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PARTNERSHIP GUARANTEE AGREEMENT
Capita Preferred Funding, L.P.
Dated as of October __, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I.................................................................... 2
SECTION 1.1. Definitions............................................... 2
ARTICLE II................................................................... 4
SECTION 2.1. Guarantee................................................. 4
SECTION 2.2. Waiver of Notice and Demand............................... 4
SECTION 2.3. Obligations Not Affected.................................. 4
SECTION 2.4. Rights of Holders......................................... 5
SECTION 2.5. Guarantee of Payment...................................... 6
SECTION 2.6. Subrogation............................................... 6
SECTION 2.7. Independent Obligations................................... 7
ARTICLE III.................................................................. 7
SECTION 3.1. Limitation of Transactions................................ 7
SECTION 3.2. Ranking................................................... 7
ARTICLE IV................................................................... 8
SECTION 4.1. Termination............................................... 8
ARTICLE V.................................................................... 8
SECTION 5.1. Successors and Assigns.................................... 8
SECTION 5.2. Amendments................................................ 9
SECTION 5.3. Notices................................................... 9
SECTION 5.4. Gender.................................................... 9
SECTION 5.5. Benefit................................................... 9
SECTION 5.6. Governing Law............................................. 9
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PARTNERSHIP GUARANTEE AGREEMENT
This PARTNERSHIP GUARANTEE AGREEMENT, dated as of ___________, 1996,
is executed and delivered by AT&T Capital Corporation, a Delaware corporation
(the "Company" or the "Guarantor"), for the benefit of the holders from time to
time of the Partnership Preferred Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), dated as of the date hereof, of
Capita Preferred Funding, L.P., a Delaware limited partnership (the "Issuer"),
the Issuer may issue a single series of limited partner interests in the Issuer
(the "Partnership Preferred Securities");
WHEREAS, pursuant to the Partnership Agreement, the proceeds
received by the Issuer from the issuance and sale of the Partnership Preferred
Securities will be invested by the Issuer in the Affiliate Investment
Instruments and Eligible Debt Securities (each as defined in the Partnership
Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Partnership Preferred Securities, desires hereby irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby agrees
shall directly or indirectly provide at least some material benefit to the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders.
ARTICLE I
SECTION 1.1. Definitions
As used in this Partnership Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Partnership Agreement.
"Affiliate" means, with respect to any specified person, any other
person that directly or indirectly controls or is controlled by, or is under
common control with, such specified person, provided, that, with respect to the
Guarantor, "Affiliate" shall be deemed to also include any entity of which at
least 20% of the capital stock is owned by a person that directly or indirectly
controls the Guarantor.
"Affiliated Restricted Payments" means any payment (including,
without limitation, payments for the sale, purchase or lease of any assets or
properties or the rendering of any services) to any Affiliate of the Guarantor,
except for Permissible Affiliated Payments.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accrued and
unpaid distributions that have theretofore been declared on the Partnership
Preferred Securities out of funds legally available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), payable out of funds legally available
therefor, with respect to any Partnership Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer, the lesser of (a) the aggregate of the
liquidation preference and all accrued and unpaid distributions on the
Partnership Preferred Securities to the date of payment and (b) the amount of
assets of the Issuer after satisfaction of all liabilities remaining available
for distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
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"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Partnership Preferred Securities; provided,
however, that in determining whether the holders of the requisite percentage of
Partnership Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"Permissible Affiliated Payments" means (i) payments by the Company
or its subsidiaries (other than the Partnership or the Trust) to Affiliates of
the Company for management or other advisory services not to exceed $10 million
per annum and (ii) transactions made in good faith the terms of which are fair
and reasonable to the Company or such majority-owned subsidiary, as the case may
be, and are at least as favorable as terms which could be obtained by the
Company or such majority-owned subsidiary, as the case may be, in a comparable
transaction made on an arm's length basis with persons which are not Affiliates
of the Company; provided, that with respect to a payment or a series of payments
not greater than $1 million, such payments shall be conclusively deemed to be on
terms which are fair and reasonable to the Company or any of its majority-owned
subsidiaries and on terms which are at least as favorable as the terms which
could be obtained on an arm's length basis with persons who are not Affiliates
if such payments are approved by a majority of the Company's independent
directors; and provided, further, that with respect to a payment or a series of
related payment or payments in excess of $1 million, the Company or such
subsidiary shall either (A) have received a written opinion of a nationally
recognized investment bank stating that the terms of such payment are fair to
the Company or such subsidiary, as the case may be, from a financial point of
view, or (B) have selected the Affiliate or Affiliates which are to receive such
payments based upon a competitive bid procedure in which the Company or such
subsidiary shall have received at least two independent bids, administered in
good faith and on commercially reasonable terms by the Company or such
subsidiary.
