
defined below) and four HFS Directors (as defined below) and whose Chairman
shall be the Chairman of the Board; (ii) a Compensation Committee consisting of
two CUC Directors and two HFS Directors and whose Chairman shall be an HFS
Director; and (iii) an Audit Committee consisting of two CUC Directors and two
HFS Directors and whose Chairman shall be a CUC Director. The Board of
Directors may designate one or more directors as alternate members of any
committee to fill any vacancy on a committee and to fill a vacant chairmanship
of a committee occurring as a result of a member or chairman leaving the
committee, whether through death, resignation, removal or otherwise. Until the
third anniversary of the Effective Time, the affirmative vote of 80% of the
entire Board of Directors will be required in order to remove a director from a
committee, change the chairmanship of a committee, designate an alternate
member to any committee, designate any additional committee, or amend, modify
or repeal or adopt any provision inconsistent with the provisions described
herein.
The term "HFS Director" means (A) any person serving as a Director of
HFS on May 27, 1997 (or any person appointed by the Board of Directors of HFS
after May 27, 1997 to fill a vacancy on the HFS Board of Directors created
other than due to an increase in the size of the Board of Directors of HFS) who
continues as a Director of the Company at the Effective Time and (B) any person
who becomes a Director of the Company and who was designated as such by the
remaining HFS Directors prior to his or her election; and the term "CUC
Director" means (A) any person serving as a Director of the Company on May 27,
1997 (or any person appointed by the Board of Directors of the Company after
May 27, 1997 but prior to the Effective Time to fill a vacancy on the Board of
Directors created other than due to an increase in the size of the Board of
Directors) who continues as a Director of the Company at the Effective Time,
(B) any of the four persons designated by the CUC Directors to become a
Director of the Company at the Effective Time and (C) any person who becomes
Director of the Company and who was designated as such by the remaining CUC
Directors prior to his or her election.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Pursuant to the By-Laws, until the third anniversary of the Effective
Time, the Board of Directors will delegate to the Executive Committee the full
and exclusive power and authority to nominate directors for election to the
Board of Directors at the next stockholders' meetings at which directors are to
be elected, elect directors to fill vacancies on the Board of Directors between
stockholders' meetings and fill vacancies on any committee of the Board of
Directors to the extent an alternate member has not been previously designated.
Such nominations and elections of directors and members of committees shall be
undertaken by the Executive Committee such that (i) the number of HFS Directors
and CUC Directors on the Board of Directors or any committee of the Board of
Directors shall be equal and (ii) the remaining HFS Directors (if the number of
HFS Directors is less than the number of CUC Directors) or the remaining CUC
Directors (if the number of CUC Directors is less than the number of HFS
Directors) shall designate the person to be nominated or elected. Any
resolution regarding such election or nomination as described above in a manner
that (a) is consistent with the two preceding sentences will require the
approval by only three members of the Executive Committee (or only two members
if there are then two vacancies on the Executive Committee) or (b) is
inconsistent with the two preceding sentences will require approval by at least
seven members of the Executive Committee. Until the third anniversary of the
Effective Time, the affirmative vote of at least 80% of the entire Board of
Directors shall be required in order for the Board of Directors to amend,
modify or repeal, or adopt any provision inconsistent with, the provisions of
the By-Laws described herein.
OFFICERS
Pursuant to the By-Laws, Walter A. Forbes shall be the Chairman of the
Board from and after the Effective Time and until January 1, 2000, at which
time Henry R. Silverman will be the Chairman of the Board. If, for any reason
Mr. Forbes ceases to serve as Chairman of the Board prior to January 1, 2000
and at such time Mr. Silverman is President and Chief Executive Officer, Mr.
Silverman shall become Chairman of the Board. Mr. Silverman will be President
and Chief Executive Officer from and after the Effective Time and until January
1, 2000, at which time Mr. Forbes will be President and Chief Executive
Officer. If, for any reason Mr. Silverman ceases to serve as President and
Chief Executive Officer prior to January 1, 2000 and at such time Mr. Forbes is
Chairman of the Board, Mr. Forbes shall become President and Chief Executive
Officer. Until January 1, 2002, the affirmative vote of 80% of the entire Board
of Directors shall be required in order for the Board to (i) amend, modify,
repeal or adopt any provision inconsistent with the provisions described
herein, (ii) remove Mr. Forbes or Mr. Silverman from the positions specifically
provided for in their employment agreements with the Company and HFS,
respectively, (iii) modify either of the respective roles, duties or authority
of Messrs. Forbes and Silverman.
17
SPECIAL MEETINGS OF STOCKHOLDERS
A special meeting of stockholders may be called only by the Chairman
of the Board of Directors, the President or the Board of Directors pursuant to
a resolution approved by a majority of the entire Board of Directors.
QUORUM AT STOCKHOLDER MEETINGS
The holders of one-third of the shares entitled to vote at any meeting
of the stockholders, present in person or by proxy, shall constitute a quorum
at all stockholder meetings.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Stockholder action by written consent in lieu of a meeting is
prohibited under the Certificate. As a result, stockholder action can be taken
only at an annual or special meeting of stockholders. This prevents the holders
of a majority of the outstanding voting stock of the Company from using the
written consent procedure to take stockholder action without giving all the
stockholders of the Company entitled to vote on a proposed action the
opportunity to participate in determining the proposed action.
ADVANCE NOTICE OF STOCKHOLDER--PROPOSED BUSINESS AT ANNUAL MEETINGS
The By-Laws provide that for business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days nor more than
90 days prior to the meeting; provided, however, that in the event that less
than 70 days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the tenth day following the
date on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary must set
forth as to each matter the stockholder proposes to bring before the annual
meeting; (i) a brief description of the business desired to be brought before
the annual meeting, (ii) the name and address, as they appear on the Company's
books, of the stockholder proposing such business, (iii) the class and number
of shares of the Company which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business.
In addition, the By-Laws provide that for a stockholder to properly
nominate a director at a meeting of stockholders, the stockholder must have
given timely notice thereof in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company (i) in the case of an annual
meeting, at least 90 days prior to the date of the last annual meeting of the
Company stockholders and (ii) with respect to a special meeting of
stockholders, the close of business on the 10th day following the date on which
notice of such meeting is first given to stockholders. Such stockholder's
notice to the Secretary must set forth: (i) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated, (ii) a representation that the stockholder is holder of record of
Common Stock and intends to appear in person or by proxy at the meeting to
nominate each such nominee, (iii) a description of all arrangements between
such stockholder and each nominee, (iv) such other information with respect to
each nominee as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Commission, and (v) the consent of each
nominee to serve as director of the Company if so elected.
AMENDMENT OF GOVERNING DOCUMENTS
In addition to the provisions of the Certificate which require a
super-majority of stockholders to approve certain amendments to the Certificate
and the By-Laws, the By-Laws require the affirmative vote of 80% of the entire
Board of Directors in order for the Board of Directors to adopt certain
amendments to the By-Laws as described under "--Board of Directors,"
"--Committees of the Board of Directors," "Newly Created Directorships and
Vacancies" and "--Officers."
FAIR PRICE PROVISIONS
Under the Delaware General Corporation Law and the Certificate, an
agreement of merger, sale, lease or exchange of all or substantially all of the
Company's assets must be approved by the Board of Directors and adopted by the
holders of a majority of the outstanding shares of stock entitled to vote
thereon. However, the Certificate includes what generally is referred to as a
"fair price provision," which requires the affirmative vote of the holders of
at least 80% of the outstanding shares of capital stock entitled to vote
generally in the election of the Company's directors, voting together as a
single class, to approve certain business combination transactions (including
certain mergers, recapitalization and the issuance or transfer of securities of
the Company or a subsidiary having
18
an aggregate fair market value of $10 million or more) involving the Company or
a subsidiary and an owner or any affiliate of an owner of 5% or more of the
outstanding shares of capital stock entitled to vote, unless either (i) such
business combination is approved by a majority of disinterested directors, or
(ii) the shareholders receive a "fair price" for their securities and certain
other procedural requirements are met. The Certificate provides that this
provision may not be repealed or amended in any respect except by the
affirmative vote of the holders of not less than 80% of the outstanding shares
of capital stock entitled to vote generally in the election of directors.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants to purchase Debt Securities, Preferred
Stock, Common Stock or any combination thereof, and such Warrants may be issued
independently or together with any such Securities and may be attached to or
separate from such Securities. Each series of Warrants will be issued under a
separate warrant agreement (each a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Warrants of
each such series and will not assume any obligation or relationship of agency
for or with holders or beneficial owners of Warrants. The following sets forth
certain general terms and provisions of the Warrants offered hereby. Further
terms of the Warrants and the applicable Warrant Agreement will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any
Warrants in respect of which this Prospectus is being delivered, including the
following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including composite currencies, in which the price
of such Warrants may be payable; (v) the designation and terms of the
Securities (other than Preferred Securities and Common Securities) purchasable
upon exercise of such Warrants; (vi) the price at which and the currency or
currencies, including composite currencies, in which the Securities (other than
Preferred Securities and Common Securities) purchasable upon exercise of such
Warrants may be purchased; (vii) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (viii)
whether such Warrants will be issued in registered form or bearer form; (ix) if
applicable, the minimum or maximum amount of such Warrants which may be
exercised at any one time; (x) if applicable, the designation and terms of the
Securities (other than Preferred Securities and Common Securities) with which
such Warrants are issued and the number of such Warrants issued with each such
Security; (xi) if applicable, the date on and after which such Warrants and the
related Securities (other than Preferred Securities and Common Securities) will
be separately transferable; (xii) information with respect to book-entry
procedures, if any; (xiii) if applicable, a discussion of certain United States
Federal income tax considerations; and (xiv) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
DESCRIPTION OF PREFERRED SECURITIES OF THE CENDANT TRUSTS
GENERAL
Each Cendant Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Cendant Trust authorizes the Regular
Trustees of such Cendant Trust to issue on behalf of such Cendant Trust one
series of Preferred Securities. Each Declaration will be qualified as an
indenture under the Trust Indenture Act. The Institutional Trustee, an
independent trustee, will act as indenture
19
trustee for the Preferred Securities for purposes of compliance with the
provisions of the Trust Indenture Act. The Preferred Securities will have such
terms, including distributions, redemption, voting, liquidation rights and such
other preferred, deferred or other special rights or such restrictions as shall
be established by the Regular Trustees in accordance with the applicable
Declaration or as shall be set forth in the Declaration or made part of the
Declaration by the Trust Indenture Act. Reference is made to any Prospectus
Supplement relating to the Preferred Securities of a Cendant Trust for specific
terms of the Preferred Securities, including, to the extent applicable, (i) the
distinctive designation of such Preferred Securities, (ii) the number of
Preferred Securities issued by such Cendant Trust, (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
issued by such Cendant Trust and the date or dates upon which such
distributions shall be payable (provided, however, that distributions on such
Preferred Securities shall, subject to any deferral provisions, and any
provisions for payment of defaulted distributions, be payable on a quarterly
basis to holders of such Preferred Securities as of a record date in each
quarter during which such Preferred Securities are outstanding), (iv) any right
of such Cendant Trust to defer quarterly distributions on the Preferred
Securities as a result of an interest deferral right exercised by the Company
on the Subordinated Debt Securities held by such Cendant Trust; (v) whether
distributions on Preferred Securities shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities shall be cumulative, (vi) the amount or amounts which
shall be paid out of the assets of such Cendant Trust to the holders of
Preferred Securities upon voluntary or involuntary dissolution, winding-up or
termination of such Cendant Trust, (vii) the obligation or option, if any, of
such Cendant Trust to purchase or redeem Preferred Securities and the price or
prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities shall be purchased or redeemed, in
whole or in part, pursuant to such obligation or option with such redemption
price to be specified in the applicable Prospectus Supplement, (viii) the
voting rights, if any, of Preferred Securities in addition to those required by
law, including the number of votes per Preferred Security and any requirement
for the approval by the holders of Preferred Securities as a condition to
specified action or amendments to the Declaration, (ix) the terms and
conditions, if any, upon which Subordinated Debt Securities held by such
Cendant Trust may be distributed to holders of Preferred Securities, and (x)
any other relevant rights, preferences, privileges, limitations or restrictions
of Preferred Securities consistent with the Declaration or with applicable law.
All Preferred Securities offered hereby will be guaranteed by the Company to
the extent set forth below under "Description of Trust Guarantees." The Trust
Guarantee issued to each Cendant Trust, when taken together with the Company's
back-up undertakings, consisting of its obligations under each Declaration
(including the obligation to pay expenses of each Cendant Trust), the
applicable Indenture and any applicable supplemental indentures thereto and the
Subordinated Debt Securities issued to any Cendant Trust will provide a full
and unconditional guarantee by the Company of amounts due on the Preferred
Securities issued by each Cendant Trust. The payment terms of the Preferred
Securities will be the same as the Subordinated Debt Securities issued to the
applicable Cendant Trust by the Company.
Each Declaration authorizes the Regular Trustees to issue on behalf of
the applicable Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be established by the Regular Trustees in accordance with
the Declaration or as shall otherwise be set forth therein. The terms of the
Common Securities issued by each Cendant Trust will be substantially identical
to the terms of the Preferred Securities issued by such Cendant Trust, and the
Common Securities will rank pari passu, and payments will be
20
made thereon pro rata, with the Preferred Securities except that, if an event
of default under such Declaration has occurred and is continuing, the rights of
the holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. The Common Securities will
also carry the right to vote and to appoint, remove or replace any of the
Cendant Trustees of such Cendant Trust. All of the Common Securities of each
Cendant Trust will be directly or indirectly owned by the Company.
The financial statements of any Cendant Trust that issues Preferred
Securities will be reflected in the Company's consolidated financial statements
with the Preferred Securities shown as Company-obligated mandatorily-redeemable
preferred securities of a subsidiary trust under minority interest in
consolidated subsidiaries. In a footnote to the Company's audited financial
statements there will be included statements that the applicable Cendant Trust
is wholly-owned by the Company and that the sole asset of such Cendant Trust is
the Subordinated Debt Securities (indicating the principal amount, interest
rate and maturity date thereof).
DESCRIPTION OF TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust
Guarantees that will be executed and delivered by the Company for the benefit
of the holders, from time to time, of Preferred Securities. Each Trust
Guarantee will be qualified as an indenture under the Trust Indenture Act.
Unless otherwise specified in the applicable Prospectus Supplement, Wilmington
Trust Company will act as independent indenture trustee for Trust Indenture Act
purposes under each Trust Guarantee (the "Preferred Securities Guarantee
Trustee"). The terms of each Trust Guarantee will be those set forth in such
Trust Guarantee and those made part of such Trust Guarantee by the Trust
Indenture Act. The following summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the provisions of the
form of Trust Guarantee, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and the Trust
Indenture Act. Each Trust Guarantee will be held by the Preferred Securities
Guarantee Trustee for the benefit of the holders of the Preferred Securities of
the applicable Cendant Trust.
GENERAL
Unless otherwise specified in the applicable Prospectus Supplement,
pursuant to each Trust Guarantee, the Company will agree, to the extent set
forth therein, to pay in full to the holders of the Preferred Securities, the
Guarantee Payments (as defined below) (except to the extent paid by such
Cendant Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such Cendant Trust may have or assert. The following
payments or distributions with respect to the Preferred Securities (the
"Guarantee Payments"), to the extent not paid by such Cendant Trust, will be
subject to the Trust Guarantee (without duplication): (i) any accrued and
unpaid distributions that are required to be paid on such Preferred Securities,
to the extent such Cendant Trust shall have funds available therefor, (ii) the
redemption price, including all accrued and unpaid distributions to the date of
redemption (the "Redemption Price"), to the extent such Cendant Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by such Cendant Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such Cendant Trust (other than in
connection with such distribution of Subordinated Debt Securities to the
holders of
21
Preferred Securities or the redemption of all of the Preferred Securities upon
maturity or redemption of the Subordinated Debt Securities) the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid
distributions on such Preferred Securities to the date of payment, to the
extent such Cendant Trust has funds available therefor or (b) the amount of
assets of such Cendant Trust remaining for distribution to holders of such
Preferred Securities in liquidation of such Cendant Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of Preferred Securities or
by causing the applicable Cendant Trust to pay such amounts to such holders.
Each Trust Guarantee will not apply to any payment of distributions
except to the extent the applicable Cendant Trust shall have funds available
therefor. If the Company does not make interest or principal payments on the
Subordinated Debt Securities purchased by such Cendant Trust, such Cendant
Trust will not pay distributions on the Preferred Securities issued by such
Cendant Trust and will not have funds available therefore.
The Company has also agreed to guarantee the obligations of each
Cendant Trust with respect to the Common Securities (the "Common Guarantee")
issued by such Cendant Trust to the same extent as the Trust Guarantee, except
that, if an Event of Default under the Subordinated Indenture has occurred and
is continuing, holders of Preferred Securities under the Trust Guarantee shall
have priority over holders of the Common Securities under the Common Guarantee
with respect to distributions and payments on liquidation, redemption or
otherwise.
CERTAIN COVENANTS OF THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement, in
each Trust Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by the applicable Cendant Trust remain outstanding, if there
shall have occurred any event of default under such Trust Guarantee or under
the Declaration of such Cendant Trust, then (a) the Company will not declare or
pay any dividend on, make any distributions 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 (other than
into cash or other property) 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); (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
which rank junior to the Subordinated Debt Securities issued to the applicable
Cendant Trust and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to a Trust Guarantee).
22
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the
rights of holders of Preferred Securities (in which case no consent of such
holders will be required), each Trust Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation amount
of the outstanding Preferred Securities of such Cendant Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be set
forth in accompanying Prospectus Supplement. All guarantees and agreements
contained in a Trust Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities of the applicable Cendant Trust then
outstanding.
EVENTS OF DEFAULT
An event of default under a Trust Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder. The holders of a majority in liquidation amount of the Preferred
Securities to which such Trust Guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Securities Guarantee Trustee in respect of such Trust Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Securities Guarantee Trustee under such Trust Guarantee.
If the Preferred Securities Guarantee Trustee fails to enforce such
Trust Guarantee, any record holder of Preferred Securities to which such Trust
Guarantee relates may institute a legal proceeding directly against the Company
to enforce the Preferred Securities Guarantee Trustee's rights under such Trust
Guarantee without first instituting a legal proceeding against the applicable
Cendant Trust, the Preferred Securities Guarantee Trustee or any other person
or entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment under a Trust Guarantee, a record holder of Preferred
Securities to which such Trust Guarantee relates may directly institute a
proceeding against the Company for enforcement of such Trust Guarantee for such
payment to the record holder of the Preferred Securities to which such Trust
Guarantee relates of the principal of or interest on the applicable
Subordinated Debt Securities on or after the respective due dates specified in
the Subordinated Debt Securities, and the amount of the payment will be based
on the holder's pro rata share of the amount due and owing on all of the
Preferred Securities to which such Trust Guarantee relates. The Company has
waived any right or remedy to require that any action be brought first against
the applicable Cendant Trust or any other person or entity before proceeding
directly against the Company. The record holder in the case of the issuance of
one or more global Preferred Securities certificates will be The Depository
Trust Company acting at the direction of the beneficial owners of the Preferred
Securities.
The Company will be required to provide annually to the Preferred
Securities Guarantee Trustee a statement as to the performance by the Company
of certain of its obligations under each outstanding Trust Guarantee and as to
any default in such performance.
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
The Preferred Securities Guarantee Trustee, prior to the occurrence of
a default to a Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in such Trust Guarantee and, after default with respect
to such Trust Guarantee, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Preferred Securities Guarantee Trustee is under no
obligation to exercise any of the powers vested
23
in it by a Trust Guarantee at the request of any holder of Preferred Securities
to which such Trust Guarantee relates unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
TERMINATION
Each Trust Guarantee will terminate as to the Preferred Securities
issued by the applicable Cendant Trust upon full payment of the Redemption
Price of all Preferred Securities of such Cendant Trust, upon distribution of
the Subordinated Debt Securities held by such Cendant Trust to the holders of
all of the Preferred Securities of such Cendant Trust or upon full payment of
the amounts payable in accordance with the Declaration of such Cendant Trust
upon liquidation of such Cendant Trust. Each Trust Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities issued by the applicable Cendant Trust must
restore payment of any sums paid under such Preferred Securities or such Trust
Guarantee.
STATUS OF THE TRUST GUARANTEES
The Trust Guarantees will constitute an unsecured obligation of the
Company and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Company, including the Subordinated Debt Securities,
except those liabilities of the Company made pari passu or subordinate by their
terms, (ii) pari passu with the most senior preferred or preference stock now
or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company and (iii) senior to the Common Stock. The terms of
the Preferred Securities provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Trust Guarantee relating thereto.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under such Trust Guarantee
without instituting a legal proceeding against any other person or entity).
GOVERNING LAW
The Trust Guarantees will be governed by and construed in accordance
with the law of the State of New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, including contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock or Preferred Stock at a
future date or dates. The consideration per share of Common Stock or Preferred
Stock may be fixed at the time the Stock Purchase Contracts are issued or may
be determined by reference to a specific formula set forth in the Stock
Purchase Contracts. The Stock Purchase Contracts may be issued separately or as
a part of units ("Stock Purchase Units") consisting of a Stock Purchase
Contract and Debt Securities, Preferred Securities or debt obligations of third
24
parties, including U.S. Treasury securities, securing the holders' obligations
to purchase the Common Stock or Preferred Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require the Company to make
periodic payments to the holders of the Stock Purchase Units or vice versa, and
such payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
The applicable Prospectus Supplement will describe the terms of any
Stock Purchase Contracts or Stock Purchase Units. The description in the
Prospectus Supplement will not necessarily be complete, and reference will be
made to the Stock Purchase Contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to such Stock Purchase
Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
The Company may sell the Securities and the Cendant Trusts may sell
Preferred Securities being offered hereby in any of, or any combination of, the
following ways: (i) directly to purchasers; (ii) through agents; (iii) through
underwriters; and/or (iv) through dealers.
Offers to purchase Securities may be solicited directly by the Company
and/or a Cendant Trust or by agents designated by the Company and/or a Cendant
Trust from time to time. Any such agent, who may be deemed to be an underwriter
as that term is defined in the Securities Act, involved in the offer or sale of
Securities, will be named, and any commissions payable by the Company and/or a
Cendant Trust to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in a Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment (ordinarily
five business days or less).
If an underwriter or underwriters are utilized in the offer or sale of
Securities, the Company and/or the applicable Cendant Trust will execute an
underwriting agreement with such underwriters at the time of sale of such
Securities to such underwriters and the names of such underwriters and the
principal terms of the Company's and/or the applicable Cendant Trust's
agreement with such underwriters will be set forth in the appropriate
Prospectus Supplement.
If a dealer is utilized in the offer or sale of Securities, the
Company and/or the applicable Cendant Trust will sell such Securities to such
dealer, as principal. Such dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. The
name of such dealer and the principal terms of the Company's and/or the
applicable Cendant Trust's agreement with such dealer will be set forth in the
appropriate Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under agreements
with the Company and/or a Cendant Trust to indemnification by the Company
and/or a Cendant Trust against certain liabilities, including liabilities under
the Securities Act. Agents, dealers and underwriters may also be customers of,
engage in transactions with, or perform services for the Company in the
ordinary course of their business.
Underwriters, agents or their controlling persons may engage in
transactions with and perform services for the Company in the ordinary course
of business.
The place and time of delivery for Securities will be set forth in the
accompanying Prospectus Supplement for such Securities.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon on behalf of the Cendant Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP. The validity of the Securities
offered hereby by the Company will be passed on for the Company by Eric J.
Bock, Esq., Vice President - Legal of the Company. Mr. Bock holds shares of
Common Stock and options to acquire shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company and its
consolidated subsidiaries, except PHH Corporation ("PHH"), as of December 31,
1996 and January 31, 1996 and for the years ended December 31, 1996, January
31, 1996 and 1995 and CUC International Inc. ("CUC") as of January 31, 1997
and 1996 and for each of the three years in the period ended January 31, 1997
incorporated in this Prospectus by reference from the Company Form 8-K dated
January 29, 1998, have been audited by Deloitte & Touche LLP, as stated in
their report which is incorporated herein by reference. The financial
statements of PHH (consolidated with those of the Company) have been audited
by KPMG Peat Marwick LLP, independent auditors of PHH Corporation, as stated
in their report incorporated herein by reference. Their report contains an
explanatory paragraph that states that PHH adopted the provisions of Statement
of Financial Standards No. 122 "Accounting for Mortgage Service Rights" in the
year ended January 31, 1996. The consolidated financial statements of CUC
(consolidated with those of the Company) have been audited by Ernst & Young LLP,
as set forth in their report included in the Current Report on Form 8-K, dated
January 29, 1998 incorporated herein by reference, which, as to the years ended
January 31, 1996 and 1995, is based in part on the reports of Deloitte & Touche
LLP, independent auditors of Sierra On-Line, Inc., KPMG Peat Marwick LLP,
independent auditors of Davidson & Associates, Inc., and Price Waterhouse
LLP, independent accountants of Ideon Group, Inc. Such supplemental
consolidated financial statements of the Company and its consolidated
subsidiaries are incorporated by reference herein in reliance upon the
respective reports of such firms given upon their authority as experts in
accounting and auditing. All of the foregoing firms are independent auditors.
25
The consolidated financial statements of Avis Rent A Car, Inc.
incorporated in this Prospectus by reference from the Current Report on
Form 8-K, dated February 6, 1998, filed by Cendant Corporation have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission
Registration Fee....................................... $1,180,000
Trustee's Expenses..................................... 25,000
*Accounting Fees and Expenses.......................... 50,000
*Legal Fees and Expenses............................... 50,000
*Miscellaneous......................................... 20,000
----------
Total Expenses......................................... $1,325,000
------------
* 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 each Trust limits the liability to
the Trust and certain other persons and provides for the indeminification by
the Trust or the Company of Trustees, the Officers, other employees and certain
other persons.
II-1
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 idemnification
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.
II-2
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit No. Description
- ----------- -----------
1.1 Form of Underwriting Agreement (Standard Provisions) for Debt
Securities.*
1.2 Form of Underwriting Agreement (Standard Provisions) for Common
Stock.*
1.3 Form of Underwriting Agreement (Standard Provisions) for
Preferred Stock.*
1.4 Forms of Underwriting Agreement for Offering of Preferred
Securities, Stock Purchase Units, Stock Purchase Contracts,
Guarantees and Warrants.**
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 on Form S-4 of the Registrant, Registration No.
333-34517).
4.1 Form of Certificate for the Company's Common Stock, par value
$.01 per share.*
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.*
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.*
4.4 Certificate of Trust of Cendant Capital I.
4.5 Certificate of Trust of Cendant Capital II.
4.6 Certificate of Trust of Cendant Capital III.
4.7 Declaration of Trust of Cendant Capital I.
4.8 Declaration of Trust of Cendant Capital II.
4.9 Declaration of Trust of Cendant Capital III.
4.10 Form of Amended and Restated Declaration of Trust of Cendant
Capital I.
4.11 Form of Amended and Restated Declaration of Trust of Cendant
Capital II.
4.12 Form of Amended and Restated Declaration of Trust of Cendant
Capital III.
4.13 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital I.
4.14 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital II.
4.15 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital III.
4.16 Form of Warrant Agreement.**
4.17 Form of Preferred Securities.**
4.18 Form of Warrant.**
4.19 Form of Guarantee with respect to Preferred Securities.**
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 Ernst & Young LLP relating to the financial
statements of CUC International Inc.
23.3 Consent of KPMG Peat Marwick LLP related to the financial
statements of PHH Corporation.
23.4 Consent of Deloitte & Touche LLP relating to the financial
statements of Sierra On-Line, Inc.
23.5 Consent of Deloitte & Touche LLP relating to the financial
statements of Avis Rent A Car, Inc.
23.6 Consent of KPMG Peat Marwick LLP relating to the financial
statements of Davidson & Associates, Inc.
23.7 Consent of Price Waterhouse LLP relating to the financial
statements of Ideon Group, Inc.
23.8 Consent of Eric J. Bock (included in Exhibit 5.1).**
II-3
23.9 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.2).**
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 Senior Debt Securities.*
25.2 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 Subordinated Debt Securities.*
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Wilmington Trust Company, as Trustee under the
Declaration of Trust and Preferred Securities Guarantee of
Cendant Capital I, the Declaration of Trust and Preferred
Securities Guarantee of Cendant Capital II and the Declaration
of Trust and Preferred Securities Guarantee of Cendant
Capital III.**
* Previously filed.
** To be filed by amendment.
II-4
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 Parsippany, State of New Jersey, on
February 6, 1998.
CENDANT CORPORATION
By: /s/ James E. Buckman
---------------------------------
James E. Buckman
Senior Executive Vice President,
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
* Chairman of the Board February 6, 1998
- ------------------------
(Walter A. Forbes)
* President, Chief Executive February 6, 1998
- ------------------------ Officer and Director
(Henry R. Silverman)
* Vice Chairman, Chief Financial February 6, 1998
- ------------------------ Officer and Director
(Michael P. Monaco)
* Senior Vice President-Finance February 6, 1998
- ------------------------ (Chief Accounting Officer)
Scott E. Forbes
* Vice Chairman and Director February 6, 1998
- ------------------------
(Stephen P. Holmes)
* Vice Chairman and Director February 6, 1998
- ------------------------
(Robert D. Kunisch)
II-5
* Vice Chairman and Director February 6, 1998
- ----------------------------
(Christopher K. McLeod)
* Vice Chairman and Director February 6, 1998
- ----------------------------
(E. Kirk Shelton)
* Vice Chairman, Director February 6, 1998
- ---------------------------- and Secretary
(Robert T. Tucker)
/s/ James E. Buckman Senior Executive Vice February 6, 1998
- ---------------------------- President, General Counsel
(James E. Buckman) and Director
* Director February 6, 1998
- ----------------------------
(John D. Snodgrass)
* Director February 6, 1998
- ----------------------------
(Bartlett Burnap)
* Director February 6, 1998
- ----------------------------
(Leonard S. Coleman)
* Director February 6, 1998
- ----------------------------
(T. Barnes Donnelley)
* Director February 6, 1998
- ----------------------------
(Martin L. Edelman)
* Director February 6, 1998
- ----------------------------
(Frederick D. Green)
* Director February 6, 1998
- ------------------------
(Stephen A. Greyser)
* Director February 6, 1998
- ------------------------
(Dr. Carole G. Hankin)
* Director February 6, 1998
- ----------------------------
(The Rt. Hon. Brian Mulroney,
P.C., LL.D.)
II-6
* Director February 6, 1998
- ----------------------------
(Robert E. Nederlander)
* Director February 6, 1998
- ----------------------------
(Burton C. Perfit)
* Director February 6, 1998
- ----------------------------
(Anthony G. Petrello)
* Director February 6, 1998
- ----------------------------
(Robert W. Pittman)
* Director February 6, 1998
- ----------------------------
(E. John Rosenwald, Jr.)
* Director February 6, 1998
- ----------------------------
(Robert P. Rittereiser)
* Director February 6, 1998
- ----------------------------
(Stanley M. Rumbough, Jr.)
* Director February 6, 1998
- ----------------------------
(Leonard Schutzman)
* Director February 6, 1998
- ----------------------------
(Robert F. Smith)
* Director February 6, 1998
- ----------------------------
(Craig R. Stapleton)
/s/ James E. Buckman
- ----------------------------
James E. Buckman
(As Attorney-in-fact for
each of the persons
indicated)*
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Cendant
Capital I, Cendant Capital II and Cendant Capital III certify that they have
reasonable grounds to believe that they meet all of the requirements for filing
on Form S-3 and that they have duly caused this Registration Statement to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of Parsippany, State of New Jersey on February 6, 1998.
CENDANT CAPITAL I
By: /s/ Michael P. Monaco
--------------------------------
Michael P. Monaco, Trustee
By: /s/ James E. Buckman
--------------------------------
James E. Buckman, Trustee
CENDANT CAPITAL II
By: /s/ Michael P. Monaco
--------------------------------
Michael P. Monaco, Trustee
By: /s/ James E. Buckman
--------------------------------
James E. Buckman, Trustee
CENDANT CAPITAL III
By: /s/ Michael P. Monaco
--------------------------------
Michael P. Monaco, Trustee
By: /s/ James E. Buckman
--------------------------------
James E. Buckman, Trustee
II-8
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Form of Underwriting Agreement (Standard Provisions) for Debt
Securities.*
1.2 Form of Underwriting Agreement (Standard Provisions) for Common
Stock.*
1.3 Form of Underwriting Agreement (Standard Provisions) for
Preferred Stock.*
1.4 Forms of Underwriting Agreement for Offering of Preferred
Securities, Stock Purchase Units, Stock Purchase Contracts,
Guarantees and Warrants.**
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 on Form S-4 of the Registrant, Registration No.
333-34517).
4.1 Form of Certificate for the Company's Common Stock, par value
$.01 per share.*
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.*
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.*
4.4 Certificate of Trust of Cendant Capital I.
4.5 Certificate of Trust of Cendant Capital II.
4.6 Certificate of Trust of Cendant Capital III.
4.7 Declaration of Trust of Cendant Capital I.
4.8 Declaration of Trust of Cendant Capital II.
4.9 Declaration of Trust of Cendant Capital III.
4.10 Form of Amended and Restated Declaration of Trust of Cendant
Capital I.
4.11 Form of Amended and Restated Declaration of Trust of Cendant
Capital II.
4.12 Form of Amended and Restated Declaration of Trust of Cendant
Capital III.
4.13 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital I.
4.14 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital II.
4.15 Form of Preferred Securities Guarantee Agreement by Cendant
Corporation with respect to Cendant Capital III.
4.16 Form of Warrant Agreement.**
4.17 Form of Preferred Securities.**
4.18 Form of Warrant.**
4.19 Form of Guarantee with respect to Preferred Securities.**
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 Ernst & Young LLP relating to the financial
statements of CUC International Inc.
23.3 Consent of KPMG Peat Marwick LLP related to the financial
statements of PHH Corporation.
23.4 Consent of Deloitte & Touche LLP relating to the financial
statements of Sierra On-Line, Inc.
23.5 Consent of Deloitte & Touche LLP relating to the financial
statements of Avis Rent A Car, Inc.
23.6 Consent of KPMG Peat Marwick LLP relating to the financial
statements of Davidson & Associates, Inc.
23.7 Consent of Price Waterhouse LLP relating to the financial
statements of Ideon Group, Inc.
23.8 Consent of Eric J. Bock (included in Exhibit 5.1).**
23.9 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.2).**
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 Senior Debt Securities.*
25.2 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 Subordinated Debt Securities.*
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Wilmington Trust Company, as Trustee under the
Declaration of Trust and Preferred Securities Guarantee of
Cendant Capital I, the Declaration of Trust and Preferred
Securities Guarantee of Cendant Capital II and the Declaration
of Trust and Preferred Securities Guarantee of Cendant
Capital III.**
* Previously filed.
** To be filed by amendment.
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital I, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section
3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the
"Trust") is "Cendant Capital I."
2. The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Trust as of the date written below.
/s/ Michael P. Monaco WILMINGTON TRUST COMPANY
- ------------------------ Not in its individual capacity, but solely
Michael P. Monaco, as Trustee.
Trustee By: Pat Evans
/s/ James E. Buckman ---------------------
- ------------------------ Name:/s/ Pat Evans
James E. Buckman, ---------------------
Trustee Title:
- ------------------------ --------------------
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital II, desiring to form
a business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section
3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the
"Trust") is "Cendant Capital II."
2. The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Trust as of the date written below.
/s/ Michael P. Monaco
- ------------------------ WILMINGTON TRUST COMPANY
Michael P. Monaco, Not in its individual capacity, but solely
Trustee as Trustee.
By: /s/ Pat Evan
/s/ James E. Buckman ------------------------
- ------------------------ Name: Pat Evan
James E. Buckman, ------------------------
Trustee Title:
------------------------
- ------------------------
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital III, desiring to form
a business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section
3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the
"Trust") is "Cendant Capital III."
2. The name and business address of the trustee of the Trust
which has its principal place of business in the State of
Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Trust as of the date written below.
/s/ Michael P. Monaco
- ------------------------ WILMINGTON TRUST COMPANY
Michael P. Monaco, Not in its individual capacity, but solely
Trustee as Trustee.
By: /s/ Pat Evan
/s/ James E. Buckman ------------------------
- ------------------------ Name: Pat Evan
James E. Buckman, ------------------------
Trustee Title:
------------------------
- ------------------------
Exhibit 4.7
================================
DECLARATION OF TRUST
Cendant Capital I
Dated as of February 5, 1998
================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................ 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name....................................... 4
SECTION 2.2 Office..................................... 4
SECTION 2.3 Purpose.................................... 4
SECTION 2.4 Authority.................................. 4
SECTION 2.5 Title to Property of the Trust............. 4
SECTION 2.6 Powers of the Trustees..................... 4
SECTION 2.7 Filing of Certificate of Trust............. 6
SECTION 2.8 Duration of Trust.......................... 6
SECTION 2.9 Responsibilities of the Sponsor............ 6
Section 2.10 Declaration Binding on Securities Holders.. 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees................................... 7
SECTION 3.2 Regular Trustees........................... 8
SECTION 3.3 Delaware Trustee........................... 8
SECTION 3.4 Institutional Trustee...................... 8
Section 3.5 Not Responsible for Recitals or Suffi-
ciency of Declaration...................... 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation................................ 9
SECTION 4.2 Fiduciary Duty............................. 9
SECTION 4.3 Indemnification............................10
SECTION 4.4 Outside Businesses.........................13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.................................14
SECTION 5.2 Termination of Trust.......................14
SECTION 5.3 Governing Law..............................15
SECTION 5.4 Headings...................................15
SECTION 5.5 Successors and Assigns.....................15
SECTION 5.6 Partial Enforeceability....................15
SECTION 5.7 Counterparts...............................15
i
DECLARATION OF TRUST
OF
Cendant Capital I
February 5, 1998
DECLARATION OF TRUST ("Declaration") dated and effec-
tive as of February 5, 1998 by the undersigned Trustees (together with all other
persons from time to time duly appointed and serving as trustees in accordance
with the provisions of this Declaration, the "Trustees"), Cendant Corporation,
a Delaware corporation, as trust sponsor (the "Sponsor"), and by the hold-
ers, from time to time, of undivided beneficial interests in the
Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to estab-
lish a trust (the "Trust") pursuant to the Delaware Business Trust Act for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the securi-
ties representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective mean-
ings 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 Declara-
tion" are to this Declaration of Trust as modified,
supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sec-
tions are to Articles and Sections of this Declaration
unless otherwise specified; and
(e) 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.
"Business Day" means any day other than a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular
Trustee; (b) any Affiliate of any Regular Trustee; (c) any offi-
cers, directors, shareholders, members, partners, employees, representatives or
agents of any Regular Trustee; or (d) any employee or agent of the Trust or its
Affiliates.
"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 in its capacity
as the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be
issued by the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means The Bank of Nova Scotia Trust
Company of New York, as trustee under the Indenture until a suc-
cessor is appointed thereunder, and thereafter means such succes-
sor trustee.
"Delaware Trustee" has the meaning set forth in Section
3.1.
2
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1,
1994, among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Person" means a legal person, including any individu-
al, 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 Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section
3.1.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Cendant Corporation in its capacity as
sponsor of the Trust.
"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.
3
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Cendant
Capital I." The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
Cendant Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054. At any time,
the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, 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. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
4
The Regular Trustees shall have the exclusive power 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 the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(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 a
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(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 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 an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors, and consultants and provide for reasonable compensation for
such services;
(d) to incur expenses which are necessary or incidental to
carry out any of the purposes of this Declaration; and
5
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale 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;
(b) 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) to prepare for filing by the Trust 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) to prepare for filing by the Trust with the Commission
a registration statement on Form 8-A relating to the registration of
the class of Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
6
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a
Security or any interest therein 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.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (each, a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Michael P. Monaco
James E. Buckman
(a) Except as expressly set forth in this Declaration, 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, 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 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority 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
7
signing any documents which the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North,
1100 North Market Street,
Wilmington, Delaware 19890
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except that such limitation
shall not limit the liability, if any, of the Delaware Trustee to a holder for
acts that the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act or for the gross
negligence or willful misconduct of the Delaware Trustee. The Delaware Trustee
may, at any time resign as Trustee hereunder upon 30 days' prior written notice
of such resignation to the Sponsor. Upon its receipt of such notice of
resignation, the Sponsor promptly shall appoint a successor Delaware Trustee
(each, a "Successor Trustee") and such resignation shall take effect when the
Successor Trustee accepts in writing the Successor Trustee's appointment as
successor Delaware Trustee. If within such 30-day period, the Sponsor has
failed to take appropriate steps to appoint a successor Trustee, the Delaware
Trustee may, but shall not be required to, petition any court of competent
jurisdiction for the appointment of a Successor Trustee. Such court may
thereupon appoint a Successor Trustee after such notice to the Sponsor as such
court may deem proper and prescribe. The resignation of the Delaware Trustee
shall not be deemed to constitute bad faith for the purposes of Section 4.2 (b)
hereof.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
8
Section 3.5 Not Responsible for Recitals or Sufficiency of
Declaration.
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.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 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; and
(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 if selected by such
Indemnified Person has been selected with reasonable care, 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 4.2 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
9
existing at law or in equity, are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered 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; and
(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 ex-
press 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.
10
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer 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 Debenture Issuer 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) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in
11
defense of any action, suit or proceeding referred to in paragraphs
(i) and (ii) of this Section 4.3(a), or in defense of any claim, issue
or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer 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.
(v) 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 4.3(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 he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(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, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified 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 his duty to the Trust or its Common or Preferred
Security Holders.
12
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
4.3(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 stockholders or disinterested
directors of the Debenture Issuer 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 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer 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 Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(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 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 4.3(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 heirs, executors and administrators of
such a person.
(b) (i) The Debenture Issuer agrees to indemnify the (1) the Delaware
Trustee, (2) any Affiliate, to the full extent permitted by law, of the
Delaware Trustee, and (3) any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Delaware Trustee
13
(each of the Persons in (1) through (3) 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 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. (ii) To the
fullest extent permitted by applicable law, expenses (including reasonable and
documented legal fees) incurred by a Fiduciary Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Debenture Issuer prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Debenture Issuer of an
undertaking by or on behalf of the Fiduciary 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 4.3 (b) (i). (iii) The obligation to
indemnify and advance expenses as set forth in this Section 4.3(b) shall
survive the termination of this Declaration and shall survive the resignation
or removal of the Delaware Trustee.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware 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 or the Delaware 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 and the
Delaware 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 and the Delaware 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 may act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
14
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment affects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall not be effective unless approved in
writing by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further
force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of disso-
lution or its equivalent with respect to the Sponsor or the
revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
(b) as soon as is practicable upon completion of winding up
by the Trustees after the occurrence of an event referred to in Section 5.2(a),
the Trustees shall file a certificate of cancellation with the Secretary of
State of the State of Delaware.
SECTION 5.3 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 5.4 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.
15
SECTION 5.5 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 5.6 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 5.7 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.
16
IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of Cendant Capital I to be executed as of the day and year
first above written.
/s/ Michael P. Monaco
--------------------------------------
Name: Michael P. Monaco
Title: Regular Trustee
/s/ Jame E. Buckman
--------------------------------------
Name: James E. Buckman
Title: Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Pat Evan
--------------------------------------
Name: Pat Evan
Title:
CENDANT CORPORATION, as Sponsor and
Debenture Issuer
By: /s/ James E. Buckman
--------------------------------------
Name: James E. Buckman
Title: Executive Vice President
and General Counsel
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital I,
desiring to form a business trust pursuant to Delaware Business
Trust Act, 12 Del. C. ss. 3810, hereby certify as follows:
(1) The name of the business trust being formed hereby
(the "Trust") is "Cendant Capital I."
(2) The name and business address of the trustee of the
Trust which has its principal place of busi-
ness in the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
- -------------------------------- WILMINGTON TRUST COMPANY, as
Name: Michael P. Monaco Trustee
Tile: Trustee
- -------------------------------- By:
Name: James E. Buckman -----------------------------
Title: Trustee Name: Pat Evan
Title:
18
================================
DECLARATION OF TRUST
Cendant Capital II
Dated as of February 5, 1998
================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.......................................................................... 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name................................................................................. 4
SECTION 2.2 Office............................................................................... 4
SECTION 2.3 Purpose.............................................................................. 4
SECTION 2.4 Authority............................................................................ 4
SECTION 2.5 Title to Property of the Trust....................................................... 4
SECTION 2.6 Powers of the Trustees............................................................... 4
SECTION 2.7 Filing of Certificate of Trust....................................................... 6
SECTION 2.8 Duration of Trust.................................................................... 6
SECTION 2.9 Responsibilities of the Sponsor...................................................... 6
Section 2.10 Declaration Binding on Securities Holders............................................ 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees............................................................................. 7
SECTION 3.2 Regular Trustees..................................................................... 7
SECTION 3.3 Delaware Trustee..................................................................... 8
SECTION 3.4 Institutional Trustee................................................................ 8
Section 3.5 Not Responsible for Recitals or Suffi
ciency of Declaration................................................................ 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.......................................................................... 9
SECTION 4.2 Fiduciary Duty....................................................................... 9
SECTION 4.3 Indemnification...................................................................... 10
SECTION 4.4 Outside Businesses................................................................... 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments........................................................................... 14
SECTION 5.2 Termination of Trust................................................................. 14
SECTION 5.3 Governing Law........................................................................ 15
SECTION 5.4 Headings............................................................................. 15
SECTION 5.5 Successors and Assigns............................................................... 15
SECTION 5.6 Partial Enforceability............................................................... 15
SECTION 5.7 Counterparts......................................................................... 15
i
DECLARATION OF TRUST
OF
Cendant Capital III
February 5, 1998
DECLARATION OF TRUST ("Declaration") dated and effective as
of February , 1998 by the undersigned Trustees (together with all other persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Cendant Corporation, a
Delaware corporation, as trust sponsor (the "Sponsor"), and by the holders,
from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the securi-
ties representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 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 of Trust as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
(e) 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.
"Business Day" means any day other than a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"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 employee or agent of the Trust or its Affiliates.
"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 in its capacity
as the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be
issued by the Debenture Issuer and acquired by the Trust.
"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.
"Delaware Trustee" has the meaning set forth in Section
3.1.
2
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1,
1994, among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"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 Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section
3.1.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Cendant Corporation in its capacity as
sponsor of the Trust.
"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.
3
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Cendant
Capital II." The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
Cendant Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054. At any time,
the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, 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. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
4
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activi ties:
(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 the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(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 a reg-
istration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(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 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 reg-
istration 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 an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors, and consultants and provide for reasonable compensation for
such services;
(d) to incur expenses which are necessary or incidental to
carry out any of the purposes of this Declaration; and
5
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provi sions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale 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;
(b) 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) to prepare for filing by the Trust 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) to prepare for filing by the Trust with the Com mission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange
Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
6
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a
Security or any interest therein 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.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (each, a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Michael P. Monaco
James E. Buckman
(a) Except as expressly set forth in this Declaration, 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, 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 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority 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
7
signing any documents which the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North,
1100 North Market Street,
Wilmington, Delaware 19890
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except that such limitation
shall not limit the liability, if any, of the Delaware Trustee to a holder for
acts that the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act or for the gross
negligence or willful misconduct of the Delaware Trustee. The Delaware Trustee
may, at any time resign as Trustee hereunder upon 30 days' prior written notice
of such resignation to the Sponsor. Upon its receipt of such notice of
resignation, the Sponsor promptly shall appoint a successor Delaware Trustee
(each, a "Successor Trustee") and such resignation shall take effect when the
Successor Trustee accepts in writing the Successor Trustee's appointment as
successor Delaware Trustee. If within such 30-day period, the Sponsor has
failed to take appro priate steps to appoint a successor Trustee, the Delaware
Trustee may, but shall not be required to, petition any court of compe tent
jurisdiction for the appointment of a Successor Trustee. Such court may
thereupon appoint a Successor Trustee after such notice to the Sponsor as such
court may deem proper and pre scribe. The resignation of the Delaware Trustee
shall not be deemed to constitute bad faith for the purposes of Section 4.2 (b)
hereof.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
8
Section 3.5 Not Responsible for Recitals or Sufficiency of
Declaration.
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.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 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; and
(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 if selected by such
Indemnified Person has been selected with reasonable care, 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 distribu tions to holders of
Securities might properly be paid.
SECTION 4.2 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
9
existing at law or in equity, are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between an Indemnified Person and any Covered
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; and
(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.
10
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer 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 Debenture Issuer 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
de fense 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) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in
11
defense of any action, suit or proceeding referred to in paragraphs
(i) and (ii) of this Section 4.3(a), or in defense of any claim, issue
or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer 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 par-
ties 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.
(v) 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 4.3(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 he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(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, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified 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 his duty to the Trust or its Common or
Preferred Security Holders.
12
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
4.3(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 stockholders or disinterested
directors of the Debenture Issuer 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 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer 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 Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(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 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 4.3(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 heirs, executors and administrators of
such a person.
(b)(i) The Debenture Issuer agrees to indemnify the (1) the Delaware
Trustee, (2) any Affiliate, to the full extent permitted by law, of the
Delaware Trustee, and (3) any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Delaware Trustee
13
(each of the Persons in (1) through (3) 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 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. (ii) To
the fullest extent permitted by applicable law, expenses (including reasonable
and documented legal fees) incurred by a Fiduciary Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Debenture Issuer prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Debenture
Issuer of an undertaking by or on behalf of the Fiduciary 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 4.3 (b) (i). (iii) The
obligation to indemnify and advance expenses as set forth in this Section
4.3(b) shall survive the termination of this Declaration and shall survive the
resignation or removal of the Delaware Trustee.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware 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 or the Delaware 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 and the
Delaware 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 and the Delaware 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 may act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
14
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment affects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall not be effective unless approved in
writing by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further
force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of disso-
lution or its equivalent with respect to the Sponsor or the
revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial dis-
solution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
(b) as soon as is practicable upon completion of winding up
by the Trustees after the occurrence of an event referred to in Section 5.2(a),
the Trustees shall file a certificate of cancellation with the Secretary of
State of the State of Delaware.
SECTION 5.3 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 5.4 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.
15
SECTION 5.5 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 5.6 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 5.7 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.
16
IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of Cendant Capital II to be executed as of the day and
year first above written.
/s/ Michael P. Monaco
------------------------------------------
Name: Michael P. Monaco
Title: Regular Trustee
/s/ James E. Buckman
------------------------------------------
Name: James E. Buckman
Title: Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Pat Evan
---------------------------------------
Name: Pat Evan
Title:
CENDANT CORPORATION, as Sponsor and
Debenture Issuer
By: /s/ James E. Buckman
---------------------------------------
Name: James E. Buckman
Title: Senior Executive Vice President
and General Counsel
17
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital II,
desiring to form a business trust pursuant to Delaware Business
Trust Act, 12 Del. C. ss. 3810, hereby certify as follows:
(1) The name of the business trust being formed hereby
(the "Trust") is "Cendant Capital II."
(2) The name and business address of the trustee of the
Trust which has its principal place of busi ness in
the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
- ------------------------------- WILMINGTON TRUST COMPANY, as
Name: Michael P. Monaco Trustee
Tile: Trustee
By:
- ------------------------------- -------------------------------------
Name: James E. Buckman
Title: Trustee Name: Pat Evan
Title:
18
================================
DECLARATION OF TRUST
Cendant Capital III
Dated as of February 5, 1998
================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...................................... 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name............................................. 4
SECTION 2.2 Office........................................... 4
SECTION 2.3 Purpose.......................................... 4
SECTION 2.4 Authority........................................ 4
SECTION 2.5 Title to Property of the Trust................... 4
SECTION 2.6 Powers of the Trustees........................... 4
SECTION 2.7 Filing of Certificate of Trust................... 6
SECTION 2.8 Duration of Trust................................ 6
SECTION 2.9 Responsibilities of the Sponsor.................. 6
Section 2.10 Declaration Binding on Securities Holders........ 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees......................................... 7
SECTION 3.2 Regular Trustees................................. 7
SECTION 3.3 Delaware Trustee................................. 8
SECTION 3.4 Institutional Trustee............................ 8
Section 3.5 Not Responsible for Recitals or Suffi-
ciency of Declaration............................ 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation...................................... 9
SECTION 4.2 Fiduciary Duty................................... 9
SECTION 4.3 Indemnification.................................. 10
SECTION 4.4 Outside Businesses............................... 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments....................................... 14
SECTION 5.2 Termination of Trust............................. 14
SECTION 5.3 Governing Law.................................... 15
SECTION 5.4 Headings......................................... 15
SECTION 5.5 Successors and Assigns........................... 15
SECTION 5.6 Partial Enforceability........................... 15
SECTION 5.7 Counterparts..................................... 15
i
DECLARATION OF TRUST
OF
Cendant Capital III
February 5, 1998
DECLARATION OF TRUST ("Declaration") dated and effective as
of February 5, 1998 by the undersigned Trustees (together with all other
persons from time to time duly appointed and serving as trustees in accordance
with the provisions of this Declaration, the "Trustees"), Cendant Corporation,
a Delaware corporation, as trust sponsor (the "Sponsor"), and by the holders,
from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the securi-
ties representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 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 of Trust as modified, supplemented or
amended from time to time;
1
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
(e) 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.
"Business Day" means any day other than a day on which
banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commis-
sion.
"Common Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"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 employee or agent of the Trust or its Affiliates.
"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 in its capacity
as the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be
issued by the Debenture Issuer and acquired by the Trust.
"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.
"Delaware Trustee" has the meaning set forth in Section
3.1.
2
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1,
1994, among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"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 Security" means a security denominated as such and
representing an undivided beneficial interest in the assets of the Trust with
such terms as may be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section
3.1.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means Cendant Corporation in its capacity as
sponsor of the Trust.
"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.
3
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Cendant
Capital III." The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o
Cendant Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054. At any time,
the Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, 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. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
4
The Regular Trustees shall have the exclusive power 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 the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(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 a reg-
istration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(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 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 reg-
istration 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 an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities;
(c) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors, and consultants and provide for reasonable compensation for
such services;
(d) to incur expenses which are necessary or incidental to
carry out any of the purposes of this Declaration; and
5
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for fifty-five (55) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale 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;
(b) 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) to prepare for filing by the Trust 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) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
class of Preferred Securities under Section 12(b) of the Exchange
Act, including any amendments thereto; and
(e) to negotiate the terms of an underwriting agreement and
pricing agreement providing for the sale of the Preferred Securities.
6
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a
Security or any interest therein 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.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (each, a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Michael P. Monaco
James E. Buckman
(a) Except as expressly set forth in this Declaration, 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, 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 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority 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
7
signing any documents which the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North,
1100 North Market Street,
Wilmington, Delaware 19890
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of ss. 3807 of
the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust, of the Sponsor or of the Regular Trustees except that such limitation
shall not limit the liability, if any, of the Delaware Trustee to a holder for
acts that the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act or for the gross
negligence or willful misconduct of the Delaware Trustee. The Delaware Trustee
may, at any time resign as Trustee hereunder upon 30 days' prior written notice
of such resignation to the Sponsor. Upon its receipt of such notice of
resignation, the Sponsor promptly shall appoint a successor Delaware Trustee
(each, a "Successor Trustee") and such resignation shall take effect when the
Successor Trustee accepts in writing the Successor Trustee's appointment as
successor Delaware Trustee. If within such 30-day period, the Sponsor has
failed to take appropriate steps to appoint a successor Trustee, the Delaware
Trustee may, but shall not be required to, petition any court of competent
jurisdiction for the appointment of a Successor Trustee. Such court may
thereupon appoint a Successor Trustee after such notice to the Sponsor as such
court may deem proper and prescribe. The resignation of the Delaware Trustee
shall not be deemed to constitute bad faith for the purposes of Section 4.2 (b)
hereof.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
8
Section 3.5 Not Responsible for Recitals or Sufficiency of
Declaration.
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.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 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; and
(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 if selected by such
Indemnified Person has been selected with reasonable care, 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 4.2 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
9
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between an Indemnified Person and any Covered
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; and
(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.
10
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer 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 Debenture Issuer 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) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in
11
defense of any action, suit or proceeding referred to in paragraphs
(i) and (ii) of this Section 4.3(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer 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 par-
ties 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.
(v) 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 4.3(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 he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(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, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified 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 his duty to the Trust or its Common or Preferred
Security Holders.
12
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
4.3(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 stockholders or disinterested
directors of the Debenture Issuer 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 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer 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 Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(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 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 4.3(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 heirs, executors and administrators of
such a person.
(b)(i) The Debenture Issuer agrees to indemnify the (1) the Delaware
Trustee, (2) any Affiliate, to the full extent permitted by law, of the
Delaware Trustee, and (3) any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Delaware Trustee
13
(each of the Persons in (1) through (3) 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 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. (ii) To the
fullest extent permitted by applicable law, expenses (including reasonable and
documented legal fees) incurred by a Fiduciary Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Debenture Issuer prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Debenture Issuer of an
undertaking by or on behalf of the Fiduciary 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 4.3 (b) (i). (iii) The obligation to
indemnify and advance expenses as set forth in this Section 4.3(b) shall
survive the termination of this Declaration and shall survive the resignation
or removal of the Delaware Trustee.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware 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 or the Delaware 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 and the
Delaware 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 and the Delaware 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 may act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.
14
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment affects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall not be effective unless approved in
writing by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further
force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of disso-
lution or its equivalent with respect to the Sponsor or the
revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial dis-
solution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with the
consent of all of the Regular Trustees and the Sponsor; and
(b) as soon as is practicable upon completion of winding up
by the Trustees after the occurrence of an event referred to in Section 5.2(a),
the Trustees shall file a certificate of cancellation with the Secretary of
State of the State of Delaware.
SECTION 5.3 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 5.4 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.
15
SECTION 5.5 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 5.6 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 5.7 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.
16
IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of Cendant Capital III to be executed as of the day and
year first above written.
/s/ Michael P. Monaco
--------------------------
Name: Michael P. Monaco
Title: Regular Trustee
/s/ James E. Buckman
---------------------------
Name: James E. Buckman
Title: Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Pat Evan
---------------------------
Name: Pat Evan
Title:
CENDANT CORPORATION, as Sponsor and
Debenture Issuer
By: /s/ James E. Buckman
--------------------------------
Name: James E. Buckman
Title: Senior Executive
Vice President and
General Counsel
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of Cendant Capital III,
desiring to form a business trust pursuant to Delaware Business
Trust Act, 12 Del. C. ss. 3810, hereby certify as follows:
(1) The name of the business trust being formed hereby
(the "Trust") is "Cendant Capital III."
(2) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
WILMINGTON TRUST COMPANY, as
- --------------------------- Trustee
Name: Michael P. Monaco
Tile: Trustee
- --------------------------- By:
Name: James E. Buckman -------------------------------
Title: Trustee Name: Pat Evan
Title:
18
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
Cendant Capital I
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
i
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 REGARDING SECURITIES.............................................31
SECTION 7.2 PAYING AGENT........................................................................31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST................................................................32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES..............................................................33
SECTION 9.2 TRANSFER OF CERTIFICATES............................................................33
SECTION 9.3 DEEMED SECURITY HOLDERS.............................................................33
SECTION 9.4 BOOK ENTRY INTERESTS................................................................34
SECTION 9.5 NOTICES TO CLEARING AGENCY..........................................................34
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY............................................35
ii
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES..........................................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
iii
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CENDANT CAPITAL I
[ 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 I (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.
2
"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.
3
"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.
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:
5
(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.
6
"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
7
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.
8
"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.
9
(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.
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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.
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(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.
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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 I," 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, 6 Sylvan Way, Parsippany, New Jersey 07054. On ten Business Days
written notice to the Institutional Trustee and Holders of the Securities, the
Regular Trustees may designate another principal office.
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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
14
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
15
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;
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(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;
17
(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.
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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.
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(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:
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(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;
21
(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;
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(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.
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(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
24
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:
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(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.
26
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.
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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
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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
29
(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:
[ ]
30
[ ]
[ ]
[ }
(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
31
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.
32
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
33
(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
34
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.
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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.
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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.
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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
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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
39
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.
40
(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
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(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.
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(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
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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
44
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.
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(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.
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(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
47
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.
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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,
49
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.
50
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):
51
Cendent Capital I
c/o Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
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
6 Sylvan Way
Parsippany, New Jersey 07054
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.
52
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.
53
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
I-1
Exhibit 4.11
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
i
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 BUSINESS0...............................30
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS..........................................30
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES................31
SECTION 7.2 PAYING AGENT...........................................31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST...................................32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.................................33
SECTION 9.2 TRANSFER OF CERTIFICATES...............................33
SECTION 9.3 DEEMED SECURITY HOLDERS................................33
SECTION 9.4 BOOK ENTRY INTERESTS...................................34
SECTION 9.5 NOTICES TO CLEARING AGENCY.............................34
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY...............35
ii
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES.............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
iii
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 ' 3801 et seq., as it may be amended from time to time, or
any successor legislation.
2
"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.
3
"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.
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:
5
(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.
6
"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
7
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.
8
"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.
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(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 " 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.
(a) 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.
(b) The Institutional Trustee shall comply with its obligations under
(SECTIONS) 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.
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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.
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(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 ' 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.
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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, 6 Sylvan Way, Parsippany, New Jersey 07054. On ten Business Days
written notice to the Institutional Trustee and Holders of the Securities, the
Regular Trustees may designate another principal office.
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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
14
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
15
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;
16
(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;
17
(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.
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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.
19
(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:
20
(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;
21
(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;
22
(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.
23
(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
24
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:
25
(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.
26
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.
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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
28
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
29
(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:
[ ]
30
[ ]
[ ]
[ }
(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
31
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the Regular
Trustees and the Sponsor.
(c) 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.
32
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
33
(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
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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.
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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.
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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.
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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
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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
39
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.
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(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 (SECTION) 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
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(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.
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(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
43
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
44
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.
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(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.
46
(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
47
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.
48
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,
49
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.
50
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):
51
Cendent Capital I
c/o Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
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
6 Sylvan Way
Parsippany, New Jersey 07054
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.
52
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.
53
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
I-1
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
Cendant Capital III
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
i
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 REGARDING SECURITIES................31
SECTION 7.2 PAYING AGENT...........................................31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST...................................32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.................................33
SECTION 9.2 TRANSFER OF CERTIFICATES...............................33
SECTION 9.3 DEEMED SECURITY HOLDERS................................33
SECTION 9.4 BOOK ENTRY INTERESTS...................................34
SECTION 9.5 NOTICES TO CLEARING AGENCY.............................34
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY...............35
ii
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES.............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
iii
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
Cendant Capital III
[ 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 III (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.
2
"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.
3
"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:
(b) if the Person is a natural person, by that Person; or
(d) 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.
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:
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(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.
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"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
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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.
8
"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.
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(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.
(a) 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.
(b) 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.
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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.
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(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.
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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 III," 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, 6 Sylvan Way, Parsippany, New Jersey 07054. On ten Business Days
written notice to the Institutional Trustee and Holders of the Securities, the
Regular Trustees may designate another principal office.
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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
14
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
15
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;
16
(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;
17
(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.
18
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.
19
(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:
20
(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;
21
(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;
22
(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.
23
(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
24
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:
25
(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.
26
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.
27
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
28
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
29
(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:
[ ]
[ ]
[ ]
[ }
30
(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
31
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) 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.
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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
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(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
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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.
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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.
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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.
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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
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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
39
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.
40
(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
41
(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.
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(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
43
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
44
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.
45
(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.
46
(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
47
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.
48
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,
49
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.
50
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):
51
Cendent Capital I
c/o Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
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
6 Sylvan Way
Parsippany, New Jersey 07054
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.
52
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.
53
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
I-1
Exhibit 4.13
-------------------------------------------
FORM OF
PREFERRED SECURITIES GUARANTEE AGREEMENT
CENDANT CAPITAL I
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
i
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
ii
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.
2
"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;
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(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
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(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
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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.
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(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
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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.
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(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
9
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.
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(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
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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
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(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.
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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
14
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
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(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:
16
(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
6 Sylvan Way
Parsippany, New Jersey 07054
(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.
17
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:
-------------------------------------------
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
i
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
ii
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
2
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.
3
"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
theDeclaration.
"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,
4
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.
5
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
6
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 andconclusively 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
7
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
8
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
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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,
10
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
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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:
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(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
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(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):
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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
6 Sylvan Way
Parsippany, New Jersey 07054
(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.
15
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 4.15
-------------------------------------------
FORM OF
PREFERRED SECURITIES GUARANTEE AGREEMENT
Cendant Capital III
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
i
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
ii
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 III, 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.
2
"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;
3
(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
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(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
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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.
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(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
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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.
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(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
9
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.
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(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
11
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
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(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.
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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
14
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
15
(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:
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(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
6 Sylvan Way
Parsippany, New Jersey 07054
(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.
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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:
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Name:
Title:
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-45227 of Cendant Corporation on Form S-3 of
our report dated December 17, 1997, appearing in the Current Report on Form
8-K of Cendant Corporation filed on January 29, 1998, and to the reference to
us under the heading "Experts" in the Prospectus, which is a part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 6, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 1997, included in the Current Report on
Form 8-K, dated January 29, 1998, with respect to the consolidated financial
statements of CUC International Inc. incorporated by reference in Amendment
No. 1 to Form S-3 Registration Statement (No. 333-45227) and related
Prospectus of Cendant Corporation (formerly "CUC International Inc.") for
the registration of up to $4,000,000,000 of its debt securities, preferred
stock and/or common stock.
/s/ Ernst & Young LLP
-----------------------------
ERNST & YOUNG LLP
Stamford, Connecticut
February 6, 1998
EXHIBIT 23.3
The Board of Directors
PHH Corporation:
We consent to the incorporation by reference in Amendment No. 1 to the Form
S-3 Registration Statement of Cendant Corporation, of our report dated
April 30, 1997, with respect to the consolidated balance sheets of PHH
Corporation and subsidiaries (the "Company") at December 31, 1996 and
January 31, 1996 and the related consolidated statements of income,
stockholders' equity, and cash flows for the year ended December 31, 1996
and each of the years in the two year period ended January 31, 1996, which
report appears in the Form 8-K of Cendant Corporation dated January 29, 1998,
incorporated by reference in the Registration Statement. We also consent to
the reference to our firm under the heading "Experts" in the Registration
Statement.
Our report contains an explanatory paragraph that states that the Company
adopted the provisions of Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights," in the year ended January 31,
1996.
/s/ KPMG Peat Marwick LLP
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KPMG Peat Marwick LLP
Baltimore, Maryland
February 5, 1998
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-45227 of Cendant Corporation on Form S-3 of
our report dated June 24, 1996, appearing in the Current Report on Form 8-K
of Cendant Corporation filed on January 29, 1998, and to the reference to us
under the heading "Experts" in the Prospectus, which is a part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Seattle, Washington
February 6, 1998
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-45227 of Cendant Corporation on Form S-3 of
our report dated May 12, 1997 (August 20, 1997 as to Note 15), appearing in
the Current Report on Form 8-K of Cendant Corporation filed on February
6, 1998, and to the reference to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 6, 1998
EXHIBIT 23.6
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Cendant Corporation
We consent to the use of our report incorporated by reference in the
Amendment No. 1 to Registration Statement of Cendant Corporation on Form S-3
(No. 333-45227) with respect to the consolidated balance sheet of Davidson &
Associates, Inc. and subsidiaries as of December 31, 1995 and the related
consolidated statements of earnings, shareholders' equity, and cash flows and
related schedule for each of the years in the two-year period ended December
31, 1995, and to the reference to our firm under the heading "Experts" in the
prospectus. Our report appears in the Current Report on Form 8-K of Cendant
Corporation dated January 29, 1998.
/s/ KPMG Peat Marwick LLP
Long Beach, California
February 5, 1998
EXHIBIT 23.7
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of Amendment No. 1 to the Registration Statement on Form
S-3 (No. 333-45227) of Cendant Corporation (formerly known as CUC
International Inc.) of our report dated February 2, 1996, relating to the
consolidated financial statements of Ideon Group, Inc., which appears in the
Current Report on Form 8-K of Cendant Corporation dated January 29, 1998. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
February 5, 1998