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ARTICLE II
SECTION 2.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due (without duplication of
amounts theretofore paid by the Issuer), regardless of any defense, right of
set-off or counterclaim which 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 2.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Partnership
Guarantee Agreement 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, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Partnership Guarantee Agreement 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 Partnership
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, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the
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Partnership Preferred Securities; provided that nothing in this
Partnership Guarantee Agreement shall affect or impair any valid
extension;
(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 Partnership
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 Partnership
Preferred Securities;
(f) the settlement or compromise of any obli- gation 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 2.3 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 2.4. Rights of Holders
The Guarantor expressly acknowledges that (i) this Partnership
Guarantee Agreement will be deposited with the General Partner to be held for
the benefit of the Holders; (ii) in the event of the appointment of a Special
Representative to, among other things, enforce this Partnership Guarantee
Agreement, the Special Representative may take possession of this Partnership
Guarantee Agreement for such purpose; (iii) if no Special
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Representative has been appointed, the General Partner has the right to enforce
this Partnership Guarantee Agreement on behalf of the Holders; (iv) the Holders
of not less than a majority in aggregate liquidation preference of the
Partnership Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available in respect of this
Partnership Guarantee Agreement including the giving of directions to the
General Partner or the Special Representative, as the case may be; and (v) if
the General Partner or Special Representative fails to enforce this Partnership
Guarantee Agreement as above provided, any Holder may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Partnership Guarantee Agreement, without first instituting a legal proceeding
against the Issuer or any other person or entity. Notwithstanding the foregoing,
if the Guarantor has failed to make a guarantee payment, a Holder may directly
institute a proceeding against Guarantor to enforce such payment under this
Partnership Guarantee Agreement.
SECTION 2.5. Guarantee of Payment
This Partnership Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full to the extent not paid by the
Issuer.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Partnership Guarantee Agreement provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Partnership Guarantee Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Partnership
Guarantee Agreement. 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.
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SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Partnership
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
Partnership Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.3 hereof.
ARTICLE III
SECTION 3.1. Limitation of Transactions
So long as any Partnership Preferred Securities remain outstanding,
if (a) for any distribution period, full distributions on a cumulative basis on
any Partnership Preferred Securities have not been paid or declared and set
apart for payment (b) there shall have occurred an Event of Default under the
Partnership Agreement or (c) the Guarantor shall be in default with respect to
its payment obligations under this Partnership Guarantee Agreement, the Trust
Preferred Securities Guarantee, the Trust Common Securities Guarantee or any
[Investment Guarantee] then, during such period the Company shall not, nor
permit any majority owned subsidiary to (i) declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to any of its capital stock or comparable
equity interest (except for dividends or distributions in shares of its capital
stock, conversions or exchanges of common stock of one class into common stock
of another class and dividends, distributions with respect to the Partnership or
the Trust or dividends and distributions on the common stock of wholly owned
subsidiaries of the Company), (ii) make, or permit the making of, any Affiliated
Restricted Payments except for Permissible Affiliated Payments, and (iii) make
any guarantee payments with respect to the foregoing.
SECTION 3.2. Ranking
This Partnership Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and
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will rank (i) subordinate and junior in right of payment to all other
liabilities of the Guarantor, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued from time to time 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. Any similar guarantee given hereafter by
the Company with respect to Partnership Preferred Securities that is silent as
to seniority will rank pari passu with this Partnership Guarantee Agreement.
ARTICLE IV
SECTION 4.1. Termination
This Partnership Guarantee Agreement shall terminate and be of no
further force and effect, as to the Partnership Preferred Securities, upon full
payment of the Redemption Price of all Partnership Preferred Securities, and
will terminate completely upon full payment of the amounts payable in accordance
with the Partnership Agreement upon liquidation of the Issuer. This Partnership
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must, in accordance with Delaware Revised
Uniform Limited Partnership Act, restore payment of any sums paid under any
Partnership Preferred Securities or this Partnership Guarantee Agreement.
ARTICLE V
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Partnership
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Partnership Preferred Securities then outstanding.
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SECTION 5.2. Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Partnership Guarantee Agreement may only be amended with the prior approval of
the Holders of not less than a majority in liquidation preference of all the
outstanding Partnership Preferred Securities.
SECTION 5.3. Notices
Any notice, request or other communication required or permitted to
be given hereunder to the Guarantor shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
addressed to the Guarantor, as follows (and if so given, shall be deemed given
when mailed):
AT&T Capital Corporation
44 Whippany Road
Morristown, NJ 07962
Attention: General Counsel
Facsimile No: (201) 397-4356
Any notice, request or other communication required or permitted to
be given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.4. Gender
The masculine, feminine and neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 5.5. Benefit
This Partnership Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Partnership Preferred
Securities.
SECTION 5.6. Governing Law
THIS PARTNERSHIP GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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THIS PARTNERSHIP GUARANTEE AGREEMENT is executed as of the day and
year first above written.
AT&T CAPITAL CORPORATION
By: __________________________
Name:
Title: