<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 5, 1998
REGISTRATION NO. 333-33783
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONTIFINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3852588
(STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION OR NO.)
ORGANIZATION)
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277 PARK AVENUE
NEW YORK, NEW YORK 10172
(212) 207-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ALAN L. LANGUS, ESQ.
SENIOR VICE PRESIDENT AND CHIEF COUNSEL
CONTIFINANCIAL CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(212) 207-2822
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
DOUGLAS L. GETTER, ESQ.
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
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: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AGGREGATE
TITLE OF EACH CLASS OF OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE(3)
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<S> <C> <C>
Common Stock, Preferred Stock and Debt
Securities............................... $600,000,000 $181,818.18(4)
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</TABLE>
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(1) In United States dollars or the equivalent thereof in foreign currency or
currency units. In no event will the aggregate initial price of the
Securities offered exceed $600,000,000.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
(3) Calculated pursuant to Rule 457(a).
(4) $145,744.42 of such Registration Fee was paid pursuant to Amendment No. 2
of this Registration Statement. The remaining $36,073.76 of the
Registration Fee was accounted for at the time of the first filing of this
Registration Statement.
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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.
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<PAGE>
PROSPECTUS
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CONTIFINANCIAL CORPORATION
COMMON STOCK
PREFERRED STOCK
DEBT SECURITIES
ContiFinancial Corporation (the "Company") may offer from time to time,
together or separately, (i) shares of its Common Stock, $0.01 par value per
share (the "Common Stock"), (ii) shares of its preferred stock, $0.01 par value
per share (the "Preferred Stock") and (iii) its unsecured debt securities,
which may be either senior (the "Senior Debt Securities") or subordinated (the
"Subordinated Debt Securities" and, together with the Senior Debt Securities,
the "Debt Securities") (the Common Stock, the Preferred Stock and the Debt
Securities are collectively referred to herein as the "Securities"), in
amounts, at prices and on terms to be determined at the time of the offering
thereof. The Subordinated Debt Securities and Preferred Stock may be
convertible or exchangeable into other series of Preferred Stock or shares of
Common Stock. The Securities offered pursuant to this Prospectus by the Company
may be issued in one or more series or issuances the aggregate offering price
of which will not exceed $600,000,000 (or the equivalent thereof in one or more
foreign currencies or foreign currency units).
The specific terms of the Securities in respect of which this Prospectus is
being delivered (the "Offered Securities") will be set forth in an accompanying
supplement to this Prospectus (each, a "Prospectus Supplement"), including,
where applicable, (i) in the case of Common Stock, the aggregate number of
shares offered and whether such shares will be offered by the Company, (ii) in
the case of Preferred Stock, the specific designation, the aggregate number of
shares offered, the dividend rate (or method of calculation thereof), the
dividend period and dividend payment dates, whether such dividends will be
cumulative or noncumulative, the liquidation preference, the voting rights, if
any, any terms for optional or mandatory redemption, any terms for conversion
or exchange into other Securities and any other special terms and (iii) in the
case of Debt Securities, the specific designation, the aggregate principal
amount, the ranking as Senior Debt Securities or Subordinated Debt Securities,
the authorized denominations, the maturity, any premium, rate or method of
calculation of interest and dates for payment thereof, any terms for optional
or mandatory redemption, any sinking fund provisions, any terms for conversion
or exchange into other Securities and any other special terms. If so specified
in the applicable Prospectus Supplement, Debt Securities of a series may be
issued in whole or in part in the form of one or more temporary or permanent
global securities. Unless otherwise specified in a Prospectus Supplement, the
Senior Debt Securities, when issued, will rank equally with all other
unsubordinated and unsecured indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinate in right of payment to all
existing and future Senior Indebtedness (as defined below) of the Company
including any Senior Debt Securities.
The Company may sell the Securities (i) through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale, (ii) through
agents designated from time to time, or (iii) directly. The names of any
underwriters or agents of the Company involved in the sale of the Offered
Securities, the public offering price or purchase price thereof, any applicable
commissions or discounts, any other terms of the offering of such Offered
Securities and the net proceeds to the Company from such sale, will be set
forth in the applicable Prospectus Supplement.
FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE THE INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE 6.
The Common Stock is listed on the New York Stock Exchange under the symbol
"CFN." Any shares of Common Stock sold pursuant to a Prospectus Supplement will
be listed on such exchange, subject to an official notice of issuance.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement, whose terms shall modify and
supersede any inconsistent statement made herein.
The date of this Prospectus is March 5, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Available Information...................................................... 3
Incorporation Of Certain Documents By Reference............................ 3
The Company................................................................ 4
Recent Developments........................................................ 5
Risk Factors............................................................... 6
Ratios Of Earnings To Fixed Charges........................................ 13
Use Of Proceeds............................................................ 13
Description Of Securities.................................................. 14
Plan Of Distribution....................................................... 48
Legal Matters.............................................................. 49
Experts.................................................................... 49
</TABLE>
2
<PAGE>
AVAILABLE INFORMATION
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 statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices located at Suite 1300, Seven World Trade
Center, New York, New York 10048, and Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such materials can be
obtained from the Public Reference Section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates and
electronically through the Commission's Electronic Data Gathering, Analysis
and Retrieval System ("EDGAR") at the Commission's web site
(http://www.sec.gov). Such materials can also be inspected at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the securities. This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities offered
hereby. Statements contained herein concerning the provisions of any document
are not necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. These documents may be inspected without charge at
the office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies may be obtained at fees and charges
prescribed by the Commission.
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: (a) the
Company's Annual Report on Form 10-K for the year ended March 31, 1997; (b)
the Company's Quarterly Reports on Form 10-Q for the quarters ended June 30,
1997, September 30, 1997 and December 31, 1997; and (c) the Company's Proxy
Statement sent on or about July 29, 1997 in connection with the Company's
Annual Meeting of Stockholders held on September 17, 1997.
All reports and any definitive proxy or information statements filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
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 this
Prospectus is delivered, upon written or oral request of such person, a copy
of any and all of the documents that have been or may be incorporated by
reference herein (other than exhibits to such documents which are not
specifically incorporated by reference into such documents). Such requests
should be directed to ContiFinancial Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Chief Counsel or by telephone at (212) 207-2800.
3
<PAGE>
THE COMPANY
The Company together with its subsidiaries engages in the consumer and
commercial finance business by originating home equity loans, commercial real
estate loans and non-prime auto loans. The Company together with its
subsidiaries also provides financing and asset securitization structuring and
placement services to originators of a broad range of loans, leases,
receivables and other assets. The Company is a leading originator, purchaser,
seller and servicer of home equity loans made to borrowers whose borrowing
needs may not be met by traditional financial institutions due to credit
exceptions or other factors. Loans are made to borrowers primarily for debt
consolidation, home improvements, education or refinancing and are primarily
secured by first mortgages on one- to four-family residential properties.
During the nine months ended December 31, 1997 and the year ended March 31,
1997, the Company securitized or sold $4.7 billion and $3.6 billion,
respectively, of home equity loans through its subsidiary ContiMortgage
Corporation ("ContiMortgage") and the Home Equity Companies (defined below).
For the same periods, the Company securitized or sold $982 million and $742
million, respectively, of commercial real estate loans, and $308 million and
$568 million, respectively, of other loans and assets for its Strategic
Alliance Clients (as defined below). In addition, during the nine months ended
December 31, 1997 and the year ended March 31, 1997, the Company securitized
or sold $108 million and $44 million, respectively, of non-prime auto loans
originated by its majority-owned subsidiary, Triad Financial Corporation
("Triad").
During the fiscal year ended March 31, 1997, the Company purchased 100% of
the outstanding stock of California Lending Group, Inc. d/b/a United Lending
Group ("ULG"), a west coast-based home equity lender specializing in retail
originations through direct mail and telemarketing throughout the United
States, and Royal Mortgage Partners, L.P., d/b/a Royal MortgageBanc ("Royal"),
a California-based wholesale and retail originator of home equity loans. The
Company also purchased Resource One Consumer Discount Company, Inc. ("Resource
One"), a Pennsylvania-based home equity lender specializing in retail
origination through direct mail, television, telemarketing, referrals and
other sources to generate loan inquiries directly from borrowers throughout
the eastern and mid-western states. During the same period, the Company
organized ContiWest Corporation ("ContiWest"), a Nevada corporation, to better
administer and underwrite the Company's origination portfolio. Collectively,
ContiMortgage, ContiWest, ULG, Royal and Resource One are referred to as the
"Home Equity Companies."
Additionally, the Company, through its wholly owned subsidiary, ContiTrade
Services L.L.C. ("ContiTrade"), provides financing and asset securitization
structuring expertise, and through its subsidiary, ContiFinancial Services
Corporation ("ContiFinancial Services"), provides placement services. In this
area, ContiTrade's management and execution of ContiMortgage's financing,
hedging and securitization needs has served as a model for the Company's
strategic alliances with originators of a broad range of consumer and
commercial loans and other assets ("Strategic Alliances"). The Company offers
Strategic Alliance clients ("Strategic Alliance Clients") complete balance
sheet liability management, including warehouse financing, interest rate
hedging services and the structuring and placement of asset portfolios in the
form of asset-backed securities.
4
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RECENT DEVELOPMENTS
The Company is continually evaluating acquisition opportunities with the view
of expanding the origination capabilities of its current asset classes and
diversifying into the origination and servicing of other under-served,
securitizable asset classes. Consequently, in October 1997, the Company,
through its subsidiary ContiMortgage, acquired Fidelity Mortgage Decisions
Corporation ("FMD"), a midwest-based wholesale and retail originator of fixed
and adjustable rate "B" and "C" credit grade home equity loans and in December
1997, acquired a 24% equity interest in Empire Funding Holding Corporation
("EFHC") with an option to acquire additional shares of EFHC at a later date.
EFHC is a newly formed entity which owns 100% of Empire Funding Corp., a Texas-
based originator, servicer and securitizer of high loan-to-value home
improvement loans. In January 1998, as part of the Company's strategies of
diversifying and expanding its origination capabilities, the Company, through
its subsidiary, ContiMortgage, acquired Crystal Mortgage Company, Inc.
("Crystal"), a midwest-based retail mortgage broker and its subsidiary Lenders
M.D., Inc. ("Lenders"), a midwest-based mortgage bank. Crystal and Lenders
originate conforming and non-conforming mortgage loans. Towards diversifying
into other securitizable asset classes, the Company, in February 1998, through
its subsidiary, ContiAsset Receivables Management LLC ("CARMA") acquired
Pacific Advisory Services LLC ("Pacific"), a California-based firm specializing
in sourcing, pricing and acquiring charged-off consumer receivable portfolios.
Concurrent with the merger of Pacific into CARMA, CARMA entered into an
agreement with Arrow Service Bureau, Inc., a midwest-based accounts receivable
management firm specializing in the collection of charged-off consumer
receivables to service and collect the charged-off consumer debt sourced by
CARMA. In March 1998, the Company acquired the remaining 44% of the outstanding
common stock of Triad Financial Corporation, the Company's automobile finance
subsidiary, from Triad's minority shareholders.
5
<PAGE>
RISK FACTORS
Prior to making an investment decision, prospective investors should
carefully consider all information set forth in this Prospectus and, in
particular, should evaluate the factors described below.
ECONOMIC CONDITIONS
General
The risks associated with the Company's business become more acute in any
economic slowdown or recession. Periods of economic slowdown or recession may
be accompanied by decreased demand for consumer and commercial credit and
declining real estate and other asset values. In the mortgage business, any
material decline in real estate values reduces the ability of borrowers to use
home equity to support borrowings and increases the loan-to-value ratios of
loans previously made by the Company, thereby weakening collateral coverage
and increasing the possibility of a loss in the event of a default.
Delinquencies, foreclosures and losses generally increase during economic
slowdowns or recessions. Because of the Company's focus on credit-impaired
borrowers in the home equity loan market and certain other markets, the actual
rates of delinquencies, foreclosures and losses on such loans could be higher
under adverse economic conditions than those experienced in such markets in
general. In addition, in an economic slowdown or recession, the Company's
servicing costs will increase. Any sustained period of increased
delinquencies, foreclosures, losses or increased costs could adversely affect
the Company's ability to sell loans or other assets through securitization and
could increase the cost of selling loans or other assets through
securitization, which could adversely affect the Company's financial condition
and results of operations.
Interest Rates
Profitability may be directly affected by the level of and fluctuations in
interest rates which affect the Company's ability to earn a spread between
interest received on its loans and the costs of its liabilities. While the
Company monitors the interest rate environment and employs a hedging strategy
designed to mitigate the impact of changes in interest rates, there can be no
assurance that the profitability of the Company would not be adversely
affected during any period of changes in interest rates. During periods of
increasing interest rates, the Company generally experiences competitive
pressure to reduce servicing spreads. In addition, an increase in interest
rates may decrease the demand for consumer or commercial credit. A substantial
and sustained increase in interest rates could, among other things (i)
adversely affect the ability of the Company to purchase or originate loans or
other assets; (ii) reduce the average size of loans underwritten by the
Company; and (iii) reduce the gains recognized by the Company upon their
securitization and sale. A decline in interest rates could decrease the size
of the Company's loan servicing portfolio by increasing the level of loan
prepayments, thereby shortening the life and impairing the value of the Excess
Spread Receivable (as defined below). Fluctuating interest rates also may
affect the net interest income earned by the Company resulting from the
difference between the yield to the Company on loans held pending sale and the
cost of funds obtained by the Company to finance such loans. In addition,
inverse or flattened interest yield curves could have an adverse impact on the
profitability of the Company because the loans or assets pooled and sold by
the Company are priced based on long-term interest rates while the senior
interests in the related REMIC, owner trust or grantor trust are priced on the
basis of intermediate term United States Treasury rates.
NEGATIVE CASHFLOWS AND CAPITAL NEEDS
Although the Company believes that cash available from operations will be
sufficient to enable it to make required interest payments on its debt
obligations and other required payments, there can be no assurance in this
regard and the Company may encounter liquidity problems which could affect its
ability to meet such obligations while attempting to withstand competitive
pressures or adverse economic conditions. In such circumstances, the value of
the debt obligations, including any Debt Securities, could be adversely
affected.
6
<PAGE>
The Company's primary cash requirements are expected to include the funding
of: (i) mortgage, loan and lease originations and purchases pending their
pooling and sale; (ii) the points and expenses paid in connection with the
acquisition of wholesale loans; (iii) fees and expenses incurred in connection
with its securitization program; (iv) overcollateralization or reserve account
requirements in connection with loans and leases pooled and sold; (v) ongoing
administrative and other operating expenses; (vi) payments related to tax
obligations; (vii) interest and principal payments under the Company's long-
term debt and short-term borrowed funds; (viii) the costs of the Purchase and
Sale Facilities (as defined below) and the funding obligation under the
Repurchase Agreement (as defined below); and (ix) the cost of any new
acquisitions that the Company may pursue and deferred purchase price
commitments on existing acquisitions. The Company has operated, and expects to
continue to operate, on a negative cash flow basis which is expected to
increase as the volume of the Company's loan and asset purchases and
originations increases and its securitization program grows. In a
securitization, the Company recognizes a gain on the sale of loans or assets
securitized upon the closing of the securitization, but does not receive the
majority of the cash representing such gain until it receives the Excess
Spread, which is payable over the actual life of the loan or other assets
securitized. This negative cash flow has been partially offset by the
Company's move into retail origination which resulted in an increase in the
cash received from securitization through origination points and other cash
income included in the gain on sale results. The Company incurs significant
expenses in connection with a securitization and incurs both current and
deferred tax liabilities as a result of the gain on sale. Therefore, the
Company requires continued access to short- and long-term external sources of
cash to fund its operations.
The Company's primary sources of liquidity are existing cash, sales of
loans, leases and other assets, the sale of loans under the Purchase and Sale
Facilities and Repurchase Agreement, the sale of Excess Spread Receivables and
further issuances of debt and equity (subject to the covenants of Senior Notes
and the Debt Securities).
In anticipation of growth in the Company's future operations, additional
financing sources will be required although there can be no assurance that the
Company will be successful in consummating additional financing transactions
in the future on terms that the Company would consider to be favorable.
Furthermore, no assurance can be given that Continental Grain Company
("Continental Grain") will provide any financing if the Company is unable to
obtain third party financing.
Dependence on Securitization Program
Since 1991, the Company has pooled and sold through securitization
substantially all loans or other assets which it originates or purchases.
Accordingly, adverse changes in the securitization market could impair the
Company's ability to originate, purchase and sell loans or other assets on a
favorable or timely basis. Any such impairment could have a material adverse
effect upon the Company's business and results of operations. In addition, the
securitization market for many types of assets is relatively undeveloped and
may be more susceptible to market fluctuations or other adverse changes than
more developed capital markets. Finally, any delay in the sale of a loan or
other asset pool would postpone the recognition of gain on such loans until
their sale. Such delays could cause the Company's earnings to fluctuate from
quarter to quarter.
In addition, in order to gain access to the securitization market for home
equity loans and certain other classes of assets the Company has credit
enhanced its securitizations with a guarantee from a monoline insurance
company and through the internal credit enhancement of a senior/subordinate
structure. The senior/subordinate structure utilizes overcollateralization
mechanics that include (i) subordinating the principal and interest payments
due to junior securityholders to the principal and interest payments due to
senior securityholders and (ii) requiring the Company to retain certain Excess
Spread Receivables. For guaranteed securitizations, the Company has primarily
relied on four monoline insurance companies to provide guarantees on
outstanding senior interests in the related REMIC, owner trust or grantor
trust to enable it to obtain an AAA/Aaa rating for such interests. Any
unwillingness of the monoline insurance companies to guarantee the senior
interests in the Company's home equity loan or other asset pools may have a
material adverse effect on the Company's financial
7
<PAGE>
position and results of operations. For senior/subordinate structures, any
decline in interest by investors for less than "AAA" rated investments may
require the Company to retain more Excess Spread Receivables.
Dependence on Purchase and Sale Facilities and the Repurchase Agreement
In order to fund new loan and asset originations and purchases, the Company
is dependent upon its ability to sell loans and other assets through its
subsidiaries under the Purchase and Sale Facilities and the Repurchase
Agreement with certain financial institutions. The "Purchase and Sale
Facilities" allow the Company's subsidiaries to sell, with limited recourse,
interests in designated pools of loans and other assets, subject to various
repurchase options. A portion of the purchase price for any assets (up to 10%)
is generally deposited into an account held by the financial institution on
behalf of the subsidiary, against which the financial institution may set off
any losses incurred in the resale of such assets. Unless waived, each Purchase
and Sale Facility will terminate upon the occurrence of certain events, which
include: (i) failure of the subsidiary to perform under the terms and
covenants of the Purchase and Sale Facility (including payment obligations),
to make true representations and warranties regarding the assets sold and
certain other matters, to make material scheduled payments under all
indebtedness or to perform under any other agreement with the financial
institution; (ii) any material adverse change in the financial condition of
the Company or the subsidiary; and (iii) certain bankruptcy events of the
Company or the subsidiary. The Company has guaranteed its subsidiaries'
obligations under the Purchase and Sale Facilities. The "Repurchase Agreement"
is a funding agreement which allows the Company to sell receivables held for
sale to a financial institution under an agreement that the Company will
repurchase the asset, generally within 30 to 90 days. This agreement has a
one-year renewable term which expires March 1999.
Although the Company expects to be able to obtain replacement financing or
asset purchase commitments when the Company's current Purchase and Sale
Facilities and the Repurchase Agreement expire or additional financing or
asset purchase commitments when such agreements become fully utilized, there
can be no assurance that such financing will be obtainable on as favorable
terms, if at all. To the extent that the Company is unable to arrange any
third party or other financing, the Company's loan origination and purchasing
activities would be adversely affected, which could have a material adverse
effect on the Company's operations, financial results and cash position.
EFFECT OF CERTAIN DEBT OBLIGATIONS ON THE COMPANY
Effect of the Notes
In August 1996, the Company issued $300 million aggregate principal amount
of 8 3/8% Senior Notes due 2003 (the 8 3/8% Senior Notes ), and, in March 1997,
the Company issued $200 million aggregate principal amount of 7 1/2% Senior
Notes due 2002 (the 7 1/2% Senior Notes, and together with the 8 3/8% Senior
Notes, the "Senior Notes"). The indentures pursuant to which the Senior Notes
were issued (the "Senior Notes Indentures"), and the indenture pursuant to which
any Debt Securities may be issued (the "Indenture") place certain restrictions
on the Company which may limit the Company's operating flexibility. Such
restrictions include the following: (i) limitations on indebtedness; (ii)
limitations on liens; (iii) limitations on restricted payments such as
dividends, repurchases of the Company's stock and repurchase of subordinated
obligations and minority investments; (iv) limitations on restrictions on
distributions from subsidiaries; (v) limitations on sales of assets and
subsidiary stock; and (vi) limitations on mergers and consolidations.
In addition, upon a "change of control," the Holders of the Senior Notes may
cause the Company to repurchase the Senior Notes. A "change of control" as
defined in the Senior Notes Indentures and the Indenture includes the
occurrence of: (i) the acquisition of 35% of the outstanding Common Stock by a
person other than Continental Grain or its stockholders at a time when
Continental Grain or its stockholders own less than such amount owned by such
greater than 35% stockholder; (ii) certain changes in the composition of a
majority of the Board of Directors during any two consecutive years; and (iii)
certain mergers and consolidations or sale of all or substantially all of the
assets of the Company.
8
<PAGE>
The occurrence of an event of default under the Senior Notes Indentures and
the Indenture or a "change of control" could have a material adverse effect
upon the Company.
Effect of Credit Facilities
The Company's Credit Facilities contain a number of restrictive covenants
including: (i) limitations on indebtedness; (ii) limitations on liens; (iii)
minimum net worth requirements; (iv) limitations on restrictions on
distributions from subsidiaries; (v) limitations on sales of assets and
subsidiary stock; and (vi) limitations on merger and consolidations.
EXCESS SPREAD RECEIVABLES
As a fundamental part of its business and financing strategy, the Company
sells substantially all of its loans or other assets through securitizations.
In a securitization, the Company sells loans or other assets that it has
originated or purchased to a trust for a cash purchase price and an interest
in the loans or other assets securitized in the form of the Excess Spread. The
cash purchase price is raised through an offering of pass-through certificates
by the trust. Following the securitization, the purchasers of the pass-through
certificates receive a portion of the loans' principal and interest collected
and interest at the investor pass-through interest rate on the certificate
balance, while the Company receives the Excess Spread. The Excess Spread
generally represents, over the life of the loans or other assets, the excess
of the weighted average coupon on each pool of loans or other assets sold over
the sum of the pass-through interest rate plus a normal servicing fee, a
trustee fee, an insurance fee and an estimate of annual future credit losses
related to the loans or other assets securitized.
The primary component of the Company's gross income is the gain on sale of
loans or other assets, which represents the Excess Spread Receivable. The
Company recognizes the gain on sale of loans or other assets in the fiscal
year in which such loans or other assets are sold, although cash (representing
the Excess Spread and servicing fees) is received by the Company over the life
of the loans or other assets. Concurrent with recognizing such gain on sale,
the Company records the Excess Spread Receivable as an asset on its
consolidated balance sheet.
In 1994, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"), which requires fair value accounting for these
securities. In accordance with the provisions of SFAS 115, the Company
classifies subordinated classes of REMICs, owner trusts and grantor trusts as
"trading securities" and, as such, they are recorded at fair value with the
resultant unrealized gain or loss recorded in the results of operations in the
period of the change in fair value. The Company determines fair value on a
quarterly basis based on a discounted cash flow analysis. The cash flows are
estimated as the excess of the weighted average coupon on each pool of
consumer and commercial loans, leases and receivables (collectively, the
"Receivables") sold over the sum of the pass-through interest rates plus a
normal servicing fee, a trustee fee, an insurance fee (where applicable) and
an estimate of annual future credit losses related to the Receivables
securitized, over the life of the Receivables. These cash flows are projected
over the life of the Receivables using prepayment, default, and interest rate
assumptions that the Company believes market participants would use for
similar financial instruments subject to prepayment, credit and interest rate
risk and are discounted using an interest rate that the Company believes a
purchaser unrelated to the seller of such a financial instrument would demand.
Higher than anticipated rates of loan prepayments or credit losses on the
loans or other assets underlying the Excess Spread Receivables would require
the Company to write down the value of the Excess Spread Receivables, which
could have a material adverse impact on the Company's financial position and
results of operations.
While the Company has consummated contingent recourse sales of Excess Spread
Receivables from time to time, there is no liquid market for such Excess
Spread Receivables. In fiscal 1995, the Company, through its subsidiaries,
began to sell certain Excess Spread Receivables. In fiscal 1998, the Company,
executed a securitization of Excess Spread Receivables through the issuance of
$99.7 million in Net Interest Margin Notes by a subsidiary of the Company. In
connection with such sales of Excess Spread Receivables, the Company may
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retain negotiated levels of recourse obligations in the event the purchaser
does not realize expected cash flows from the Excess Spread Receivables that
have been sold. Prior to April 2, 1996, Continental Grain had guaranteed, for
a fee, the Company's performance obligations under such sales, but is under no
obligation to provide such guarantees for future transactions. The Company, as
well as Continental Grain, has guaranteed its subsidiaries' performance
obligations under each such sale although, in fiscal 1997, the Company sold
Excess Spread Receivables without guarantees by Continental Grain. The Company
expects to continue such sales in the future. If Continental Grain does not
provide such guarantees in the future, the Company's ability to raise cash by
entering into future sales of its Excess Spread Receivables with retained
recourse could be impaired. The Company's recourse obligations under these
sales transactions could result in losses in the event actual cash flow from
the Excess Spread Receivables that have been sold is significantly less than
was anticipated at the time of the related sale.
In addition, the Company has also sold without recourse a significant volume
of interest-only certificates which the Company generated from its
securitization activities from time to time. These sales represent an
important source of liquidity for the Company. Any impairment of the Company's
ability to sell these interest-only certificates would require the Company to
obtain liquidity from other sources and thus could have a materially adverse
impact on the Company's financial position or results of operations.
Although the Company intends to continue to pursue opportunities to sell
Excess Spread Receivables, no assurance can be given that such opportunities
will be available in the future or that all or any portion of Excess Spread
Receivables could in fact be sold at their stated value on the balance sheet,
if at all. The Senior Notes Indentures, the Indenture and the Credit
Facilities place certain limitations on the Company's ability to incur
indebtedness secured by its Excess Spread Receivables. Although the Company
may seek in the future to negotiate such financing within the terms of such
limitations, there can be no assurance that the Company will be able to
identify sources of such financing or whether the terms of any such financing,
if available, would be on terms the Company would consider favorable.
FINANCING EXCESS SPREAD RECEIVABLES FOR STRATEGIC ALLIANCE CLIENTS
The Company finances the Excess Spread Receivables of certain Strategic
Alliance Clients through loans secured by such Excess Spread Receivables or by
a pledge of the stock of the special purpose corporation holding such Excess
Spread Receivables. In a similar manner, the Company also finances the related
Excess Spread, subsequent to the related securitization, of certain Strategic
Alliance Clients. The financed Excess Spread Receivables are generated through
securitizations of home equity and home improvement loans. While all financed
Excess Spread Receivables have been issued in securitizations which yielded
securities rated investment grade by nationally recognized statistical rating
organizations, and all have been financed at a discount to fair value
determined after application of discounts for expected loss, prepayment and
interest rate factors, the Strategic Alliance Clients are often companies with
limited operating histories and capital and have not been rated or have a non-
investment grade credit rating. The value of the financed Excess Spread
Receivables or Excess Spread is dependent on, among other things, the ability
of the Strategic Alliance Client to service its securitized assets in
accordance with the specifications of the related pooling and servicing
agreements. If a Strategic Alliance Client is unable to meet its obligations
under the pooling and servicing agreement pertaining to the financed Excess
Spread Receivables, the value of such Excess Spread Receivables could decline
to less than the amount of the loan it secures. In such cases, the Company
would suffer losses.
COMPETITION
The home equity loan market is highly competitive. The Company faces
competition from other consumer finance lenders, mortgage lenders, mortgage
brokers, commercial banks, mortgage banks, large securities firms, smaller
boutique securities firms, credit unions, thrift institutions, credit card
issuers and finance companies. Many of these competitors are substantially
larger and have more capital and other resources than the Company. Competition
can take many forms, including convenience in obtaining a loan, customer
service, marketing and
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distribution channels, terms provided and interest rates charged to borrowers.
Heightened competition could contribute to higher prepayments. In addition,
the current level of gains realized by the Company and its competitors on the
sale of their home equity loans could attract additional competitors into this
market with the possible effect of lowering gains that may be realized on the
Company's future loan sales. Although the Company has recently diversified its
organization capabilities with the acquisition of home equity companies with
retail capabilities, wholesale loans are expected to remain a significant part
of the Company's home equity loan production program. As a purchaser of
wholesale loans, the Company is exposed to fluctuations in the volume and cost
of wholesale loans resulting from competition from other purchasers of such
loans, market conditions and other factors.
CONTINGENT RISKS
Although the Company sells substantially all loans or other assets which it
originates or purchases, the Company retains some degree of risk on
substantially all loans or other assets sold. During the period of time that
loans or other assets are held pending sale, the Company is subject to the
various business risks associated with the lending business including the risk
of borrower default, the risk of foreclosure and the risk that an increase in
interest rates would result in a decline in the value of loans or other
assets. The Company continues to be subject to the risks of default and
foreclosure following the sale of the loans or other assets through
securitization to the extent that actual losses exceed the loss assumption
made by the Company in valuing the Excess Spread received from its
securitizations. The documents governing the Company's securitization program
require (i) the Company to establish deposit accounts or (ii) the related
trust to build overcollateralization levels by retaining Excess Spread
distributions or applying Excess Spread distributions to reduce the principal
balances of the senior interests issued by the trust. These actions serve as
credit enhancement for the related trust and are therefore available to fund
losses realized on loans or other assets held by such trust. In addition,
documents governing the Company's securitization programs require the Company
to commit to repurchase or replace loans or other assets which do not conform
to the representations and warranties made by the Company at the time of sale.
When borrowers are delinquent in making monthly payments on loans included in
a REMIC, owner trust or grantor trust, the Company is required, if it is the
servicer of such loans, to advance amounts equal to the delinquent interest on
such loans to the extent that the Company deems such advances ultimately
recoverable. These advances may require funding from the Company's capital
resources but have priority of repayment out of the trust from the succeeding
month's payments on loans in the trust. The Company also has contingent risk
with respect to financing through its Purchase and Sale Facilities and the
sale of Excess Spread Receivables. See "Negative Cashflows and Capital Needs--
Dependence on Purchase and Sale Facilities and the Repurchase Agreement" and
"Excess Spread Receivables."
ENVIRONMENTAL LIABILITIES
In the course of its business, the Company has acquired, and may in the
future acquire, properties securing loans that are in default. There is a risk
that hazardous substances or waste, contaminants, pollutants or sources
thereof could be discovered on such properties after acquisition by the
Company. In such event, the Company might be required to remove such
substances from the affected properties at its sole cost and expense. There
can be no assurances that the cost of such removal would not substantially
exceed the value of the affected properties or the loans secured by the
properties or that the Company would have adequate remedies against the prior
owner or other responsible parties, or that the Company would not find it
difficult or impossible to sell the affected properties either prior to or
following any such removal.
GOVERNMENT REGULATIONS
The home equity loan and financing operations of the Company are subject to
regulation by federal, state and local government authorities, as well as to
various laws and judicial and administrative decisions, that impose
requirements and restrictions affecting, among other things, the Company's
loan originations, credit activities, maximum interest rates, finance and
other charges, disclosures to customers, the terms of secured transactions,
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collection, repossession and claims-handling procedures, multiple
qualification and licensing requirements for doing business in various
jurisdictions and other trade practices. Although the Company believes that it
is in compliance in all material respects with applicable local, state and
federal laws, rules and regulations, there can be no assurance that more
restrictive laws, rules and regulations will not be adopted in the future that
could make compliance much more difficult or expensive, restrict the Company's
ability to originate, purchase or sell loans, further limit or restrict the
amount of interest and other charges earned on loans originated or purchased
by the Company, further limit or restrict the terms of loan agreements, or
otherwise adversely affect the business of the Company. In addition, changes
in government sponsored loan programs, such as the Title I Home Improvement
Loan program, could adversely affect the business of the Company.
As part of the Company's financing and asset securitization business,
ContiFinancial Services is required to register as a broker-dealer with
certain Federal and state securities regulatory agencies and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). As a
registered broker-dealer, ContiFinancial Services is subject to certain
minimum net capital rules and certain other requirements. Any changes in such
requirements or the loss of the broker-dealer license of ContiFinancial
Services, for any reason, could have a material adverse effect on the Company.
INVESTMENT COMPANY ACT CONSIDERATIONS
The Company believes that it is not an investment company as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
Among other things, under the Investment Company Act, an investment company is
prohibited from engaging in certain activities, is restricted from entering
into certain transactions with affiliated persons and interested persons, is
governed by certain laws that limit the issuance of debt securities, preferred
stock, warrants and rights to subscribe or purchase a security and is subject
to certain restrictions on the payment of dividends, the making of loans and
the purchase and redemption of its securities.
The Company intends to continue its business and to conduct its operations
so as not to become regulated as an investment company under the Investment
Company Act. The Company's business strategy includes acquiring equity or debt
interests in Strategic Alliance Clients and investing in loans, other assets
and Excess Spread Receivables. In order to avoid becoming an investment
company, the Company will have to limit certain types of its investments or
its activities. If the Company were to become an investment company for any
reason, the Company could be required either (i) to change significantly the
manner in which it conducts its operations to avoid being required to register
as an investment company or (ii) to register as an investment company, either
of which could have a material adverse effect on the Company and the market
prices for the Offered Securities.
CONTROL OF THE COMPANY
Continental Grain currently owns approximately 75% of the Company's
outstanding Common Stock. As a result, Continental Grain is able to elect all
of the directors of the Company and to determine the outcome of any matter
submitted to a vote of the Company's stockholders for approval. Continental
Grain has advised the Company that its current intention is to continue to
hold all shares of Common Stock beneficially owned by it. However, there can
be no assurance that Continental Grain will not decide to sell all or a
portion of its holdings at some future date.
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RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the nine months ended December 31, 1997 and for each of the
years in the five-year period ended March 31, 1997.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
DECEMBER 31, YEAR ENDED MARCH 31,
------------ -----------------------------
1997 1997 1996 1995 1994 1993
------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges... 2.33x 2.47x 2.65x 2.63x 3.49x 2.62x
===== ===== ===== ===== ===== =====
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. Earnings consist of income before income taxes less
undistributed earnings of unconsolidated subsidiaries plus fixed charges.
Fixed charges consist of interest on all indebtedness.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Offered Securities will be
used for general corporate purposes, which may include the repayment of
indebtedness outstanding from time to time, acquisitions and other general
corporate purposes.
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<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms of the Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
may apply to the Securities so offered will be described in the Prospectus
Supplement relating to such Securities.
CAPITAL STOCK
The authorized capital stock of the Company consists of 250,000,000 shares
of Common Stock and 25,000,000 shares of Preferred Stock. As of December 31,
1997, the Company had 47,657,539 shares of Common Stock and no shares of
Preferred Stock outstanding. The following summary description of the capital
stock of the Company is qualified in its entirety by reference to the Restated
Certificate of Incorporation and the By-laws of the Company, copies of which
are incorporated by reference herein.
COMMON STOCK
The shares of Common Stock currently outstanding are, and the shares of
Common Stock that may be offered hereby will be, fully paid and non-
assessable. Each holder of Common Stock is entitled to one vote for each share
owned of record on the applicable record date on all matters presented to a
vote of stockholders, including the election of directors. In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the holders of Common Stock are entitled to share equally and ratably
in the net assets of the Company, if any, remaining after the payment of all
debts and liabilities of the Company and the liquidation preference of any
outstanding Preferred Stock. The holders of the Common Stock have no
cumulative voting rights or preemptive or preferential right to purchase or
subscribe for any part of the unissued capital stock of the Company of any
class or for any new issue of stock of any class or to purchase or subscribe
for any Debt Securities, whether or not convertible into Common Stock, whether
now or hereafter issued. Holders of Common Stock are entitled to receive
dividends if, as and when declared by the Board of Directors out of funds
legally available for such purpose, subject to the dividend and liquidation
rights of any Preferred Stock that may be issued.
The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York.
PREFERRED STOCK
The description of the Preferred Stock set forth below and in any Prospectus
Supplement does not purport to be complete and is subject to and qualified in
its entirety by reference to the Company's Certificate of Incorporation, as
amended (the "Certificate"), and the Certificate of Designations relating to
each such series of Preferred Stock.
General
Under the Certificate, the Board of Directors may, by resolution, establish
series of Preferred Stock having such voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as the Board of Directors
may determine.
Each series of Preferred Stock will have the dividend, liquidation,
redemption and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to such series of Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of
Preferred Stock offered thereby for specific terms, including: (1) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (2) the amount of liquidation preference per share (or
method of calculation); (3) the price at which such series of Preferred Stock
will be issued; (4) the dividend rate (or method of calculation),
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<PAGE>
the dates on which dividends will be payable, whether such dividends will be
cumulative or noncumulative and, if cumulative, the dates from which dividends
will accrue; (5) any redemption or sinking fund provisions; (6) any terms by
which such series of Preferred Stock may be convertible into or exchanged for
Common Stock or Debt Securities; (7) any listing of such series on any
securities exchange or inclusion on any automated trading system; (8) the
relative ranking and preferences, if applicable, of such series as to dividend
rights and rights upon liquidation, dissolution or the winding up of the
affairs of the Company; and (9) any additional or other rights, preferences,
privileges, limitations and restrictions relating to such series of Preferred
Stock.
The Preferred Stock offered hereby will be issued in one or more series. The
holders of Preferred Stock will have no preemptive rights. Preferred Stock
will be fully paid and nonassessable upon issuance against full payment of the
purchase price therefor. Unless otherwise specified in the Prospectus
Supplement relating to a particular series of Preferred Stock, each series of
Preferred Stock will, with respect to dividend rights and rights on
liquidation, dissolution and winding up of the Company, rank prior to the
Common Stock (the "Junior Stock") and on a parity with each other series of
Preferred Stock offered hereby (the "Parity 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. Such rate 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. Dividends on any series of the Preferred Stock may
be cumulative or noncumulative, as provided in the Prospectus Supplement
relating thereto. If the Board of Directors of the Company fails to declare a
dividend payable on a dividend payment date on any series of Preferred Stock
for which dividends are noncumulative, then the right to receive a dividend in
respect of the dividend period ending on such dividend payment date will be
lost, and the Company will have no obligation to pay the dividend accrued for
that period, whether or not dividends are declared for any future period.
Dividends on shares of each series of Preferred Stock for which dividends are
cumulative will accrue from the date set forth in the applicable Prospectus
Supplement.
The Preferred Stock of each series will include customary provisions (1)
restricting the payment of dividends or the making of other distributions on,
or the redemption, purchase or other acquisition of, Junior Stock unless full
dividends, including, in the case of cumulative Preferred Stock, accruals, if
any, in respect of prior dividend periods, on the shares of such series of
Preferred Stock have been paid and (2) providing for the pro rata payment of
dividends on such series and other Parity Stock when dividends have not been
paid in full upon such series and other Parity Stock.
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
Junior Stock, 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. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the amounts
payable with respect to the Preferred Stock of any series and any Parity Stock
are not paid in full, the holders of the Preferred Stock of such series and of
such Parity Stock will share ratably in any such distribution of assets of the
Company in proportion to the full respective preferential amounts (which may
include accumulated dividends) to which they are entitled. After payment of
the full amount of the liquidating distribution to which they are entitled,
the holders of such series of Preferred Stock will have no right or claim to
any of the remaining assets of the Company. Neither the sale of all or a
portion of the Company's assets nor the merger or consolidation of the Company
into or with any other corporation shall be deemed to be a dissolution,
liquidation or winding up, voluntarily or involuntarily, of the Company.
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<PAGE>
Redemption
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by mandatory
or optional redemption, the shares to be redeemed will be determined by lot or
pro rata, as may be determined by the Board of Directors of the Company, or by
any other method determined to be equitable by the Board of Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
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.
DEBT SECURITIES
The following summary of the terms of the Debt Securities sets forth certain
general terms and provisions of the Debt Securities to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in
the Prospectus Supplement relating to such Debt Securities.
The Debt Securities are to be issued under an indenture dated as of March 4,
1998, as supplemented from time to time (the "Indenture"), between the Company
and The Bank of New York, as Trustee (the "Trustee"). The Indenture provides
that there may be more than one trustee thereunder, each with respect to one
or more series of Debt Securities. In the event that there is more than one
trustee under the Indenture, the powers and trust obligations of each trustee
as described herein will extend only to the series of Debt Securities for
which it is Trustee. The Indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA").
The statements made under this heading relating to the Debt Securities and
the Indenture, as modified or superseded by the applicable Prospectus
Supplement, are summaries of the provisions thereof, do not purport to be
complete and are qualified in their entirety by reference to the detailed
provisions of the Indenture (the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part), including the
definitions of certain terms therein and in the TIA. Certain capitalized terms
used below but not defined herein have the meanings ascribed to them in the
Indenture. Unless otherwise noted below, section references below are to the
Indenture.
The particular terms of the Debt Securities being offered (the "Offered Debt
Securities"), any modifications of or additions to the general terms of the
Debt Securities as described herein that may be applicable in the case of the
Offered Debt Securities and any applicable federal income tax considerations
will be described in the Prospectus Supplement relating to the Offered Debt
Securities. Accordingly, for a description of the terms of the Offered Debt
Securities, reference must be made both to the Prospectus Supplement relating
thereto and the description of Debt Securities set forth in this Prospectus.
General
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Senior Debt Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the
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Company. The indebtedness represented by the Subordinated Debt Securities will
be subordinated in right of payment to the prior payment in full of the Senior
Indebtedness of the Company (including the Senior Debt Securities) as
described under "Debt Securities--Subordination" below. The Debt Securities
may be issued in one or more series. The Indenture provides that there is no
limitation on the amount of debt securities that may be issued thereunder from
time to time.
The Company primarily conducts its operations through its Subsidiaries. The
rights of the Company and its creditors, including the Holders of the Debt
Securities, to participate in the assets of any Subsidiary upon the latter's
liquidation or reorganization will be subject to the prior claims of the
Subsidiary's creditors except to the extent that the Company may itself be a
creditor with recognized claims against the Subsidiary.
Reference is made to the Prospectus Supplement relating to the particular
Debt Securities offered thereby for the following terms, where applicable, of
the Debt Securities:
(1) the specific designation or title of the Debt Securities;
(2) the denominations in which such Debt Securities are authorized to be
issued, if other than U.S.$1,000 or any integral multiple thereof in the
case of Registered Securities (as defined below) and U.S.$5,000 in the case
of Bearer Securities (as defined below);
(3) the aggregate principal amount of such Debt Securities;
(4) the date or dates on which the principal of such Debt Securities will
mature or the method of determining such date or dates;
(5) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Debt Securities will be issued;
(6) the rate or rates (which may be fixed or variable) at which such Debt
Securities will bear interest, if any, or the method of calculating such
rate or rates;
(7) the times and places where principal of and any premium and interest,
if any, on such Debt Securities will be payable;
(8) the date or dates on which interest, if any, will be payable and the
record date or dates therefor or the method by which such date or dates
will be determined;
(9) the obligation, if any, of the Company to redeem or purchase such
Debt Securities pursuant to any sinking fund or analogous provisions, upon
the happening of a specified event or at the option of a holder thereof and
the period or periods within which, the price or prices at which and the
terms and conditions upon which, such Debt Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligations;
(10) the terms and conditions upon which conversion of such Debt
Securities ("Convertible Debt Securities") will be effected, including the
conversion price, the conversion period and other conversion provisions in
addition to or in lieu of those described below;
(11) the currency or currency units for which such Debt Securities may be
purchased or in which such Debt Securities may be denominated and/or the
currency or currency units in which principal, or premium, if any, and/or
interest, if any, on such Debt Securities will be payable and whether the
Company or the Holders of any such Debt Securities may elect to receive
payments in respect of such Debt Securities in a currency or currency units
other than that in which such Debt Securities are stated to be payable;
(12) if other than the principal amount thereof, the portion of the
principal amount of such Debt Securities which will be payable upon
declaration of the acceleration of the maturity thereof or the method by
which such portion shall be determined;
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(13) the person to whom any interest on any such Debt Security shall be
payable if other than the person in whose name such Debt Security is
registered on the applicable record date;
(14) any addition to, or modification or deletion of, any Event of
Default or any covenant of the Company specified in the Indenture with
respect to such Debt Securities;
(15) the application, if any, of such means of defeasance or covenant
defeasance as may be specified for such Debt Securities;
(16) whether such Debt Securities are to be issued in whole or in part in
the form of one or more temporary or permanent global securities and, if
so, the identity of the depositary for such global security or securities;
(17) whether such Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; and
(18) other material or special terms pertaining to such Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will not be listed on any securities exchange. Unless otherwise
provided in the applicable Prospectus Supplement, principal and premium, if
any, or interest, if any, will be payable and the Debt Securities may be
surrendered for payment or transferred at the offices of the Trustee as paying
and authenticating agent, provided that payment of interest on Registered
Securities may be made at the option of the Company (i) by check mailed to the
address of the person entitled thereto as it appears in the Security or (ii)
by wire transfer to an account designated by such person pursuant to an
arrangement that is satisfactory to the Company and the Trustee. Payment of
Bearer Securities may be made at such paying agencies outside of the United
States as the Company may appoint.
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will be issued in fully registered form without coupons in
denominations set forth in the Prospectus Supplement. No service charge will
be made for any transfer or exchange of such Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Where Debt Securities and Convertible
Debt Securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special Federal income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the Prospectus Supplement. Bearer Securities will be
transferable by delivery.
The Prospectus Supplement for a particular series may indicate terms for
redemption at the option of a Holder. Unless otherwise indicated in the
applicable Prospectus Supplement, the covenants contained in the Indenture and
the Debt Securities will not provide for redemption at the option of a Holder
nor necessarily afford Holders thereof protection in the event of a highly
leveraged or other transaction that may adversely affect such Holders.
Same-Day Settlement and Payment
Unless otherwise specified in the related Prospectus Supplement, settlement
for the Debt Securities will be made in immediately available funds. All
payments of principal and interest will be made by the Company in immediately
available funds. The Debt Securities will trade in the Same-Day Funds
Settlement System of The Depository Trust Company ("DTC") until maturity, and
secondary market trading activity for the Debt Securities will therefore
settle in immediately available funds.
Change of Control
Unless otherwise specified in the related Prospectus Supplement, upon the
occurrence of any of the following events (each a "Change of Control"), each
Holder shall have the right to require that the Company repurchase such
Holder's Debt Securities at a purchase price in cash equal to 100% of the
principal amount
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thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date):
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the
Voting Stock of the Company; provided, however, that the Permitted Holders
beneficially own (as defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of the Company than such
other person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this clause (i), such other person shall be
deemed to beneficially own any Voting Stock of a corporation held by
another corporation (a "parent corporation"), if such other person is the
beneficial owner (as defined above for such person), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined above for the Permitted Holders), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of
such parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent corporation);
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of the Company was approved by
a vote of 66 2/3% of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(iii) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company to another
Person (other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation; provided, however, that the sale by the Company or
its Restricted Subsidiaries from time to time of Receivables to a trust for
the purpose solely of effecting one or more securitizations shall not be
treated hereunder as a sale of all or substantially all the assets of the
Company.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Debt Securities at a purchase price in cash equal to
100% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment
date); (2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma results of
operations, cash flow and capitalization after giving effect to such Change of
Control); (3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (4) the
instructions determined by the Company, consistent with the covenant described
hereunder, that a Holder must follow in order to have its Debt Securities
purchased.
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Debt Securities pursuant to the covenant
described hereunder. To the extent that the provisions of any securities laws
or regulations conflict
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with the provisions of the covenant described hereunder, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the covenant described hereunder
by virtue thereof.
Management has no present intention to engage in a transaction involving a
Change of Control, although it is possible that the Company would decide to do
so in the future. Subject to the limitations discussed below, the Company
could, in the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect the Company's
capital structure or credit ratings. Restrictions on the ability of the
Company and its Subsidiaries to incur additional Indebtedness are contained in
the covenants described under "--Certain Covenants Applicable to Debt
Securities--Limitation on Incurrence of Indebtedness of the Company", "--
Limitation on Liens" and "--Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries". Such restrictions can only be waived with the
consent of the Holders of a majority in principal amount of the Debt
Securities then outstanding. See "--Modification or Waiver." Except for the
limitations contained in such covenants, however, the Indenture will not
contain any covenants or provisions that may afford Holders of the Debt
Securities protection in the event of a highly leveraged transaction.
Future indebtedness of the Company may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require such indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the Holders of a right to require the Company to
repurchase the Debt Securities could cause a default under such indebtedness,
even if the Change of Control itself does not, due to the financial effect of
such repurchase on the Company. Finally, the Company's ability to pay cash to
the Holders of Debt Securities following the occurrence of a Change of Control
may be limited by the Company's then existing financial resources. There can
be no assurance that sufficient funds will be available when necessary to make
any required repurchases. The provisions under the Indenture relative to the
Company's obligation to make an offer to repurchase the Debt Securities as a
result of a Change of Control may be waived or modified with the written
consent of the Holders of a majority in principal amount of the Debt
Securities.
Certain Covenants Applicable to Debt Securities
Set forth below are descriptions of certain covenants set forth in the
Indenture. With respect to the Debt Securities of any series, the covenants
may be modified or supplemented as set forth in the related Supplemental
Indenture for such series; any such modifications on supplements which are
material will be described in the applicable Prospectus Supplement. The
definition of certain capitalized terms set forth below are set forth under
"Debt Securities--Certain Definitions."
IN THE EVENT THAT AT ANY TIME (I) THE RATINGS ASSIGNED TO A PARTICULAR
SERIES OF DEBT SECURITIES BY BOTH OF THE RATING AGENCIES (AS DEFINED BELOW)
ARE INVESTMENT GRADE RATINGS (AS DEFINED BELOW) AND (II) NO DEFAULT HAS
OCCURRED AND IS CONTINUING UNDER THE INDENTURE WITH RESPECT TO SUCH SERIES,
EXCEPT AS SET FORTH IN THE PROSPECTUS SUPPLEMENT, THE PROVISIONS OF THE
INDENTURE DESCRIBED BELOW UNDER "--LIMITATION ON INCURRENCE OF INDEBTEDNESS OF
THE COMPANY", "--LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF RESTRICTED
SUBSIDIARIES", "--LIMITATION ON LIENS", "--LIMITATION ON RESTRICTED PAYMENTS",
"--LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES",
"--LIMITATION ON AFFILIATE TRANSACTIONS" "--LIMITATION ON SALES OF ASSETS AND
SUBSIDIARY STOCK" AND CLAUSE (III) OF "--MERGER AND CONSOLIDATION" WILL BE
PERMANENTLY TERMINATED WITH RESPECT TO SUCH SERIES AND THE COMPANY AND ITS
RESTRICTED SUBSIDIARIES WILL NO LONGER BE SUBJECT THERETO WITH RESPECT TO SUCH
SERIES (SUCH PERMANENT TERMINATION OF SUCH PROVISIONS BEING HEREIN CALLED THE
"COVENANT TERMINATION").
LIMITATION ON THE INCURRENCE OF INDEBTEDNESS OF THE COMPANY. (a) The Company
shall not Incur, directly or indirectly, any Indebtedness if, on the date of
such Incurrence and after giving effect thereto, the Consolidated Leverage
Ratio exceeds 2.5 to 1.0.
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(b) Notwithstanding the foregoing paragraph (a), the Company may Incur any
or all of the following Indebtedness:
(1) Permitted Warehouse Indebtedness;
(2) Indebtedness owed to and held by the Company or a Consolidated
Restricted Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock which results in any such Consolidated
Restricted Subsidiary ceasing to be a Consolidated Restricted Subsidiary or
any subsequent transfer of such Indebtedness (other than to the Company or
another Consolidated Restricted Subsidiary) shall be deemed, in each case,
to constitute the Incurrence of such Indebtedness by the Company;
(3) with respect to any series of Debt Securities, the Debt Securities of
such series and all Debt Securities of such series and all prior series
Outstanding as of the Issue Date of such series of Debt Securities;
(4) Indebtedness outstanding on the Issue Date of a series of Debt
Securities (other than Indebtedness described in clause (1), (2) or (3) of
this covenant);
(5) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
to paragraph (a) or pursuant to clause (b)(3) or (b)(4) or this clause
(b)(5);
(6) Hedging Obligations directly related to: (i) Indebtedness Incurred
(or reasonably expected to be Incurred) and permitted to be Incurred by the
Company or the Restricted Subsidiaries pursuant to the Indenture; (ii)
Receivables held by the Company or its Restricted Subsidiaries pending sale
or securitization; (iii) Receivables of the Company or its Restricted
Subsidiaries that are subject to a Warehouse Facility; (iv) Receivables
with respect to which the Company reasonably expects to purchase or commit
to purchase, finance or accept as collateral; or (v) Excess Spread
Receivables and other assets owned or financed by the Company or its
Restricted Subsidiaries in the ordinary course of business; provided,
however, that such Hedging Obligations are eligible to receive hedge
accounting treatment in accordance with GAAP as applied by the Company as
of the date of Incurrence thereof; and
(7) Indebtedness in an aggregate principal amount which, together with
the principal amount of all other Indebtedness of the Company outstanding
on the date of such Incurrence (other than Indebtedness permitted by
clauses (1) through (6) above or paragraph (a)) does not exceed $40.0
million.
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Debt Securities to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing covenant, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company, in its sole
discretion, may (i) classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses
or (ii) divide and classify such item of Indebtedness in more than one of the
types of Indebtedness described above.
LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF RESTRICTED
SUBSIDIARIES. The Company shall not permit any Restricted Subsidiary to Incur,
directly or indirectly, any Indebtedness or Preferred Stock except:
(a) Permitted Warehouse Indebtedness;
(b) Warehouse Margin Indebtedness provided, that such Warehouse Margin
Indebtedness has remained unpaid for five or fewer Business Days; provided
further, however, that the amount of such Warehouse Margin Indebtedness,
when taken together with the aggregate amount of all other Warehouse Margin
Indebtedness Incurred pursuant to this clause (b) and outstanding on the
date of such Incurrence, does not exceed 5% of Consolidated Net Worth;
(c) Indebtedness or Preferred Stock issued to and held by the Company or
a Consolidated Restricted Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in any
such Consolidated Restricted Subsidiary ceasing to be a Consolidated
Restricted Subsidiary or any
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subsequent transfer of such Indebtedness or Preferred Stock (other than to
the Company or a Consolidated Restricted Subsidiary) shall be deemed, in
each case, to constitute the Incurrence of such Indebtedness or Preferred
Stock by the issuer thereof;
(d) Indebtedness or Preferred Stock of a Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was acquired
by the Company (other than Indebtedness or Preferred Stock Incurred in
connection with, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company); provided, however, that on the date of such
acquisition and after giving effect thereto, the Company would have been
able to Incur at least $1.00 of Indebtedness pursuant to paragraph (a) of
the covenant described under "--Limitation on Incurrence of Indebtedness of
the Company";
(e) Indebtedness or Preferred Stock outstanding on the Issue Date of a
series of Debt Securities (other than Indebtedness described in clause (a),
(b), (c) or (d) of this covenant); and
(f) Refinancing Indebtedness Incurred in respect of Indebtedness or
Preferred Stock referred to in clause (d) or (e) above or this clause (f);
provided, however, that to the extent such Refinancing Indebtedness
directly or indirectly Refinances Indebtedness or Preferred Stock of a
Subsidiary described in clause (d) above, such Refinancing Indebtedness
shall be Incurred only by such Subsidiary.
LIMITATION ON LIENS. With respect to any series of Debt Securities, the
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, Incur or permit to exist any Lien of any nature whatsoever on
any of its properties (including Capital Stock of a Restricted Subsidiary),
whether owned at the Issue Date of such series or thereafter acquired, other
than Permitted Liens, without effectively providing that the Debt Securities
of such series shall be secured equally and ratably with (or prior to) the
obligations so secured for so long as such obligations are so secured.
LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to make a Restricted
Payment if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); (2) the Company is not able to Incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant described
under "--Limitation on Incurrence of Indebtedness of the Company"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
since March 12, 1997 would exceed the sum of: (A) 25% of the Consolidated Net
Income accrued during the period (treated as one accounting period) from
January 1, 1997 to the end of the most recent fiscal quarter prior to the date
of such Restricted Payment for which financial statements are available (or,
in case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock)
subsequent to January 1, 1997 (other than an issuance or sale to a Subsidiary
of the Company and other than an issuance or sale to an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees); (C) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent
to March 12, 1997, of any Indebtedness of the Company convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash, or the fair value of any other property,
distributed by the Company upon such conversion or exchange); (D) an amount
equal to the sum of (i) the net reduction in Investments in any Person
resulting from dividends or repayments of loans or advances, in each case to
the Company or any Restricted Subsidiary from such Person, and (ii) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of an Unrestricted Subsidiary at the
time such Unrestricted Subsidiary is designated a Restricted Subsidiary;
provided, however, that the foregoing sum in this clause (D) shall not exceed,
in the case of any Person, the amount of Investments made since March 12, 1997
by the Company or any Restricted Subsidiary in such Person and treated as a
Restricted Payment; and (E) $15 million.
(b) The provisions of the foregoing paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the
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substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company or an employee stock ownership plan or to a trust established
by the Company or any of its Subsidiaries for the benefit of their employees);
provided, however, that (A) such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from the calculation of amounts
under clause (3)(B) of paragraph (a) above; (ii) any purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value of
Subordinated Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company which is
permitted to be Incurred pursuant to the covenant described under "--
Limitation on Incurrence of Indebtedness of the Company"; provided, however,
that such purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value shall be excluded in the calculation of the amount of
Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted by the covenant
described under "--Limitation on Sales of Assets and Subsidiary Stock";
provided, however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments; (iv) dividends paid within
60 days after the date of declaration thereof if at such date of declaration
such dividend would have complied with the covenant described hereunder;
provided, however, that at the time of payment of such dividend, no other
Default shall have occurred and be continuing (or result therefrom); provided,
further, however, that such dividend shall be included in the calculation of
the amount of Restricted Payments; (v) any purchase of Capital Stock of the
Company made from time to time to meet the Company's obligations under its
employee stock ownership and option plans; provided, however, that such
purchase shall be excluded in the calculation of the amount of Restricted
Payments; (vi) the exercise or conversion of an option, warrant or other
security convertible or exchangeable for an equity security of a Strategic
Alliance Client in connection with a substantially simultaneous sale or other
disposition by the Company or a Restricted Subsidiary of such equity security;
provided, however, that the exercise price or other consideration paid by the
Company or a Restricted Subsidiary in connection with such exercise or
conversion shall be excluded from the calculation of the amount of Restricted
Payments and (vii) the making of an Investment by the Company or a Restricted
Subsidiary in another Person to the extent that the amount of such Investment,
when added together with the aggregate amount of all other Investments made
pursuant to this clause (vii) and then outstanding, does not exceed 10% of
Consolidated Net Tangible Assets; provided, however, that such Person's
primary business is a Related Business; provided, further, however, that (I)
at the time of such Investment, no Default shall have occurred and be
continuing and (II) the amount of such Investment shall be included in the
calculation of the amount of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary (a) to pay dividends or make any other
distributions on its Capital Stock to the Company or a Restricted Subsidiary
or pay any Indebtedness owed to the Company, (b) to make any loans or advances
to the Company or (c) transfer any of its property or assets to the Company,
except: (i) with respect to any series of Debt Securities, any encumbrance or
restriction pursuant to an agreement in effect at or entered into on the Issue
Date of such series; (ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement applicable to such Restricted
Subsidiary on or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than an agreement entered into in connection
with, or in anticipation of, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date; (iii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
any other agreement contained in any amendment to an agreement referred to in
clause (i) or (ii) of this covenant or this clause (iii); provided, however,
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement or amendment are no less favorable
to the Holders of Debt Securities than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in the agreements referred to
in clauses (i) or (ii) of the covenant described hereunder, as the case may
be; (iv) any such encumbrance or restriction consisting of customary non
assignment provisions in leases governing leasehold interests to the extent
such provisions restrict the transfer of the lease or the property leased
thereunder; (v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages
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securing Indebtedness of a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements or mortgages; and (vi) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, consummate any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset Disposition and at
least 85% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents and (ii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company elects, either to (x) acquire Additional
Assets, either directly or through a Restricted Subsidiary, or (y) prepay,
repay, redeem or purchase Senior Indebtedness of the Company or any
Indebtedness of a Restricted Subsidiary, as the case may be (other than in
either case Indebtedness owed to the Company or an Affiliate of the Company),
in either case within 180 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (B) second, to the
extent of the balance of such Net Available Cash after application in
accordance with clause (A), (x) make an offer to the Holders of a series of
Debt Securities (and to Holders of other Indebtedness which ranks pari passu
with such series of Debt Securities designated by the Company) to purchase
Debt Securities of such series (and such other pari passu Indebtedness)
pursuant to and subject to the conditions contained in the Indenture; and (C)
third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B) to (x) the acquisition by
the Company or any Restricted Subsidiary of Additional Assets or (y) the
prepayment, repayment or purchase of Indebtedness (other than any Disqualified
Stock) of the Company (other than Indebtedness owed to an Affiliate of the
Company), in either case within 180 days from the later of the receipt of such
Net Available Cash and the date the offer described in clause (b) below is
consummated; provided, however, that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (B) or (C)
above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased, and (iii) at the time of such Asset Disposition no
Default shall have occurred and be continuing (or would result therefrom).
Notwithstanding the foregoing provisions of this paragraph, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this paragraph except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which are not applied in
accordance with this paragraph exceeds $10 million. Pending application of Net
Available Cash pursuant to this covenant, such Net Available Cash shall be
invested in Temporary Cash Investments.
For the purposes of this covenant, the following are deemed to be cash or
cash equivalents: (x) the assumption of Indebtedness of the Company or any
Restricted Subsidiary, and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness, in connection with such
Asset Disposition and (y) securities received by the Company or any Restricted
Subsidiary from the transferee that are promptly converted by the Company or
such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of the
Debt Securities of a series (and other pari passu Indebtedness) pursuant to
clause (a)(ii)(B) above, the Company will be required to purchase Debt
Securities of such series tendered pursuant to an offer by the Company for
such Debt Securities (and other pari passu Indebtedness) at a purchase price
of 100% of their principal amount (without premium) plus accrued but unpaid
interest (or, in respect of such other pari passu Indebtedness, such lesser
price, if any, as may be provided for by the terms of such pari passu
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the Indenture. If the aggregate
purchase price of Debt Securities of such series (and any other pari passu
Indebtedness) tendered pursuant to such offer is less than the
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Net Available Cash allotted to the purchase thereof, the Company will be
required to apply the remaining Net Available Cash in accordance with clause
(a)(ii)(C) above. The Company shall not be required to make such an offer to
purchase Debt Securities (and other pari passu Indebtedness) pursuant to this
covenant if the Net Available Cash available therefor is less than $10 million
(which lesser amount shall be carried forward for purposes of determining
whether such an offer is required with respect to any subsequent Asset
Disposition).
(c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Debt Securities
pursuant to the covenant described hereunder. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
the covenant described hereunder, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this clause by virtue thereof.
LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company shall not, and shall
not permit any Restricted Subsidiary to, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof
(1) are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate, (2) if such Affiliate
Transaction involves an amount in excess of $2.0 million, (i) are set forth in
writing and (ii) have been approved by a majority of the members of the Board
of Directors having no personal stake in such Affiliate Transaction and (3) if
such Affiliate Transaction involves an amount in excess of $10.0 million, have
been determined by a nationally recognized investment banking firm to be fair,
from a financial standpoint, to the Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Permitted Investment or any Restricted Payment permitted to be made pursuant
to the covenant described under "--Limitation on Restricted Payments" or any
Permitted Investment, (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved
by the Board of Directors, (iii) the grant of stock options or similar rights
to employees and directors of the Company pursuant to plans approved by the
Board of Directors, (iv) loans or advances to employees in the ordinary course
of business in accordance with the past practices of the Company or its
Restricted Subsidiaries, but in any event not to exceed $10 million in
aggregate principal amount outstanding at any one time, (v) the payment of
reasonable fees to directors of the Company and its Restricted Subsidiaries
who are not employees of the Company or its Restricted Subsidiaries, (vi) any
Affiliate Transaction between the Company and a Consolidated Restricted
Subsidiary or between Consolidated Restricted Subsidiaries and (vii) with
respect to any series of Debt Securities, transactions pursuant to any
agreement as in existence as of the Issue Date of such series between the
Company or its Restricted Subsidiaries and Continental Grain or one of its
Subsidiaries.
MERGER AND CONSOLIDATION. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
related transactions, all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Debt
Securities and the Indenture; (ii) immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as having
been Incurred by such Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing, (iii)
immediately after giving effect to such transaction, the Successor Company
would be able to Incur an additional $1.00 of Indebtedness pursuant to
paragraph (a) of the covenant described under "--Limitation on Incurrence of
Indebtedness of the
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Company", (iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that is not
less than the Consolidated Net Worth of the Company prior to such transaction;
and (v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, but the predecessor Company, in the case of a
lease, shall not be released from the obligation to pay the principal of and
interest on the Debt Securities.
LIMITATION ON INVESTMENT COMPANY STATUS. The Company shall not take any
action, or otherwise permit to exist any circumstance, that would require the
Company to register as an "investment company" under the Investment Company
Act of 1940, as amended.
SEC REPORTS. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC and provide the Trustee with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a
U.S. corporation subject to such Sections, such information, documents and
other reports to be so filed and provided at the times specified for the
filing of such information, documents and reports under such Sections.
Certain Definitions
Set forth below is a summary of certain defined terms used in the Indenture:
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) used or useful in a Related Business, (ii) the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary, (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary; provided, however, that any such
Restricted Subsidiary described in clause (ii) or (iii) above is primarily
engaged in a Related Business or (iv) the Capital Stock or Indebtedness of a
Strategic Alliance Client.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the provisions described under "--Certain
Covenants--Limitation on Affiliate Transactions" and "--Certain Covenants--
Limitations on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall
also mean any beneficial owner of Capital Stock representing 5% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Capital Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any
such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of
this definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary,
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary,
(iv) any Investment in a Strategic Alliance
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Client or (v) any Excess Spread Receivables (other than, in the case of (i),
(ii), (iii), (iv) and (v) above, (x) a disposition by a Restricted Subsidiary
to the Company or by the Company or a Restricted Subsidiary to a Consolidated
Restricted Subsidiary, (y) for purposes of the covenant described under "--
Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the covenant
described under "--Certain Covenants--Limitation on Restricted Payments" or
(z) a disposition of assets (including related assets) for an aggregate
consideration of $1.0 million or less).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Bearer Security" means any Debt Security which is payable to bearer.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented
by such obligation shall be the capitalized amount of such obligation
determined in accordance with GAAP; and the Stated Maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests or membership interests in (however designated) equity of such
Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Current Liabilities" as of the date of determination means the
aggregate amount of liabilities of the Company and its consolidated Restricted
Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a consolidated basis, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of all Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis, excluding (A) Permitted
Warehouse Indebtedness and (B) Hedging Obligations permitted to be Incurred
pursuant to clause (b)(6) of the covenant described under "--Limitation on the
Incurrence of Indebtedness of the Company" to (ii) the Consolidated Net Worth
of the Company.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Restricted Subsidiary, except that (A) subject
to the exclusion contained in clause (iv) below, the Company's equity in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person for such period shall be included in determining
such Consolidated Net Income; (ii) any net income (or loss) of any Person
acquired by
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the Company or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition; (iii) any net income of any
Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or indirectly,
to the Company, except that (A) subject to the exclusion contained in clause
(iv) below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net Income
to the extent that cash could have been distributed by such Restricted
Subsidiary during such period to the Company or another Restricted Subsidiary
as a dividend or other distribution (subject, in the case of a dividend or
other distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Company's equity in a net loss of any
such Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income; (iv) any gain (but not loss) realized upon the
sale or other disposition of any asset (excluding any equity Investment in a
Strategic Alliance Client) of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold
or otherwise disposed of in the ordinary course of business and any gain (but
not loss) realized upon the sale or other disposition of any Capital Stock of
any Person (excluding Capital Stock in a Strategic Alliance Client); (v)
extraordinary gains or losses; and (vi) the cumulative effect of a change in
accounting principles. Notwithstanding the foregoing, for the purposes of the
covenant described under "Certain Covenants--Limitation on Restricted
Payments" only, there shall be excluded from Consolidated Net Income any
dividends, repayments of loans or advances or other transfers of assets from
any Person to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Tangible Assets" as of any date of determination, means
the total amount of assets (less accumulated depreciation and amortization,
allowances for doubtful receivables, other applicable reserves and other
properly deductible items) which would appear on a balance sheet of the
Company and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, and after giving effect to purchase accounting and after
deducting therefrom all Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of: (i) minority interests in consolidated
Subsidiaries held by Persons other than the Company or a Restricted
Subsidiary; (ii) excess of cost over fair value of assets of businesses
acquired, as determined in good faith by the Board of Directors; (iii) any
revaluation or other write-up in book value of assets (other than Excess
Spread Receivables) subsequent to the Issue Date as a result of a change in
the method of valuation in accordance with GAAP consistently applied; (iv)
unamortized debt discount and expenses and other unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights,
licenses, organization or developmental expenses and other intangible items;
(v) treasury stock; (vi) cash set apart and held in a sinking or other
analogous fund established for the purpose of redemption or other retirement
of Capital Stock to the extent such obligation is not reflected in
Consolidated Current Liabilities; and (vii) Investments in and assets of
Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company for which financial statements are available, as
(i) the par or stated value of all outstanding Capital Stock of the Company
plus (ii) paid-in capital or capital surplus relating to such Capital Stock
plus (iii) any retained earnings or earned surplus less (A) any accumulated
deficit, (B) any amounts attributable to Disqualified Stock and (C) any
amounts attributable to deferred compensation appropriately classified as net
worth in accordance with GAAP.
"Consolidated Restricted Subsidiary" means a Restricted Subsidiary (i) 80%
of the Capital Stock and 80% of the Voting Stock of which is owned by the
Company or one or more Consolidated Restricted Subsidiaries and (ii) which is
treated as a consolidated subsidiary for the purpose of the Company's U.S.
Federal income tax reporting.
"Continental Grain" means Continental Grain Company, a Delaware corporation
and its successors.
"Credit Facilities" means (a) the $200,000,000 Revolving Credit Facility,
dated as of January 7, 1997, among the Company as Borrower, the lenders party
thereto, Credit Suisse First Boston, New York Branch, as
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Administrative Agent and Co-Arranger and Dresdner Bank AG, New York and Grand
Cayman Branches as Co-Arrangers, together with the related documents thereto,
in each case as such agreements may be amended, supplemented or otherwise
modified from time to time, including any agreement extending the maturity of,
refinancing, replacing, substituting, renewing or otherwise restructuring all
or a portion of the Indebtedness under such agreement or any successor or
replacement agreement and (b) the $275,000,000 Letter of Credit and
Reimbursement Agreement dated as of September 9, 1997 among the Company, as
Borrower, the participating banks thereto, Credit Suisse First Boston, New
York Branch, as Agent and Co-Arranger and Dresdner Bank AG, New York Branch,
as Issuing Bank and Co-Arranger.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Debt" means (a) any Indebtedness of the Company under the
Credit Facilities and (b) any other Senior Indebtedness of the Company having,
at the time of determination, an aggregate principal amount of at least
$25,000,000 and specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Debt" by the Company.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Debt Securities of such series and to have satisfied all the obligations under
the Indenture relating to the Debt Securities of such series, except (i) the
right of Holders of Debt Securities of such series to receive, from the trust
fund described under "Discharge, Legal Defeasance and Covenant Defeasance"
below, payment of the principal of (and premium, if any) and interest on such
Debt Securities when such payments are due, (ii) the Company's obligations
with respect to the Debt Securities of such series under the provisions
relating to exchanges, transfers and replacement of Debt Securities, the
maintenance of an office or agency of the Company and the defeasance trust
fund, the provisions relating to compensation and reimbursement of the
applicable Trustee and (iii) the rights, powers, trusts, duties and immunities
of the applicable Trustee thereunder.
"Disqualified Stock" means, with respect to any Person and any series of
Debt Securities, any Capital Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant
to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable
for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of
the holder thereof, in each case in whole or in part on or prior to the first
anniversary of the Stated Maturity of the Debt Securities of such series;
provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving Holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Debt Securities of such series
shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are not more favorable as
determined in good faith by the Board of Directors to the holders of such
Capital Stock than the provisions described under "--Certain Covenants--
Limitation on Sales of Assets and Subsidiary Stock" and "Change of Control".
"Eligible Excess Spread Receivables" means Excess Spread Receivables created
after April 2, 1996; provided, however, that Eligible Excess Spread
Receivables shall not include any Excess Spread Receivables created as the
result of the securitization or sale of Excess Spread Receivables.
"Excess Spread" means, over the life of a "pool" of Receivables that have
been sold by a Person to a trust or other Person in a securitization or sale,
the rights retained by such Person or its Restricted Subsidiaries at or
subsequent to the closing of such securitization or sale to receive cash flows
attributable to such "pool".
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"Excess Spread Receivables" of a Person means the contractual or
certificated right to Excess Spread capitalized on such Person's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth (i) in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) in the statements and
pronouncements of the Financial Accounting Standards Board, (iii) in such
other statements by such other entity as approved by a significant segment of
the accounting profession, and (iv) in the rules and regulations of the SEC
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC
and releases of the Emerging Issues Task Force.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of
any Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement, Currency Agreement or such other
agreement designed to mitigate risks of fluctuations in value of assets owned,
financed or sold, or of liabilities incurred or assumed, in either case in the
ordinary course of business of the Company or its Restricted Subsidiaries.
"Holder" means with respect to a Registered Security, a Person in whose name
a Debt Security is registered in the Security Register and, with respect to a
Bearer Security, a bearer thereof or of a coupon appertaining thereto.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness of a Person existing at the time
such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary. The term "Incurrence" when used as a noun
shall have a correlative meaning. The accretion of principal of a non-interest
bearing or other discount security shall be deemed the Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the outstanding principal as of such
date in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable,
including, in each case, any premium on such indebtedness to the extent such
premium has become due and payable; (ii) all Capital Lease Obligations of such
Person; (iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and expense accruals arising in the ordinary
course of business); (iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction (other
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than obligations with respect to letters of credit securing obligations (other
than obligations described in (i) through (iii) above) entered into in the
ordinary course of business of such Person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock (but
excluding any accrued dividends); (vi) Warehouse Indebtedness; (vii) in
connection with each sale by such Person of any Excess Spread Receivables, the
maximum aggregate contractual claim (if any) that the purchaser thereof could
have as of such date against such Person if the amounts anticipated at the
time of such sale to be received by such purchaser in connection with such
Excess Spread Receivables are not received by such purchaser; (viii) all
obligations of the type referred to in clauses (i) through (vii) of other
Persons and all dividends of other Persons for the payment of which, in either
case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any Guarantee; (ix) all
obligations of the type referred to in clauses (i) through (viii) of other
Persons secured by any Lien on any property or asset of such Person (whether
or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured and (x) to the extent not
otherwise included in this definition, Hedging Obligations of such Person. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date. Notwithstanding
the foregoing, any securities issued in a securitization by a special purpose
owner trust or similar entity formed by or on behalf of a Person and to which
Receivables or Excess Spread Receivables have been sold or otherwise
transferred by or on behalf of such Person or its Subsidiaries shall not be
treated as Indebtedness of such Person or its Subsidiaries under the
Indenture, regardless of whether such securities are treated as indebtedness
for tax purposes and regardless of whether such securities are styled as debt.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, repurchase agreement, futures contract or other financial
agreement or arrangement designed to protect the Company or any Restricted
Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are
recorded as trade accounts on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person. For purposes of the
definition of "Unrestricted Subsidiary", the definition of "Restricted
Payment" and the covenant described under "--Certain Covenants--Limitation on
Restricted Payments", (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in such Subsidiary) of the
fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) and BBB- (or the equivalent) by Moody's Investors Service,
Inc. (or any successor to the rating agency business thereof) and Standard &
Poor's Ratings Group (or any successor to the rating agency business thereof),
respectively.
"Issue Date" means, with respect to any series of Debt Securities, the date
of issuance of such series of Debt Securities.
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"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York. If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the record
date shall not be affected.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be, repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition and (iv) the deduction of appropriate amounts
provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed in such
Asset Disposition and retained by the Company or any Restricted Subsidiary
after such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Permitted Holders" means lineal descendants of Jules Fribourg, including
any individual legally adopted; spouses of such descendants; trusts, the
beneficiaries of which are any of the foregoing; partnerships, corporations,
or other entities in which any of the foregoing (individually or collectively)
has a controlling interest; and charitable organizations established by any of
the foregoing.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) the Company, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) a Strategic Alliance Client to the extent such Investment
consists of options, warrants or other securities that are convertible or
exchangeable for equity securities of such Strategic Alliance Client and is
received by the Company or a Restricted Subsidiary without the payment of any
consideration other than the concurrent provision by the Company or such
Restricted Subsidiary to such Strategic Alliance Client of financing or asset
securitization expertise on terms determined by the Company to be fair and
reasonable to the Company or such Restricted Subsidiary from a financial point
of view without taking into consideration any value that may inhere in such
option, warrant or convertible or exchangeable security; (iii) another Person
if as a result of such Investment such other Person is merged or consolidated
with or into, or transfers or conveys all or substantially all its assets to,
the Company or a Restricted Subsidiary; provided, however, that such Person's
primary business is a Related Business; (iv) Temporary Cash Investments; (v)
receivables owing to the Company or any Restricted Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; (vi) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vii) loans or advances to employees made
in the ordinary course of business consistent with past practices of the
Company or such Restricted Subsidiary; (viii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business
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and owing to the Company or any Restricted Subsidiary or in satisfaction of
judgments; (ix) any Person to the extent such Investment represents the non-
cash portion of the consideration received for an Asset Disposition as
permitted pursuant to the covenant described under "--Certain Covenants--
Limitation on Sales of Assets and Subsidiary Stock"; (x) Receivables; (xi) a
Strategic Alliance Client to the extent such Investment consists of (A)
Indebtedness of such Strategic Alliance Client that is secured by Receivables
owned, directly or indirectly, by such Strategic Alliance Client in an
aggregate principal amount at any time outstanding not to exceed 100% of the
aggregate market value of such Receivables; provided, however, that such
Indebtedness has not been outstanding in excess of 364 days; or
(B) Indebtedness of such Strategic Alliance Client that is secured by Excess
Spread Receivables owned by such Strategic Alliance Client; and (xii) Excess
Spread Receivables.
"Permitted Liens" means, with respect to any Person:
(a) pledges or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to
secure public or statutory obligations of such Person or pledges or
deposits to secure surety or appeal bonds to which such Person is a party,
or pledges or deposits as security for contested taxes or import duties or
for the payment of rent, in each case Incurred in the ordinary course of
business;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review;
(c) Liens for property taxes not yet subject to penalties for non-payment
or which are being contested in good faith and by appropriate proceedings;
(d) Liens in favor of issuers of surety bonds or letters of credit issued
pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that any reimbursement
obligation with respect to the related letter of credit does not constitute
Indebtedness as of the date such Lien is incurred;
(e) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property or Liens
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the
operation of the business of such Person;
(f) Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property of
such Person (but excluding Capital Stock of another Person); provided,
however, that the Lien may not extend to any other property owned by such
Person or any of its Subsidiaries at the time the Lien is Incurred, and the
Indebtedness secured by the Lien may not be Incurred more than one year
after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property
subject to the Lien;
(g) Liens on Excess Spread Receivables (or on the Capital Stock of any
Subsidiary of such Person substantially all the assets of which are Excess
Spread Receivables); provided, however, that
(I) unless the Covenant Termination has occurred,
(A) in the case of Excess Spread Receivables which are Pre-Existing
Excess Spread Receivables, no Lien created on such Pre-Existing Excess
Spread Receivable after the Issue Date of a series of Debt Securities
(a "Subsequent Lien") shall be a Permitted Lien unless
(i) such Pre-Existing Excess Spread Receivable was, on April 2,
1996, subject to a Lien created by the Company in respect of the
financing thereof (a "predecessor Lien"), and
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(ii) the sum of (x) the aggregate book value of subordinated
interests created and retained by the Company or its Restricted
Subsidiaries as a result of the sale or financing associated with
such Subsequent Liens and (y) the aggregate book value of all Pre-
Existing Excess Spread Receivables which are not then subject to any
Lien (other than Permitted Liens described under another clause of
this definition) shall equal at least (z) the product of (1) the
aggregate book value, at the date of incurrence of such Subsequent
Lien, of all such Pre-Existing Excess Spread Receivables which are
then subject to Subsequent Liens, and (2) a fraction, the numerator
of which is the aggregate book value, on April 2, 1996, of the
subordinated interests associated with all predecessor Liens and the
denominator of which is the sum of (a) such aggregate book value of
such subordinated interests and (b) the outstanding balance, on
April 2, 1996, of the related senior interests; and
(B) in the case of Excess Spread Receivables other than Pre-Existing
Excess Spread Receivables, any Lien thereon, provided that at the date
of Incurrence of such Lien (i) the fair market value (as determined in
good faith by the Board of Directors) as of such date of all Excess
Spread Receivables then subject to Liens (other than Permitted Liens
described under another clause of this definition) collectively does
not exceed (ii) (x) 50% of the book value of Eligible Excess Spread
Receivables shown on the balance sheet of the Company and its
consolidated Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most recent fiscal
quarter of the Company prior to the creation of such Lien for which
financial statements are available minus (y) the amount of
Indebtedness then secured by Liens permitted by clause (o) below; and
(II) for purposes of this clause (g), any Lien on the Capital Stock
of any Person substantially all the assets of which are Excess Spread
Receivables shall be treated as a Lien on the Excess Spread Receivables
of such Person;
(h) Liens existing on the Issue Date of a series of Debt Securities;
(i) Liens on property or shares of Capital Stock of another Person at the
time such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming such a Subsidiary;
provided, further, however, that such Lien may not extend to any other
property owned by such Person or any of its Subsidiaries;
(j) Liens on property at the time such Person or any of its Subsidiaries
acquires the property, including any acquisition by means of a merger or
consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided,
further, however, that the Liens may not extend to any other property owned
by such Person or any of its Subsidiaries;
(k) Liens securing Indebtedness or other obligations of a Subsidiary of
such Person owing to such Person or a Consolidated Restricted Subsidiary of
such Person;
(l) Liens (other than on any Excess Spread Receivables) securing Hedging
Obligations;
(m) Liens on cash or other assets (other than Excess Spread Receivables)
securing Warehouse Indebtedness of the Company or its Restricted
Subsidiaries;
(n) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clauses (f),(h), (i) and (j); provided, however, that (I)
such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements to or on such property) and
(II) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of (A) the outstanding principal amount or,
if greater, committed amount of the Indebtedness described under clauses
(f), (h), (i) or (i), as the case may be, at the time the original Lien
became a Permitted Lien and (B) an amount necessary to pay any fees and
expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement
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(notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (f), (i) or (j) above to the extent such Lien applies
to any Additional Assets acquired directly or indirectly from Net Available
Cash pursuant to the covenant described under "--Certain Covenants--
Limitation on Sale of Assets and Subsidiary Stock"); and
(o) Liens, other than Liens described in clauses (a)-(n) above, on any
assets of the Company or Restricted Subsidiaries to secure Indebtedness if
the amount of such Indebtedness to be secured by such Lien, when taken
together with (x) the aggregate amount of Indebtedness then outstanding and
secured by Liens created pursuant to this clause (o) and (y) the aggregate
amount of Warehouse Margin Indebtedness then outstanding, does not exceed
10% of the Consolidated Net Worth of the Company.
"Permitted Warehouse Indebtedness" means Warehouse Indebtedness; provided,
however, that (i) the excess, if any, of (x) the amount of any such Warehouse
Indebtedness for which the holder thereof has contractual recourse to the
Company or its Restricted Subsidiaries to satisfy claims with respect to such
Warehouse Indebtedness over (y) the aggregate (without duplication of amounts)
realizable value of the assets which secure such Warehouse Indebtedness shall
not be Permitted Warehouse Indebtedness, and (ii) any such Indebtedness may
not have a term in excess of 364 days.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pre-Existing Excess Spread Receivable" means an Excess Spread Receivable
created on or prior to April 2, 1996.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over
shares of Capital Stock of any other class of such Person.
"Principal" of a Debt Security means the principal of the Debt Security plus
the premium, if any, payable on the Debt Security which is due or overdue or
is to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Rating Agencies" mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and Moody's Investors Service, Inc. or any successor to the
respective rating agency businesses thereof.
"Receivables" means consumer and commercial loans, leases, accounts and
other receivables purchased or originated by the Company, any Restricted
Subsidiary or a Strategic Alliance Client in the ordinary course of business;
provided, however, that for purposes of determining the amount of a Receivable
at any time, such amount shall be determined in accordance with GAAP,
consistently applied, as of the most recent practicable date.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced"
and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" in respect of a series of Debt Securities means
Indebtedness that Refinances any Indebtedness of the Company or any Restricted
Subsidiary existing on the Issue Date of such series or Incurred in compliance
with the Indenture including Indebtedness that Refinances Refinancing
Indebtedness; provided, however, that (i) such Refinancing Indebtedness has a
Stated Maturity no earlier than the Stated
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Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or
if Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided, further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or another Subsidiary
or (y) Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Registered Security" means any Debt Security issued under the Indenture
which is registered as to principal and interest in the Security Register.
"Related Business" means any consumer or commercial finance business or any
financial service business.
"Restricted Payment" with respect to any Person and in respect of a series
of Debt Securities means (i) the declaration or payment of any dividends or
any other distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than (A) dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock), (B) dividends or distributions payable
solely to the Company or a Restricted Subsidiary and (C) pro rata dividends or
other distributions made by a Subsidiary that is not a Wholly-Owned Subsidiary
to minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock
of the Company held by any Person or of any Capital Stock of a Restricted
Subsidiary held by any Affiliate of the Company (other than a Restricted
Subsidiary), including the exercise of any option to exchange any Capital
Stock (other than into Capital Stock of the Company that is not Disqualified
Stock), (iii) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations in
respect of such series (other than the purchase, repurchase or other
acquisition of such Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition) or (iv) the
making of any Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" in respect of any series of Senior Securities means
(i) Indebtedness of any Person, whether outstanding on the Issue Date or
thereafter Incurred and (ii) accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent post-filing interest is
allowed in such proceeding) in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible
or liable unless, in the case of either clause (i) or (ii), in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such obligations are subordinate in right of payment to
the Debt Securities of such series; provided, however, that Senior
Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or
other taxes owed or owing by such Person, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), (4)
any obligation in respect of Capital Stock of such Person or (5) that portion
of any Indebtedness which at the time of Incurrence is Incurred in violation
of the Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
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"Stated Maturity" means, with respect to any security or any installment of
principal thereof or interest thereon, the date specified in such security as
the fixed date on which the principal of such security or such installment of
principal or interest is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Strategic Alliance Client" means any Person (other than a Restricted
Subsidiary) engaged in a Related Business to which the Company or a Restricted
Subsidiary of the Company provides, or reasonably expects to provide,
financing or asset securitization expertise in return for asset-backed
underwriting, placement agent commitments or long-term purchase and sale of
assets.
"Subordinated Obligation" in respect of any series of Debt Securities means
any Indebtedness of the Company (whether outstanding on the Issue Date of such
series or thereafter Incurred) which is subordinate or junior in right of
payment to the Debt Securities of such series pursuant to a written agreement
to that effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i)
such Person, (ii) such Person and one or more Subsidiaries of such Person or
(iii) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company that is not an Affiliate of the Company and
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) or any money-market fund
sponsored by a registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) investments in
commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-l" (or higher)
according to Moody's Investors Service, Inc. or "A-l" (or higher) according to
Standard and Poor's Ratings Group, and (v) investments in securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien
on any property of, the Company or any other Subsidiary of the Company that is
not a Subsidiary of the Subsidiary to be so designated; provided, however,
that either (A) the Subsidiary to be so designated has total assets of $1,000
or less or (B) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under the covenant described under "--Certain
Covenants--Limitation on Restricted Payments". The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under
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paragraph (a) of the covenant described under "--Certain Covenants--Limitation
on Incurrence of Indebtedness of the Company" and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced by the Company to the Trustee by promptly filing with the
Trustee a copy of the board resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
of America (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States of America is pledged
and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests or membership interests) of such
Person then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser exclusively to finance the purchase
or origination of Receivables by the Company, a Subsidiary of the Company or a
Strategic Alliance Client for the purpose of pooling such Receivables prior to
securitization or sale in the ordinary course of business, including (i)
facilities pursuant to which the Company or a Subsidiary of the Company funds
Receivables owned or financed by a Strategic Alliance Client and (ii) any
arrangement in which the Company or a Subsidiary of the Company provides
Guarantees to a financial institution or other lender with respect to a
Strategic Alliance Client for the purpose of inducing such financial
institution or other lender to fund the purchase or origination of Receivables
by such Strategic Alliance Client.
"Warehouse Indebtedness" means Indebtedness in connection with a Warehouse
Facility; the amount of any particular Warehouse Indebtedness as of any date
of determination shall be the greater of:
(A)(i) with respect to Warehouse Indebtedness relating to a Warehouse
Facility described in clause (i) of the definition of Warehouse Facility,
the consideration received by the Company or its Restricted Subsidiaries
under such Warehouse Facility and not previously repaid to the Holder of
such Warehouse Indebtedness or (ii) with respect to Warehouse Indebtedness
relating to a Warehouse Facility described in clause (ii) of the definition
of Warehouse Facility the maximum amount of the related Guarantee; and
(B) the book value of the assets securing such Warehouse Facility.
"Warehouse Margin Indebtedness" means Warehouse Indebtedness which does not
constitute Permitted Warehouse Indebtedness solely due to, and shall equal the
amount equal to the excess resulting from, the application of clause (i) of
the definition of Permitted Warehouse Indebtedness.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares and shares held by
other Persons to the extent such shares are required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary) is owned
by the Company or one or more Wholly Owned Subsidiaries.
Denominations, Registration and Transfer
Unless specified in the Prospectus Supplement, the Debt Securities of any
series shall be issuable only as Registered Securities in denominations of
U.S.$1,000 and any integral multiple thereof and shall be payable only in U.S.
dollars. The Indenture also provides that Debt Securities of a series may be
issuable in global form. See "Debt Securities--Book-Entry Debt Securities."
Unless otherwise indicated in the Prospectus Supplement, Bearer Securities
(other than in global form) will have coupons attached.
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of like aggregate principal amount
and of like Stated Maturity and with like terms and conditions. If so
specified
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in the Prospectus Supplement, at the option of the Holder thereof, to the
extent permitted by law, any Bearer Security of any series which by its terms
is registrable as to principal and interest may be exchanged for a Registered
Security of such series of like aggregate principal amount and of a like
Stated Maturity and with like terms and conditions, upon surrender of such
Bearer Security at the corporate trust office of the applicable Trustee or at
any other office or agency of the Company designated for the purpose of making
any such exchanges. Subject to certain exceptions, any Bearer Security issued
with coupons surrendered for exchange must be surrendered with all unmatured
coupons and any matured coupons in default attached thereto. (Section 3.05)
Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States
income tax laws and regulations applicable to Debt Securities in effect at the
time of such exchange. (Section 3.05)
Except as otherwise specified in the Prospectus Supplement, in no event may
Registered Securities, including Registered Securities received in exchange
for Bearer Securities, be exchanged for Bearer Securities. (Section 3.05)
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall deliver, in the name of the designated transferee, one or
more new Registered Securities of the same series of like aggregate principal
amount of such denominations as are authorized for Registered Securities of
such series and of a like Stated Maturity and with like terms and conditions.
No service charge will be made for any transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax, penalty or other governmental charge payable in connection therewith.
(Section 3.05)
The Company shall not be required to (i) register, transfer or exchange Debt
Securities of any series during a period beginning at the opening of business
15 days before the day of the transmission of a notice of redemption of Debt
Securities of such series selected for redemption and ending at the close of
business on the day of such transmission, or to (ii) register, transfer or
exchange any Debt Security so selected for redemption in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part.
(Section 3.05)
Subordination
The payment of the principal of (and premium, if any, on) and interest, if
any, on the Subordinated Debt is expressly subordinated, to the extent and in
the manner set forth in the Indenture, in right of payment to the prior
payment in full of all present and future Senior Indebtedness of the Company.
(Section 14.01) If so indicated in the applicable Prospectus Supplement, the
provisions regarding subordination of the Subordinated Debt set forth in
Article Fourteen of the Indenture (or the definition of the term "Senior
Indebtedness" or any other term used therein) may differ from the provisions
set forth below.
The Company will not pay principal of, premium (if any) or interest on the
Subordinated Debt or make any deposit pursuant to the provisions described
under "--Discharge, Legal Defeasance and Covenant Defeasance" below and may
not repurchase, redeem or otherwise retire any Subordinated Debt Securities if
(i) any payment of principal, premium (if any) or interests, if any, on any
Designated Senior Debt is not paid when due (after giving effect to any
applicable grace periods) or (ii) any other default on Designated Senior Debt
occurs and the maturity of such Designated Senior Debt is accelerated in
accordance with its terms unless, in either case, the default has been cured
or waived or has ceased to exist and any such acceleration has been rescinded
or such Designated Senior Debt has been discharged or paid in full. However,
the Company may make any payment with respect to Subordinated Debt Securities
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the representative of the Designated Senior
Debt with respect to which either of the events set forth in clause (i) or
(ii) of the immediately preceding sentence has occurred and is continuing.
(Section 14.03)
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Upon any distribution of the assets of the Company upon a total or partial
liquidation or dissolution or any reorganization or similar proceeding
(including bankruptcy, insolvency or receivership proceedings or upon any
assignment for the benefit of creditors or any other marshalling of the
Company's assets and liabilities) relating to the Company or any of its
property (except in connection with a merger or consolidation under Article
Eight of the Indenture), the Holders of Senior Indebtedness will be entitled
to receive payment in full of principal and interest (including interest
accrued subsequent to the commencement of any bankruptcy proceeding) with
respect to such Senior Indebtedness before the Holders of Subordinated Debt
Securities are entitled to receive any payment or distribution of cash,
securities (subject to certain exceptions) or other property with respect to
the principal of or interest on the Subordinated Debt Securities, and until
the Senior Indebtedness is paid in full (including interest accrued subsequent
to the commencement of any bankruptcy proceeding), any payment or distribution
to which Holders of Subordinated Debt Securities would be entitled but for the
subordination provisions of the Indenture will be made to Holders of such
Senior Indebtedness as their interests may appear. If a distribution is made
to Holders of Subordinated Debt Securities that, due to the subordination
provisions, should not have been made to them, such Holders of Subordinated
Debt Securities are required to hold it in trust for the Holders of Senior
Indebtedness and pay it over to them as their interests may appear. (Section
14.02)
If payment of the Subordinated Debt Securities is accelerated because of an
Event of Default, the Company or the Trustee shall promptly notify the Holders
of Designated Senior Debt or the representative of such Holders of the
acceleration. By reason of the subordination provisions contained in the
Indenture, in the event of insolvency, creditors of the Company who are
Holders of Senior Indebtedness may recover more, ratably, than the Holders of
Subordinated Debt Securities. (Section 14.03)
If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Debt Securities, the Prospectus Supplement relating
thereto, or information incorporated by reference therein, will set forth the
approximate amount of Senior Indebtedness outstanding as of a recent date.
The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in
trust by the Trustee for the payment of principal of and interest on the
Subordinated Debt Securities pursuant to the provisions described under "--
Discharge, Legal Defeasance and Covenant Defeasance." (Section 14.09)
Events of Default
Under the Indenture, "Event of Default" with respect to the Debt Securities
of any series means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law, pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest upon any Debt Security or any
payment with respect to the coupons, if any, of such series when it becomes
due and payable, and continuance of such default for a period of 30 days;
(2) default in the payment of the principal of (and premium, if any, on)
any Debt Security of such series at its Stated Maturity upon redemption, by
declaration or otherwise;
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of a Debt Security of such series;
(4) default in the performance, or breach of any covenant or warranty in
the Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in the Indenture specifically
dealt with or which expressly has been included in the Indenture solely for
the benefit of Debt Securities of a series other than such series), and
continuance of such default or breach for a period of 60 days after there
has been given to the Company by the applicable Trustee or to the Company
and the applicable Trustee by the Holders of at least 25% in principal
amount of the Outstanding Debt Securities of such series, a written notice
specifying such default or breach and requiring it to be remedied;
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(5) certain events of bankruptcy, insolvency or reorganization with
respect to the Company as set forth in the Indenture; or
(6) any other Event of Default provided with respect to Debt Securities
of that series pursuant to the Indenture. (Section 5.01)
The Indenture requires the Company to file with the applicable Trustee,
annually, an officers' certificate as to the Company's compliance with all
conditions and covenants under the Indenture. (Section 12.02) The Indenture
provides that the applicable Trustee may withhold notice to the Holders of a
series of Debt Securities of any default (except payment defaults on such Debt
Securities) if it considers such withholding to be in the interest of the
Holders of such series of Debt Securities to do so. (Section 6.02)
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, then in every case the applicable
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series may declare the principal amount
(or, if any Debt Securities of such series are Discount Securities, such
portion of the principal amount of such Discount Securities as may be
specified in the terms of such Discount Securities) of the Debt Securities of
such series to be due and payable immediately, by a notice in writing to the
Company (and to the applicable Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount), plus accrued and
unpaid interest (and premium, if any) shall become immediately due and
payable. Upon payment of such amount in the currency in which such Debt
Securities are denominated (except as otherwise provided in the Indenture or
specified in the Prospectus Supplement), all obligations of the Company in
respect of the payment of principal of the Debt Securities of such series
shall terminate. (Section 5.02)
Subject to the provisions of the Indenture relating to the duties of the
applicable Trustee, in case an Event of Default with respect to Debt
Securities of a particular series shall occur and be continuing, the
applicable Trustee shall be under no obligation to exercise any of its rights
or powers under such Indenture at the request, order or direction of any of
the Holders of Debt Securities of that series, unless such Holders shall have
offered to the applicable Trustee reasonable indemnity against the expenses
and liabilities which might be incurred by it in compliance with such request.
(Section 5.07) Subject to such provisions for the indemnification of the
applicable Trustee, the Holders of 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 applicable Trustee under the Indenture, or exercising any trust or
power conferred on the applicable Trustee with respect to the Debt Securities
of that series provided that such direction does not conflict with law or with
the Indenture. (Section 5.12)
At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the applicable Trustee as
provided in the Indenture, the Holders of a majority in principal amount of
the Outstanding Debt Securities of such series, by written notice to the
Company and the applicable Trustee, may rescind and annul such declaration and
its consequences if (1) the Company has paid or deposited with the applicable
Trustee a sum in the currency in which such Debt Securities are denominated
(except as otherwise provided in the Indenture or specified in the Prospectus
Supplement) sufficient to pay (A) all overdue installments of interest on all
Debt Securities or all overdue payments with respect to any coupons of such
series, (B) the principal of (and premium, if any, on) any Debt Securities of
such series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
such Debt Securities, (C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on each Debt Security
of such series or upon overdue payments on any coupons of such series at a
rate established for such series, and (D) all sums paid or advanced by the
applicable Trustee and the reasonable compensation, expenses, disbursements
and advances of the applicable Trustee, its agents and counsel; and (2) all
Events of Default with respect to Debt Securities of such series, other than
the nonpayment of the principal of Debt Securities of such series which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in the Indenture. No such rescission and waiver will affect
any subsequent default or impair any right consequent thereon. (Section 5.02)
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Modification or Waiver
Without prior notice to or consent of any Holders, the Company and the
applicable Trustee, at any time and from time to time, may modify the
Indenture for any of the following purposes:
(1) to evidence the succession of another corporation to the rights of
the Company and the assumption by such successor of the covenants and
obligations of the Company in the Indenture and in the Debt Securities and
coupons, if any, issued thereunder;
(2) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Debt Securities and the coupons, if any,
appertaining thereto (and if such covenants are to be for the benefit of
less than all series, stating that such covenants are expressly being
included solely for the benefit of such series), or to surrender any right
or power conferred in the Indenture upon the Company;
(3) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating that such
Events of Default are expressly being included solely to be applicable to
such series);
(4) to add or change any of the provisions of the Indenture to such
extent as shall be necessary to permit or facilitate the issuance
thereunder of Debt Securities of any series in bearer form, registrable or
not registrable, and with or without coupons, to permit Bearer Securities
to be issued in exchange for Registered Securities, to permit Bearer
Securities to be issued in exchange for Bearer Securities of other
authorized denominations or to permit the issuance of Debt Securities of
any series in uncertificated form, provided that any such action shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect;
(5) to change or eliminate any of the provisions of the Indenture;
provided, that any such change or elimination will become effective only
when there is no Outstanding Debt Security issued thereunder or coupon of
any series created prior to such modification which is entitled to the
benefit of such provision and as to which such modification would apply;
(6) to secure the Debt Securities issued thereunder;
(7) to supplement any of the provisions of the Indenture to such extent
as is necessary to permit or facilitate the defeasance and discharge of any
series of Debt Securities, provided that any such action will not adversely
affect the interests of the Holders of Debt Securities of such series or
any other series of Debt Securities issued under such Indenture or any
related coupons in any material respect;
(8) to establish the form or terms of Debt Securities and coupons, if
any, as permitted by the Indenture;
(9) to evidence and provide for the acceptance of appointment thereunder
by a successor Trustee with respect to one or more series of Debt
Securities and to add to or change any of the provisions of the Indenture
as is necessary to provide for or facilitate the administration of the
trusts thereunder by more than one Trustee; or
(10) to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be defective or inconsistent with any other provision
therein, to eliminate any conflict between the terms of the Indenture and
the Debt Securities issued thereunder and the TIA or to make any other
provisions with respect to matters or questions arising under the Indenture
which will not be inconsistent with any provision of the Indenture;
provided, that such other provisions shall not adversely affect the
interests of the Holders of Outstanding Debt Securities or coupons, if any,
of any series created thereunder prior to such modification in any material
respect. (Section 15.01)
With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of each series affected by
such modification voting together as one class, the Company and the applicable
Trustee may modify the Indenture for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the
Indenture or of modifying in any manner the rights of the Holders of Debt
Securities and coupons, if any, under the Indenture; provided, however, that
no such
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modification may, without the consent of the Holder of each Outstanding Debt
Security of each such series 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 interest thereon or any premium
payable upon redemption thereof, or change the Stated Maturity of or reduce
the amount of any payment to be made with respect to any coupon, or change the
currency or currencies in which the principal of (and premium, if any) or
interest on such Debt Security is denominated or payable, or reduce the amount
of the principal of a Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof, or adversely affect the
right of repayment or repurchase, if any, at the option of the Holder, or
reduce the amount of, or postpone the date fixed for, any payment under any
sinking fund or analogous provisions for any Debt Security, or impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or limit the obligation of the Company to maintain a paying
agency outside the United States for payments on Bearer Securities, or
adversely affect the right to convert any Subordinated Debt Security into
shares of Common Stock as may be set forth in the Prospectus Supplement; (2)
reduce the percentage in principal amount of the Outstanding Debt Securities
of any series, the consent of whose Holders is required for any such
modification, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of the Indenture or certain defaults or
Events of Default thereunder and their consequences provided for in such
Indenture; (3) modify any of the provisions of the Indenture relating to
modifications and waivers of defaults and covenants, except to increase any
such percentage or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Debt Security of each series affected thereby; provided, however,
that certain of such modifications may be made without the consent of any
Holder of any Debt Security as provided in the preceding paragraph; or (4) in
the case of the Subordinated Debt Securities, modify any of the provisions
relating to the subordination of the Subordinated Debt Securities in a manner
adverse to the Holders thereof. (Section 15.02)
A modification which changes or eliminates any covenant or other provision
of the Indenture with respect to one or more particular series of Debt
Securities and coupons, if any, or which modifies the rights of the Holders of
Debt Securities and coupons of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under the Indenture
of the Holders of Debt Securities and coupons, if any, of any other series.
(Section 15.02)
In the case of the Subordinated Debt Securities, no modification may
adversely affect the rights of any holder of Senior Indebtedness under the
subordination provisions of the Indenture without the consent of such holder.
(Section 15.02)
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 any such series waive, by notice to the applicable
Trustee and the Company, any past default or Event of Default under the
Indenture with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or interest on any
Debt Security of such series, or in the payment of any sinking fund
installment or analogous obligation with respect to the Debt Securities of
such series or (2) in respect of a covenant or provision hereof which pursuant
to the second paragraph under "--Debt Securities--Modification or Waiver"
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. Upon any such waiver, such
default will cease to exist, and any Event of Default arising therefrom will
be deemed to have been cured, for every purpose of the Debt Securities of such
series under the Indenture, but no such waiver will extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
(Section 5.13)
The Company may omit in any particular instance to comply with certain
covenants in the Indenture (including, if so specified in the Prospectus
Supplement, any covenant not set forth in the Indenture but specified in the
Prospectus Supplement to be applicable to the Debt Securities of any series
issued thereunder, except as otherwise specified in the Prospectus Supplement,
and including the covenants relating to the maintenance by the Company of its
existence, rights and franchises), if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Debt
Securities affected either waive such compliance in such instance or generally
waive compliance with such provisions, but no such waiver may extend to or
affect
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any term, provision or condition except to the extent expressly so waived,
and, until such waiver becomes effective the obligations of the Company and
the duties of the applicable Trustee in respect of any such provision will
remain in full force and effect. (Section 15.02)
Discharge, Legal Defeasance and Covenant Defeasance
The Indenture with respect to the Debt Securities of any series may be
Discharged, subject to certain terms and conditions, when (1) either (A) all
Debt Securities and the coupons, if any, of such series have been delivered to
the applicable Trustee for cancellation or (B) all Debt Securities and the
coupons, if any, of such series not theretofore delivered to the applicable
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at their Stated Maturity within one year, or (iii) are to be
called for redemption within one year under arrangements satisfactory to the
applicable Trustee for the giving of notice by the applicable Trustee, and the
Company, in the case of (i), (ii) or (iii) of subclause (B), has irrevocably
deposited or caused to be deposited with the applicable Trustee as trust funds
in trust for such purpose an amount in the currency in which such Debt
Securities are denominated sufficient to pay and discharge the entire
indebtedness on such Debt Securities 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; provided, however, in the event a petition for relief under
the applicable Federal or state bankruptcy, insolvency or other similar law is
filed with respect to the Company within 123 days after the deposit and the
applicable Trustee is required to return the deposited money to the Company,
the obligations of the Company under the Indenture with respect to such Debt
Securities will not be deemed terminated or Discharged; (2) the Company has
paid or caused to be paid all other sums payable under the Indenture by the
Company; and (3) the Company has delivered to the applicable Trustee an
officers' certificate and an opinion of counsel each stating that all
conditions precedent therein provided relating to the satisfaction and
Discharge of the Indenture with respect to such series have been complied
with. (Section 4.01)
If provision is made for the defeasance of Debt Securities of a series, and
if the Debt Securities of such series are Registered Securities and
denominated and payable only in U.S. dollars, then the provisions of the
Indenture relating to defeasance shall be applicable except as otherwise
specified in the Prospectus Supplement for Debt Securities of such series.
Defeasance provisions, if any, for Debt Securities denominated in a foreign
currency or currencies or for Bearer Securities may be specified in the
Prospectus Supplement. (Section 13.01)
At the Company's option, either (1) the Company shall be deemed to have been
Discharged from its obligations with respect to Debt Securities of any series
(including, in the case of Subordinated Debt Securities, the provisions
described under "--Debt Securities--Subordination" herein) ("legal defeasance
option") or (2) the Company shall cease to be under any obligation to comply
with any obligation of the Company in the Indenture including any restrictive
covenants described in the accompanying Prospectus Supplement and any other
covenants applicable to the Debt Securities which are subject to covenant
defeasance (including, in the case of Subordinated Debt Securities, the
provisions described under "Subordination" herein) ("covenant defeasance
option") at any time after the applicable conditions set forth below have been
satisfied: (A) the Company shall have deposited or caused to be deposited
irrevocably with the applicable Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders
of the Debt Securities of such series (i) money in an amount, or (ii) U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the opinion (with respect to (i)
and (ii)) of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the applicable
Trustee, to pay and discharge each installment of principal (including any
mandatory sinking fund payments) of (and premium, if any) and interest on, the
Outstanding Debt Securities of such series on the dates such installments of
interest or principal and premium are due; (B) such deposit shall not cause
the applicable Trustee with respect to the Debt Securities of that series to
have a conflicting interest with respect to the Debt Securities of any series;
(C) such deposit will not result in a breach or violation of, or constitute a
default under, the Indenture or any other agreement or instrument to which the
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Company is a party or by which it is bound; (D) if the Debt Securities of such
series are then listed on any national securities exchange, the Company shall
have delivered to the applicable Trustee an opinion of counsel or a letter or
other document from such exchange to the effect that the Company's exercise of
its legal defeasance option or the covenant defeasance option, as the case may
be, would not cause such Debt Securities to be delisted; (E) no Event of
Default or event (including such deposit) which, with notice or lapse of time
or both, would become an Event of Default with respect to the Debt Securities
of such series shall have occurred and be continuing on the date of such
deposit and, with respect to the legal defeasance option only, no Event of
Default under the provisions of the Indenture relating to certain events of
bankruptcy or insolvency or event which with the giving of notice or lapse of
time, or both, would become an Event of Default under such bankruptcy or
insolvency provisions shall have occurred and be continuing on the 123rd day
after such date; and (F) certain other opinions, officers' certificates and
other documents specified in the Indenture, including, in the case of legal
defeasance option, an opinion of counsel or a ruling of the Internal Revenue
Service to the effect that such deposit, defeasance or discharge will not
cause the Holders of the Debt Securities of such series to recognize income,
gain or loss for Federal income tax purposes. Notwithstanding the foregoing,
if the Company exercises its covenant defeasance option and an Event of
Default under the provisions of the Indenture relating to certain events of
bankruptcy or insolvency or event which with the giving of notice or lapse of
time, or both, would become an Event of Default under such bankruptcy or
insolvency provisions shall have occurred and be continuing on the 123rd day
after the date of such deposit, the obligations of the Company referred to
under the definition of covenant defeasance option with respect to such Debt
Securities shall be reinstated in full. (Section 13.03)
Payment and Paying Agents
If Debt Securities of a series are issuable only as Registered Securities,
the Company will maintain an office or agency where Debt Securities of a
series may be presented or surrendered for payment, where Debt Securities of
that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Debt
Securities of that series and the Indenture may be served. (Section 3.05)
Book-Entry Debt Securities
The Debt Securities of a series may be issued in whole or in part in global
form that will be deposited with, or on behalf of, a depositary identified in
the Prospectus Supplement. Global Notes may be issued in either registered or
bearer form and in either temporary or permanent form (each a "Global Note").
Payments of principal of (and premium, if any) and interest on Debt Securities
represented by a Global Note will be made by the Company to the applicable
Trustee and then by such Trustee to the depositary.
If specified in the applicable Prospectus Supplement, any Global Notes will
be deposited with, or on behalf of, The Depository Trust Company, New York,
New York ("DTC"), as depositary, or such other depositary as may be specified
in the applicable Prospectus Supplement. In the event that DTC acts as
depositary with respect to any Global Notes, the Company anticipates that such
Global Notes will be registered in the name of DTC's nominee, and that the
following provisions will apply to the depositary arrangements with respect to
any such Global Notes. Additional or differing terms of the depositary
arrangements, if any, applicable to the Offered Debt Securities, will be
described in the accompanying Prospectus Supplement.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole Holder of the
Debt Securities represented by such Global Note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a
Global Note will not be entitled to have Debt Securities represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery or Debt Securities in certificated form and will not
be considered the owners or Holders thereof under the Indenture. The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in certificated form; accordingly, such laws may
limit the transferability of beneficial interests in a Global Note.
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If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in exchange
for the Global Notes. In addition, the Company may at any time, and in its
sole discretion, determine not to have any Debt Securities represented by one
or more Global Notes and, in such event, will issue individual Debt Securities
in certificated form in exchange for the relevant Global Notes. If Registered
Securities of any series shall have been issued in the form of one or more
Global Notes and if an Event of Default with respect to the Debt Securities of
such series shall have occurred and be continuing, the Company will issue
individual Debt Securities in certificated form in exchange for the relevant
Global Notes. (Section 3.04)
The following is based on information furnished by DTC:
DTC is a limited-purpose trust company organized under the Banking Law of
the State of New York, a "banking organization" within the meaning of the
Banking Law of the State of New York, a member of the Federal Reserve System,
a clearing corporation within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written
confirmation from DTC of its purchase, but such Beneficial Owner is expected
to receive a written confirmation providing details of the transaction, as
well as periodic statements of its holdings, from the Direct or Indirect
Participant through which such Beneficial Owner entered into the transaction.
Transfers of ownership interests in Debt Securities are accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners do not receive certificates representing their
ownership interests in Debt Securities, except in the event that use of the
book entry system for the Debt Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. effects
no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners are governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Debt
Securities within a series are being redeemed, DTC's practice is to determine
by lot the amount of the interest of each Direct Participant in such series to
be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date.
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The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Debt Securities are credited on the
record date (identified on a list attached to the Omnibus Proxy).
Principal and interest payments on the Debt Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable date
in accordance with their respective holdings as shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the payable
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Paying Agent or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Company or the Paying Agent,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the Paying Agent. Under such circumstances, in the event that a
successor securities depositary is not appointed, Debt Security certificates
are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the applicable Prospectus Supplement, the
underwriters or agents with respect to a series of Debt Securities issued as
Global Notes will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the applicable Trustee or any
applicable Paying Agent will have the responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
Conversion or Exchange Rights
The terms and conditions, if any, upon which Subordinated Debt Securities
being offered are convertible or exchangeable into another series of Debt
Securities or shares of Common Stock will be set forth in the Prospectus
Supplement relating thereto. Such terms will include the conversion or
exchange price, the conversion or exchange period, provisions as to whether
conversion or exchange will be at the option of the Holder or the Company, the
events requiring an adjustment of the conversion or exchange price and
provisions affecting conversions or exchanges in the event of the redemption
of such Subordinated Debt Securities.
Concerning the Trustee
The Company may from time to time maintain deposit accounts and conduct
other banking transactions with the Trustee and its affiliated entities in the
ordinary course of business.
47
<PAGE>
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities in one or more of the
following ways: (i) through underwriters or dealers, (ii) through agents or
(iii) directly to one or more purchasers. The Prospectus Supplement with
respect to a particular offering of a series of Securities will set forth the
terms of the offering of such Securities, including the name or names of any
underwriters or agents with whom the Company has entered into arrangements
with respect to the sale of such Securities, the public offering or purchase
price of such Securities and the proceeds to the Company from such sales and
any underwriting discounts, agency fees or commissions and other items
constituting underwriters' compensation, the initial public offering price,
any discounts or concessions to be allowed or re-allowed or paid to dealers
and any securities exchange, if any, on which such Securities may be listed.
Dealer trading may take place in certain of the Offered Securities, including
Offered Securities not listed on any securities exchange.
If underwriters are used in the offer and sale of Offered Securities, the
Offered Securities will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The Offered Securities may be offered to the
public either through underwriting syndicates represented by managing
underwriters, or by underwriters without a syndicate, all of which
underwriters in either case will be designated in the applicable Prospectus
Supplement. Unless otherwise set forth in the applicable Prospectus
Supplement, under the terms of the underwriting agreement, the obligations of
the underwriters to purchase Offered Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
the Offered Securities if any are purchased. Any initial public offering price
and any discounts or concessions allowed or re-allowed or paid to dealers may
be changed from time to time.
Offered Securities may be offered and sold directly by the Company or
through agents designated by the Company from time to time. Any agent involved
in the offer or sale of the Offered Securities with respect to which this
Prospectus is delivered will be named in, and any commissions payable to such
agent will be set forth in or calculable from, the applicable Prospectus
Settlement. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the applicable Prospectus Supplement, the Company may
authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase the Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Delayed Delivery Contracts") providing for payment and
delivery on the date or dates stated in the Prospectus Supplement. Each
Delayed Delivery Contract will be for an amount of the Offered Securities not
less than and, unless the Company otherwise agrees, the aggregate amount of
the Offered Securities sold pursuant to Delayed Delivery Contracts shall be
not more than the respective minimum and maximum amounts stated in the
Prospectus Supplement. Institutions with which Delayed Delivery Contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions, but shall in all cases be subject to the approval of the Company
in its sole discretion. The obligations of the purchaser under any Delayed
Delivery Contract to pay for and take delivery of the Offered Securities will
not be subject to any conditions except that (i) the purchase of the Offered
Securities by such institution shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such institution is subject, and
(ii) any related sale of the Offered Securities to underwriters shall have
occurred. A commission as set forth in the Prospectus Supplement will be paid
to underwriters soliciting purchases of the Offered Securities pursuant to
Delayed Delivery Contracts accepted by the Company. The underwriters will not
have any responsibility in respect of the validity or performance of Delayed
Delivery Contracts.
The Debt Securities and the Preferred Stock will be new issues of securities
with no established trading market. Any underwriters to whom Offered
Securities are sold by the Company for public offering and sale may make a
market in such Offered Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
Offered Securities.
48
<PAGE>
Any underwriter, dealer or agent participating in the distribution of the
Offered Securities may be deemed to be an underwriter, as that term is defined
in the Securities Act, of the Offered Securities so offered and sold, and any
discounts or commissions received by it from the Company and any profit
realized by it on the sale or resale of the Offered Securities may be deemed
to be underwriting discounts and commissions under the Securities Act.
Under agreements entered into with the Company, underwriters, dealers and
agents may be entitled to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof.
Underwriters, dealers and agents also may be customers of, engage in
transactions with, or perform other services for the Company in the ordinary
course of business.
LEGAL MATTERS
Unless otherwise specified in the applicable Prospectus Supplement, the
validity of the Common Stock, the Preferred Stock and the Debt Securities
offered hereby will be passed upon for the Company by Dewey Ballantine LLP,
New York, New York. Certain other legal matters may be passed upon for the
Company by Dewey Ballantine LLP. Certain legal matters in connection with any
offering of Securities involving any underwriters or dealers will be passed
upon for such underwriters or dealers by counsel to be named in the
appropriate Prospectus Supplement.
EXPERTS
The consolidated financial statements of ContiFinancial Corporation and its
subsidiaries as of March 31, 1997 and 1996 and for each of the years in the
three-year period ended March 31, 1997 included in the Company's Annual Report
on Form 10-K for the year ended March 31, 1997 are incorporated by reference
in this Prospectus and have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto and are
incorporated by reference herein in reliance upon the authority of said firm
as experts in giving said reports.
49
<PAGE>
GLOSSARY
Adjustable Rate Mortgages or
ARMs........................ Mortgages with a variable interest rate which
typically adjust off LIBOR or U.S. treasury
rates.
"A", "B", "C" and "D" Credit
Grades...................... A grading system used in the finance industry
to reflect a borrower's overall credit quality.
The grade assigned by a lender to each borrower
is a function of the borrower's historical
payment performance on his or her outstanding
consumer debt. Sub debt may include credit
cards and automobile loans. The Company
establishes the prices it will pay for loans
based on the borrower's credit profile,
prevailing market conditions and other factors.
Broker Loans................. Loans referred to the Company by brokers.
Commercial/Multi-family
Loans....................... Loans secured by commercial properties
including multi-family dwellings, self-storage
facilities, assisted living and other health-
related facilities, and retail and industrial
buildings.
Conduits..................... Stand-alone securitization vehicles where the
originator(s), underwriter(s), servicer(s) and
seller(s) may all be different parties coming
together to generate loans or other assets to
be serviced and securitized. Conduits allow
smaller originators to sell their assets into a
single securitizable pool, thus benefiting from
economies of scale and the ability to share the
fixed transaction costs associated with
securitization.
Covered Loans................ Mortgage loans (other than mortgage loans to
finance the acquisition or initial construction
of a dwelling) with (i) total points and fees
upon origination in excess of eight percent of
the loan amount or (ii) an annual percentage
rate of more than ten percentage points higher
than comparably maturing U.S. Treasury
Securities.
Debt-to-Income Ratio......... The ratio of a borrower's monthly debt service
requirements to his or her monthly income.
Equipment Leases............. Leases of assets primarily to commercial users.
Leased assets may include office equipment and
medical equipment.
Franchise Loans.............. Loans to franchisees of national restaurant
chains or other service chains. The loans are
secured by fixtures, equipment and cash flows.
Gain on Sale of Receivables.. The gross income from the structuring and sale
of loans and other assets into REMICs, owner
trusts and grantor trusts. Gain on sale of
receivables represents the Excess Spread
Receivables less cost of originating and
structuring the loans and other assets.
Ginnie Mae ("GNMA"), Fannie
Mae ("FNMA"), Freddie Mac
("FHLMC")...................Government National Mortgage Association,
Federal National Mortgage Association and
Federal Home Loan Mortgage Corporation.
50
<PAGE>
Home Equity Loans............ Loans made to borrowers typically for debt
consolidation, home improvements, education or
refinancing and secured by a first or second
mortgage on one- to four-family residential
properties.
Interest-only Certificate.... Represents Excess Spread Receivables which
represent the right to receive interest
payments on a securitization trust's underlying
assets and is subject to changes in value due
to changes in prepayment rates. Generally, the
Interest-Only Certificate is senior to the
Residual Certificate(s).
Non-conforming Home Equity
Loans....................... Home equity loans made to borrowers whose
financing needs cannot be met by traditional
financial institutions due to credit exceptions
or other factors and cannot be market to
agencies such as Ginnie Mae, Fannie Mae and
Freddie Mac.
Non-prime Auto Loans and
Leases...................... Automobile loans or leases secured by new or
used automobiles made generally to "B" or "C"
Credit Grade borrowers.
Overcollateralization........ The amount by which the outstanding principal
balance of assets which have been securitized
exceeds the outstanding principal balance of
the certificates issued by the related trust.
The surplus principal of the assets is
available to absorb losses. The amount of
overcollateralization required for a
securitization is specified for each issuance.
Overcollateralization is developed by applying
Excess Spread as an accelerated payment of
principal on the certificates. Once the
required level of overcollateralization is
reached, and for so long as such level is
maintained, the Excess Spread flows through to
the Company.
Purchase Premium Refunds..... That portion of the premium paid by the Company
to a wholesale originator upon purchase of a
loan which is required to be repaid by the
originator if the loan prepays before a
contractually set time.
REMIC........................ Real Estate Mortgage Investment Conduit.
REMICs, Owner Trusts and
Grantor Trusts.............. Trusts formed to purchase securitizable assets,
issue pass-through certificates and make
distributions to investors. Such trusts are
organized in accordance with the Internal
Revenue Code so as to not be subject to
corporate tax at the entity level.
Reserve Account.............. A reserve account serves the same purpose as
Overcollateralization. However, instead of
applying Excess Spread as a payment of
principal on the certificates, it is
accumulated in an account until a required
amount is reached. Funds from this account are
available to cover losses realized on loans or
other assets held by a trust.
Residual Certificates........ Represent Excess Spread Receivables which are
subject to change in value due to prepayment
rates and credit losses. The Residual
Certificates are subordinate certificates and
are in a first loss position.
51
<PAGE>
Securitization............... The sale by the Company of loans or other
assets it has originated or purchased to a
trust (or other special purpose entity).
Concurrently, the trust issues securities
(usually pass-through certificates) to
investors in a private placement or a public
offering. The Company is paid a purchase price
consisting of cash from the proceeds of the
sale of the securities and an interest in the
loans or other assets securitized generally in
the form of Interest-only Certificates and/or
Residual Certificates (i.e., the Excess Spread
Receivable).
Small Business Loans......... Loans to small businesses collateralized
primarily by accounts receivable. Such loans
are not guaranteed by the Small Business
Administration or any other government agency.
Strategic Alliance Equity
Interests................... Warrants, warrant-like equity participations or
other equity investments in Strategic Alliance
clients.
Structured Finance
Transactions................ The securitization of consumer and commercial
loans, leases and other receivables, including
home equity loans, which are sold through
REMICs or other trust structures or in whole
loan sales.
Sub-prime Auto Loans and
Leases...................... Automobile loans or leases made generally to
"C-" or "D" Credit Grade borrowers.
Timeshare Loans.............. Loans made to purchase a real property interest
in specific units at vacation resort
properties. Typically, the borrowers' rights to
use and occupy the real property are subject to
limitations.
Title I Home Improvement
Loans....................... Loans to homeowners, a portion of which is
guaranteed by the U.S. government, for the
purpose of certain pre-qualified home
improvements.
Warehouse Financing.......... Secured loan facilities or purchase commitments
provided to asset originators to facilitate the
accumulation of securitizable assets prior to
securitization. Commitments are typically for
one year or less and are designed to fund only
securitizable assets.
Wholesale Loans.............. Loans purchased by the Company in bulk sales
from mortgage bankers and commercial banks.
52
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION
The following table sets forth the fees and expenses payable by the Company
in connection with the registration of the Securities other than underwriting
discounts and commissions. All of such expenses except the Securities and
Exchange Commission (the "Commission") registration fee and the NASD filing
fee are estimated:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $181,818.18+
NASD filing fee............................................. $ 30,500.00
Blue Sky fees and expenses.................................. 12,000.00
Printing expense............................................ 200,000.00
Accounting fees and expenses................................ 50,000.00
Legal fees and expenses..................................... 100,000.00
Miscellaneous............................................... 125,681.82
-----------
Total....................................................... $700,000.00
===========
</TABLE>
- --------
+ $145,744.42 of such Registration Fee was paid pursuant to Amendment No. 2
of this Registration Statement. The remaining $36,073.76 of the
Registration Fee was accounted for at the time of the first filing of this
Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a Delaware corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or enterprise, against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine that despite
the adjudication of liability, such person is fairly and reasonably entitled
to be indemnified for such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsections (a) and (b) or in the defense of
any claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and
II-1
<PAGE>
maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liabilities under such
Section 145.
Section 102(b)(7) of the DGCL provides that a corporation in its original
certificate of incorporation or an amendment thereto validly approved by
stockholders may eliminate or limit personal liability of members of its board
of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his duty of loyalty, failing to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was illegal, or obtaining an improper
personal benefit. A provision of this type has no effect on the availability
of equitable remedies, such as injunction or rescission, for breach of
fiduciary duty. The Company's Restated Certificate of Incorporation contains
such a provision.
The Company's Restated Certificate of Incorporation provides that, to the
extent not prohibited by law, the Company shall indemnify any person who is or
was made, or threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding (a "Proceeding"), whether civil,
criminal, administrative or investigative, including, without limitation, an
action by or in the right of the Company to procure a judgment in its favor,
by reason of the fact that such person, or a person of whom such person is the
legal representative, is or was a director or officer of the Company, or is or
was serving as a director, officer, employee or agent or in any other capacity
at the request of the Company for any other company, partnership, joint
venture, trust, employee benefit plan or other enterprise (an "Other Entity")
while serving as a director or officer of the Company, against judgments,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection with such Proceeding if such
person acted in good faith and in a manner such person believed to be in or
not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. To the extent specified by the Board of Directors of the
Company at any time and to the extent not prohibited by law, the Company may
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed Proceeding, whether civil, criminal,
administrative or investigative, including, without limitation, an action by
or in the right of the Company to procure a judgment in its favor, by reason
of the fact that such person is or was an employee or agent of the Company, or
is or was serving as a director, officer, employee or agent or in any other
capacity at the request of the Company for any Other Entity, against judgment,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection with such Proceeding if such
person acted in good faith and in a manner such person believed to be in or
not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In addition, the Restated Certificate of Incorporation
also permits the Board of Directors to authorize the Company to purchase and
maintain insurance against any liability asserted against any director,
officer, employee or agent of the Company arising out of his capacity as such.
Pursuant to the Registration Rights Agreement between Continental Grain and
the Company, in connection with any future registration of the shares of
Common Stock held by Continental Grain, Continental Grain has agreed to
indemnify, under certain conditions, the Company, its officers, directors,
employees, agents and each person, if any, who controls the Company within the
meaning of the Securities Act, against certain liabilities.
Pursuant to the Indemnification Agreement between Continental Grain and the
Company, each of Continental Grain and the Company has agreed to indemnify the
other in the event of certain liabilities, including liabilities under the
Securities Act or the Exchange Act.
The form of underwriting agreement, filed as Exhibit 1.1 hereto, contains
provisions by which each of the Underwriters agrees to indemnify the Company,
its officers and directors and each person who controls the Company within the
meaning of the Securities Act against certain liabilities.
II-2
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for Common Stock, Preferred Stock and
Debt Securities*
3.1 Articles of Incorporation of the Company, as amended (Incorporated by
reference to Exhibit 3.1 to the Registrant's Registration Statement on
Form S-1 (Reg. No. 33-98016))
3.2 Bylaws of the Company, as amended (Incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on Form S-1
(Reg. No. 33-98016))
4.1 Form of Debt Securities Indenture*
5.1 Opinion of Dewey Ballantine LLP*
12.1 Statements as to computations of ratios of earnings to fixed charges.*
23.1 Consent of Dewey Ballantine LLP (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP*
24.1 Powers of Attorney (included on signature page)*
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee under
the Trust Indenture Act of 1939*
</TABLE>
- --------
* Filed herewith.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the 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, 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.
(3) 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
of such information in the Registration Statement.
(4) to remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(5) for the purpose of determining any liability under the Securities Act
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) 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 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.
(6) to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report,
to security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14e-3 under the Exchange Act; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not set forth in
the prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant 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 amendment to this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York, New York, on the 5th day
of March, 1998.
CONTIFINANCIAL CORPORATION
*
By: _________________________________
Name: James E. Moore
Title:President, Chief
ExecutiveOfficer and Director
Pursuant to the requirements of the Securities Act, this amendment to this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President, Chief March 5, 1998
- ------------------------------------- Executive Officer
James E. Moore and Director
(Principal
Executive Officer)
* Senior Vice March 5, 1998
- ------------------------------------- President and Chief
Daniel J. Willett Financial Officer
(Principal
Financial Officer)
/s/ Dennis G. Sullivan Vice President and March 5, 1998
- ------------------------------------- Controller
Dennis G. Sullivan (Principal
Accounting Officer)
* Director and March 5, 1998
- ------------------------------------- Chairman of the
James J. Bigham Board
* Director March 5, 1998
- -------------------------------------
Paul J. Fribourg
* Director March 5, 1998
- -------------------------------------
Donald L. Staheli
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director March 5, 1998
- -------------------------------------
John W. Spiegel
* Director March 5, 1998
- -------------------------------------
John P. Tierney
* Director March 5, 1998
- -------------------------------------
Lawrence G. Weppler
* Director March 5, 1998
- -------------------------------------
Michael J. Zimmerman
</TABLE>
/s/ Frank W. Baier
*By: ___________________________
Frank W. Baier
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
1.1 Form of Underwriting Agreement for Common Stock, Preferred Stock
and Debt Securities*
4.1 Form of Debt Securities Indenture*
5.1 Opinion of Dewey Ballantine LLP*
12.1 Statements as to computation of ratios of earnings to fixed
charges.*
23.1 Consent of Dewey Ballantine LLP (included on Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP*
24.1 Powers of Attorney (included on signature page)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee
under the Trust Indenture Act of 1939*
</TABLE>
- --------
* Filed herewith.
<PAGE>
ContiFinancial Corporation
Common Stock
Preferred Stock
Debt Securities
UNIVERSAL FORM OF UNDERWRITING AGREEMENT
----------------------------------------
1. Introductory. ContiFinancial Corporation, a Delaware corporation
("Company"), proposes to issue and sell from time to time certain of its
unsecured debt securities, which may be either senior or subordinated ("Debt
Securities"), preferred stock ("Preferred Stock") and Common Stock $.01 par
value ("Common Stock") registered under the registration statement referred to
in Section 2(a) ("Registered Securities"). The Registered Securities
constituting Debt Securities will be issued under an indenture, dated as of
, 1998 ("Indenture"), between the Company and The Bank of New York ,
as Trustee, in one or more series, which series may vary as to interest rates,
maturities, redemption provisions, selling prices and other terms. The
Registered Securities constituting Preferred Stock may be issued in one or more
series, which series may vary as to dividend rates, redemption provisions,
selling prices and other terms. Particular series or offerings of Registered
Securities will be sold pursuant to a Terms Agreement referred to in Section 3,
for resale in accordance with terms of offering determined at the time of sale.
The Registered Securities involved in any such offering are hereinafter
referred to as the "Offered Securities". The firm or firms which agree to
purchase the Offered Securities are hereinafter referred to as the
"Underwriters" of such securities, and the representative or representatives of
the Underwriters, if any, specified in a Terms Agreement referred to in Section
3 are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the Underwriters,
the term "Representatives", as used in this Agreement (other than in Sections
2(b), 5(c) and 6 and the second sentence of Section 3) shall mean the
Underwriters.
2. Representations and Warranties of the Company. The Company, as of the
date of each Terms Agreement referred to in Section 3, represents and warrants
to, and agrees with, each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Act and a registration statement (No. 333-33783), including a prospectus,
relating to the Registered Securities has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. Such
registration statement, as amended at the time of any Terms Agreement
referred to in Section 3, is hereinafter referred to as the "Registration
Statement", and the prospectus included in such Registration Statement, as
supplemented as contemplated by Section 3 to reflect the terms of the
Offered Securities (if they are Debt Securities or Preferred Stock) and the
terms of the offering of the Offered Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Securities Act of 1933 (the "Act"), including all materials
incorporated by reference therein, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
respects to the requirements of the Act, the Trust Indenture Act of 1939,
as amended ("Trust Indenture Act"), and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and on the date of each Terms Agreement referred to in Section
3, the Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, except that the foregoing does not apply to statements in
or omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives, if
any, specifically for use therein.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification,
<PAGE>
except where the failure to so qualify would not result in a material
adverse change in the condition, financial or otherwise, or in the
properties, operations or business of the Company and its subsidiaries
considered as one enterprise (a "Material Adverse Effect").
(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation or limited liability company in good standing under
the laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation or limited liability
company in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification except where the failure to so qualify would not result in a
Material Adverse Effect; all of the issued and outstanding capital stock or
membership interests of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock or membership interests of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(e) If the Offered Securities are Debt Securities: the Indenture has
been duly authorized and has been duly qualified under the Trust Indenture
Act; the Offered Securities have been duly authorized; and when the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date (as defined below) or pursuant to Delayed Delivery
Contracts (as defined below), the Indenture will have been duly executed
and delivered, such Offered Securities will have been duly executed,
authenticated, issued and delivered, will be entitled to the benefits of
the Indenture and will conform to the description thereof contained in the
Prospectus and the Indenture and such Offered Securities will constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(f) If the Offered Securities are Preferred Stock: the Offered
Securities have been duly authorized and, when the Offered Securities have
been delivered and paid for in accordance with the Terms Agreement on the
Closing Date or pursuant to Delayed Delivery Contracts, such Offered
Securities will have been validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the Prospectus; and
the stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(g) If the Offered Securities are Common Stock: the Offered Securities
and all other outstanding shares of capital stock of the Company have been
duly authorized; all outstanding shares of capital stock of the Company
are, and, when the Offered Securities have been delivered and paid for in
accordance with the Terms Agreement on the Closing Date, such Offered
Securities will have been validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the Prospectus; and
the stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(h) If the Offered Securities are convertible: when the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date, such Offered Securities will be convertible into Common
Stock of the Company in accordance with their terms (if the Offered
Securities are Preferred Stock) or the Indenture (if the Offered Securities
are Debt Securities); the shares of Common Stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of the Company
have no preemptive rights with respect to the Common Stock.
(i) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment.
(j) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company, except such as
have been obtained and made under the Act and, if the Offered Securities
are Debt Securities, the Trust Indenture Act and such as may be required
under state securities laws.
2
<PAGE>
(k) The execution, delivery and performance of the Indenture (if the
Offered Securities are Debt Securities), the Terms Agreement (including the
provisions of this Agreement) and any Delayed Delivery Contracts, and the
issuance and sale of the Offered Securities and, if the Offered Securities
are Debt Securities or Preferred Stock, compliance with the terms and
provisions thereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any subsidiary
of the Company or any of their properties, or any agreement or instrument
to which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the properties
of the Company or any such subsidiary is subject, or the charter or by-laws
of the Company or any such subsidiary, except for such breach, violation or
default that would not result in a Material Adverse Effect, and the Company
has full power and authority to authorize, issue and sell the Offered
Securities as contemplated by the Terms Agreement (including the provisions
of this Agreement).
(l) The Terms Agreement (including the provisions of this Agreement)
and, if the Offered Securities are Debt Securities or Preferred Stock, any
Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company.
(m) Except as disclosed in the Prospectus, each of the Company and its
subsidiaries has good and marketable title to all real properties and all
other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would have a Material Adverse Effect or
materially interfere with the use made or to be made thereof by it; and
except as disclosed in the Prospectus, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would have a Material Adverse Effect.
(n) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(p) Except as disclosed in the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic
or foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property contaminated with
any substance that is subject to any environmental laws, is liable for any
off-site disposal or contamination pursuant to any environmental laws, or
is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and the Company is not aware of
any pending investigation which might lead to such a claim.
(q) Except as disclosed in the Prospectus, to the knowledge of the
Company, there are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect or would materially and adversely affect the ability of the
Company to perform its obligations under the Indenture (if the Offered
Securities are Debt Securities), the terms of the Offered Securities (if
the Offered Securities are Preferred Stock or Common Stock), the Terms
Agreement (including the provisions of this Agreement) or any Delayed
Delivery Contracts, or which are otherwise material in the context of the
sale of the Offered Securities; and to the Company's knowledge, no such
actions, suits or proceedings are threatened.
(r) The financial statements incorporated by reference in the
Registration Statement and Prospectus present fairly in all material
respects the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis.
3
<PAGE>
(s) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor, to the knowledge of the Company, any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock other than in the ordinary course of
business.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(u) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, the failure of which to own or possess would not result
in a Material Adverse Effect, and have not received any notice of
infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect.
(v) The Company and each of its subsidiaries maintains reasonably
adequate insurance.
(w) No relationship, direct or indirect, exists between or among any
of the Company or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of any of them, on the
other hand, which is required by the Act or by the Rules and Regulations
thereunder to be described in the Registration Statement or the Prospectus
which is not so described or is not described in all material respects as
required.
(x) The information provided separately to the Underwriters and
disclosed in the Prospectus regarding delinquencies and foreclosures, loan
losses, the value of the servicing portfolios and Excess Spread Receivables
(as such term is defined in the Registration Statement) and the sale of
Excess Spread Receivables is accurate and complete in all material
respects.
3. Purchase and Offering of Offered Securities. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at the
time the Company determines to sell the Offered Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount or number
of shares to be purchased by each Underwriter, the purchase price to be paid by
the Underwriters and (if the Offered Securities are Debt Securities or Preferred
Stock) the terms of the Offered Securities not already specified (in the
Indenture, in the case of Offered Securities that are Debt Securities),
including, but not limited to, interest rate (if Debt Securities), dividend rate
(if Preferred Stock), maturity (if Debt Securities), any redemption provisions
and any sinking fund requirements and whether any of the Offered Securities may
be sold to institutional investors pursuant to Delayed Delivery Contracts. The
Terms Agreement will also specify the time and date of delivery and payment
(such time and date, or such other time not later than seven full business days
thereafter as the Underwriter first named in the Terms Agreement (the "Lead
Underwriter") and the Company agree as the time for payment and delivery, being
herein and in the Terms Agreement referred to as the "Closing Date"), the place
of delivery and payment and any details of the terms of offering that should be
reflected in the prospectus supplement relating to the offering of the Offered
Securities. For purposes of Rule 15c6-1 under the Securities Exchange Act of
1934, the Closing Date (if later than the otherwise applicable settlement date)
shall be the date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering other than Contract Securities
(as defined below) for which payment of funds and delivery of securities shall
be as hereinafter provided. The obligations of the Underwriters to purchase the
Offered Securities will be several and not joint. It is understood that the
Underwriters propose to offer the Offered Securities for sale as set forth in
the Prospectus.
If the Terms Agreement provides for sales of Offered Securities pursuant to
delayed delivery contracts, the Company authorizes the Underwriters to solicit
offers to purchase Offered Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date the
Company will pay, as compensation, to the Representatives for the accounts of
the
4
<PAGE>
Underwriters, the fee set forth in such Terms Agreement in respect of the
principal amount or number of shares of Offered Securities to be sold pursuant
to Delayed Delivery Contracts ("Contract Securities"). The Underwriters will not
have any responsibility in respect of the validity or the performance of Delayed
Delivery Contracts. If the Company executes and delivers Delayed Delivery
Contracts, the Contract Securities will be deducted from the Offered Securities
to be purchased by the several Underwriters and the aggregate principal amount
or number of shares of Offered Securities to be purchased by each Underwriter
will be reduced pro rata in proportion to the principal amount or number of
shares of Offered Securities set forth opposite each Underwriter's name in such
Terms Agreement, except to the extent that the Lead Underwriter determines that
such reduction shall be otherwise than pro rata and so advises the Company. The
Company will advise the Lead Underwriter not later than the business day prior
to the Closing Date of the principal amount or number of shares of Contract
Securities.
If the Offered Securities are Debt Securities and the Terms Agreement
specifies "Book-Entry Only" settlement or otherwise states that the provisions
of this paragraph shall apply, the Company will deliver against payment of the
purchase price the Offered Securities in the form of one or more permanent
global securities in definitive form (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and registered
in the name of Cede & Co., as nominee for DTC. Interests in any permanent global
securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Offered
Securities shall be made by the Underwriters (if the Terms Agreement specifies
that the Offered Securities will not trade in DTC's Same Day Funds Settlement
System) by certified or official bank check or checks in New York Clearing House
(next day) funds or (if the Terms Agreement specifies that the Offered
Securities will trade in DTC's Same Day Funds Settlement System) in Federal
(same day) funds by official check or checks or wire transfer to an account in
New York previously designated to the Lead Underwriter by the Company at a bank
acceptable to the Lead Underwriter, in each case drawn to the order of the
Company at the place of payment specified in the Terms Agreement on the Closing
Date, against delivery to the Trustee as custodian for DTC of the Global
Securities representing all of the Offered Securities.
4. Certain Agreements of the Company. The Company agrees with the several
Underwriters that it will furnish to counsel for the Underwriters, one signed
copy of the registration statement relating to the Registered Securities,
including all exhibits, in the form it became effective and of all amendments
thereto and that, in connection with each offering of Offered Securities:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b)(2) (or, if applicable and if
consented to by the Lead Underwriter, subparagraph (5)) not later than the
second business day following the execution and delivery of the Terms
Agreement.
(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any
part thereof and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company promptly will
notify the Lead Underwriter of such event and will promptly prepare and
file with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance. Neither the Lead Underwriter's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(d) (i) As soon as practicable, but not later than 16 months, after
the date of each Terms Agreement, the Company will make generally available
to its securityholders an earnings statement covering a period of at least
12 months beginning after the later of (1) the effective date of the
registration statement relating to the Registered Securities, (2) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such Terms
Agreement and (3) the date of the Company's most recent Annual Report on
Form 10-K filed with the Commission prior to the date of such Terms
Agreement, which will
5
<PAGE>
satisfy the provisions of Section 11(a) of the Act and (ii) the Company
will comply in all respects with Section 10(a) of the Act.
(e) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, the Prospectus
and all amendments and supplements to such documents, in each case as soon
as available and in such quantities as the Lead Underwriter reasonably
requests. The Company will pay the expenses of printing and distributing to
the Underwriters all such documents.
(f) The Company will use its best efforts to arrange for the
qualification of the Offered Securities for sale and (if the Offered
Securities are Debt Securities or Preferred Stock) the determination of
their eligibility for investment under the laws of such jurisdictions as
the Lead Underwriter designates and will continue such qualifications in
effect so long as required for the distribution; provided, however, that
the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.
(g) During the period of two years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as practicable
after the end of each fiscal year, a copy of its annual report to
stockholders for such year; and the Company will furnish to the
Representatives, as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under
the Securities Exchange Act of 1934 or mailed to stockholders.
(h) The Company will pay all expenses incident to the performance of
its obligations under the Terms Agreement (including the provisions of this
Agreement), for any filing fees or other reasonable expenses (including
reasonable fees and disbursements of counsel) in connection with
qualification of the Registered Securities for sale (if the Offered
Securities are Debt Securities or Preferred Stock), any determination of
their eligibility for investment under the laws of such jurisdictions as
the Lead Underwriter may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Offered Securities (if they are Debt Securities or Preferred Stock),
for any applicable filing fee incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. of the
Registered Securities, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of Registered
Securities and for reasonable expenses incurred in distributing the
Prospectus, any preliminary prospectuses, any preliminary prospectus
supplements or any other amendments or supplements to the Prospectus to the
Underwriters.
(i) If the Offered Securities are Debt Securities or Preferred Stock,
the Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to United States dollar-
denominated debt securities issued or guaranteed by the Company and having
a maturity of more than one year from the date of issue (if the Offered
Securities are Debt Securities) or any series of preferred stock issued or
guaranteed by the Company (if the Offered Securities are Preferred Stock),
or publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of the Lead
Underwriter for a period beginning at the time of execution of the Terms
Agreement and ending the number of days after the Closing Date specified
under "Blackout" in the Terms Agreement.
(j) If the Offered Securities are Common Stock or are convertible into
Common Stock, the Company will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares of
its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of the Lead Underwriter for a period
beginning at the time of execution of the Terms Agreement and ending the
number of days after the Closing Date specified under "Blackout" in the
Terms Agreement.
6
<PAGE>
5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of delivery
thereof, of Arthur Andersen LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and any schedules
and any summary of earnings examined by them and included in the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on any unaudited financial
statements included in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements, if any, and any
summary of earnings included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such
unaudited financial statements and summary of earnings for them
to be in conformity with generally accepted accounting
principles;
(B) if any unaudited "capsule" information is contained in
the Prospectus, the unaudited consolidated net sales, net
operating income, net income and net income per share amounts or
other amounts constituting such "capsule" information and
described in such letter do not agree with the corresponding
amounts set forth in the unaudited consolidated financial
statements or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of the Terms
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there
was any decrease in consolidated net assets or consolidated net
worth, as compared with amounts shown on the latest balance sheet
included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year, in consolidated net sales, net
operating income in the total or (if the Offered Securities are
Common Stock or are convertible into Common Stock) per share
amounts of consolidated income before extraordinary items or net
income or (if the Offered Securities are Debt Securities) in the
ratio of earnings to fixed charges or (if the Offered Securities
are Preferred Stock) in the ratio of earnings to fixed charges
and preferred stock dividends combined;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Prospectus (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries
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<PAGE>
subject to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter and
have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter; and
(v) if unaudited pro forma financial statements are included or
incorporated by reference in the Registration Statement or the
Prospectus, on the basis of a reading of the unaudited pro forma
financial statements, carrying out certain specified procedures,
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters, and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial statements, nothing came
to their attention which caused them to believe that the pro forma
financial statements do not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or its subsidiaries
which, in the judgment of a majority in interest of the Underwriters
including any Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities or preferred stock of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities or preferred stock of the Company (other
than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or, New York authorities; (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including any Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (vi) the
enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other governmental
authority which in the opinion of a majority in interest of the
Underwriters materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company or its
Subsidiaries; or (vii) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs
which in the opinion of a majority in interest of the Underwriters has a
material adverse effect on the financial markets in the United States.
(d) The Representatives shall have received an opinion, dated the
Closing Date, of Dewey Ballantine LLP, counsel for the Company, to the
effect that:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is an existing corporation or limited liability
company in good standing under the laws of the jurisdiction of
incorporation or organization, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus; and all the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable;
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<PAGE>
(ii) If the Offered Securities are Debt Securities: the Indenture
has been duly authorized, executed and delivered by the Company and
has been duly qualified under the Trust Indenture Act; the Offered
Securities have been duly authorized; the Offered Securities other
than any Contract Securities have been duly executed, authenticated,
issued and delivered and are entitled to the benefits of the
Indenture; the Indenture and the Offered Securities other than any
Contract Securities constitute, and any Contract Securities, when
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to Delayed Delivery Contracts, will
constitute, valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Offered
Securities other than any Contract Securities conform, and any
Contract Securities, when so issued and delivered and sold will
conform in all material respects, to the description thereof contained
in the Prospectus;
(iii) If the Offered Securities are Preferred Stock: the Offered
Securities have been duly authorized; the Offered Securities other
than any Contract Securities have been validly issued and are fully
paid and nonassessable; any Contract Securities, when issued,
delivered and sold pursuant to Delayed Delivery Contracts, will be
validly issued, fully paid and nonassessable; and the Offered
Securities other than any Contract Securities conform, and any
Contract Securities, when so issued, delivered and sold, will conform
in all material respects, to the description thereof contained in the
Prospectus; and, except as disclosed in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities;
(iv) If the Offered Securities are Common Stock: the Offered
Securities and all other outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description thereof contained in
the Prospectus; and, except as disclosed in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities;
(iv) If the Offered Securities are convertible: the Offered
Securities other than any Contract Securities are, and any Contract
Securities, when (if the Offered Securities are Debt Securities)
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to Delayed Delivery Contracts or
(if the Offered Securities are Preferred Stock) when issued, delivered
and sold pursuant to Delayed Delivery Contracts, will be convertible
into Common Stock of the Company in accordance with (if they are Debt
Securities) the Indenture or (if they are Preferred Stock) their
terms; the shares of Common Stock initially issuable upon conversion
of the Offered Securities have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such conversion,
will be validly issued, fully paid and nonassessable; the outstanding
shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and conform in all material respects
to the description thereof contained in the Prospectus; and, except as
disclosed in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the Common Stock;
(v) If the Offered Securities are Common Stock or are convertible
into Common Stock: Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act;
(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance or sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act and, if the Offered
Securities are Debt Securities, the Trust Indenture Act and such as
may be required under state securities laws;
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<PAGE>
(vii) The execution, delivery and performance of the Indenture
(if the Offered Securities are Debt Securities), the Terms Agreement
(including the provisions of this Agreement) and, if the Offered
Securities are Debt Securities or Preferred Stock, any Delayed
Delivery Contracts and the issuance and sale of the Offered Securities
and, if the Offered Securities are Debt Securities or Preferred Stock,
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or, to
such counsel's knowledge, order of any governmental agency or body or
any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, or any agreement or instrument
to which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the
charter or by-laws of the Company or any such subsidiary except for
such breach, violation or default which would not result in a Material
Adverse Effect, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
the Terms Agreement (including the provisions of this Agreement);
(viii) The statements under the captions "Description of the
Notes" and "Underwriting" in the Prospectus, as amended or
supplemented, and Items 14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of legal
matters or documents referred to therein, fairly present the
information called for with respect to such legal matters or documents
in all material respects;
(ix) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940;
(x) The Terms Agreement (including the provisions of this
Agreement) and, if the Offered Securities are Debt Securities or
Preferred Stock, any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company; and
(xi) The Company meets the requirements for use of Form S-3 under
the Act and the Registration Statement has become effective under the
Act, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein, and, to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under
the Act, and the registration statement relating to the Registered
Securities, as of its effective date, the Registration Statement and
the Prospectus, as of the date of the Terms Agreement, and any
amendment or supplement thereto, as of its date, complied as to form
in all material respects with the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Initial Purchasers,
officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement, the Prospectus and
related matters were discussed, and such counsel has assisted the Company
in the preparation of the Registration Statement and the Prospectus, and
although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except and only
to the extent as set forth in clause (viii) above), on the basis of the
foregoing, such counsel has no reason to believe that such registration
statement, as of its effective date, the Registration Statement or the
Prospectus, as of the date of the Terms Agreement or as of the Closing
Date, or any amendment or supplement thereto, as of its date or as of the
Closing Date, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that such counsel does not express any comment with
respect to the financial statements including the notes thereto and
supporting schedules, or any other financial data set forth or referred to
in or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the federal law of the United States, the laws
10
<PAGE>
of the State of New York and the General Corporation Law of the State of
Delaware and (B) may rely, as to matters of fact, to the extent they deem
proper, on representations or certificates of responsible officers of the
Company and certificates of public officials.
(e) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, Cravath, Swaine & Moore may rely as to the
incorporation of the Company and all other matters governed by New York law
upon the opinion of Dewey Ballantine LLP referred to above.
(f) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct in all material respects, that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, that no
stop order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission and that, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(g) The Underwriters shall have received on opinion, dated on Closing
Date, of Alan Langus, Chief Counsel of the Company, to the effect that:
(i) Each of the Company and its subsidiaries is duly qualified to
do business as a foreign corporation or limited liability company in
good standing in all jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification
except where failure to be so qualified would not result in a Material
Adverse Effect; all of the issued and outstanding capital stock or
membership interests of each subsidiary owned by the Company has been
duly authorized and validly issued and is fully paid and
nonassessable; and, to the knowledge of such counsel, the capital
stock or membership interests of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects;
(ii) The statements under the captions "Business-Legal
Proceedings", "Regulation-Truth in Lending", "Regulation-Other Lending
Laws", "Regulation-Broker/Dealer", "Certain Transactions-Current
Relationships with Continental Grain" and "Description of Certain
Indebtedness and Financing Arrangements" in the Prospectus, as amended
or supplemented, insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings in all material respects;
(iii) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits"), as are necessary to own, lease and operate
its respective properties and to conduct its business in the manner
described in the Prospectus except those Permits, the failure to so
own would not have a Material Adverse Effect; to the best of such
counsel's knowledge, after due inquiry, the Company and each of its
subsidiaries has fulfilled and performed all of its material
obligations with respect to such Permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit, subject in each case to
such qualification as may be set forth in the Prospectus, such Permits
contain no restrictions that are materially burdensome to the Company
or any of its subsidiaries except those Permits, the failure to so own
would not have a Material Adverse Effect; and
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
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<PAGE>
(h) The Representatives shall have received a letter, dated the
Closing Date, of Arthur Andersen LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to the Closing Date for the purposes of this subsection.
The Company will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as the
Representatives reasonably request. The Lead Underwriter may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters under this Agreement and the Terms
Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Lead Underwriter, if any,
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in the Terms Agreement provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not enure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages and liabilities and judgments purchased Securities, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Prospectus (as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives, if any, specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
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No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities under the Terms Agreement and
the aggregate principal amount (if Debt Securities) or number of shares (if
Preferred Stock or Common Stock) of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount (if Debt Securities) or number of shares (if
Preferred Stock or Common Stock) of Offered Securities, the Lead Underwriter may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments under the
Terms Agreement (including the provisions of this Agreement), to purchase the
Offered Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate
principal amount (if Debt Securities) or number of shares (if Preferred Stock or
Common Stock) of Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount (if Debt Securities) or
number of shares (if Preferred Stock or Common Stock) of Offered Securities and
arrangements satisfactory to the Lead Underwriter and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, the Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default. If the Offered
Securities are Debt Securities or Preferred Stock, the respective commitments of
the several Underwriters for the purposes of this Section shall be determined
without regard to reduction in the respective Underwriters' obligations to
purchase the principal amounts (if Debt Securities) or numbers of shares (if
Preferred Stock) of the Offered
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<PAGE>
Securities set forth opposite their names in the Terms Agreement as a result of
Delayed Delivery Contracts entered into by the Company.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of the Terms
Agreement pursuant to Section 7 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
9. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to them
at their address furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at 277 Park Avenue, 38th Floor, New York, New
York 10172, Attention: Chief Counsel.
10. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified in the Terms Agreement and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. Any Representatives will act for the
several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws.
The Company and the Underwriters hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to the
Terms Agreement (including the provisions of this Agreement) or the transactions
contemplated thereby.
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ANNEX I
(Three copies of this Delayed Delivery Contract should be signed and returned
to the address shown below so as to arrive not later than 9:00 A.M. New
York time, on , 1998
DELAYED DELIVERY CONTRACT
-------------------------
Contifinancial corporation
c/o [Name and Address of Lead Underwriter]
Gentlemen:
The undersigned will purchase from the Company as of the date hereof, for
delivery on the dates set forth below, Securities in the principal amounts set
forth below:
<TABLE>
<CAPTION>
Principal Amount
----------------
Number
Delivery Date of Shares
------------- ---------
<S> <C>
</TABLE>
Each of such delivery dates is hereinafter referred to as a Delivery Date.
Payment for the Securities that the undersigned has agreed to purchase for
delivery on each Delivery Date shall be made to the Company or its order by
certified or official bank check in New York Clearing House (next day) funds at
the office of at .M. on such Delivery Date upon
delivery to the undersigned of the Securities to be purchased by the undersigned
for delivery on such Delivery Date in definitive form and in such denominations
and registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to such Delivery Date.
It is expressly agreed that the provisions for delayed delivery and payment
are for the sole convenience of the undersigned; that the purchase hereunder of
Securities is to be regarded in all respects as a purchase as of the date of
this Contract; that the obligation of the Company to make delivery of and accept
payment for, and the obligation of the undersigned to take delivery of and make
payment for, Securities on each Delivery Date shall be subject only to the
conditions that (1) investment in the Securities shall not at such Delivery Date
be prohibited under the laws of any jurisdiction in the United States to which
the undersigned is subject and (2) the Company shall have sold to the
Underwriters the total [principal amount] [number of shares] of the Securities
less the [principal amount] [number of shares] thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
Promptly after completion of the sale to the Underwriters the Company will
mail or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
15
<PAGE>
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
-----------------------------------------
(Name of Purchaser)
by
--------------------------------------
--------------------------------------
(Title of Signatory)
--------------------------------------
--------------------------------------
(Address of Purchaser)
Accepted, as of the above date.
CONTIFINANCIAL CORPORATION
by
--------------------------
[Insert title]
by
--------------------------
[Insert title]
16
<PAGE>
[The following form of Terms Agreement will not be an annex to the related
Underwriting Agreement and should normally be typed separately. In order to
inform the issuer of all the standard underwriting terms, a draft of the Terms
Agreement should be circulated together with the first draft of the Underwriting
Agreement.]
ContiFinancial Corporation
("Company")
Debt Securities
TERMS AGREEMENT
---------------
, 19
To: The Representative of the Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement on Form S-3 (No. 333-33783) ("Underwriting
Agreement"), the following securities ("Offered Securities") on the following
terms:
Title: [ %] [Floating Rate] [Notes] [Debentures] [Bonds] Due .
Principal Amount: $ .
Interest: [ % per annum, from , 19 , payable semiannually
on and , commencing , 19 , to holders of record on the
preceding or , as the case may be.] [Zero coupon.]
Maturity: , 19 .
Optional Redemption:
Sinking Fund:
Listing: [None.] [ Stock Exchange.] [The Nasdaq Stock
Market Inc.'s National Market.]
Delayed Delivery Contracts: [None.] [Delivery Date[s] shall be
. 19 . Underwriters' fee is % of the principal amount of
the Contract Securities.]
Purchase Price: % of principal amount, plus accrued interest[, if
any,] from , 19 .
Expected Reoffering Price: % of principal amount, subject to change
by the Underwriters.
Closing: A.M. on , 19 , at , in Federal
(same day) funds.
Settlement and Trading: [Physical certificated form.] [Book-Entry Only
via DTC. The Offered Securities will trade in DTC's Same Day Funds
Settlement System.]
Blackout: Until days after the Closing Date.
Name and Address of Lead Underwriter:
The respective principal amounts of the Offered Securities to be purchased
by each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Offered Securities will be made available for checking and packaging at
the office of at least 24 hours prior to the Closing Date.
17
<PAGE>
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and [,] stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement and [,] the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [If
paragraph regarding passive market making is included, insert and the
information contained in the paragraph under the caption
"Underwriting" in the prospectus supplement] [If applicable, insert; and (ii)
the following information in the prospectus supplement furnished on behalf of
[insert name of Underwriter]: [insert description of information, such as
material relationship disclosure under the caption "Underwriting" in the
prospectus supplement]./1/
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CONTIFINANCIAL CORPORATION,
by
------------------------------------
[Insert title]
by
------------------------------------
[Insert title]
The foregoing Terms Agreement is
hereby confirmed and accepted as
of the date first above written.
[NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
[Acting on behalf of itself and
as the Representative of the
several Underwriters.]
[NAME OF LEAD UNDERWRITER]
---------------------------
---------------------------
[Acting on behalf of themselves
and as the Representatives of
the several Underwriters.]
By [NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
- -----------
/1/Special care should be taken to ensure that the description of the
information, including caption references and any references to particular
paragraphs or sentences, matches the final Prospectus.
18
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Principal
Underwriter Amount
----------- ------
<S> <C>
................................................... $
---------
Total ............................ $
=========
</TABLE>
19
<PAGE>
[The following form of Terms Agreement will not be an annex to the related
Underwriting Agreement and should normally be typed separately. In order to
inform the issuer of all the standard underwriting terms, a draft of the Terms
Agreement should be circulated together with the first draft of the Underwriting
Agreement.]
ContiFinancial Corporation
("Company")
Preferred [Common] Stock
TERMS AGREEMENT
---------------
, 19
To: The Representative of the Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement on Form S-3 (No. 33-33783) ("Underwriting
Agreement"), the following securities ("Offered Securities") on the following
terms:
Title:
Number of Shares:
Dividend Rate:
Optional Redemption:
Sinking Fund:
Listing: [None.] [ Stock Exchange.] [The Nasdaq Stock Market]
Delayed Delivery Contracts: [None.] [Delivery Date[s] shall be
. 19 . Underwriters' fee is $ per share of the Contract
Securities.]
Purchase Price: $ per share [If preferred stock issue, insert
plus accrued dividends[, if any,] from , 19 ].
Expected Reoffering Price: $ per share, subject to change by the
[Representative[s]] [Underwriters].
Closing: A.M. on , 19 , at , in New York
Clearing House (next day) funds.
Underwriter[s']['s] Compensation: $ payable to the
[Representative [s] for the proportionate accounts of the] Underwriter[s]
on the Closing Date.
Blackout: Until days after the Closing Date.
Name and Address of Lead Underwriter:
The respective numbers of shares of the Offered Securities to be purchased
by each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Offered Securities will be made available for checking and packaging at
the office of at least 24 hours prior to the Closing Date.
20
<PAGE>
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and [,] stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement and [,] the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [If
paragraph regarding passive market making is included, insert and the
information contained in the paragraph under the caption
"Underwriting" in the prospectus supplement] [If applicable, insert; and (ii)
the following information in the prospectus supplement furnished on behalf of
[insert name of Underwriter]: [insert description of information, such as
material relationship disclosure under the caption "Underwriting" in the
prospectus supplement]./1/
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CONTIFINANCIAL CORPORATION,
by
------------------------------------
[Insert title]
by
------------------------------------
[Insert title]
The foregoing Terms Agreement is
hereby confirmed and accepted as
of the date first above written.
[If no co-representative, use first
confirmation form. If co-representative,
use second.]
[NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
[Acting on behalf of itself and
as the Representative of the
several Underwriters.]
[NAME OF LEAD UNDERWRITER]
---------------------------
---------------------------
[Acting on behalf of themselves
and as the Representatives of
the several Underwriters.]
By [NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
- -----------
/1/Special care should be taken to ensure that the description of the
information, including caption references and any references to particular
paragraphs or sentences, matches the final Prospectus.
21
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ------
<S> <C>
................................................... $
---------
Total ............................ $
=========
</TABLE>
22
<PAGE>
EXHIBIT 4.1
-----------
================================================================================
CONTIFINANCIAL CORPORATION
___________________
INDENTURE
Dated as of March 4, 1998
The Bank of New York
Trustee
================================================================================
<PAGE>
Reconciliation and tie between Indenture, dated as of
March 4, 1998 and the Trust Indenture Act of 1939, as amended ("TIA").
<TABLE>
<CAPTION>
TIA Section Indenture Section
- ----------- -----------------
<S> <C>
310(a)(1)................................................................ 6.09
(a)(2)................................................................ 6.09
(a)(3)................................................................ Not Applicable
(a)(4)................................................................ Not Applicable
(a)(5)................................................................ 6.09
(b)................................................................... 6.10
311(a)................................................................... 6.13
(b)................................................................... 6.13
(c)................................................................... Not Applicable
312(a)................................................................... 7.01; 7.02(a)
(b)................................................................... 7.02(b)
(c)................................................................... 7.02(c)
313(a)................................................................... 7.03
(b)................................................................... 7.03
(c)................................................................... 7.03
(d)................................................................... 7.03(b)
314(a)................................................................... 7.04; TIA
(b)................................................................... Not Applicable
(c)(1)................................................................ 1.03
(c)(2)................................................................ 1.03
(c)(3)................................................................ Not Applicable
(d)................................................................... Not Applicable
(e)................................................................... 1.03
315(a)................................................................... 6.01(a); 6.03; 6.08
(b)................................................................... 6.02
(c)................................................................... 6.01(b)
(d)(1)................................................................ 6.01(c)(1)
(d)(2)................................................................ 6.01(c)(2)
(d)(3)................................................................ 6.01(c)(3)
(e)................................................................... 5.15
316(a)(1)(A)............................................................. 5.12
(a)(1)(B)............................................................. 5.13
(a)(2)................................................................ Not Applicable
(b)................................................................... Not Applicable
(c)................................................................... Not Applicable
317(a)(1)................................................................ 5.03
(a)(2)................................................................ 5.04
(b)................................................................... 10.03
318(a)................................................................... 1.09
(b)................................................................... 1.09
(c)................................................................... 1.09
</TABLE>
____________________
This reconciliation and tie section does not constitute part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................................1
Section 1.01 Definitions................................................................................1
Section 1.02 Other Definitions.........................................................................23
Section 1.03 Compliance Certificates and Opinions......................................................23
Section 1.04 Form of Documents Delivered to Trustee....................................................24
Section 1.05 Acts of Holders; Record Dates.............................................................24
Section 1.06 Notices, Etc., to Trustee and Company.....................................................26
Section 1.07 Notice to Holders; Waiver.................................................................26
Section 1.08 Incorporators, Stockholders, Officers and Directors of Company, Exemption from Individual
Liability.................................................................................27
Section 1.09 Conflict with Trust Indenture Act.........................................................27
Section 1.10 Effect of Headings and Table of Contents..................................................27
Section 1.11 Successors and Assigns....................................................................27
Section 1.12 Separability Clause.......................................................................27
Section 1.13 Benefits of Indenture.....................................................................28
Section 1.14 Governing Law.............................................................................28
Section 1.15 Legal Holidays............................................................................28
Section 1.16 Counterparts..............................................................................28
ARTICLE TWO SECURITY FORMS................................................................................28
Section 2.01 Forms Generally...........................................................................28
Section 2.02 Form of Trustee's Certificate of Authentication...........................................29
Section 2.03 Additional Provisions Required in Global Security.........................................29
ARTICLE THREE THE SECURITIES..............................................................................29
Section 3.01 Amount Unlimited; Issuable in Series......................................................29
Section 3.02 Denominations.............................................................................31
Section 3.03 Execution, Authentication, Delivery and Dating of Securities..............................32
Section 3.04 Temporary Securities......................................................................33
Section 3.05 Registration, Registration of Transfer and Exchange.......................................34
Section 3.06 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.................................36
Section 3.07 Payment of Interest; Interest Rights Preserved............................................37
Section 3.08 Persons Deemed Owners.....................................................................39
Section 3.09 Cancellation..............................................................................39
Section 3.10 Computation of Interest...................................................................40
Section 3.11 Currency and Manner of Payments in Respect of Securities..................................40
Section 3.12 Appointment and Resignation of Successor Exchange Rate Agent..............................43
Section 3.13 Compliance with Certain Laws and Regulations..............................................43
Section 3.14 CUSIP Numbers.............................................................................43
ARTICLE FOUR SATISFACTION AND DISCHARGE...................................................................44
Section 4.01 Satisfaction and Discharge of Indenture...................................................44
Section 4.02 Application of Trust Money................................................................45
ARTICLE FIVE REMEDIES.....................................................................................45
Section 5.01 Events of Default.........................................................................45
Section 5.02 Acceleration of Maturity; Rescission and Annulment........................................46
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee...........................47
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
<C>
Section 5.04 Trustee May File Proofs of Claim..........................................................48
Section 5.05 Trustee May Enforce Claims Without Possession of Securities...............................49
Section 5.06 Application of Moneys Collected by Trustee................................................49
Section 5.07 Limitation on Suits.......................................................................50
Section 5.08 Unconditional Right of Holders to Receive Principal, Premium and Interest.................50
Section 5.09 Restoration of Rights and Remedies........................................................51
Section 5.10 Rights and Remedies Cumulative............................................................51
Section 5.11 Delay or Omission Not Waiver..............................................................51
Section 5.12 Control by Holders........................................................................51
Section 5.13 Waiver of Past Defaults...................................................................52
Section 5.14 Undertaking for Costs.....................................................................52
Section 5.15 Waiver of Stay or Extension Laws..........................................................52
ARTICLE SIX THE TRUSTEE....................................................................................53
Section 6.01 Certain Duties and Responsibilities.......................................................53
Section 6.02 Notice of Defaults........................................................................54
Section 6.03 Certain Rights of the Trustee.............................................................54
Section 6.04 Not Responsible for Recitals or Issuance of Securities....................................55
Section 6.05 May Hold Securities.......................................................................55
Section 6.06 Money Held in Trust.......................................................................55
Section 6.07 Compensation and Reimbursement............................................................56
Section 6.08 Right to Rely on Officers' Certificate....................................................56
Section 6.09 Eligibility...............................................................................57
Section 6.10 Resignation and Removal; Appointment of Successor.........................................57
Section 6.11 Acceptance of Appointment by Successor....................................................58
Section 6.12 Merger, Conversion, Consolidation or Succession to Business...............................59
Section 6.13 Preferential Collection of Claims Against Company.........................................60
Section 6.14 Appointment of Authenticating Agent.......................................................60
ARTICLE SEVEN HOLDERS' LIST AND REPORTS BY TRUSTEE AND COMPANY.............................................61
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders.................................61
Section 7.02 Preservation of Information; Communications to Holders....................................62
Section 7.03 Reports by Trustee........................................................................62
Section 7.04 Reports by Company........................................................................62
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.........................................63
Section 8.01 Company May Consolidate, Etc., Only on Certain Terms......................................63
Section 8.02 Successor Substituted.....................................................................64
ARTICLE NINE SUPPLEMENTAL INDENTURES.......................................................................64
Section 9.01 Supplemental Indentures Without Consent of Holders........................................64
Section 9.02 Supplemental Indentures with Consent of Holders...........................................65
Section 9.03 Execution of Supplemental Indentures......................................................66
Section 9.04 Effect of Supplemental Indentures.........................................................66
Section 9.05 Conformity with Trust Indenture Act.......................................................66
Section 9.06 Reference in Securities to Supplemental Indentures........................................67
ARTICLE TEN COVENANTS......................................................................................67
Section 10.01 Payment of Principal, Premium and Interest................................................67
Section 10.02 Maintenance of Office or Agency...........................................................67
Section 10.03 Money for Securities Payments to Be Held in Trust.........................................67
Section 10.04 Limitation on Indebtedness................................................................68
Section 10.05 Limitation on Indebtedness and Preferred Stock of Restricted Subsidiaries.................70
Section 10.06 Limitation on Restricted Payments.........................................................70
Section 10.07 Limitation on Restrictions on Distributions from Restricted Subsidiaries..................72
Section 10.08 Limitation on Sales of Assets and Subsidiary Stock........................................72
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 10.09 Limitation on Affiliate Transactions....................................................75
Section 10.10 Change of Control.......................................................................76
Section 10.11 Limitation on Liens.....................................................................76
Section 10.12 Limitation on Investment Company Status.................................................77
Section 10.13 SEC Reports.............................................................................77
Section 10.14 Certificate of Compliance...............................................................77
Section 10.15 Certain Covenants Suspended.............................................................77
Section 10.16 Calculation of Original Issue Discount..................................................78
ARTICLE ELEVEN REDEMPTION OF SECURITIES..................................................................78
Section 11.01 Applicability of Article................................................................78
Section 11.02 Election to Redeem; Notice to Trustee...................................................78
Section 11.03 Selection by Trustee of Securities to Be Redeemed.......................................78
Section 11.04 Notice of Redemption....................................................................79
Section 11.05 Deposit of Redemption Price.............................................................79
Section 11.06 Securities Payable on Redemption Date...................................................79
Section 11.07 Securities Redeemed in Part.............................................................80
ARTICLE TWELVE SINKING FUNDS.............................................................................80
Section 12.01 Applicability of Article................................................................80
Section 12.02 Satisfaction of Sinking Fund Payments with Securities...................................80
Section 12.03 Redemption of Securities for Sinking Fund...............................................81
ARTICLE THIRTEEN DEFEASANCE..............................................................................81
Section 13.01 Applicability of Article; Company's Option to Effect Defeasance or Covenant Defeasance..81
Section 13.02 Defeasance and Discharge................................................................81
Section 13.03 Covenant Defeasance.....................................................................82
Section 13.04 Conditions to Defeasance or Covenant Defeasance.........................................82
Section 13.05 Deposited Money and Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions................................................................................84
Section 13.06 Reinstatement...........................................................................84
ARTICLE FOURTEEN SUBORDINATION...........................................................................85
Section 14.01 Agreement to Subordinate................................................................85
Section 14.02 Payments to Holders of Subordinated Securities..........................................85
Section 14.03 No Payment When Designated Senior Debt in Default.......................................86
Section 14.04 Subrogation.............................................................................87
Section 14.05 Authorization by Holders of Subordinated Securities.....................................88
Section 14.06 Notice to Trustee.......................................................................88
Section 14.07 Trustee's Relation to Senior Indebtedness...............................................89
Section 14.08 No Impairment of Subordination..........................................................89
Section 14.09 Trust Moneys Not Subordinated...........................................................90
ARTICLE FIFTEEN AMENDMENTS...............................................................................90
Section 15.01 Without Consent of Holders..............................................................90
Section 15.02 With Consent of Holders.................................................................91
Section 15.03 Compliance with Trust Indenture Act.....................................................92
Section 15.04 Effect of Consents......................................................................93
Section 15.05 Notation on or Exchange of Securities...................................................93
Section 15.06 Trustee Protected.......................................................................93
</TABLE>
iii
<PAGE>
RECITALS OF THE COMPANY
ContiFinancial Corporation, a Delaware corporation (the "Company") has
duly authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its unsecured debentures, notes or other evidences
of indebtedness (as such term is hereinafter defined) of the Company (such
debentures, notes or other evidences of indebtedness herein called the
"Securities") to be issued in one or more series as in this Indenture provided.
The Securities may either be senior (the "Senior Securities") or subordinated
(the "Subordinated Securities").
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by
the Holders thereof, it is agreed for the equal and proportionate benefit of all
Holders of the Securities of any series, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 1.01 Definitions.
For all purposes of this Indenture and of any indenture supplemental
hereto, except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act or by Commission rule under the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) "or" is not exclusive;
(f) "including" means including without limitation;
(g) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
<PAGE>
(h) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP; and
(i) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred Stock,
whichever is greater.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) used or useful in a Related Business, (ii) the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary, (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary; provided, however, that any such
Restricted Subsidiary described in clause (ii) or (iii) above is primarily
engaged in a Related Business or (iv) the Capital Stock or Indebtedness of a
Strategic Alliance Client.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 10.08 and 10.09 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 5% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary, (iii)
any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary, (iv)
any Investment in a Strategic Alliance Client or (v) any Excess Spread
Receivables (other than, in the case of (i), (ii), (iii), (iv) and (v) above,
(x) a disposition by a Restricted Subsidiary to the Company or by the Company or
a Restricted Subsidiary to a Consolidated Restricted Subsidiary, (y) for
purposes of Section 10.08 only, a disposition that constitutes a Restricted
Payment permitted by Section 10.06 or (z) a disposition of assets (including
related assets) for an aggregate consideration of $1.0 million or less).
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper of general circulation, in
the official language of the country of publication or in the English language,
customarily published on each Business Day whether or not published on
Saturdays, Sundays or holidays. Whenever successive publications in an
Authorized Newspaper are required hereunder they may be made
2
<PAGE>
(unless otherwise expressly provided herein) on the same or different days of
the week and in the same or different Authorized Newspapers.
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bearer Security" means any Security issued under this Indenture which
is payable to bearer.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests or membership interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the following
events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than the Permitted Holders, who is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the
Voting Stock of the Company; provided, however, that the Permitted Holders
beneficially own (as defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of the Company than such
other person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this clause (i), such other person shall be
deemed to beneficially own any Voting Stock of a corporation held by
another corporation (a "parent corporation"), if such other person is the
beneficial owner (as defined above for such person), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined
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above for the Permitted Holders), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of
such parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent corporation);
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by
a vote of 66-2/3% of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(iii) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company to another
Person (other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation; provided, however, that the sale by the Company or
its Restricted Subsidiaries from time to time of Receivables to a trust for
the purpose solely of effecting one or more securitizations shall not be
treated hereunder as a sale of all or substantially all the assets of the
Company.
"Closing Price Per Share" means, with respect to the Capital Stock of
the Company, for any day the last reported sales price per share (i) on the New
York Stock Exchange, Inc. as reported in the Wall Street Journal (or other
similar newspaper) for New York Stock Exchange Composite Transactions (or, if no
such sale is so reported on such day, the average of such reported closing bid
and asked prices regular way) or, if the Capital Stock is not listed or admitted
to trading on such Exchange, on the principal (as determined by the Company's
Board of Directors) national securities exchange on which the Capital Stock is
listed or admitted to trading or, (ii) if not listed or admitted to trading on
any national securities exchange, on the National Association of Securities
Dealers Automated Quotations National Market System; or if the Capital Stock is
not listed or admitted to trading on any national securities exchange or quoted
on such National Market System, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.
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"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Order" and "Company Request" mean, respectively, a written
order or request signed in the name of the Company by both (i) its Chairman of
the Board of Directors, its Vice Chairman of the Board of Directors, its
President or a Vice President, and (ii) its Treasurer, an Assistant Treasurer,
its Controller, an Assistant Controller, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Consolidated Current Liabilities" as of the date of determination
means the aggregate amount of liabilities of the Company and its consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a consolidated basis, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Leverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of all Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis, excluding (A) Permitted
Warehouse Indebtedness and (B) Hedging Obligations permitted to be Incurred
pursuant to Section 10.04(b)(6), to (ii) the Consolidated Net Worth of the
Company.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Restricted Subsidiary, except that (A) subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Restricted Subsidiary if
such Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income to the extent that cash could have been distributed
by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) the Company's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income; (iv) any gain (but not loss) realized
upon the sale or other disposition of any asset (excluding any equity Investment
in a Strategic Alliance Client) of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (but not
loss) realized upon the sale or other disposition of any Capital Stock of any
Person (excluding Capital Stock in a Strategic Alliance Client); (v)
extraordinary gains or losses; and (vi) the cumulative effect of a change in
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accounting principles. Notwithstanding the foregoing, for the purposes of
Section 10.06 only, there shall be excluded from Consolidated Net Income any
dividends, repayments of loans or advances or other transfers of assets from any
Person to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under Section 10.06(a)(iii)(D).
"Consolidated Net Tangible Assets" as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a balance sheet of the
Company and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, and after giving effect to purchase accounting and after
deducting therefrom all Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of: (i) minority interests in consolidated
Subsidiaries held by Persons other than the Company or a Restricted Subsidiary;
(ii) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors; (iii) any revaluation or
other write-up in book value of assets (other than Excess Spread Receivables)
subsequent to the Issue Date as a result of a change in the method of valuation
in accordance with GAAP consistently applied; (iv) unamortized debt discount and
expenses and other unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, licenses, organization or developmental
expenses and other intangible items; (v) treasury stock; (vi) cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation is
not reflected in Consolidated Current Liabilities; and (vii) Investments in and
assets of Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company for which financial statements are available, as
(i) the par or stated value of all outstanding Capital Stock of the Company plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit,
(B) any amounts attributable to Disqualified Stock and (C) any amounts
attributable to deferred compensation appropriately classified as net worth in
accordance with GAAP.
"Consolidated Restricted Subsidiary" means a Restricted Subsidiary (i)
80% of the Capital Stock and 80% of the Voting Stock of which is owned by the
Company or one or more Consolidated Restricted Subsidiaries and (ii) which is
treated as a consolidated subsidiary for the purpose of the Company's U.S.
Federal income tax reporting.
"Continental Grain" means Continental Grain Company, a Delaware
corporation, and its successors.
"Conversion Event" means the cessation of use of (a) a Foreign
Currency both by the government of the country which issued such Currency and by
a central bank or other public institutions of or within the international
banking community for the settlement of transactions, (b) the ECU both within
the European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (c) any currency unit (or
composite currency) other than the ECU for the purposes for which it was
established.
"Corporate Trust Office" means the office of the Trustee specified in
Section 1.06 hereof or such other address as to which the Trustee may give
notice to the Company.
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"Corporation" includes corporations, associations, companies, joint-
stock companies, limited liability companies and business trusts.
"Coupon" means any interest coupon appertaining to a Bearer Security.
"Credit Agreements" means (a) the $200,000,000 Revolving Credit
Facility, dated as of January 7, 1997, among the Company as Borrower, the
lenders party thereto, Credit Suisse First Boston, New York Branch, as
Administrative Agent and Co-Arranger, and Dresdner Bank AG, New York and Grand
Cayman Branches, as Co-Arrangers, together with the related documents thereto,
in each case as such agreements may be amended, supplemented or otherwise
modified from time to time, including any agreement extending the maturity of,
refinancing, replacing, substituting, renewing or otherwise restructuring all or
a portion of the Indebtedness under such agreement or any successor or
replacement agreement and (b) the $275,000,000 Letter of Credit and
Reimbursement Agreement, dated as of September 9, 1997, among the Company, as
Borrower, the participating banks party thereto, Credit Suisse First Boston, New
York Branch, as Agent and Co-Arranger, and Dresdner Bank AG, New York Branch, as
Issuing Bank and Co-Arranger.
"Currency" means any currency or currencies, currency unit or units or
composite currency or currencies, including, the ECU, issued by the government
of one or more countries or by any recognized confederation or association of
such governments.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"Debt" means any 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.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.01 until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall mean
or include each Person who is then a Depositary hereunder, and if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Securities of that series.
"Designated Senior Debt" means (a) any Indebtedness of the Company
under the Credit Agreements and (b) any other Senior Indebtedness of the Company
having, at the time of determination, an aggregate principal amount of at least
$25,000,000 and specifically designated in the instrument evidencing such Senior
Indebtedness as "Designated Senior Debt" by the Company.
"Disqualified Stock" means, with respect to any Person and any series
of Securities, any Capital Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the
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holder thereof, in each case in whole or in part on or prior to the first
anniversary of the Stated Maturity of the Securities of such series; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the first anniversary of the
Stated Maturity of the Securities of such series shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable as determined in good
faith by the Board of Directors to the holders of such Capital Stock than the
provisions in Sections 10.08 and 10.10.
"Dollar" or "U.S. Dollar" or "$" means a dollar or other equivalent
unit in such coin or currency of the United States of America as at the time
shall be legal tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised from
time to time by the Council of the European Communities.
"Eligible Excess Spread Receivables" means Excess Spread Receivables
created after April 2, 1996; provided, however, that Eligible Excess Spread
Receivables shall not include any Excess Spread Receivables created as the
result of the securitization or sale of Excess Spread Receivables.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 5.01.
"Excess Spread" means, over the life of a "pool" of Receivables that
have been sold by a Person to a trust or other Person in a securitization or
sale, the rights retained by such Person or its Restricted Subsidiaries at or
subsequent to the closing of such securitization or sale to receive cash flows
attributable to such "pool."
"Excess Spread Receivables" of a Person means the contractual or
certificated right to Excess Spread capitalized on such Person's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Rate Agent" , with respect to Securities of or within any
series, means, unless otherwise specified with respect to any Securities
pursuant to Section 3.01, a New York Clearing House bank, designated pursuant to
Section 3.01 or Section 3.12.
"Exchange Rate Officer's Certificate" means a tested telex or a
certificate setting forth (a) the applicable Market Exchange Rate and (b) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a
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Security having the lowest denomination principal amount determined in
accordance with Section 3.02 in the relevant Currency), payable with respect to
a Security of any series on the basis of such Market Exchange Rate, sent (in the
case of a telex) or signed (in the case of a certificate) by the Treasurer, any
Vice President or any Assistant Treasurer of the Company.
"Foreign Currency" means any Currency other than the U.S. Dollar.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
(i) in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) in the statements and
pronouncements of the Financial Accounting Standards Board, (iii) in such other
statements by such other entity as approved by a significant segment of the
accounting profession, and (iv) in the rules and regulations of the SEC
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC
and releases of the Emerging Issues Task Force.
"Global Security" means a Security bearing the legend prescribed in
Section 2.03 evidencing all or part of a series of Securities, issued to the
Depositary for such series or its nominee, and registered in the name of such
Depositary or nominee.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any Person and any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. "Guarantee" used as a verb has a corresponding
meaning.
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or such other
agreement designed to mitigate risks of fluctuations in value of assets owned,
financed or sold, or of liabilities incurred or assumed, in either case in the
ordinary course of business of the Company or its Restricted Subsidiaries.
"Holder" means, with respect to a Registered Security, a Person in
whose name a Security is registered in the Security Register and, with respect
to a Bearer Security, a bearer thereof or of a Coupon appertaining thereto.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness of a Person existing at the
time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary. The term "Incurrence" when
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used as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall be deemed the Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the outstanding principal as of such
date in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable, including, in
each case, any premium on such indebtedness to the extent such premium has
become due and payable; (ii) all Capital Lease Obligations of such Person; (iii)
all obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (but excluding trade accounts
payable and expense accruals arising in the ordinary course of business); (iv)
all obligations of such Person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the tenth Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock (but excluding any accrued
dividends); (vi) Warehouse Indebtedness; (vii) in connection with each sale by
such Person of any Excess Spread Receivables, the maximum aggregate contractual
claim (if any) that the purchaser thereof could have against such Person if the
amounts anticipated at the time of such sale to be received by such purchaser in
connection with such Excess Spread Receivables are not received by such
purchaser; (viii) all obligations of the type referred to in clauses (i) through
(vii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee; (ix) all obligations of the type referred to in clauses (i) through
(viii) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured and (x) to the extent not
otherwise included in this definition, Hedging Obligations of such Person. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date. Notwithstanding the
foregoing, any securities issued in a securitization by a special purpose owner
trust or similar entity formed by or on behalf of a Person and to which
Receivables or Excess Spread Receivables have been sold or otherwise transferred
by or on behalf of such Person or its Subsidiaries shall not be treated as
Indebtedness of such Person or its Subsidiaries under this Indenture, regardless
of whether such securities are treated as indebtedness for tax purposes and
regardless of whether such securities are styled as debt.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the mandatory provisions of the Trust Indenture Act that are deemed
to be a part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated in Section 3.01.
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"Interest" means, when used with respect to a non-interest bearing
Security, interest payable after the principal thereof has become due and
payable whether at Maturity, by declaration of acceleration, by call for
redemption, pursuant to a sinking fund or otherwise, and, when used with respect
to an Original Issue Discount Security which by its terms bears interest only
after Maturity, interest payable after Maturity.
"Interest Payment Date" , when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, repurchase agreement, futures contract or other
financial agreement or arrangement designed to protect the Company or any
Restricted Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as trade accounts on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary", the definition of "Restricted Payment" and Section
10.06, (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) and BBB- (or the equivalent) by Moody's Investors Service,
Inc. (or any successor to the rating agency business thereof) and Standard &
Poor's Ratings Group (or any successor to the rating agency business thereof),
respectively.
"Issue Date" means, with respect to any series of Securities, the date
of issuance of such series of Securities.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York. If a payment
date is a Legal Holiday, payment shall be made on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
If a regular record date is a Legal Holiday, the record date shall not be
affected.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
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"Market Exchange Rate" means, unless otherwise specified with respect
to the Securities of a series pursuant to Section 3.01, (a) for any conversion
involving a currency unit on the one hand and Dollars or any Foreign Currency on
the other, the exchange rate between the relevant currency unit and Dollars or
such Foreign Currency calculated by the method specified pursuant to Section
3.01 for the Securities of such series, (b) for any conversion of Dollars into
any Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (c) for any conversion of
one Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion is
being made from major banks located in either New York City, London or any other
principal market for Dollars or such purchased Foreign Currency, in each case
determined by the Exchange Rate Agent. Unless otherwise specified with respect
to the Securities of a series pursuant to Section 3.01, in the event of the
unavailability of any of the exchange rates provided for in the foregoing
clauses (a), (b) and (c), the Exchange Rate Agent shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York as of the most recent available date, or quotations
from one or more major banks in New York City, London or any other principal
market for such Currency in question, or such other quotations as the Exchange
Rate Agent shall deem appropriate.
"Maturity", when used with respect to any Security, means the date on
which the principal of such 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, call for redemption, pursuant to a sinking fund or
otherwise.
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Disposition, (ii) all payments made
on any Indebtedness which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be, repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Disposition
and (iv) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
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"NYSE" means the New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board, the President, any Senior
Vice President, any Vice President, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by both (a) the
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors,
the President or a Vice President and (b) the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee. Each such Officers' Certificate shall include the statements required
by Section 1.03 hereunder.
"Opinion of Counsel" means a written opinion of counsel who shall be
acceptable to the Trustee, who may be an employee of or counsel for the Company,
and which opinion complies with the requirements of Section 1.03.
"Original Issue Discount Security" means any 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 5.02.
"Outstanding", when used with respect to Securities of any series,
means, except as otherwise required by the Trust Indenture Act as of the date of
determination, all Securities of such series theretofore authenticated and
delivered under this Indenture, except:
(a) Securities of such series theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities of such series, or portions thereof, for whose payment
or redemption 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 Securities and of any Coupons pertaining
to such Securities; provided, however, that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and
(c) Securities of such series which have been paid pursuant to Section
3.07 or in exchange for or in lieu of which other Securities of such series have
been authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; provided,
however, that in determining whether the Holders of the requisite principal
amount of the Outstanding Securities of any series have taken any action
(including the making of any request, demand, authorization or direction), the
giving of any notice, consent or waiver (or the taking of any other action)
hereunder and in determining voting rights of any Holder of a Security hereunder
(i) the principal amount of Original Issue Discount Securities that shall be
deemed to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.02,
(ii) the principal amount of any Security of such series, the principal amount
of which is denominated in a Specified Currency, shall be deemed to be that
amount as determined in accordance with Section 3.11 (or, in the case of any
Original Issue Discount Security, the amount determined in accordance with
clause (i) above as well as Section 3.11), and (iii) Securities of such series
owned by the Company or any other obligor upon such
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Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities of such
series which a Responsible Officer of the Trustee actually knows to be so owned
shall be so disregarded. 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
Securities and that the pledgee is not the Company or any other obligor upon
such Securities or any Affiliate of the Company or any such other obligor. In
case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice.
"Overdue Rate" means, unless otherwise specified in the Securities of
any series, the same rate as the rate of interest specified in the Securities of
such series or, in the case of a series of Original Issue Discount Securities,
the Yield to Maturity of such series of Securities.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Permitted Holders" means lineal descendants of Jules Fribourg,
including any individual legally adopted; spouses of such descendants; trusts,
the beneficiaries of which are any of the foregoing; partnerships, corporations,
or other entities in which any of the foregoing (individually or collectively)
has a controlling interest; and charitable organizations established by any of
the foregoing.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) the Company, a Restricted Subsidiary or a Person
that will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary is a
Related Business; (ii) a Strategic Alliance Client to the extent such Investment
consists of options, warrants or other securities that are convertible or
exchangeable for equity securities of such Strategic Alliance Client and is
received by the Company or a Restricted Subsidiary without the payment of any
consideration other than the concurrent provision by the Company or such
Restricted Subsidiary to such Strategic Alliance Client of financing or asset
securitization expertise on terms determined by the Company to be fair and
reasonable to the Company or such Restricted Subsidiary from a financial point
of view without taking into consideration any value that may inhere in such
option, warrant or convertible or exchangeable security; (iii) another Person if
as a result of such Investment such other Person is merged or consolidated with
or into, or transfers or conveys all or substantially all its assets to, the
Company or a Restricted Subsidiary; provided, however, that such Person's
primary business is a Related Business; (iv) Temporary Cash Investments; (v)
receivables owing to the Company or any Restricted Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; (vi) payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; (viii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (ix) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to Section
10.08; (x) Receivables; (xi) a Strategic Alliance Client to the extent such
Investment consists of (A) Indebtedness of such Strategic Alliance Client that
is secured by Receivables owned, directly or indirectly, by such Strategic
Alliance
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Client in an aggregate principal amount at any time outstanding not to exceed
100% of the aggregate market value of such Receivables; provided, however, that
such Indebtedness has not been outstanding in excess of 364 days; or (B)
Indebtedness of such Strategic Alliance Client that is secured by Excess Spread
Receivables owned by such Strategic Alliance Client; and (xii) Excess Spread
Receivables.
"Permitted Liens" means, with respect to any Person:
(a) pledges or deposits by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or pledges or deposits to secure
surety or appeal bonds to which such Person is a party, or pledges or deposits
as security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceedings or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review;
(c) Liens for property taxes not yet subject to penalties for non-
payment or which are being contested in good faith and by appropriate
proceedings;
(d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that any reimbursement
obligation with respect to the related letter of credit does not constitute
Indebtedness as of the date such Lien is incurred;
(e) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real property or Liens incidental
to the conduct of the business of such Person or to the ownership of its
properties which were not Incurred in connection with Indebtedness and which do
not in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;
(f) Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property of such
Person (but excluding Capital Stock of another Person); provided, however, that
the Lien may not extend to any other property owned by such Person or any of its
Subsidiaries at the time the Lien is Incurred, and the Indebtedness secured by
the Lien may not be Incurred more than one year after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien;
(g) Liens on Excess Spread Receivables (or on the Capital Stock of any
Subsidiary of such Person substantially all the assets of which are Excess
Spread Receivables); provided, however, that
(I) unless the Covenant Termination has occurred,
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(A) in the case of Excess Spread Receivables which are Pre-
Existing Excess Spread Receivables, no Lien created on such Pre-
Existing Excess Spread Receivable after the Issue Date of a series of
Securities (a "Subsequent Lien") shall be a Permitted Lien unless
(i) such Pre-Existing Excess Spread Receivable was, on April
2, 1996, subject to a Lien created by the Company in respect of
the financing thereof (a "predecessor Lien"), and
(ii) the sum of (x) the aggregate book value of subordinated
interests created and retained by the Company or its Restricted
Subsidiaries as a result of the sale or financing associated with
such Subsequent Liens and (y) the aggregate book value of all
Pre-Existing Excess Spread Receivables which are not then subject
to any Lien (other than Permitted Liens described under another
clause of this definition) shall equal at least (z) the product
of (1) the aggregate book value, at the date of incurrence of
such Subsequent Lien, of all such Pre-Existing Excess Spread
Receivables which are then subject to subsequent Liens, and (2) a
fraction, the numerator of which is the aggregate book value, on
April 2, 1996, of the subordinated interests associated with all
predecessor Liens and the denominator of which is the sum of (a)
such aggregate book value of such subordinated interests and (b)
the outstanding balance, on April 2, 1996, of the related senior
interests; and
(B) in the case of Excess Spread Receivables other than Pre-
Existing Excess Spread Receivables, any Lien thereon, provided that at
the date of Incurrence of such Lien (i) the fair market value (as
determined in good faith by the Board of Directors) as of such date of
all Excess Spread Receivables then subject to Liens (other than
Permitted Liens described under another clause of this definition)
collectively does not exceed (ii) (x) 50% of the book value of
Eligible Excess Spread Receivables shown on the balance sheet of the
Company and its consolidated Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company prior to the creation of such
Lien for which financial statements are available minus (y) the amount
of Indebtedness then secured by Liens permitted by clause (o) below;
and
(II) for purposes of this clause (g), any Lien on the Capital
Stock of any Person substantially all the assets of which are Excess Spread
Receivables shall be treated as a Lien on the Excess Spread Receivables of such
Person;
(h) Liens existing on the Issue Date of a series of Securities;
(i) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming such a Subsidiary;
provided, further, however, that such Lien may not extend to any other property
owned by such Person or any of its Subsidiaries;
(j) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or
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into such Person or a Subsidiary of such Person; provided, however, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition; provided, further, however, that the Liens
may not extend to any other property owned by such Person or any of its
Subsidiaries;
(k) Liens securing Indebtedness or other obligations of a Subsidiary
of such Person owing to such Person or a Consolidated Restricted Subsidiary of
such Person;
(l) Liens (other than on any Excess Spread Receivables) securing
Hedging Obligations;
(m) Liens on cash or other assets (other than Excess Spread
Receivables) securing Warehouse Indebtedness of the Company or its Restricted
Subsidiaries;
(n) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in the
foregoing clauses (f),(h), (i) and (j); provided, however, that (I) such new
Lien shall be limited to all or part of the same property that secured the
original Lien (plus improvements to or on such property) and (II) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (h), (i) or
(j), as the case may be, at the time the original Lien became a Permitted Lien
and (B) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement
(notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (f), (i) or (j) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 10.08); and
(o) Liens, other than Liens described in clauses (a) - (n) above, on
any assets of the Company or Restricted Subsidiaries to secure Indebtedness if
the amount of such Indebtedness to be secured by such Lien, when taken together
with (x) the aggregate amount of Indebtedness then outstanding and secured by
Liens created pursuant to this clause (o) and (y) the aggregate amount of
Warehouse Margin Indebtedness then outstanding, does not exceed 10% of the
Consolidated Net Worth of the Company.
"Permitted Warehouse Indebtedness" means Warehouse Indebtedness;
provided, however, that (i) the excess, if any, of (x) the amount of any such
Warehouse Indebtedness for which the holder thereof has contractual recourse to
the Company or its Restricted Subsidiaries to satisfy claims with respect to
such Warehouse Indebtedness over (y) the aggregate (without duplication of
amounts) realizable value of the assets which secure such Warehouse Indebtedness
shall not be Permitted Warehouse Indebtedness, and (ii) any such Indebtedness
may not have a term in excess of 364 days.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pre-Existing Excess Spread Receivable" means an Excess Spread
Receivable created on or prior to April 2, 1996.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for
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the purposes of this definition, any Security authenticated and delivered under
Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Rating Agencies" mean Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., and Moody's Investors Service, Inc. or any successor to the
respective rating agency businesses thereof.
"Receivables" means consumer and commercial loans, leases, accounts
and other receivables purchased or originated by the Company, any Restricted
Subsidiary or a Strategic Alliance Client in the ordinary course of business;
provided, however, that for purposes of determining the amount of a Receivable
at any time, such amount shall be determined in accordance with GAAP,
consistently applied, as of the most recent practicable date.
"Record Date" for the interest payable on any Interest Payment Date on
the Securities of any series means the date specified as such in the terms of
the Securities of such series.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" in respect of a series of Securities means
Indebtedness that Refinances any Indebtedness of the Company or any Restricted
Subsidiary existing on the Issue Date of such series or Incurred in compliance
with this Indenture including Indebtedness that Refinances Refinancing
Indebtedness; provided, however, that (i) such Refinancing Indebtedness has a
Stated Maturity no earlier than the Stated Maturity of the Indebtedness being
Refinanced, (ii) such Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being Refinanced and (iii) such Refinancing
Indebtedness has an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) that is equal to or less than the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and expenses,
including
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any premium and defeasance costs) under the Indebtedness being Refinanced;
provided, further, however, that Refinancing Indebtedness shall not include (x)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or
another Subsidiary or (y) Indebtedness of the Company or a Restricted Subsidiary
that Refinances Indebtedness of an Unrestricted Subsidiary.
"Registered Holder" means the Holder of a Registered Security.
"Registered Security" means any Security issued under this Indenture
which is registered as to principal and interest in the Security Register.
"Related Business" means any consumer or commercial finance business
or any financial service business.
"Responsible Officer", when used with respect to the Trustee, means
any officer, including any vice president, assistant vice president, assistant
treasurer or corporate trust officer, of the Trustee with direct responsibility
for the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer or employee to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Payment" with respect to any Person and in respect of a
series of Securities means (i) the declaration or payment of any dividends or
any other distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than (A) dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock), (B) dividends or distributions payable
solely to the Company or a Restricted Subsidiary and (C) pro rata dividends or
other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary
to minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company held by any Person or of any Capital Stock of a Restricted
Subsidiary held by any Affiliate of the Company (other than a Restricted
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Company that is not Disqualified Stock),
(iii) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations in respect of
such series (other than the purchase, repurchase or other acquisition of such
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) the making of any Investment (other
than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Bearer Security, including any Coupon
appertaining thereto, or any Registered Security authenticated and delivered
under this Indenture.
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"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" in respect of any series of Senior Securities
means (i) Indebtedness of any Person, whether outstanding on the Issue Date of
such series or thereafter Incurred and (ii) accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent post-
filing interest is allowed in such proceeding) in respect of (A) indebtedness of
such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable unless, in the case of either clause (i) or
(ii), in the instrument creating or evidencing the same or pursuant to which the
same is outstanding, it is provided that such obligations are subordinate in
right of payment to the Securities of such series; provided, however, that
Senior Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities), (4) any
obligation in respect of Capital Stock of such Person or (5) that portion of any
Indebtedness which at the time of Incurrence is Incurred in violation of this
Indenture.
"Senior Securities" has the meaning stated in the first recital of
this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, when used with respect to any Security or any
installment of principal thereof or interest thereon, the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable including pursuant to
any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the Holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Strategic Alliance Client" means any Person (other than a Restricted
Subsidiary) engaged in a Related Business to which the Company or a Restricted
Subsidiary of the Company provides, or reasonably expects to provide, financing
or asset securitization expertise in return for asset-backed underwriting or
placement agent commitments or long-term purchase and sale of assets.
"Subordinated Obligations" in respect of any series of Securities
means any Indebtedness of the Company (whether outstanding on the Issue Date of
such series or thereafter Incurred) which is subordinate or junior in right of
payment to the Securities of such series pursuant to a written agreement to that
effect.
"Subordinated Securities" has the meaning stated in the first recital
of this Indenture.
"Subordinated Securities Payment" has the meaning specified in Section
14.02.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the
20
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occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
(i) such Person, (ii) such Person and one or more Subsidiaries of such Person or
(iii) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is not an Affiliate of the
Company and which is organized under the laws of the United States of America,
any state thereof or any foreign country recognized by the United States, and
which bank or trust company has capital, surplus and undivided profits
aggregating in excess of $50,000,000 (or the foreign currency equivalent
thereof) and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any money-
market fund sponsored by a registered broker dealer or mutual fund distributor,
(iii) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Group, and (v) investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Trading Day" means, with respect to any Capital Stock of the Company,
so long as such Capital Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, or, if such
Capital Stock is not listed or admitted to trading on the NYSE, a day on which
the principal national securities exchange on which such Capital Stock is listed
is open for the transaction of business, or, if such Capital Stock is not so
listed or admitted for trading on any national securities exchange, a day on
which Nasdaq National Market is open for the transaction of business.
"Trust Indenture Act" (except as otherwise provided in Section 9.05)
means the Trust Indenture Act of 1939, as amended, as in force at the date as of
which this instrument was executed; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.
"Trustee" means, initially, The Bank of New York, until a successor
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean or include each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean the
Trustee with respect to Securities of that series.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
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"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Capital Stock or Indebtedness of, or holds any Lien on any property of,
the Company or any other Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 10.06. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under Section 10.04(a) and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced by the Company to the Trustee by promptly filing with the Trustee a
copy of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"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 of "vice president".
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests or membership interests) of such
Person then outstanding and normally entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser exclusively to finance the purchase or
origination of Receivables by the Company, a Subsidiary of the Company or a
Strategic Alliance Client for the purpose of pooling such Receivables prior to
securitization or sale in the ordinary course of business, including (i)
facilities pursuant to which the Company or a Subsidiary of the Company funds
Receivables owned or financed by a Strategic Alliance Client and (ii) any
arrangement in which the Company or a Subsidiary of the Company provides
Guarantees to a financial institution or other lender with respect to a
Strategic Alliance Client for the purpose of inducing such financial institution
or other lender to fund the purchase or origination of Receivables by such
Strategic Alliance Client.
"Warehouse Indebtedness" means Indebtedness in connection with a
Warehouse Facility; the amount of any particular Warehouse Indebtedness as of
any date of determination shall be the greater of:
(A) (i) with respect to Warehouse Indebtedness relating to a Warehouse
Facility described in clause (i) of the definition of Warehouse Facility, the
consideration received by the Company or its Restricted Subsidiaries under such
Warehouse Facility and not previously repaid to the Holder of such Warehouse
Indebtedness or (ii) with respect to Warehouse
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Indebtedness relating to a Warehouse Facility described in clause (ii) of the
definition of Warehouse Facility, the maximum amount of the related Guarantee;
and
(B) the book value of the assets securing such Warehouse Facility.
"Warehouse Margin Indebtedness" means Warehouse Indebtedness which
does not constitute Permitted Warehouse Indebtedness solely due to, and shall
equal the amount equal to the excess resulting from, the application of clause
(i) of the definition of Permitted Warehouse Indebtedness.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and shares held
by other Persons to the extent such shares are required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary) is owned by
the Company or one or more Wholly Owned Subsidiaries.
"Yield to Maturity" means, in the case of any Original Issue Discount
Security, the yield to maturity specified in such Security or in a Board
Resolution relating thereto.
Section 1.02 Other Definitions.
<TABLE>
<CAPTION>
Term Defined in
---- Section
----------
<S> <C>
"Affiliate Transaction"....................................................... 10.09
"Conversion Date"............................................................. 3.11(d)
"Covenant Defeasance"......................................................... 13.03
"Covenant Termination"........................................................ 10.15
"Defaulted Interest".......................................................... 3.07
"Defeasance".................................................................. 13.02
"Dollar Equivalent of the Currency Unit"...................................... 3.11(g)
"Dollar Equivalent of the Foreign Currency"................................... 3.11(f)
"Election Date"............................................................... 3.11(h)
"Government Obligations"...................................................... 13.04
"Offer"....................................................................... 10.08
"Offer Amount"................................................................ 10.08
"Offer Period"................................................................ 10.08
"Proceeding".................................................................. 14.02
"Purchase Date"............................................................... 10.08
"Security Register"........................................................... 3.05
"Security Registrar".......................................................... 3.05
"Special Record Date"......................................................... 3.07
"Successor Company"........................................................... 8.01
"Temporary Securities"........................................................ 3.04
</TABLE>
Section 1.03 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by any officer of
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the Company, or Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.04 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.05 Acts of Holders; Record Dates.
(a) Whenever in this Indenture it is provided that the Holders of a
specified percentage in aggregate principal amount of the Securities of any
series may take any action (including the making of any demand or request, the
giving of any notice, consent or waiver or
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<PAGE>
the taking of any other action), the fact that at the time of taking any such
action the Holders of such specified percentage have joined therein may be
evidenced (1) by any instrument or any number of instruments of similar tenor
executed by such Holders in person or by agent or proxy appointed in writing, or
(2) by the record of such Holders of Securities voting in favor thereof at any
meeting of such Holders duly called and held, or (3) by a combination of such
instrument or instruments and any such record of such a meeting of such Holders;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments and/or such record are delivered
to the Trustee and, where it is expressly required, to the Company. Proof of
execution of any instrument or of a writing appointing any such agent or proxy
shall be sufficient for any purpose of this Indenture and (subject to the
requirements of the Trust Indenture Act and Section 6.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section
1.05.
Without limiting the generality of the foregoing, a Holder, including
a Depositary that is a Holder of a Global Security, may make, give or take, by a
proxy or proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted in this
Indenture to be made, given or taken by Holders, and a Depositary that is a
Holder of a Global Security may provide its proxy or proxies to the beneficial
owners of interest in any such Global Security.
(b) Subject to the requirements of the Trust Indenture Act and
Sections 6.01 and 6.03, proof of the execution of any instrument by a Holder or
his agent or proxy shall be sufficient if made in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.
(c) If the Company shall solicit from the Registered Holders any
demand, request, notice, consent, waiver or the taking of any other action, the
Company may, at its option, by a Board Resolution, fix in advance a record date
for the determination of Registered Holders entitled to give such demand,
request, notice, consent or waiver or to take such other action, but the Company
shall have no obligation to do so. If such a record date is fixed, such demand,
request, notice, consent, waiver or other action may be given before or after
the record date, but only the Registered Holders of record at the close of
business on the record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite percentage of Securities
Outstanding have authorized or agreed or consented to such demand, request,
notice, consent, waiver or taking of any other action, and for that purpose the
Securities Outstanding shall be computed as of the record date; provided,
however, that no such demand, request, notice, consent, waiver or taking of any
other action by the Holders on the record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the Record Date.
(d) The ownership of Registered Securities shall be proved by the
Security Register or by a certificate of the Person designated by the Company to
keep the Security Register and to act as repository in accordance with the
provisions of Section 3.05.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, any
Paying Agent or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
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<PAGE>
(f) At any time prior to (but not after) the evidencing to the Trustee
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number or other distinguishing symbol of which is shown by
the evidence to be included among the serial numbers or other distinguishing
symbols of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security.
Section 1.06 Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at 101 Barclay Street, Floor 21 West, New York, NY 10286,
Attention: Corporate Trust Trustee Administration.
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at 277 Park Avenue, New York, NY 10172, Attention: Chief Counsel or at any other
address previously furnished in writing to the Trustee by the Company.
Section 1.07 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, (i)
if any of the Securities affected by such event are Registered Securities, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any)
prescribed for the giving of such notice, and, (ii) if any of the Securities
affected by such event are Bearer Securities, notice to the Holders thereof
shall be sufficiently given (unless otherwise herein or in the terms of such
Bearer Securities expressly provided) if published once in an Authorized
Newspaper in New York, New York, and in such other city or cities, if any, as
may be specified as contemplated in Section 3.01.
In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. In any case where notice is given to Holders by publication,
neither the failure to publish such notice, nor any defect in any notice so
published, shall affect the sufficiency of such notice with respect to other
Holders.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. Notwithstanding anything to the contrary elsewhere
in this Indenture as to the giving of notice, any other form of written notice
is sufficient, if received.
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<PAGE>
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give any notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder. If it is
impossible or, in the opinion of the Trustee, impracticable to give any notice
by publication in the manner herein required, then such publication in lieu
thereof as shall be made with the approval of the Trustee shall constitute a
sufficient publication of such notice.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Section 1.08 Incorporators, Stockholders, Officers and Directors of Company,
Exemption from Individual Liability.
To the extent permitted by law, no recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor, either
directly or through the Company or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities by the Holders thereof
and as part of the consideration for the issue of the Securities.
Section 1.09 Conflict with Trust Indenture Act.
This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be a part of this Indenture and shall, to the extent
applicable, be governed by such provisions. If any provision hereof limits,
qualifies or conflicts with a provision of the Trust Indenture Act that is
required under such Act to be a part of and govern this Indenture, the provision
of the Trust Indenture Act shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
Section 1.10 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.11 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.12 Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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<PAGE>
Section 1.13 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 1.14 Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to conflict
of law principles thereof.
Section 1.15 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Stated
Maturity or Maturity of any Security shall not be a Business Day at the place of
payment, then (notwithstanding any other provision on this Indenture or of the
Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day in such place with the
same force and effect as if made on such Interest Payment Date or Redemption
Date or at the Stated Maturity or Maturity; provided, however, that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Stated Maturity or Maturity, as the case may be, to the next
succeeding Business Day.
Section 1.16 Counterparts.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
ARTICLE TWO
Security Forms
Section 2.01 Forms Generally.
The Securities of each series and any Coupons to be attached thereto
shall be substantially in such form as shall be established by a Board
Resolution or pursuant to authority granted by a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have imprinted or otherwise reproduced
thereon such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may be required to comply with any applicable
law, rule or regulation or with the rules of any securities exchange or as may,
consistent with the provisions of this Indenture, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
Temporary Securities of any series may be issued as permitted by Section 3.04.
If the form of Securities or Coupons of any series is established by action
taken pursuant to authority granted by a Board Resolution, a copy of an
appropriate record of any such action taken pursuant thereto, including a copy
of the approved form of Securities or Coupons, shall be certified by the
Secretary or an Assistant Secretary of the Company and delivered to the Trustee
at or prior to the
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<PAGE>
delivery of the Company Order contemplated in Section 3.03 for the
authentication and delivery of such Securities. Any portion of the text of any
Security may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Security.
Unless otherwise specified as contemplated in Section 3.01, Bearer
Securities shall have Coupons attached.
The definitive Securities and Coupons shall be printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced by
their execution of such Securities and Coupons.
Section 2.02 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Securities shall be
in substantially the following form:
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
The Bank of New York,
As Trustee
By
-----------------------------
Authorized Signatory
Section 2.03 Additional Provisions Required in Global Security.
Any Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
"This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee thereof. This Security may not be transferred to, or registered or
exchanged for Securities registered in the name of, any Person other than the
Depositary or a nominee thereof and no such transfer may be registered, except
in the limited circumstances described in the Indenture. Every Security
authenticated and delivered upon registration or transfer of, or in exchange for
or in lieu of, this Security shall be a Global Security subject to the
foregoing, except in such limited circumstances."
ARTICLE THREE
The Securities
Section 3.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
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<PAGE>
The Securities may be issued in one or more series. There shall be
established in a Board Resolution or pursuant to authority granted by a Board
Resolution, a copy of which, certified by the Secretary or an assistant or
attesting Secretary of the Company, shall be delivered to the Trustee, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of a particular series, the following:
(a) the specific designation or title (including CUSIP Numbers) of the
Securities;
(b) the denominations in which such Securities are authorized to be
issued, if other than denominations of U.S.$1,000 or any integral multiple
thereof in the case of Registered Securities and US$5,000 in the case of Bearer
Securities;
(c) the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Sections
3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Securities which, pursuant to
Section 3.03, are deemed never to have been authenticated and delivered
hereunder);
(d) the date or dates on which the principal of the Securities of the
series will mature or the method by which such date or dates may be determined;
(e) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which such Securities shall be issued;
(f) the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the method by which
such rate or rates shall be determined;
(g) the times and places where the principal of and any premium and
interest, if any, on Securities of the series shall be payable;
(h) the date or dates on which interest, if any, will be payable and
the applicable record date or dates or the method by which such date or dates
may be determined;
(i) the period or periods within which, the price or prices at which,
the Currency in which and other terms and conditions upon which Securities of
the series may be redeemed, in whole or in part, at the option of the Company;
(j) the obligation, if any, of the Company to redeem or purchase such
Securities pursuant to any sinking fund or analogous provisions upon the
happening of a specified event or at the option of a Holder thereof and the
period or periods within which, the price or prices at which, and other terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(k) the terms and conditions upon which conversion of such Securities
will be effected, including the Conversion Price, the Conversion Period and any
other conversion provisions;
(l) the currency or currency units for which such Securities may be
purchased or in which such Securities may be denominated or the currency or
currency units in which principal or premium, if any, or interest, if any, on
such Securities will be payable and whether the
30
<PAGE>
Company or the Holders of any such Securities may elect to receive payments in
respect of such Securities in a currency or currency units other than that in
which such Securities are stated to be payable;
(m) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.02 or
provable in bankruptcy pursuant to Section 5.04;
(n) the person to whom any interest on any such Securities shall be
payable if other than the person in whose name such Security is registered on
the applicable record date;
(o) any addition to, or modification or deletion of, any Event of
Default or any covenant of the Company specified in this Indenture with respect
to such Securities;
(p) the applicability, if any, of Section 13.02 or Section 13.03 to
the Securities of such series, or such other means of defeasance or covenant
defeasance as may be specified for the Securities of such series;
(q) whether such Securities shall be issuable in whole or in part in
the form of one or more temporary or permanent Global Securities and, if so, the
Depositary or Depositaries for such Global Security or Global Securities;
(r) whether the Securities of such series shall be subordinated and
subject in right of payment to the prior payment in full of all Senior
Indebtedness as set forth in Article Fourteen hereunder or are Senior
Securities; and
(s) any other material or special terms of the series pertaining to
such Securities.
All Securities of any one series shall be substantially identical
except as to denomination, interest rate and maturity and except as may
otherwise be provided in or pursuant to such Board Resolution or in any such
indenture supplemental hereto. The applicable Board Resolution or the applicable
supplemental indenture may provide that Securities of any particular series may
be issued at various times, with different Maturities and redemption and
repayment provisions (if any) and bearing interest at different rates, but shall
for all purposes under this Indenture, including, but not limited to, voting and
Events of Default, be treated as Securities of a single series.
Section 3.02 Denominations.
In the absence of any specification as contemplated in Section 3.01
with respect to the Securities of any series, any Securities of a series shall
be issuable in denominations of U.S.$1,000 (or, if such Securities are
denominated in a currency other than United States dollars or in a composite
currency, 1,000 units of such other currency or composite currency) and any
integral multiple thereof in the case of Registered Securities and U.S.$5,000 in
the case of Bearer Securities. The Securities of each series shall be numbered,
lettered or otherwise distinguished in such manner or in accordance with such
plan as the officers of the Company who execute such Securities may determine
with the approval of the Trustee as evidenced by the execution and
authentication thereof.
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Section 3.03 Execution, Authentication, Delivery and Dating of Securities.
The Securities shall be signed on behalf of the Company by its
Chairman of the Board of Directors, its Vice Chairman of the Board of Directors,
its President or any of its Vice Presidents, under its corporate seal which may,
but need not, be attested by its Secretary or any of its Assistant Secretaries.
Such signatures may be the manual or facsimile signatures of such officers. The
seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Security that has been duly authenticated and delivered by the Trustee.
In case any officer of the Company who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Company; and any Security may be signed on behalf of the Company by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee, in accordance
with the Company Order, shall thereupon authenticate and deliver such Securities
without any further action by the Company. In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities the Trustee shall be entitled to receive, and (subject to the
requirements of the Trust Indenture Act) shall be fully protected in relying
upon:
(a) a copy of any Board Resolution or Board Resolutions relating to
such series and, if applicable, an appropriate record of any action taken
pursuant to such Board Resolutions as prescribed in Sections 2.01 and 3.01;
(b) an executed supplemental indenture, if any, relating thereto; and
(c) an Officers' Certificate setting forth the form and terms of the
Securities as required pursuant to Sections 2.01 and 3.01, respectively, and
prepared in accordance with the requirements of the Trust Indenture Act and
Section 1.04.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Company or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee or a trust committee of directors or trustees or Responsible
Officers shall determine that such action would expose the Trustee to personal
liability to existing Holders or adversely affect the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
The Trustee shall not be required to authenticate Securities
denominated in a coin or currency other than that of the United States of
America if the Trustee reasonably determines that such Securities impose duties
or obligations on the Trustee which the Trustee is not able or
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reasonably willing to accept; provided, however, that the Trustee, upon the
request of the Company, will resign as Trustee with respect to Securities of any
series as to which such a determination is made, prior to the issuance of such
Securities, and will comply with the request of the Company to execute and
deliver a supplemental indenture appointing a successor Trustee pursuant to
Section 9.01.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Security Registrar, paying agent or agent for services of
notices and demands.
Notwithstanding the provisions of Section 3.01 and this Section 3.03,
if all Securities of a series are not to be originally issued at one time, it
shall not be necessary to deliver the Officers' Certificate and Company Order
otherwise required pursuant to this Section 3.03 at or prior to the time of
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication, shall
bear interest, if any, from the date, and shall be payable on the dates, in each
case, which shall be specified as contemplated in Section 3.01.
Only such Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, executed by the
Trustee by the manual signature of one of its authorized signatories, shall be
entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee upon any Security executed by the
Company shall be conclusive evidence that the Security so authenticated has been
duly authenticated and delivered hereunder and that the Holder is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.09, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.04 Temporary Securities.
Pending the preparation of definitive Securities for any series, the
Company may execute, and upon a Company Order the Trustee shall authenticate and
deliver, temporary Securities ("Temporary Securities") for such series printed,
lithographed, typewritten or otherwise produced. Temporary Securities of any
series shall be issuable, with or without coupons, in any authorized
denomination, and substantially of the tenor or form of the definitive
Securities of such series in lieu of which they are issued but with such
omissions, insertions and variations as may be appropriate for Temporary
Securities, all as may be determined by the Company. Temporary Securities may
contain such reference to any provisions of this Indenture as may be
appropriate. Every Temporary Security shall be authenticated by the Trustee upon
the same conditions and in substantially the same manner, and with like effect,
as the definitive Securities in lieu of which they are issued. Without
unreasonable delay the Company shall execute and shall furnish definitive
Securities of such series and thereupon Temporary Securities of such series may
be surrendered (together with any unmatured Coupons) in exchange therefor
without
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charge at each office or agency to be maintained by the Company for that purpose
pursuant to Section 10.02, and the Trustee shall authenticate and deliver in
exchange for such Temporary Securities of such series a like aggregate principal
amount of definitive Securities of the same series of authorized denominations
having the same interest rate, Maturity and redemption and repayment provisions
and bearing interest from the same date as such Temporary Securities; provided,
however, that no definitive Bearer Security shall be delivered in exchange for a
temporary Registered Security; and provided, further, that no definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security unless a
Responsible Officer of the Trustee shall have actually received from the Person
entitled to receive the definitive Bearer Security a certificate substantially
in the form approved in the Board Resolutions relating thereto and such delivery
shall occur only outside the United States of America. Until so exchanged, the
Temporary Securities of any series shall be entitled to the same benefits under
this Indenture as definitive Securities of the same series authenticated and
delivered hereunder.
Section 3.05 Registration, Registration of Transfer and Exchange.
The Company will keep, either at the office or agency designated and
maintained by the Company in the Borough of Manhattan, the City of New York, in
accordance with the provisions of Section 10.02, or at any of such other offices
or agencies as may be designated and maintained in accordance with the
provisions of Section 10.02, a register or registers in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Registered Securities of a series. Each such register is
sometimes herein referred to as a "Security Register". Each Security Register
shall be in written form in the English language or in any other form capable of
being converted into such form within a reasonable time. At all normal business
hours such Security Register shall be open for inspection by the Trustee and any
Security Registrar.
Upon surrender for registration of transfer of any Security of any
series at any such office or agency to be maintained for the purpose as provided
in Section 10.02, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Registered Securities of the same series and of like tenor in any
authorized denomination for a like aggregate principal amount and having the
same interest rate, Maturity, repayment and redemption provisions.
Bearer Securities (except for any temporary global Bearer Securities)
or any Coupons appertaining thereto (except for Coupons attached to any
temporary global Bearer Security) shall be transferable by delivery.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series and of like
tenor in other authorized denominations, in an equal aggregate principal amount
and having the same interest rate, Maturity, repayment and redemption
provisions. Registered Securities of any series to be exchanged shall be
surrendered at any office or agency to be maintained by the Company for the
purpose as provided in Section 10.02, and the Company shall execute, and the
Trustee shall authenticate and deliver, in exchange therefor the Registered
Securities of the same series and having the same interest rate and Maturity
which the Holder making the exchange shall be entitled to receive, bearing
numbers or other distinguishing symbols not contemporaneously outstanding. Each
Person designated by the Company pursuant to the provisions of Section 10.02 as
a Person authorized to register and register the transfer of the Registered
Security is sometimes herein referred to as a "Security Registrar". The Company
may have one or more Security Registrars. The Company or any of its domestic
Subsidiaries may act as Security Registrar.
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Unless otherwise specified as contemplated in Section 3.01, at the
option of the Holder, Bearer Securities of such series may be exchanged for
Registered Securities (if the Securities of such series are issuable in
registered form) or Bearer Securities (if Bearer Securities of such series are
issuable in more than one denomination and such exchanges are permitted by such
series) of the same series, of any authorized denominations and of like tenor
and aggregate principal amount, upon surrender of the Bearer Securities to be
exchanged at any such office or agency, with all unmatured Coupons and all
matured Coupons in default. If the Holder of a Bearer Security is unable to
produce any such unmatured Coupon or matured Coupon in default, such exchange
may be effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face amount
of such missing Coupon, or the surrender of such missing Coupon may be waived by
the Company and the Trustee if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing Coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment; provided, however, that, except as otherwise provided in Section 10.02,
interest represented by Coupons shall be payable only upon presentation and
surrender of those Coupons at an office or agency located outside the United
States of America. Notwithstanding the foregoing, in case any Bearer Security of
any series is surrendered at any such office or agency in exchange for a
Registered Security of the same series after the close of business at such
office or agency on (i) any Record Date and before the opening of business at
such office or agency on the relevant Interest Payment Date, or (ii) any Special
Record Date and before the opening of business at such office or agency on the
related date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date or
proposed date of payment, as the case may be (or, if such Coupon is so
surrendered with such Bearer Security, such Coupon shall be returned to the
Person so surrendering the Bearer Security), and interest or Defaulted Interest,
as the case may be, will not be payable on such Interest Payment Date or
proposed date of payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such Coupon, when due in accordance with the provisions of this
Indenture.
The Company will at all times designate one Person (who may be the
Company and who need not be a Security Registrar) to act as repository of a
master list of names and addresses of the Holders of the Registered Securities.
The Corporate Trust Office of the Trustee shall act as such repository unless
and until some other Person is, by written notice from the Company to such
office or agency and each Security Registrar, designated by the Company to act
as such. The Company shall cause each Security Registrar to furnish to such
repository, on a current basis, such information as to all registrations of
transfer and exchanges effected by such Security Registrar, as may be necessary
to enable such repository to maintain the master list of Registered Holders on
as current a basis as is practicable.
No Person shall at any time be designated as or act as a Security
Registrar unless such Person is at such time empowered under applicable law to
act as such and duly registered to act as such under and to the extent required
by applicable law and regulations.
Every Registered Security presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Company or the
Trustee) be duly endorsed by, or be accompanied by a written instrument of
transfer or exchange in form satisfactory to the Company and the Trustee duly
executed by, the Holder or his attorney duly authorized in writing.
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The Company may require payment of a sum sufficient to cover any tax,
penalty or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities, other than exchanges
pursuant to Section 3.04, 9.06 or 11.07 not involving any registration of
transfer. No service charge shall be made for any such transaction.
The Company shall not be required (1) to exchange or register a
transfer of any Securities of any series for a period of 15 days next preceding
the mailing of a notice of redemption of Securities of that series to be
redeemed, (2) to exchange or register a transfer of any Registered Securities
selected, called or being called for redemption or surrendered for repayment in
whole or in part except, in the case of any Security to be redeemed or repaid in
part, the portion thereof not so to be redeemed or repaid, or (3) to exchange
any Bearer Security so selected for redemption, except that such a Bearer
Security may be exchanged for a Registered Security of that series and like
tenor; provided, however, that such Registered Security shall be simultaneously
surrendered for redemption.
Notwithstanding the foregoing and except as otherwise specified or
contemplated in Section 3.01, no Global Security shall be exchangeable pursuant
to this Section 3.05 or Sections 3.04, 9.06, and 11.07 for the Securities of,
and no transfer of a Global Security of any series may be registered to, any
Person other than the Depositary for such Security or its nominee unless (1)
such Depositary (A) notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or (B) ceases to be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, (2) the
Company executes and delivers to the Trustee a Company Order that such Global
Security shall be so exchangeable and the transfer thereof so registrable, or
(3) there shall have occurred and be continuing an Event of Default, or an event
which after notice or lapse of time would be an Event of Default, with respect
to the Securities evidenced by such Global Security. Upon the occurrence in
respect of any Global Security of any series of any one or more of the
conditions specified in clauses (1), (2) or (3) of the preceding sentence or
such other conditions as may be specified as contemplated in Section 3.01 for
such series, such as that the Securities of such series may be exchanged for
Bearer Securities, such Global Security may be exchanged for Registered
Securities in the names of, and the transfer of such Global Security may be
registered to, such Persons (including Persons other than the Depositary with
respect to such series and its nominees), as such Depositary shall direct.
Notwithstanding any other provision of this Indenture, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security shall also be a Global Security and
shall bear the legend specified in Section 2.03 except for any Security
authenticated and delivered in exchange for, or upon registration of transfer
of, a Global Security pursuant to the preceding sentence.
Section 3.06 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.
In case any temporary or definitive Security or Coupon shall become
mutilated or defaced or be destroyed, lost or stolen, in the absence of notice
to the Company or the Trustee that such Security or Coupon has been acquired by
a bona fide purchaser, the Company may in its discretion execute, and the
Trustee, upon a Company Request, shall authenticate and deliver, a new
Registered Security, if such surrendered Security was a Registered Security, or
a new Bearer Security with Coupons corresponding to the Coupons appertaining to
the surrendered Security, if such surrendered Security was a Bearer Security,
which shall be of the same series and of like tenor and aggregate principal
amount, bearing a number or other distinguishing symbol not contemporaneously
Outstanding, in exchange and substitution for the mutilated or defaced Security,
or in lieu of and substitution for the Security so destroyed, lost or stolen. In
every case
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the applicant for a substitute Security shall furnish to the Company and to the
Trustee (and any agent of the Company or Trustee, if requested by the Company)
such security or indemnity as may be required by them to indemnify and defend
and to save each of them harmless and, in every case of destruction, loss or
theft, evidence to their satisfaction of the destruction, loss or theft of such
Security, or of such Coupon appurtenant thereto, and of the ownership thereof.
Upon the issuance of any substitute Security, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Trustee and its counsel) connected
therewith.
In case any Security that has matured or is about to mature or has
been called for redemption in full shall become mutilated or defaced or be
destroyed, lost or stolen, the Company in its discretion may instead of issuing
a substitute Security pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Security), if the
applicant for such payment shall furnish to the Company and to the Trustee (and
any agent of the Company or the Trustee, if requested by the Company or the
Trustee) such security or indemnity as any of them may require to indemnify and
defend and to save each of them harmless, and, in every case of destruction,
loss or theft, evidence to their satisfaction of the destruction, loss or theft
of such Security and of the ownership thereof.
Every substituted Security (and every appurtenant Coupon, if any) of
any series issued pursuant to the provisions of this Section by virtue of the
fact that any such Security is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone and shall be
entitled to all the benefits of (but shall be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately with any and all
other Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude (to the extent lawful) any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments or
other securities without their surrender.
Section 3.07 Payment of Interest; Interest Rights Preserved.
Except as otherwise specified for a particular series pursuant to
Section 3.01, interest on any Registered Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Registered Security (or one or more Predecessor
Securities) is registered in the Security Register at the close of business on
the Record Date for such interest at the Company's option either (i) by check
mailed to the address of such Person as referenced in the Security Register or
(ii) by wire transfer to an account designated by such Person pursuant to an
arrangement that is satisfactory to the Company and the Trustee. Unless
otherwise provided pursuant to Section 3.01, the Company shall pay to the
Trustee or the Paying Agent the aggregate amount of interest in immediately
available funds by 10:00 A.M. New York City time on the Interest Payment Date.
The Trustee shall not be held responsible or liable for any loss resulting from
a failure of the federal funds wire system or any other occurrence beyond its
control in connection with wire transfers made pursuant to this Section 3.07.
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Except as otherwise specified for a particular series pursuant to
Section 3.01, (i) interest on any Bearer Securities shall be paid only against
presentation and surrender of the Coupons for such interest installments as are
evidenced thereby as they mature and (ii) the accreted amount, if any, with
respect to Bearer Securities which constitute Original Issue Discount Securities
shall be paid only against presentation and surrender of such Securities; in
either case at the office of a Paying Agent located outside the United States of
America, unless the Company shall have otherwise instructed the Trustee in
writing, provided that the Company furnishes the Trustee with an Opinion of
Counsel stating that any such instruction for payment in the United States of
America does not cause any Bearer Security to be treated as a "registration-
required obligation" under United States laws and regulations. The interest on
any temporary Bearer Security shall be paid, as to any installment of interest
evidenced by a Coupon attached thereto, only upon presentation and surrender of
such Coupon and, as to other installments of interest, only upon presentation of
such Security for notation thereon of the payment of such interest. If at the
time a payment of principal of or interest on a Bearer Security or Coupon shall
become due, the payment of the full amount so payable at the office or offices
of all the Paying Agents outside the United States is illegal or effectively
precluded because of the imposition of exchange controls or other similar
restrictions on the payment of such amount in United States dollars, then the
Company may instruct the Trustee in writing to make such payments at a Paying
Agent located in the United States of America, provided that the Company
furnishes the Trustee with an Opinion of Counsel stating that provision for such
payment in the United States of America would not cause such Bearer Security to
be treated as a "registration-required obligation" under United States laws and
regulations.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
special record date ("Special Record Date") for the payment of such Defaulted
Interest which shall be fixed in the following manner. The Company shall notify
the Trustee in writing not less than 30 days prior to the date of the proposed
payment of the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Registered Securities of
such series at its address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Registered Securities of such series (or
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their respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such Registered
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry all the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.08 Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
may deem and treat the Person in whose name any Registered Security shall be
registered in the Security Register for such series as the absolute owner of
such Registered Security (whether or not such Registered Security shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, any premium or interest on, such
Registered Security and for all other purposes; and neither the Company nor the
Trustee nor any agent of the Company or the Trustee shall be affected by any
notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security and the bearer of any Coupon as the
absolute owner of such Bearer Security or Coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Bearer Security or Coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
All payments so made to any such Person or bearer, or upon his order,
shall be valid and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Security.
Section 3.09 Cancellation.
All Securities and Coupons surrendered for the purpose of payment,
redemption, registration of transfer or exchange, or for credit against any
payment in respect of a sinking or analogous fund, if surrendered to the
Company, any Security Registrar, any Paying Agent or any other agent of the
Company or any agent of the Trustee, shall be delivered to the Trustee and
promptly canceled by it or, if surrendered to the Trustee, shall be promptly
canceled by it; and no Securities shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee
shall deliver canceled Securities and Coupons held by it to the Company. If the
Company shall acquire any of the Securities, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such
Securities unless and until the same are delivered to the Trustee for
cancellation.
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Section 3.10 Computation of Interest.
Except as otherwise specified as contemplated in Section 3.01 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 3.11 Currency and Manner of Payments in Respect of Securities.
(a) Unless otherwise specified with respect to any Securities
pursuant to Section 3.01, with respect to Registered Securities of any series
not permitting the election provided for in paragraph (b) below or the Holders
who have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of (and premium, if any, on) and interest, if
any, on any Registered or Bearer Security of such series will be made in the
Currency in which such Registered Security or Bearer Security, as the case may
be, is payable. The provisions of this Section 3.11 may be modified or
superseded with respect to any Securities pursuant to Section 3.01.
(b) It may be provided pursuant to Section 3.01 with respect to
Registered Securities of any series that Holders shall have the option, subject
to subsections (d) and (e) below, to receive payments of principal of (and
premium, if any, on) or interest, if any, on such Registered Securities in any
Currency which may be designated for such election by delivering to the Trustee
for such series of Registered Securities a written election with signature
guarantees and in the applicable form established pursuant to Section 3.01, not
later than the close of business on the Election Date immediately preceding the
applicable payment date. If a Holder so elects to receive such payments in any
such Currency, such election will remain in effect for such Holder or any
transferee of such Holder until changed by such Holder or such transferee by
written notice to the Trustee for such series of Registered Securities (but any
such notice must be given not later than the close of business on the Election
Date immediately preceding the next payment date to be effective with respect to
the payment to be made on such payment date and no such change of election may
be made with respect to payments to be made on any Registered Security of such
series with respect to which (i) an Event of Default has occurred, (ii) the
Company has deposited funds pursuant to Articles Four or Fourteen, (iii) a
notice of redemption has been given by the Company or (iv) a notice of option to
elect repayment has been given by such Holder or such transferee). Any Holder of
any such Registered Security who shall not have delivered any such election to
the Trustee of such series of Registered Securities prior to the close of
business on the applicable Election Date will be paid the amount due on the
applicable payment date in the relevant Currency as provided in subsection (a)
above. The Trustee for each such series of Registered Securities shall notify
the Exchange Rate Agent as soon as practicable, but not later than two Business
Days after the Election Date of the aggregate principal amount of Registered
Securities for which Holders have made such written election.
(c) Unless otherwise specified pursuant to Section 3.01, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 3.01, then, not later than the fourth Business Day after the Election
Date for each payment date for Registered Securities of any series, the Exchange
Rate Agent will deliver to the Company a written notice specifying, in the
Currency in which Registered Securities of such series are payable, the
respective aggregate amounts of principal of (and premium, if any, on) and
interest, if any, on the Registered Securities to be paid on such payment date,
specifying the amounts in such Currency so payable in respect of the Registered
Securities as to which the Holders of Registered Securities denominated in any
Currency shall have elected to be paid in another Currency as provided in
paragraph (b) above. If
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the election referred to in paragraph (b) above has been provided for pursuant
to Section 3.01 and if at least one Holder has made such election, then, unless
otherwise specified pursuant to Section 3.01, on the fifth Business Date
preceding such payment date the Company will deliver to the Trustee for such
series of Registered Securities an Exchange Rate Officer's Certificate in
respect of the Dollar or Foreign Currency payments to be made on such payment
date. Unless otherwise specified pursuant to Section 3.01, the Dollar or Foreign
Currency amount receivable by Holders of Registered Securities who have elected
payment in a Currency as provided in paragraph (b) above shall be determined by
the Company on the basis of the applicable Market Exchange Rate in effect on the
third Business Day (the "Valuation Date") immediately preceding each payment
date, and such determination shall be conclusive and binding for all purposes,
absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign Currency in
which any of the Securities are denominated or payable other than pursuant to an
election provided for pursuant to paragraph (b) above, then with respect to each
payment date for the payment of principal of (and premium, if any, on) and
interest, if any, on the applicable Securities denominated or payable in such
Foreign Currency occurring after the last date on which such Foreign Currency
was used (the "Conversion Date"), the Dollar shall be the Currency of payment
for use on each such payment date. Unless otherwise specified pursuant to
Section 3.01, the Dollar amount to be paid by the Company to the Trustee or any
Paying Agent to the Holders of such Securities with respect to such payment date
shall be, in the case of a Foreign Currency other than a currency unit, the
Dollar Equivalent of the Foreign Currency or, in the case of a currency unit,
the Dollar Equivalent of the currency unit, in each case as determined by the
Exchange Rate Agent in the manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 3.01, if the
Holder of a Registered Security denominated in any Currency shall have
elected to be paid in another Currency as provided in paragraph (b) above,
and a Conversion Event occurs with respect to such elected Currency, such
Holder shall thereafter receive payment in the Currency in which payment
would have been made in the absence of such election; and if a Conversion
Event occurs with respect to the Currency in which payment would have been
made in the absence of such election, such Holder shall receive payment in
Dollars as provided in subsection (d) above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each
subsequent payment date by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be determined
by the Exchange Rate Agent and subject to the provisions of paragraph (h)
below shall be the sum of each amount obtained by converting the Specified
Amount of each Component Currency into Dollars at the Market Exchange Rate
for such Component Currency on the Valuation Date with respect to each
payment.
(h) For purposes of this Section 3.11 the following terms shall have
the following meanings:
A "Component Currency" shall mean any Currency which, on the
Conversion Date, was a component currency of the relevant currency unit,
including the ECU.
A "Specified Amount" of a Component Currency shall mean the number of
units of such Component Currency or fractions thereof which were represented in
the relevant currency
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unit, including the ECU, on the Conversion Date. If after the Conversion Date
the official unit of any Component Currency is altered by way of combination or
subdivision, the Specified Amount of such Component Currency of the relevant
currency shall be divided or multiplied in the same proportion. If after the
Conversion Date two or more Component Currencies are consolidated into a single
Currency, the respective Specified Amounts of such Component Currencies shall be
replaced by an amount in such single Currency equal to the sum of the respective
Specified Amounts of such consolidated Component Currencies expressed in such
single Currency, and such amount shall thereafter be a Specified Amount and such
single Currency shall thereafter be a Component Currency. If after the
Conversion Date any Component Currency shall be divided into two or more
Currencies, the Specified Amount of such Component Currency shall be replaced by
amounts of such two or more Currencies, having an aggregate dollar Equivalent
Value at the Market Exchange Rate on the date of such replacement equal to the
Dollar Equivalent of the Specified Amount of such former Component Currency at
the Market Exchange Rate immediately before such division and such amounts shall
thereafter be Specified Amounts and such currencies shall thereafter be
Component Currencies. If, after the Conversion Date of the relevant currency
unit, including the ECU, a Conversion Event (other than any event referred to
above in this definition of "Specified Amount") occurs with respect to any
Component Currency of such currency unit and is continuing on the applicable
Valuation Date, the Specified Amount of such Component Currency shall, for
purposes of calculating the Dollar Equivalent of the Currency Unit, be converted
into Dollars at the Market Exchange Rate in effect on the Conversion Date of
such Component Currency.
"Election Date" shall mean the date for any series of Registered
Securities as specified pursuant to Section 3.01(l) by which the written
election referred to in subsection (b) above may be made.
All decisions and determinations by the Exchange Rate Agent regarding
the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as
specified above shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and irrevocably binding upon the
Company and the Trustee for the appropriate series of Securities and all Holders
of such Securities denominated or payable in the relevant Currency. The
Exchange Rate Agent shall promptly give written notice to the Company and the
Trustee for the appropriate series of Securities of any such decision or
determination.
In the event that the Company determines in good faith that a
Conversion Event has occurred with respect to a Foreign Currency, the Company
will immediately give written notice thereof to the Trustee of the appropriate
series of Securities (including CUSIP Numbers) and to the Exchange Rate Agent
(and such Trustee will promptly thereafter give notice in the manner provided in
Section 1.07 to the affected Holders) specifying the Conversion Date. In the
event the Company so determines that a Conversion Event has occurred with
respect to the ECU or any other currency unit in which Securities are
denominated or payable, the Company will immediately give written notice thereof
to the Trustee of the appropriate series of Securities and to the Exchange Rate
Agent (and such Trustee will promptly thereafter give notice in the manner
provided in Section 1.07 to the affected Holders) specifying the Conversion Date
and the Specified Amount of each Component Currency on the Conversion Date. In
the event the Company determines in good faith that any subsequent change in any
Component Currency as set forth in the definition of Specified Amount above has
occurred, the Company will similarly give written notice to the Trustee of the
appropriate series of Securities and to the Exchange Rate Agent.
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The Trustee of the appropriate series of Securities shall be fully
justified and protected in relying and acting upon information received by it
from the Company and the Exchange Rate Agent and shall not otherwise have any
duty or obligation to determine the accuracy or validity of such information
independent of the Company or the Exchange Rate Agent.
Section 3.12 Appointment and Resignation of Successor Exchange Rate Agent.
(a) Unless otherwise specified pursuant to Section 3.01, if and so
long as the Securities of any series (i) are denominated in a Currency other
than Dollars or (ii) may be payable in a Currency other than Dollars, or so long
as it is required under any other provision of this Indenture, then the Company
will appoint and maintain with respect to each such series of Securities, or as
so required, at least one Exchange Rate Agent. The Company will cause the
Exchange Rate Agent to make the necessary foreign exchange determinations at the
time and in the manner specified pursuant to Section 3.01 for the purpose of
determining the applicable rate of exchange and, if applicable, for the purpose
of converting the issued Currency into the applicable payment Currency for the
payment of principal (and premium, if any) and interest, if any, pursuant to
Section 3.11.
(b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become effective
until the acceptance of appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to the Company, with a copy to the
Trustee accepting such appointment executed by the successor Exchange Rate
Agent.
(c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Exchange
Rate Agent for any cause, with respect to the Securities of one or more series,
the Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Exchange Rate Agent or Exchange Rate Agents with respect to the
Securities of that or those series (it being understood that any such successor
Exchange Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified pursuant to
Section 3.01, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued by
the Company on the same date and that are initially denominated and/or payable
in the same Currency).
Section 3.13 Compliance with Certain Laws and Regulations.
If any Bearer Securities are to be issued in any series of Securities,
the Company will use reasonable efforts to provide for arrangements and
procedures designed pursuant to then applicable laws and regulations, if any, to
ensure that Bearer Securities are sold or resold, exchanged, transferred and
paid only in compliance with such laws and regulations and without adverse
consequences to the Company or the Trustee.
Section 3.14 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed
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on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers. The Company will promptly notify the Trustee of
any change in the "CUSIP" numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 4.01 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, upon a Company Request and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(1) all Securities theretofore authenticated and delivered and
all Coupons appertaining thereto (other than (i) Securities and Coupons
which have been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.06, (ii) Securities and Coupons for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.03, (iii) Coupons
appertaining to Bearer Securities surrendered in exchange for Registered
Securities and maturing after such exchange, surrender of which is not
required or has been waived as provided in Section 3.05, and (iv) Coupons
appertaining to Bearer Securities called for redemption and maturing after
the relevant Redemption Date, surrender of which has been waived as
provided in Section 11.06) have been delivered to the Trustee for
cancellation; or
(2) all such Securities, and, in the case of (i) and (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) 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) in subclause (2) above, has
irrevocably deposited or caused to be deposited with the applicable Trustee as
trust funds in trust for such purpose an amount in the currency in which such
Securities are denominated sufficient to pay and discharge the entire
indebtedness on such Securities, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;
provided, however, in the event a petition for relief under the applicable
Federal or state bankruptcy, insolvency or other similar law is filed with
respect to the Company within 123 days after the deposit and the applicable
Trustee is
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required to return the deposited money to the Company, the
obligations of the Company under this Indenture with respect to such Securities
will not be deemed terminated or discharged;
(b) the Company has paid or caused to be paid all other sums payable
under this Indenture by the Company; and
(c) 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 this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (2) of clause (a) of
this Section 4.01, the obligations of the Trustee under Sections 3.05, 3.06,
4.02 and 10.02 and the last paragraph of Section 10.03, shall survive.
Section 4.02 Application of Trust Money.
Subject to provisions of the last paragraph of Section 10.03, all
money deposited with the Trustee pursuant to Section 4.01 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) or Depositary as the
Trustee may determine, to the Holders of the particular Securities of such
series for the payment or redemption of which such money has been deposited with
or received by the Trustee, of all sums due and to become due thereon for
principal and any premium and interest.
ARTICLE FIVE
Remedies
Section 5.01 Events of Default.
"Event of Default", with respect to Securities of a particular series
wherever used herein, means any one of the following events and such other
events as may be established with respect to the Securities of such series as
contemplated in Section 3.01, continued for the period of time, if any, and
after the giving of notice, if any, designated in this Indenture or as may be
established with respect to such Securities as contemplated in Section 3.01, as
the case may be, unless such event is either inapplicable or is specifically
deleted or modified in, or pursuant to, the applicable Board Resolution or in
the supplemental indenture under which such series of Securities is issued, as
the case may be, as contemplated in Section 3.01:
(a) default in the payment of the principal of, or any premium on,
any of the Securities of such series as and when the same shall become due and
payable either at Stated Maturity, upon redemption, by declaration or otherwise;
or
(b) default in the payment of any installment of interest, if any, or
any payment with respect to the Coupons, if any, upon any of the Securities of
such series as and when it shall become due and payable, and continuance of such
default for a period of 30 days; or
(c) default in the deposit of any sinking fund payment, when and as
due and payable by the terms of the Securities of such series; or
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(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to such series or in any
supplemental indenture with respect to such series (other than a covenant or
warranty a default in the performance of which or a breach of which is elsewhere
in this Section 5.01 specifically dealt with or which has expressly been
included in this Indenture and designated as being solely for the benefit of a
series of Securities other than such series), 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 applicable Trustee or to the Company and
the applicable Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of such series, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(e) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar
official) of the Company or for all or substantially all of its property or
ordering the winding up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or
(f) the Company shall commence a voluntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or for all or substantially
all of its property, or make any general assignment for the benefit of
creditors, or the admission by the Company in writing of its inability to pay
its debts generally as they become due; or
(g) any other Event of Default provided with respect to Securities of
such series.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then, and in each and every such
case, unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of such
series, by notice in writing to the Company (and to the Trustee if given by
Holders), may declare the entire principal amount (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal as
may be specified in the terms of such series) of all of the Securities of such
series and any premium and interest accrued thereon to be due and payable
immediately, and upon any such declaration such principal amount (or specified
amount) and any premium and interest accrued thereon shall become immediately
due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series shall have been so declared due
and payable, and before any judgment or decree for the payment of money due
shall have been obtained or entered as hereinafter provided,
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(a) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all overdue installments of interest, if any, with
currency in which the Securities of such series are denominated, on all
Securities or all overdue payments with respect to any Coupons of such series,
(B) the principal of (and premium, if any, on) any Securities of such series
which have become due otherwise than by such declaration of acceleration and
interest, if any, thereon at the rate or rates prescribed therefor in such
Securities, (C) to the extent that payment of such interest is lawful, interest
upon overdue installments of interest on each Security of such series or upon
overdue payments on any Coupons of such series at a rate established for such
series, and (D) all sums paid or advanced by the Trustee and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and
(b) all Events of Default under this Indenture with respect to the
Securities of such series other than the nonpayment of the principal of such
Securities which shall have become due by such declaration of acceleration,
shall have been cured, waived or otherwise remedied as provided in Section 5.13,
then and in every such case the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of such series, by written notice
to the Company and to the Trustee, may rescind and annul such declaration and
its consequences with respect to such series, but no such rescission and
annulment shall extend to or shall affect any subsequent default or shall impair
any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal
of any Original Issue Discount Securities shall have been accelerated and
declared due and payable pursuant to the provisions hereof, then, from and after
such declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or shall have been determined adversely
to the Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former rights and positions thereunder.
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any of the Securities of any series as and when such interest becomes due and
payable, and such default continues for a period of 30 days, or
(b) a default is made in the payment of the principal of, and any
premium on, any of the Securities of any series as and when the same becomes due
and payable, whether upon Stated Maturity of the Securities of such series or
upon redemption or by declaration or otherwise, or
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(c) default is made in the making or satisfaction of any sinking fund
payment or analogous obligation when the same becomes due by the terms of the
Securities of any series,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of the Securities of such series the whole amount then
due and payable on all Securities of such series for principal and any premium
and interest as the case may be (with interest to the date of such payment upon
the overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue premium and installments of
interest, if any, at the Overdue Rate applicable to Securities of such series);
and in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, and any further amounts payable to the Trustee
pursuant to Section 6.07.
Until such demand is made by the Trustee, the Company may pay the
principal of and any premium and interest on the Securities of any series to the
registered Holders, whether or not the principal of and any premium and interest
on the Securities of such series be overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon such
Securities and collect in the manner provided by law out of the property of the
Company or other obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.
If an Event of Default with respect to Securities of any series has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any of such rights,
either at law or in equity or in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted in this Indenture or to enforce any
other legal or equitable right granted in this Indenture or by law.
Section 5.04 Trustee May File Proofs of Claim.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor upon the Securities of
any series under Title 11 of the United States Code or any other similar
applicable Federal or State law, or in case a receiver, trustee in bankruptcy or
similar official shall have been appointed for the property of the Company or
such other obligor, or in case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities of any series, or
to the creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of any Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal (or, if the Securities of any series are Original Issue Discount
Securities, such portion of the principal amount as may be due and payable with
respect to such series pursuant to a declaration in accordance with Section
5.02) and any premium and interest owing and unpaid in respect of the Securities
of any series, and, in case of any judicial proceedings, to file such proofs of
claim and
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other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for any amounts payable to the
Trustee pursuant to Section 6.07) and of the Holders allowed in any judicial
proceedings relating to the Company or other obligor upon the Securities of any
series, or to the creditors or property of the Company or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Securities of any series in any election of a
trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or of a person performing similar
functions in comparable proceedings; and
(c) to collect and receive any money or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf (after
deduction of costs and expenses of collection, and any further amounts payable
to the Trustee and/or its agents or counsel pursuant to Section 6.07); and any
trustee in bankruptcy, receiver or other similar official is hereby authorized
by each of the Holders to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of payments directly to the Holders, to
pay to the Trustee costs and expenses of collection and any further amounts
payable to the Trustee and/or its agents or counsel pursuant to Section 6.07.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan or reorganization, arrangement, adjustment or composition
affecting the Securities of any series or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding, except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
Section 5.05 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture, or under the
Securities of any series, may be prosecuted and enforced by the Trustee without
the possession of any of the Securities of such series or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
Section 5.06 Application of Moneys Collected by Trustee.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities or Coupons in respect of which
money has been collected and stamping (or otherwise noting) thereon the payment,
or issuing Securities in reduced principal amounts in exchange for the presented
Securities of like series and tenor if only partially paid, or upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due to the Trustee (including
the reasonable compensation and expenses of its agents and counsel) under
Section 6.07;
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SECOND: To the Holders of the Securities for amounts due and unpaid
on the Securities for principal, and Premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable for principal, and Premium, if any, and interest, respectively;
provided, however, that such payments shall be made subject to the provisions of
Article Fourteen hereunder if applicable; and
THIRD: To the payment of the remainder, if any, to the Company or as
a court of competent jurisdiction may direct.
Section 5.07 Limitation on Suits.
No Holder of any Security of any series shall have any right by virtue
or by availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture, or for the appointment of a trustee in
bankruptcy, receiver or other similar official or for any other remedy
hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
default with respect to Securities of such series and of the continuance
thereof, as hereinbefore provided;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of such series shall have made written request to the
Trustee to institute such action, suit or proceedings in its own name as Trustee
hereunder;
(c) 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;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has neglected or refused to institute any such action,
suit or proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period pursuant to Section 5.12;
it being understood and intended, and being expressly covenanted by the taker
and Holder of every Security with every other taker and Holder and the Trustee,
that no one or more Holders of any Securities shall have any right in any manner
whatever by virtue or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holder of Securities, or to obtain
or to seek to obtain priority or preference over any other Holder or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all Holders of Securities. For the
protection and enforcement of the provisions of this Section, each Holder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 5.08 Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section
3.07) any interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
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Section 5.09 Restoration of Rights and Remedies.
In case the Trustee or any Holder shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee
or to such Holder, then and in every such case the Company, the Trustee and the
Holders shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company, the Trustee and
the Holders shall continue as though no such proceedings had been taken.
Section 5.10 Rights and Remedies Cumulative.
Except as provided in Section 5.07 and except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in the last paragraph of Section 3.06, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder to exercise any
right, power or remedy accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right, power or remedy or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein. Subject to Section 5.07, every power and remedy given by this Indenture
or by law to the Trustee or to the Holders of any or all series, as the case may
be, may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders of such series or all series, as the
case may be.
Section 5.12 Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any 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 by this
Indenture with respect to Securities of such series; provided, however, that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(b) the Trustee (subject to the requirements of the Trust Indenture
Act) shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or proceeding
so directed may not lawfully be taken or if the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or be unduly prejudicial to the Holders not joining therein.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Holders.
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Section 5.13 Waiver of Past Defaults.
Prior to the declaration of the acceleration of the Maturity of the
Securities of any particular series, the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default or Event of Default with respect to such series and its consequences,
except a default not theretofore cured
(a) in the payment of the principal of or any premium or interest on
any Security of such series, or
(b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected as provided in Section 9.02.
In the case of any such waiver, the Company, the Trustee and the
Holders of the Securities of each series affected shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereby shall be deemed to have agreed, that in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
a court may require any party litigant in such suit to file an undertaking to
pay the costs of such suit (including reasonable legal fees and expenses) and
may assess costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. This Section
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
5.08, a suit by Holders of more than 10% in principal amount of the Securities
of any series or a suit by the Company.
Section 5.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
The Trustee
Section 6.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with respect
to any series of Securities,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture with respect to the
Securities of such series, and no implied covenants or obligations shall be
read into this Indenture against the Trustee or any predecessor Trustee;
and
(2) in the absence of bad faith on its part, the Trustee may,
with respect to Securities of such series, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions (whether in their original or
facsimile form) furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture
(but need not confirm or investigate the accuracy of any facts or
mathematical calculations made therein).
(b) In case an Event of Default with respect to any series of
Securities has occurred and is continuing, the Trustee shall exercise with
respect to the Securities of such series such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section 6.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(3) the 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 a majority in principal amount of the
Outstanding Securities of any series relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have
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reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
Section 6.02 Notice of Defaults.
The Trustee shall transmit notices of default to the Holders in
accordance with Section 315(b) of the Trust Indenture Act and other provisions
therein related thereto. For the purpose of this Section 6.02, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to Securities of such series;
provided, however, that, except in the case of a default in the payment of the
principal of (or premium, if any, on) or interest, if any, on any Security of
such series or in the payment of any sinking fund installment with respect to
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 or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Securities of such series.
Section 6.03 Certain Rights of the Trustee.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, Officers' Certificate or
any other certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, or other paper or document (whether in its original
or facsimile form) believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Company Order or Company Request
(unless other evidence in respect thereof be herein specifically prescribed) and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with any nationally recognized counsel
with expertise in trust indenture matters of its selection and any advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request, order or direction;
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(f) prior to the occurrence of an Event of Default hereunder and after
the curing or waiving of all Events of Default, the 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 unless requested in writing to do so by the Holders of not
less than a majority in aggregate principal amount of the Outstanding Securities
of any series affected; but the Trustee, in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture.
Section 6.04 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Indenture or of the Securities, provided
that the Trustee shall not be relieved of its duty to authenticate Securities
only as authorized by this Indenture. The Trustee or any Authenticating Agent
shall not be accountable for the use or application by the Company of any of the
Securities or the proceeds thereof.
Section 6.05 May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities of any series
with the same rights it would have if it were not the Trustee, Authenticating
Agent, Paying Agent, Security Registrar or such other agent and, subject to the
provisions of the Trust Indenture Act, may otherwise deal with the Company and
receive, collect, hold and retain collections from the Company with the same
rights it would have if it were not the Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
Section 6.06 Money Held in Trust.
Subject to the provisions of Section 10.03, all money received by the
Trustee or any Paying Agent, all money and Government Obligations deposited with
the Trustee pursuant to Section 13.02 or Section 13.03 and all money received by
the Trustee in respect of Government Obligations deposited with the Trustee
pursuant to Section 13.02 or Section 13.03, shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor any Paying Agent shall be
under any liability for interest on any money received by it hereunder except as
otherwise agreed by the Company. So
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long as no Event of Default shall have occurred and be continuing, all interest
allowed on any such money shall be paid from time to time in accordance with a
Company Order.
Section 6.07 Compensation and Reimbursement.
The Company covenants and agrees
(a) to pay to the Trustee from time to time as agreed in writing
between the Company and the Trustee, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it hereunder (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its own negligence or bad
faith; and
(c) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all 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 this Indenture or the trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so promptly notify the Company,
however, shall not relieve the Company of its obligations under this paragraph
except to the extent such failure shall have materially prejudiced the Company.
The Company may at its option defend the claim and, if it so defends, then the
Trustee shall cooperate in the defense and the Company shall not be responsible
for any expenses of the Trustee's counsel thereafter. The Company need not pay
for any settlement made without its consent.
The obligations of the Company under this Section 6.07 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.01(e) or (f), the expenses and
the compensation for the services are intended to constitute expenses of
administration under any bankruptcy law.
Section 6.08 Right to Rely on Officers' Certificate.
Subject to the requirements of the Trust Indenture Act, whenever in
the administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting any action to be taken hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in the
absence of actual knowledge to the contrary, willful misconduct or bad faith on
the
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part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of actual knowledge to the contrary, willful misconduct or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of this Indenture upon the
faith thereof.
Section 6.09 Eligibility.
The Trustee for each series of Securities hereunder shall at all times
be a Person organized and doing business under the laws of the United States of
America or of any State or the District of Columbia, having a combined capital
and surplus of at least $50,000,000, and eligible under the provisions of the
Trust Indenture Act. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person at any time shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor Trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor Trustee as provided in Section
6.11.
(b) The Trustee may resign at any time with respect to one or more or
all series of Securities by giving 60 days written notice of resignation to the
Company. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor Trustee with respect to the applicable series by written
instrument in duplicate, executed by authority of the Board of Directors, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning Trustee may,
at the expense of the Company, petition any court of competent jurisdiction for
the appointment of a successor Trustee, or any Holder who has been a bona fide
Holder of a Security of the applicable series for at least six months may, at
the expense of the Company, subject to the requirements of the Trust Indenture
Act, on behalf of itself and all others similarly situated, petition any such
court for the appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint a
successor Trustee.
(c) The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series may at any time remove the Trustee with
respect to Securities of such series and appoint a successor Trustee with
respect to the Securities of such series by delivering to the Trustee so
removed, to the successor Trustee so appointed and to the Company the evidence
provided for in Section 1.04 of the action in that regard taken by the Holders.
(d) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act after written request therefor by
the Company or by any
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Holder who has been a bona fide Holder of a Security of a relevant series
for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.09 with respect to any series of Securities and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security of a relevant
series for at least six months; or
(3) the Trustee shall become incapable of acting with respect to
any series of Securities, or shall be adjudged a bankrupt or insolvent, or
a receiver or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company may remove the Trustee with respect to
the applicable series of Securities (or all series, if required) and appoint a
successor Trustee for such series by written instrument, in duplicate, executed
by authority of the Board of Directors, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee, or
(ii) subject to the requirements of the Trust Indenture Act, any Holder who has
been a bona fide Holder of a Security of such series for at least six months may
on behalf of itself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee with respect to such series. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor Trustee with respect to such series.
(e) If the Trustee shall resign, be removed or become incapable of
acting with respect to any series of Securities, or if a vacancy shall occur in
the office of the Trustee with respect to any series of Securities for any
cause, the Company, by a Board Resolution, shall promptly appoint a successor
Trustee for that series of Securities. If, within one year after such
resignation, removal or incapacity, or the occurrence of such vacancy, a
successor Trustee with respect to such series of Securities shall be appointed
by the Holders of a majority in principal amount of the Outstanding Securities
of such series by written instrument delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee with respect to such series
and supersede the successor Trustee appointed by the Company with respect to
such series. If no successor Trustee with respect to such series shall have been
so appointed by the Company or the Holders of such series and accepted
appointment in the manner hereinafter provided, subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security of that series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to such series.
Section 6.11 Acceptance of Appointment by Successor.
Any successor Trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee with respect to all or any
applicable series shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations with respect to such series of its predecessor
Trustee hereunder, with like effect as if originally named as Trustee for such
series hereunder; but, nevertheless, on the written request of the Company or of
the successor Trustee, upon payment (or due provision therefor) of
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any amounts then due it pursuant to Section 6.07, the Predecessor Trustee
ceasing to act shall, subject to Section 10.03, pay over to the successor
Trustee all money at the time held by it hereunder and shall execute and deliver
an instrument transferring to such successor Trustee all such rights, powers,
duties and obligations. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor Trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 6.07.
If a successor Trustee is appointed with respect to the Securities of
one or more (but not all) series, the Company, the predecessor Trustee and each
successor Trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust and that
each such Trustee shall be Trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such Trustee.
No successor Trustee with respect to any series of Securities shall
accept appointment as provided in this Section unless at the time of such
acceptance such successor Trustee shall, with respect to such series, be
qualified under the requirements of the Trust Indenture Act and eligible under
the provisions of Section 6.09.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 6.11, the Company shall give notice thereof to the Holders of
Securities of any series for which such successor Trustee is acting as Trustee
in the manner provided for notices to the Holders of Securities in Section 1.06.
If the Company fails to give such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided that
such Person shall be qualified under the requirements of the Trust Indenture Act
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, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee by
merger, conversion or consolidation may adopt the certificate of authentication
of any predecessor Trustee and deliver such Securities so authenticated; and, in
case at that time any of the Securities of any series shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of such successor to the Trustee or, if such successor to the
Trustee is a successor by merger,
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conversion or consolidation, in the name of any predecessor hereunder; provided,
however, that such successor shall use the predecessor's name only in such
circumstances set forth in this Section 6.12 and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have.
Section 6.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of Sections 311(a) and 311(b) of the Trust Indenture Act regarding
the collection of claims against the Company (or any such other obligor).
Section 6.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.06, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of such supervising or examining authority, then
for the purposes of this Section 6.14, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.14.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such Person shall be otherwise eligible under this Section 6.14,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be
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acceptable to the Company and shall give notice of such appointment to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve in the manner set forth in Section 1.06. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 6.14.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.14.
If an appointment with respect to one or more series is made pursuant
to this Section 6.14, the Securities of such series may have endorsed thereon,
in addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein and
referred to in the within-mentioned Indenture.
The Bank of New York,
as Trustee
By:
------------------------------------
As Authenticating Agent
By:
------------------------------------
Authorized Signatory
ARTICLE SEVEN
Holders' List and Reports by Trustee and Company
Section 7.01 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after each Record Date for
the Securities of any series (and on dates as specified as contemplated in
Section 3.01 for any series of Original Issue Discount Securities which by their
terms bear interest only after Maturity), a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities of such series as of each such Record Date (and as of dates as
specified as contemplated in Section 3.01 of this Indenture), and
(b) at such other times as the Trustee may request in writing, within
15 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such is
furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.
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Section 7.02 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Registered Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as provided
in Section 7.01 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 7.03 Reports by Trustee.
(a) Within 60 days after each May 15, beginning with the May following
the date of this Indenture, and in any event prior to July 15 in each year, so
long as any Securities are Outstanding hereunder, the Trustee shall transmit by
mail to Holders of Securities of any series such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act, including Section 313 thereof, in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities of such series are listed, with the Commission and also with the
Company. The Company will promptly notify the Trustee when any series of
Securities are listed on any stock exchange or automatic quotation series or
delisted therefrom.
Section 7.04 Reports by Company.
The Company will:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be required from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and
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covenants of this Indenture as may be required from time to time by such rules
and regulations; and
(c) transmit to all Holders of Securities, in the manner and to the
extent provided in Section 7.03, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to paragraphs (a) and (b) of this Section
7.04 as may be required by rules and regulations prescribed from time to time by
the Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 8.01 Company May Consolidate, Etc., Only on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
(whether or not affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall be a party or
parties, or shall prevent any conveyance, transfer or lease of all or
substantially all the property or assets of the Company, to any other Person
(whether or not affiliated with the Company) authorized to acquire and operate
the same; provided, however, and the Company hereby covenants and agrees, that
upon any such consolidation, merger, transfer, conveyance or lease:
(a) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to a Responsible Officer of the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture;
(b) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or any
Subsidiary as a result of such transaction as having been Incurred by the
Successor Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing;
(c) immediately after giving effect to such transaction, the Successor
Company would be able to incur an additional $1.00 of Indebtedness pursuant to
Section 10.04(a);
(d) immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth in an amount which is not less than
the Consolidated Net Worth of the Company immediately prior to such transaction;
and
(e) the Trustee, subject to the requirements of the Trust Indenture
Act and Section 6.03, shall receive an Opinion of Counsel and Officers'
Certificate from the Company
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stating that such consolidation, merger, conveyance, transfer or lease and any
supplemental indenture comply with the provisions of this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
Notwithstanding the foregoing clauses (b), (c) and (d), any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company.
Section 8.02 Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all the property or assets of the Company in accordance with
Section 8.01, the Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such Successor Company had been named as the Company
herein, and thereafter, except in the case of a lease of all or substantially
all of its assets, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
In case of any such consolidation, merger, conveyance, transfer or
lease, such changes in phraseology and form (but not in substance) may be made
in the Securities thereafter to be issued as may be appropriate.
ARTICLE NINE
Supplemental Indentures
Section 9.01 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants, agreements and
obligations of the Company contained herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating that such Events
of Default are expressly being included solely to be applicable to such series);
or
(d) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities; provided, however,
that any such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
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rights of the Holder of any such Security with respect to such provision or (ii)
shall become effective only when there is no such Security Outstanding; or
(e) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities of one or more series any property or assets; or
(f) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01; or
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11; or
(h) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be defective or inconsistent
with any other provision contained herein or in any supplemental indenture; or
to change or eliminate any provision or to make any other provisions with
respect to matters or questions arising under this Indenture or under any
supplemental indenture as the Company may deem necessary or desirable; provided,
however, that such action shall not adversely affect the interests of the
Holders of the Outstanding Securities of any series.
Section 9.02 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series affected
by such supplemental indenture (each such series voting as a single class), by
act of such Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights and
obligations of the Company and the rights of the Holders of the Securities of
such series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof, or reduce any premium thereof or change the time of payment of any
premium thereon, or reduce the rate or change the time of payment of interest
thereon, if any, or reduce any amount payable on redemption or reduce the
Overdue Rate thereof or make the principal thereof or any premium or interest
thereon, payable at any place of payment or in any Currency other than as
provided in the Security or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon an acceleration of
the Maturity thereof pursuant to Section 5.02 or the amount thereof provable in
bankruptcy pursuant to Section 5.04, or impair, if the Securities provide
therefor, any right of repayment at the option of the Holder, or impair the
right to institute a suit for the enforcement of any payment on or with respect
to any Security pursuant to Section 5.07; or
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(b) reduce the aforesaid percentage of Outstanding Securities the
consent of the Holders of which is required for any such supplemental indenture
or for waiver of compliance with certain provisions of the Indenture or for
waiver of certain defaults.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series. The preceding
sentence shall not, however, raise any inference as to whether or not a
particular series is affected by any supplemental indenture not referred to in
such sentence.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 9.02, the
Company shall give notice thereof to the Holders of Securities of each series
affected thereby in the manner provided for notices to the Holders of Securities
in Section 1.06, setting forth in general terms the substance of such
supplemental indenture. Any failure of the Company to give such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.01) shall be fully protected in conclusively relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
of Securities of each series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and any such supplemental indenture shall form a part of this
Indenture for all purposes and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.05 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as in effect at the date
such supplemental indenture is executed.
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Section 9.06 Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may bear a
notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture. If the Company or the Trustee shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company, and, upon a Company Request,
authenticated and delivered by the Trustee in exchange for the Outstanding
Securities of such series.
ARTICLE TEN
Covenants
Section 10.01 Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of, and any premium and interest on, the Securities of that series in
accordance with the terms of the Securities and this Indenture.
Section 10.02 Maintenance of Office or Agency.
The Company will designate and maintain in the Borough of Manhattan,
the City of New York, for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment (the
"Paying Agent"), where Securities of that series may be surrendered for
registration of transfer or exchange, where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be
served. The Company may have one or more Paying Agents. The Company or any of
its domestic Subsidiaries may act as Paying Agent. The Company will give prompt
written notice to a Responsible Officer of the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.
Section 10.03 Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or any premium or interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
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Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of and
any premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay the principal and any premium or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will
(a) hold all sums held by it for the payment of the principal of and
any premium or interest on the Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any payment
of the principal of or any premium or interest on the Securities of that series;
and
(c) at any time during the continuance of any such default referred to
in clause (2) above, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal and any premium or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper in
the City of New York or other place of payment, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 10.04 Limitation on Indebtedness.
(a) The Company shall not Incur, directly or indirectly, any
Indebtedness if, on the date of such Incurrence and after giving effect thereto,
the Consolidated Leverage Ratio exceeds 2.5 to 1.0.
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(b) Notwithstanding Section 10.04(a), the Company may Incur any or all
of the following Indebtedness:
(1) Permitted Warehouse Indebtedness;
(2) Indebtedness owed to and held by the Company or a
Consolidated Restricted Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock which results in any such
Consolidated Restricted Subsidiary ceasing to be a Consolidated Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to
the Company or another Consolidated Restricted Subsidiary) shall be deemed,
in each case, to constitute the Incurrence of such Indebtedness by the
Company;
(3) with respect to any series of Securities, the Securities of
such series and all Securities of any prior series Outstanding as of the
Issue Date of such series of Securities;
(4) Indebtedness outstanding on the Issue Date of a series of
Securities (other than Indebtedness described in clause (1), (2) or (3) of
this Section 10.04(b));
(5) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 10.04(a) or pursuant to clause (3) or (4) or this
clause (5) of this Section 10.04(b);
(6) Hedging Obligations directly related to: (i) Indebtedness
Incurred (or reasonably expected to be Incurred) and permitted to be
Incurred by the Company or the Restricted Subsidiaries pursuant to this
Indenture; (ii) Receivables held by the Company or its Restricted
Subsidiaries pending sale or securitization; (iii) Receivables of the
Company or its Restricted Subsidiaries that are subject to a Warehouse
Facility; (iv) Receivables with respect to which the Company reasonably
expects to purchase or commit to purchase, finance or accept as collateral;
or (v) Excess Spread Receivables and other assets owned or financed by the
Company or its Restricted Subsidiaries in the ordinary course of business;
provided, however, that such Hedging Obligations are eligible to receive
hedge accounting treatment in accordance with GAAP as applied by the
Company as of the Issue Date of a series of Securities; and
(7) Indebtedness in an aggregate principal amount which, together
with the principal amount of all other Indebtedness of the Company
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (6) of this Section 10.04(b) or Section
10.04(a)) does not exceed $40.0 million.
(c) Notwithstanding Section 10.04(a) and Section 10.04(b), the Company
shall not Incur any Indebtedness if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Indebtedness
shall be subordinated to the Securities to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with this Section 10.04, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company, in its sole discretion,
may (i) classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above
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clauses or (ii) divide and classify such item of Indebtedness in more than one
of the types of Indebtedness described in this Section 10.04.
Section 10.05 Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries.
The Company shall not permit any Restricted Subsidiary to Incur,
directly or indirectly, any Indebtedness or Preferred Stock except:
(a) Permitted Warehouse Indebtedness;
(b) Warehouse Margin Indebtedness; provided that such Warehouse Margin
Indebtedness has remained unpaid for five or fewer Business Days; provided,
further, however, that the amount of such Warehouse Margin Indebtedness, when
taken together with the aggregate amount of all other Warehouse Margin
Indebtedness Incurred pursuant to this clause (b) and outstanding on the date of
such Incurrence, does not exceed 5% of Consolidated Net Worth;
(c) Indebtedness or Preferred Stock issued to and held by the Company
or a Consolidated Restricted Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock which results in any such Consolidated
Restricted Subsidiary ceasing to be a Consolidated Restricted Subsidiary or any
subsequent transfer of such Indebtedness or Preferred Stock (other than to the
Company or a Consolidated Restricted Subsidiary) shall be deemed, in each case,
to constitute the Incurrence such Indebtedness or Preferred Stock by the issuer
thereof;
(d) Indebtedness or Preferred Stock of a Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was acquired by the
Company (other than Indebtedness or Preferred Stock Incurred in connection with,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company); provided,
however, that on the date of such acquisition and after giving effect thereto,
the Company would have been able to Incur at least $1.00 of Indebtedness
pursuant to Section 10.04(a);
(e) Indebtedness or Preferred Stock outstanding on the Issue Date of a
series of Securities (other than Indebtedness described in clause (a), (b), (c)
or (d) of this Section 10.05); and
(f) Refinancing Indebtedness Incurred in respect of Indebtedness or
Preferred Stock referred to in clause (d) or (e) of this Section 10.05 or this
clause (f); provided, however, that to the extent such Refinancing Indebtedness
directly or indirectly Refinances Indebtedness or Preferred Stock of a
Subsidiary described in clause (d) of this Section 10.05, such Refinancing
Indebtedness shall be Incurred only by such Subsidiary.
Section 10.06 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment: (i) a
Default shall have occurred and be continuing (or would result therefrom); (ii)
the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to
Section 10.04(a); or (iii) the aggregate amount of such Restricted Payment and
all other Restricted Payments since March 12, 1997 would exceed the sum of: (A)
25% of the Consolidated Net Income accrued during the period (treated as one
accounting period)
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from January 1, 1997 to the end of the most recent fiscal quarter prior to the
date of such Restricted Payment for which financial statements are available
(or, in case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent
to January 1, 1997 (other than an issuance or sale to a Subsidiary of the
Company and other than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees); (C) the amount by which Indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to March 12, 1997, of any
Indebtedness of the Company convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of any cash, or the
fair value of any other property, distributed by the Company upon such
conversion or exchange); (D) an amount equal to the sum of (i) the net reduction
in Investments in any Person resulting from dividends or repayments of loans or
advances, in each case to the Company or any Restricted Subsidiary from such
Person, and (ii) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of an Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum in this clause (D) shall
not exceed, in the case of any Person, the amount of Investments made since
March 12, 1997 by the Company or any Restricted Subsidiary in such Person and
treated as a Restricted Payment; and (E) $15 million.
(b) The provisions of Section 10.06(a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company or any of
its Subsidiaries for the benefit of their employees); provided, however, that
(A) such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such sale shall
be excluded from the calculation of amounts under clause (iii)(B) of Section
10.06(a); (ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred pursuant to
Section 10.04; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments; (iii) any purchase or
redemption of Subordinated Obligations from Net Available Cash to the extent
permitted under Section 10.08; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
this Section 10.06; provided, however, that at the time of payment of such
dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided, further, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (v) any purchase of
Capital Stock of the Company made from time to time to meet the Company's
obligations under its employee stock ownership and option plans; provided,
however, that such purchase shall be excluded in the calculation of the amount
of Restricted Payments; (vi) the exercise or conversion of an option, warrant or
other security convertible or exchangeable for an equity security of a Strategic
Alliance Client in connection with a substantially simultaneous sale or other
disposition by the Company or a Restricted Subsidiary of such equity security;
provided, however, that the exercise price or other consideration paid by the
Company or a Restricted Subsidiary in connection with such exercise or
conversion shall be excluded from the calculation of the amount of Restricted
Payments; and (vii) the making of an Investment by the Company or a Restricted
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Subsidiary in another Person to the extent that the amount of such Investment,
when added together with the aggregate amount of all other Investments made
pursuant to this clause (vii) and then outstanding, does not exceed 10% of
Consolidated Net Tangible Assets; provided, however, that such Person's primary
business is a Related Business; provided, further, however, that (I) at the time
of such Investment, no Default shall have occurred and be continuing and (II)
the amount of such Investment shall be included in the calculation of the amount
of Restricted Payments.
Section 10.07 Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) to make any loans or advances to the
Company or (c) transfer any of its property or assets to the Company, except:
(i) with respect to any series of Securities, any encumbrance or restriction
pursuant to an agreement in effect at or entered into on the Issue Date with
respect to such series; (ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement applicable to such Restricted
Subsidiary on or prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than an agreement entered into in connection
with, or in anticipation of, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date; (iii) any encumbrance
or restriction with respect to a Restricted Subsidiary pursuant to any other
agreement contained in any amendment to an agreement referred to in clause (i)
or (ii) of this Section 10.07 or this clause (iii); provided, however, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such agreement or amendment are no less favorable to the
Holders of Securities than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in the agreements referred to in clauses (i) or
(ii) of this Section 10.07, as the case may be; (iv) any such encumbrance or
restriction consisting of customary non-assignment provisions in leases
governing leasehold interests to the extent such provisions restrict the
transfer of the lease or the property leased thereunder; (v) in the case of
clause (c) above, restrictions contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements or
mortgages; and (vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition.
Section 10.08 Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless
(i) the Company or such Restricted Subsidiary receives consideration at the time
of such Asset Disposition at least equal to the fair market value (including as
to the value of all non-cash consideration), as determined in good faith by the
Board of Directors, of the shares and assets subject to such Asset Disposition
and at least 85% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents; (ii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to
the extent the Company elects, either to (x) acquire Additional Assets, either
directly or through a Restricted Subsidiary, or (y) prepay, repay, redeem
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or purchase Senior Indebtedness of the Company or any Indebtedness of a
Restricted Subsidiary, as the case may be (other than in either case
Indebtedness owed to the Company or an Affiliate of the Company), in either case
within 180 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the extent of the balance of
such Net Available Cash after application in accordance with clause (A), to make
an offer to the Holders of a series of Securities (and to Holders of other
Indebtedness which ranks pari passu with such series of Securities designated by
the Company) to purchase Securities of such series (and such other pari passu
Indebtedness) pursuant to and subject to the conditions contained in this
Section 10.08; and (C) third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and (B) to (x) the
acquisition by the Company or any Restricted Subsidiary of Additional Assets or
(y) the prepayment, repayment or purchase of Indebtedness (other than any
Disqualified Stock) of the Company (other than Indebtedness owed to an Affiliate
of the Company), in each case within 180 days from the later of the receipt of
such Net Available Cash and the date the offer described in Section 10.08(b) is
consummated; provided, however, that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (B) or (C) above,
the Company or such Restricted Subsidiary shall retire such Indebtedness and
shall cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased; and (iii)
at the time of such Asset Disposition no Default shall have occurred and be
continuing (or would result therefrom). Notwithstanding the foregoing provisions
of this Section 10.08(a), the Company and the Restricted Subsidiaries shall not
be required to apply any Net Available Cash in accordance with this Section
10.08(a) except to the extent that the aggregate Net Available Cash from all
Asset Dispositions which is not applied in accordance with this Section 10.08(a)
exceeds $10 million. Pending application of Net Available Cash pursuant to this
Section 10.08(a), such Net Available Cash shall be invested in Temporary Cash
Investments.
For the purposes of this Section 10.08(a), the following are deemed to
be cash or cash equivalents: (x) the assumption of Indebtedness of the Company
or any Restricted Subsidiary, and the release of the Company and its continuing
Restricted Subsidiaries from all liability on such Indebtedness, in connection
with such Asset Disposition and (y) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of the Securities of a series (and other pari passu Indebtedness) pursuant to
Section 10.08(a)(ii)(B) above, the Company will be required to purchase
Securities of such series tendered pursuant to an offer (the "Offer") by the
Company for such Securities (and other pari passu Indebtedness) at a purchase
price of 100% of their principal amount (without premium) plus accrued but
unpaid interest (or, in respect of such other pari passu Indebtedness, such
lesser price, if any, as may be provided for by the terms of such pari passu
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in this Section 10.08. If the aggregate
purchase price of Securities of such series (and any other pari passu
Indebtedness) tendered pursuant to such offer is less than the Net Available
Cash allotted to the purchase thereof, the Company will be required to apply the
remaining Net Available Cash in accordance with Section 10.08(a)(ii)(C). The
Company shall not be required to make such an offer to purchase Securities (and
other pari passu Indebtedness) pursuant to this Section 10.08 if the Net
Available Cash available therefor is less than $10 million (which lesser amount
shall be carried forward for purposes of determining whether such an offer is
required with respect to any subsequent Asset Disposition).
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(c)(1) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer to Holders of Securities of a series, the
Company shall be obligated to deliver to the Trustee and send, by first-class
mail to each Holder of Securities of such series, a written notice stating that
such Holder may elect to have his Securities of such series purchased by the
Company either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such Reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender such
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to the
Trustee for the applicable series an Officers' Certificate as to (i) the amount
of the Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash
from the Asset Dispositions pursuant to which such Offer is being made and (iii)
the compliance of such allocation with the provisions of Section 10.08(a). On
such date, the Company shall also irrevocably deposit with the Trustee or with a
Paying Agent for such series (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) in cash an amount equal to the Offer Amount
to be held for payment in accordance with the provisions of this Section. Upon
the expiration of the period for which the Offer remains open (the "Offer
Period"), the Company shall deliver to the Trustee for cancellation the
Securities of such series or portions thereof which have been properly tendered
to and are to be accepted by the Company. The Trustee shall, on the Purchase
Date, mail or deliver payment to each tendering Holder in the amount of the
purchase price. In the event that the aggregate purchase price of the Securities
of such series delivered by the Company to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section.
(3) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business
Day prior to the Purchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which
was delivered by the Holder for purchase by the Company and a statement
that such Holder is withdrawing his election to have such Security
purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer
Amount, the Company shall select the Securities to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the
Company).
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Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company will also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
and confirming that the Company has complied with all the provisions of
this Section 10.08. A Security shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails or
delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 10.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 10.08, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
Section 10.09 Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property, employee compensation arrangements or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless the terms thereof (1) are no less favorable to the Company
or such Restricted Subsidiary than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not such an
Affiliate, (2) if such Affiliate Transaction involves an amount in excess of
$2.0 million, (i) are set forth in writing and (ii) have been approved by a
majority of the members of the Board of Directors having no personal stake in
such Affiliate Transaction and (3) if such Affiliate Transaction involves an
amount in excess of $10.0 million, have been determined by a nationally
recognized investment banking firm to be fair, from a financial standpoint, to
the Company and its Restricted Subsidiaries.
(b) The provisions of Section 10.09(a) shall not prohibit (i) any
Permitted Investment or any Restricted Payment permitted to be made pursuant to
Section 10.06, (ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors, (iii) the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors, (iv) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $10 million in aggregate principal
amount outstanding at any one time, (v) the payment of reasonable fees to
directors of the Company and its Restricted Subsidiaries who are not employees
of the Company or its Restricted Subsidiaries, (vi) any Affiliate Transaction
between the Company and a Consolidated Restricted Subsidiary or between
Consolidated Restricted Subsidiaries and (vii) with respect to any series of
Securities transactions pursuant to any agreement as in existence as of the
Issue Date of such series between the Company or its Restricted Subsidiaries and
Continental Grain or one of its Subsidiaries.
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Section 10.10 Change of Control.
(a) Upon a Change of Control, each Holder shall have the right to
require that the Company repurchase such Holder's Securities at a purchase price
in cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the terms contemplated in Section
10.10(b).
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's Securities
at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase (subject
to the right of Holders of record on the relevant record date to receive
interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma results of
operations, cash flow and capitalization after giving effect to such Change
of Control);
(3) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with
this Section 10.10, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business
Day prior to the purchase date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which
was delivered by the Holder for purchase by the Company and a statement
that such Holder is withdrawing his election to have such Security
purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered by the Trustee for cancellation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 10.10. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 10.10 by virtue thereof.
Section 10.11 Limitation on Liens.
With respect to any series of Securities, the Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien of any
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nature whatsoever on any of its properties (including Capital Stock of a
Restricted Subsidiary), whether owned at the Issue Date of such series or
thereafter acquired, other than Permitted Liens, without effectively providing
that the Securities of such series shall be secured equally and ratably with (or
prior to) the obligations so secured for so long as such obligations are so
secured.
Section 10.12 Limitation on Investment Company Status.
The Company shall not take any action, or otherwise permit to exist
any circumstance, that would require the Company to register as an "investment
company" under the Investment Company Act of 1940, as amended.
Section 10.13 SEC Reports.
Notwithstanding that the Company may not be required to remain subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall file with the SEC and provide the Trustee with such annual reports
and such information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and other reports to be so filed and
provided at the time specified for the filing of such information, documents and
reports under such Sections. The Company also shall comply with the other
provisions of Section 314(a) of the Trust Indenture Act. Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 10.14 Certificate of Compliance.
The Company shall deliver a certificate of compliance of the Company
to the Trustee within 120 days after the end of each fiscal year pursuant to
section 314(a)(4) of the Trust Indenture Act, stating, as to each signer
thereof, that,
(a) a review of the activities of the Company during such year and of
the performance under this Indenture has been made under such signer's
supervision, and
(b) to the best of such signer's knowledge, based on such review, the
Company has fulfilled all its obligations under this Indenture throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such signer and the nature and status
thereof.
Section 10.15 Certain Covenants Suspended.
The covenants set forth above in this Article Ten will be applicable
to the Company, except that in the event that at any time (i) the ratings
assigned to a particular series of the Securities by either of the Rating
Agencies are Investment Grade Ratings and (ii) no Default has occurred and is
continuing under this Indenture with respect to such series, the Company and its
Restricted Subsidiaries will no longer be subject to the provisions of Sections
10.04, 10.05, 10.06, 10.07, 10.08, 10.09, and 10.11 and clause (iii) of Section
8.01 (the permanent termination of such Sections being herein called the
"Covenant Termination"). The Company will deliver to the Trustee an Officers'
Certificate confirming the occurrence of the Covenant Termination.
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Section 10.16 Calculation of Original Issue Discount.
To the extent applicable, the Company shall file with the Trustee
promptly at the end of each calendar year (i) a written notice specifying the
amount of original issue discount (including daily rates and accrual periods)
accrued on Outstanding Securities as of the end of such year and (ii) such other
specific information relating to such original issue discount as may then be
relevant under the Internal Revenue Code of 1986, as amended from time to time.
ARTICLE ELEVEN
Redemption of Securities
Section 11.01 Applicability of Article.
------------------------
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated in Section 3.01 for Securities of any
series) in accordance with this Article.
Section 11.02 Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of the redemption at the election of
the Company of the Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed at the
Redemption Price and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
Section 11.03 Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less than
all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities
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redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 11.04 Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided in Section
1.06 not less than 30 nor more than 60 days prior to the Redemption Date, unless
a shorter period is specified in the Securities to be redeemed, to each Holder
of Securities to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security to be redeemed and, if
applicable, that, unless the Company defaults in making such redemption
payment, interest thereon, if any, or in the case of Original Issue
Discount Securities, the original issue discount, shall cease to accrue on
and after such date;
(e) the place or places where such Securities are to
be surrendered for payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the case;
(g) the applicable CUSIP Numbers.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at Company Request, by the Trustee
in the name and at the expense of the Company.
Section 11.05 Deposit of Redemption Price.
---------------------------
On or prior to 10:00 A.M. New York City time on any Redemption Date,
the Company shall deposit in immediately available funds with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03 and as required by the
Trust Indenture Act) an amount of money (in the currency or units of currency in
which the Securities so called for redemption are denominated or an appropriate
equivalent thereof) sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on, all
the Securities which are to be redeemed on that date.
Section 11.06 Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment
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of the Redemption Price and accrued interest) such Securities shall cease to
bear interest. On presentation and surrender of such Securities for redemption
in accordance with such notice, such Securities shall be paid and redeemed by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated in Section 3.01, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal thereof so to be redeemed shall,
until paid, bear interest from the Redemption Date at the Overdue Rate
applicable to such Security. The Company shall be responsible for the payment,
if any, of the Overdue Rate.
Section 11.07 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at the place specified in the notice of redemption (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Sinking Funds
Section 12.01 Applicability of Article.
Securities of any series which are subject to a sinking fund for the
retirement of Securities of a series shall be subject to such sinking fund in
accordance with their terms and (except as otherwise specified as contemplated
in Section 3.01 for Securities of such series) in accordance with this Article.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 12.02 Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities in satisfaction of all or any part of any sinking fund payment with
respect to the
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Securities of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided, however, that
such Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 12.03 Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 12.02 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.03 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.04. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.06 and 11.07.
ARTICLE THIRTEEN
Defeasance
Section 13.01 Applicability of Article; Company's Option to Effect Defeasance or
Covenant Defeasance.
If pursuant to Section 3.01 provision is made for either or both of
(1) defeasance of the Securities of a series under Section 13.02 or (2) covenant
defeasance of the Securities of a series under Section 13.03, then the
provisions of such Section or Sections, as the case may be, together with the
other provisions of this Article, shall be applicable to the Securities of such
series, and the Company may at its option by or pursuant to a Board Resolution,
at any time, with respect to the Securities of such series, elect to have either
Section 13.02 (if applicable) or Section 13.03 (if applicable) be applied to the
Outstanding Securities of such series upon compliance with the conditions set
forth below in this Article.
Section 13.02 Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 13.01 to
have this Section 13.02 applied to the Outstanding Securities of a defeasible
series, the Company shall be deemed to have been discharged from its obligations
with respect to the Outstanding Securities of such series on the date the
conditions set forth in Section 13.04 are satisfied (hereinafter, "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Outstanding
Securities of such series and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of
Outstanding Securities of such series to receive, solely from the trust fund
described in Section 13.04 and as more fully set forth in such Section, payments
in respect of the principal of and any premium or interest on such Securities
when such payments are due, (2) the Company's
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obligations with respect to such Securities under Sections 3.04, 3.05, 3.06,
10.02 and 10.03 and, with respect to the Trustee, under Section 6.07, (3) the
rights, powers, trusts, duties, and immunities of the Trustee under Sections
3.04, 3.05, 3.06, 3.08, 3.09, 5.06 and 10.03, and otherwise the duty of the
Trustee to authenticate Securities of such series issued on registration of
transfer or exchange and (4) this Article. Subject to compliance with this
Article, the Company may exercise its option provided in Section 13.01 to have
this Section 13.02 applied to the Outstanding Securities of any defeasible
series notwithstanding the prior exercise of its option provided in Section
13.01 to have Section 13.03 applied to the Outstanding Securities of such
series.
Section 13.03 Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 13.01 to
have this Section 13.03 applied to the Outstanding Securities of any defeasible
series, the Company shall be released from (i) in the case of Senior Securities
of any series, its obligations under Sections 10.04, 10.05, 10.06, 10.07, 10.08,
10.09, 10.10, 10.11 and 10.12 hereof or (ii) in the case of Senior Securities or
Subordinated Securities of any series, its obligations with respect to any other
restrictive covenant with respect to the Outstanding Securities of such series
on and after the date the conditions set forth in Section 13.04 are satisfied
(hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such Section or such other
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such Section or such other covenant to any other provision herein
or in any other document and such omission to comply shall not constitute an
Event of Default under Section 5.01(d) or 5.01(g) (except to the extent
covenants or agreements referenced in such Sections remain applicable) but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. Notwithstanding the foregoing, if the Company
exercises its covenant defeasance option and an Event of Default under the
provisions of this Indenture relating to certain events of bankruptcy or
insolvency or event which with the giving of notice or lapse of time, or both,
would become an Event of Default under such bankruptcy or insolvency provisions
shall have occurred and be continuing on the 123rd day after the date of the
deposit of funds with the Trustee pursuant to Section 13.04(a) below, the
obligations of the Company referred to under the definition of covenant
defeasance with respect to such Securities shall be reinstated in full.
Section 13.04 Conditions to Defeasance or Covenant Defeasance.
Except as expressly provided below, the following shall be the
conditions to application of either Section 13.02 or Section 13.03 to the
Outstanding Securities of such series:
(a) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another Trustee satisfying the requirements of
Section 6.09 who shall agree to comply with the provisions of this Article
applicable to it) as trust funds 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 Securities, (A) money in an amount, or
(B) Government Obligations 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, money in an amount, or
(C) a combination thereof, sufficient without reinvestment, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying Trustee) to pay
and discharge, (i) the principal of and
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any premium on and each installment of principal of and any premium and interest
on the Outstanding Securities of such series on the Stated Maturity of such
principal or installment of principal or interest and (ii) any mandatory sinking
fund payments or analogous payments applicable to the Outstanding Securities of
such series on the day on which such payments are due and payable in accordance
with the terms of this Indenture and of such Securities. For this purpose,
"Government Obligations" means securities that are (x) direct obligations of the
United States of America or, if specified as contemplated in Section 3.01, the
government which issued the currency in which the Securities of such series are
payable, for the payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or, if specified as contemplated
in Section 3.01, such government which issued the currency in which the
Securities of such series are payable, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America
or such other government, which, in either case, are not callable or redeemable
at the option of the obligor thereof, and shall also include a depository
receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of
1933, as amended) as custodian with respect to any such Government Obligation or
a specific payment of principal of or interest on any such Government Obligation
held by such custodian for the account of the holder of such depository receipt;
provided, however, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
Government Obligation or the specific payment of principal of or interest on the
Government Obligation evidenced by such depository receipt;
(b) No Event of Default or event which, with notice or lapse of time
or both, would become an Event of Default with respect to the Securities of such
series shall have occurred and be continuing on the date of such deposit and in
the case of an election under Section 13.02 only, no Event of Default under the
provisions herein relating to certain events of bankruptcy or insolvency
provisions shall have occurred and be continuing on the 123rd day after such
date;
(c) Such defeasance or covenant defeasance shall not cause the Trustee
for the Securities of such series to have a conflicting interest for purposes of
the Trust Indenture Act with respect to any securities of the Company;
(d) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound;
(e) In the case of an election under Section 13.02, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) since the date of execution of this Indenture, there has been
a change in the applicable Federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Outstanding Securities 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;
(f) Such defeasance or covenant defeasance shall not cause any
Securities of such series then listed on any registered national securities
exchange under the Securities Exchange Act of 1934, as amended, to be delisted;
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(g) Such defeasance or covenant defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 3.01; and
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 13.02 or
the covenant defeasance under Section 13.03 (as the case may be) have been
complied with.
Section 13.05 Deposited Money and Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions.
Subject to the provisions of Section 10.03, all money and Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying Trustee--collectively, for purposes of this Section 13.05, the
"Trustee") pursuant to Section 13.04 in respect of the Outstanding Securities of
such series shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Securities and this Indenture, to the payment,
either directly or through a Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 13.04 or the principal and any premium and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Securities of such series.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided in Section 13.04 which,
in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 13.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
Government Obligations in accordance with this Article by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and each series of Securities shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article until such time as the Trustee or the Paying Agent is permitted to apply
all such money or Governmental Obligations in accordance with this Article;
provided, however, that, if the Company has made any payment of interest on or
principal of any series of Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such series of Securities to receive such payment from the money or Government
Obligations held by the Trustee or the Paying Agent.
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ARTICLE FOURTEEN
Subordination
Section 14.01 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of a Subordinated
Security issued hereunder, by his acceptance thereof, likewise covenants and
agrees, that all Subordinated Securities shall be issued subject to the
provisions of this Article; and each Person holding any Subordinated Security,
whether upon original issue or upon transfer, assignment or exchange thereof,
accepts and agrees that the principal of and interest (and premium, if any) on
all Subordinated Securities issued hereunder shall, to the extent and in the
manner herein set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and that the subordination is
for the benefit of the holders of the Senior Indebtedness.
Section 14.02 Payments to Holders of Subordinated Securities.
In the event of (i) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets; or (ii) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy; or (iii) any assignment for the benefit of creditors
or any other marshalling of assets or liabilities of the Company, then and in
any such event specified in clause (i), clause (ii) or clause (iii) above (each
such event, if any, herein sometimes referred to as a "Proceeding"):
(a) the holders of Senior Indebtedness will be entitled to receive
payment of such Senior Indebtedness in full (including interest accrued
subsequent to the commencement of any Proceeding) before the Holders of
Subordinated Securities are entitled to receive any payment or distribution of
cash, securities or other property with respect to the principal of, premium,
(if any), or interest on or other obligations in respect of the Subordinated
Securities, or on account of any purchase or other acquisition of Subordinated
Securities by the Company (all such payments, distributions, purchases and
acquisitions herein referred to, individually and collectively, as a
"Subordinated Securities Payment"), and to that end the holders of Senior
Indebtedness of the Company shall be entitled to receive, for application to the
payment thereof, any Subordinated Securities Payment which may be payable or
deliverable in respect of the Subordinated Securities in any such Proceeding;
and
(b) until the Senior Indebtedness is paid in full (including interest
accrued subsequent to the commencement of any Proceeding), any Subordinated
Securities Payment to which Holders of Subordinated Securities would be entitled
but for this Article Fourteen will be made to Holders of such Senior
Indebtedness as their interests may appear. If a Subordinated Securities Payment
is made to holders of Subordinated Securities that, due to this Article Fourteen
should not have been made to them, such Holders of Subordinated Securities are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
In the event that, notwithstanding the foregoing provisions of this
Section 14.02, the Trustee, in respect of a series of Subordinated Securities,
receives payment or distribution of assets of the Company of any kind or
character, before all the Senior Indebtedness of the
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Company is paid in full, then and in such event, such Subordinated Securities
Payment shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other person making
payment or distribution of assets of the Company for application to the payment
of all Senior Indebtedness of the Company remaining unpaid, to the extent
necessary to pay the Senior Indebtedness of the Company in full, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness of the Company.
The consolidation of the Company with, or the merger of the Company
into, another person or the liquidation or dissolution of the Company following
the conveyance or transfer of all or substantially all of its properties and
assets as an entirety to another person upon the terms and conditions set forth
in Article Eight shall not be deemed a Proceeding for the purposes of this
Section 14.02 if the person formed by such consolidation or into which the
Company is merged or the person which acquires by conveyance or transfer such
properties and assets as an entirety, as the case may be, shall, as part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
Section 14.03 No Payment When Designated Senior Debt in Default.
The Company will not make any Subordinated Securities Payment or make
any deposit pursuant to the provisions described under Article Thirteen hereof
if (i) any Designated Senior Debt is not paid when due (after giving effect to
any applicable grace periods) or (ii) any other default on Designated Senior
Debt occurs and the maturity of such Designated Senior Debt is accelerated in
accordance with its terms unless, in either case, the default has been cured or
waived or has ceased to exist and any such acceleration has been rescinded or
such Designated Senior Debt has been discharged or paid in full.
Notwithstanding the foregoing, the Company may make any Subordinated Securities
Payment if the Company and the Trustee receive written notice approving such
payment from the representative of the Designated Senior Debt with respect to
which either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing.
In the event that, notwithstanding the foregoing, the Company shall
make any Subordinated Securities Payment to the Trustee or any Holder prohibited
by the foregoing provisions of this Section 14.03, then and in such event, such
Subordinated Securities Payment shall be paid over and delivered forthwith to
the holders of the Senior Indebtedness of the Company remaining unpaid, to the
extent necessary to pay in full all the Senior Indebtedness of the Company.
If payment of the Securities is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of
Designated Senior Debt or the representative of such holders of the
acceleration.
The provisions of this Section 14.03 shall not apply to any
Subordinated Securities Payment with respect to which Section 14.02 would be
applicable.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing provisions of this Section
14.03, shall be received by the Trustee, in respect of a series of Subordinated
Securities, under this Indenture or the Holders of the Subordinated Securities
before all Senior Indebtedness is paid in full or provision is made for such
payment in accordance with its terms, and if such fact shall, at or prior to the
time of such payment or
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distribution, have been actually known to the Trustee, then such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the representative of the holders of such Senior Indebtedness, or
to the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, as their
respective interest may appear, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall have been
paid in full in accordance with its distribution to or for the holders of such
Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of arrangement, reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article with respect to the Subordinated Securities) to the payment of all
Senior Indebtedness which may at the time be outstanding; provided that (i) the
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such arrangement, reorganization or readjustment, and (ii) the rights of the
holders of the Senior Indebtedness are not, without the consent of such holders,
altered by such arrangement, reorganization or readjustment. The consolidation
of the Company with, or the merger of the Company with or into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of all or substantially all of its assets to another
corporation upon the terms and conditions provided in Article Eight shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 14.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article Eight. Nothing in this Section shall apply to claims of, or payments
to, the Trustee under or pursuant to Article Six, except as expressly provided
therein. This Section 14.03 shall be subject to the further provisions of
Section 14.06.
Section 14.04 Subrogation.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Subordinated Securities subject to the provisions of Sections 14.02 and
14.03 shall be subrogated (equally and ratably with the holders of all
obligations of the Company which by their express terms are subordinated to
Senior Indebtedness of the Company to the same extent as the Subordinated
Securities are subordinated and which are entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal of and interest on
such Subordinated Securities shall be paid in full; and for the purpose of such
subrogation, no payments of distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of such
Subordinated Securities or the Trustee on their behalf would be entitled except
for the provisions of this Article, and no payment over pursuant to the
provisions of this Article to the holders of Senior Indebtedness by Holders of
such Subordinated Securities or the Trustee on their behalf shall, as between
the Company, its creditors other than holders of Senior Indebtedness and the
Holders of such Subordinated Securities, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
Holders pursuant to the subrogation provision of this Article, which would
otherwise have been paid to the holders of Senior Indebtedness, shall be deemed
to be a payment by the Company to or for the account of such Securities. The
provisions of this Article are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
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Nothing contained in this Article or elsewhere in this Indenture or in
the Subordinated Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Subordinated Securities, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders of the Subordinated Securities
the principal of and interest on the Subordinated Securities and the amounts
owed as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights against the Company
of the Holders of the Subordinated Securities and creditors of the Company other
than the holders of Senior Indebtedness, nor shall anything herein or therein
prevent the Holder of any Subordinated Security or the Trustee on his behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Sections 6.01 and
6.03, and the Holders of the Subordinated Securities shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
such insolvency, bankruptcy, dissolution, winding-up, liquidation, arrangement
or reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Subordinated Securities for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 14.05 Authorization by Holders of Subordinated Securities.
Each Holder of a Subordinated Security by his acceptance thereof
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 14.06 Notice to Trustee.
The Company shall give prompt written notice to the Trustee and to any
Paying Agent of any fact known to the Company which would prohibit the making of
any payment of moneys to or by the Trustee or any paying agent in respect of any
series of Subordinated Securities pursuant to the provisions of this Article.
Regardless of anything to the contrary contained in this Article or elsewhere in
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any Senior Indebtedness or of any default or event of default with respect to
any Senior Indebtedness or of any other facts which would prohibit the making of
any payment of moneys to or by the Trustee in respect of any series of
Subordinated Securities unless and until a Responsible Officer of the Trustee
shall have received notice in writing at its Corporate Trust Office to that
effect signed by an officer of the Company, or by a holder or agent of a holder
of Senior Indebtedness who shall have been certified by the Company or otherwise
established to the reasonable satisfaction of the Trustee to be such holder or
agent, or by the trustee under any indenture pursuant to which Senior
Indebtedness shall be outstanding, and, prior to the receipt of any such written
notice, the Trustee shall, subject to Sections 6.01 and 6.03, be entitled to
assume that no such facts exist; provided, that if on a date at least two
Business Days prior to the date upon which by the terms hereof any such moneys
shall become payable for
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any purpose (including the payment of the principal of or interest on any
Security) the Trustee shall not have received with respect to such moneys the
notice provided for in this section, then, regardless of anything herein to the
contrary, the Trustee shall have full power and authority to receive such moneys
and to apply the same to the purpose for which they were received, and shall not
be affected by any notice to the contrary which may be received by it on or
after such prior date.
Subject to Sections 6.01 and 6.03, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee or other representative on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee or other representative on behalf of any
such holder. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and, if such evidence is not furnished, the
Trustee may defer any Payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 14.07 Trustee's Relation to Senior Indebtedness.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Indebtedness and
nothing in the Trust Indenture Act or in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder. Nothing in this
Article shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 6.07.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Sections 6.01 and 6.03, the Trustee shall not be liable to any
holder of Senior Indebtedness if it shall in good faith pay over or deliver to
Holders of Subordinated Securities, the Company or any other Person moneys or
assets to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
Section 14.08 No Impairment of Subordination.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
89
<PAGE>
Section 14.09 Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Thirteen by the Trustee for the payment of principal of, premium, if
any, and interest on the Subordinated Securities shall not be subordinated to
the prior payment of any Senior Indebtedness or subject to the restrictions on
this Article Fourteen, and none of the Trustee or the Holders of the
Subordinated Securities shall be obligated to pay over any such amount to the
Company or any holder of Senior Indebtedness of the Company or any other
creditor of the Company.
ARTICLE FIFTEEN
Amendments
Section 15.01 Without Consent of Holders.
The Company and the applicable Trustee may amend this Indenture, the
Securities or any Coupons without the consent of any Holder:
(a) to evidence the succession of another corporation to the rights
of the Company and the assumption by such successor of the covenants and
obligations of the Company in this Indenture and in the Securities and Coupons,
if any, issued hereunder;
(b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities and the Coupons, if any, appertaining
thereto (and if such covenants are to be for the benefit of less than all
series, stating that such covenants are expressly being included solely for the
benefit of such series), or to surrender any right or power conferred in this
Indenture upon the Company;
(c) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating that such Events
of Default are expressly being included solely to be applicable to such series);
(d) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance hereunder of
Securities of any series in bearer form, registrable or not registrable, and
with or without Coupons, to permit Bearer Securities to be issued in exchange
for Registered Securities, to permit Bearer Securities to be issued in exchange
for Bearer Securities of other authorized denominations or to permit the
issuance of Securities of any series in uncertificated form, provided that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related Coupons in any material respect;
(e) to change or eliminate any of the provisions of this Indenture;
provided, that any such change or elimination will become effective only when
there is no Outstanding Security issued hereunder or Coupon of any series
created prior to such modification which is entitled to the benefit of such
provision and as to which such modification would apply;
(f) to secure the Securities issued hereunder;
(g) to supplement any of the provisions of this Indenture to such
extent as is necessary to permit or facilitate the defeasance and discharge of
any series of Securities, provided
90
<PAGE>
that any such action will not adversely affect the interests of the Holders of
Securities of such series or any other series of Securities issued under such
Indenture or any related Coupons in any material respect;
(h) to establish the form or terms of Securities and Coupons, if any,
as permitted by Sections 2.01 and 3.01 hereof;
(i) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to one or more series of
Securities and to add to or change any of the provisions of this Indenture as is
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee pursuant to the requirements of Section 6.11
hereof; or
(j) to cure any ambiguity, to correct or supplement any provision in
this Indenture which may be defective or inconsistent with any other provision
herein, to eliminate any conflict between the terms of this Indenture and the
Securities issued hereunder and the Trust Indenture Act or to make any other
provisions with respect to matters or questions arising under this Indenture
which will not be inconsistent with any provision of this Indenture; provided,
that such other provisions shall not adversely affect the interests of the
Holders of Outstanding Securities or Coupons, if any, of any series created
hereunder prior to such modification in any material respect.
Section 15.02 With Consent of Holders.
With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
modification voting together as one class, the Company and the applicable
Trustee may amend this Indenture, the Securities and any Coupons for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities and Coupons, if any, under this Indenture. However,
without the consent of each Holder affected, an amendment under this Section may
not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the interest thereon or any premium payable upon redemption thereof, or
change the Stated Maturity of or reduce the amount of any payment to be made
with respect to any Coupon, or change the currency or currencies in which the
principal of (and premium, if any) or interest on such Security is denominated
or payable, 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, or adversely affect the right of repayment or repurchase, if
any, at the option of the Holder, or reduce the amount of, or postpone the date
fixed for, any payment under any sinking fund or analogous provisions for any
Security, or impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date), or limit the obligation of the Company to
maintain a paying agency outside the United States for payments on Bearer
Securities, or adversely affect the right to convert any Subordinated Security
into shares of Common Stock as may be set forth in the Prospectus Supplement;
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
modification, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults or
Events of Default hereunder and their consequences provided for in such
Indenture;
91
<PAGE>
(c) modify any of the provisions of this Indenture relating to
modifications and waivers of defaults and covenants, except to increase any such
percentage or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Security of each series affected thereby; provided, however, that certain of
such modifications may be made without the consent of any Holder of any Security
as provided in the preceding paragraph; or
(d) modify any of the provisions relating to the subordination of the
Subordinated Securities in a manner adverse to the Holders thereof.
(e) In the case of the Subordinated Securities, no modification may
adversely affect the rights of any holder of Senior Indebtedness under the
subordination provisions without the consent of such Holder.
An amendment of a provision included solely for the benefit of one or
more series does not affect Holders of any other series.
Holders need not consent to the exact text of a proposed amendment or
waiver; it is sufficient if they consent to the substance thereof.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of any such series waive, by notice to the applicable Trustee and the
Company, any past default or Event of Default under this Indenture with respect
to such series and its consequences, except a default (1) in the payment of the
principal of (or premium, if any) or interest on any Security of such series, or
in the payment of any sinking fund installment or analogous obligation with
respect to the Securities of such series or (2) in respect of a covenant or
provision hereof which pursuant to this Section 15.02 cannot be modified or
amended without the consent of the Holder of each Outstanding Security of such
series affected. Upon any such waiver, such default will cease to exist, and any
Event of Default arising therefrom will be deemed to have been cured, for every
purpose of the Securities of such series under this Indenture, but no such
waiver will extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
The Company may omit in any particular instance to comply with certain
covenants in this Indenture, if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities
affected either waive such compliance in such instance or generally waive
compliance with such provisions, but no such waiver may extend to or affect any
term, provision or condition except to the extent expressly so waived, and,
until such waiver becomes effective the obligations of the Company and the
duties of the applicable Trustee in respect of any such provision will remain in
full force and effect.
Section 15.03 Compliance with Trust Indenture Act.
Every amendment pursuant to Section 15.01 or 15.02 shall be set forth
in a supplemental indenture that complies with the Trust Indenture Act as then
in effect.
If a provision of the Trust Indenture Act requires or permits a
provision of this Indenture and the Trust Indenture Act provision is amended,
then this Indenture provision shall be automatically amended to like effect.
92
<PAGE>
Section 15.04 Effect of Consents.
An amendment or waiver becomes effective in accordance with its terms
and thereafter binds every Holder entitled to consent to it.
A consent to an amendment or waiver by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security that
evidences the same debt as the consenting Holder's Security. Any Holder or
subsequent Holder may revoke the consent as to his Security if the Trustee
receives notice of the revocation before the amendment or waiver becomes
effective.
The Company may fix a record date for the determination of Holders of
Registered Securities entitled to give a consent. The record date shall not be
less than 10 nor more than 60 days prior to the first written solicitation of
Holders.
Section 15.05 Notation on or Exchange of Securities.
The Company or the Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company may
issue in exchange for affected Securities new Securities that reflect the
amendment or waiver.
Section 15.06 Trustee Protected.
The Trustee need not sign any supplemental indenture that adversely
affects its rights. The Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each stating that the execution of any amendment or supplement or
waiver authorized pursuant to this Article is authorized or permitted by this
Indenture, and that such amendment or supplement or waiver constitutes the
legal, valid and binding obligation of the Company.
93
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
CONTIFINANCIAL CORPORATION
By: /s/ Daniel Willett
-------------------------------------
Name: Daniel Willett
Title: Chief Financial Officer
By: /s/ Frank Baier
-------------------------------------
Name: Frank Baier
Title: Treasurer
THE BANK OF NEW YORK, as Trustee
By: /s/ Marie Trimboli
-------------------------------------
Name: Marie Timboli
Title: Assistant Treasurer
<PAGE>
EXHIBIT 5.1
March 5, 1998
ContiFinancial Corporation
277 Park Avenue
New York, New York 10172
Re: Registration on Form S-3 of up to $600,000,000
of Securities of ContiFinancial Corporation
----------------------------------------------
Ladies and Gentlemen:
We are acting as counsel to ContiFinancial Corporation, a Delaware
corporation (the "Company"), in connection with the possible issuance and sale
from time to time by the Company of (i) certain debt securities of the Company
(the "Debt Securities"), (ii) shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), and (iii) shares of the Company's preferred
stock, par value $.01 per share (the "Preferred Stock"), in each case as
contemplated by the Company's Registration Statement on Form S-3 (File No. 333-
33783), as amended (the "Registration Statement"). The Debt Securities, Common
Stock and Preferred Stock are collectively referred to herein as the
"Securities." Except as otherwise defined herein, capitalized terms that are
defined in the Registration Statement are used herein as so defined.
We have examined such documents, records, and matters of law as we
have deemed necessary for purposes of this opinion. Based on such examination
and on the assumptions set forth below, we are of the opinion that:
1. The Debt Securities, when (a) duly executed by the Company and
authenticated by the applicable Trustee in accordance with the provision of the
applicable Indenture and issued and sold in accordance with the Registration
Statement and applicable Prospectus Supplement and (b) delivered to the
purchaser or purchasers thereof upon receipt by the Company of such lawful
consideration therefor as the Company's Board of Directors (or a duly authorized
committee thereof or a duly authorized officer of the Company) may determine,
will be valid and binding obligations of the Company.
2. The Common Stock, when (a) duly issued and sold in accordance with the
Registration Statement and applicable Prospectus Supplement and (b) delivered to
the purchaser or purchasers thereof upon receipt by the
<PAGE>
Company of such lawful consideration therefor as the Company's Board
of Directors (or a duly authorized committee thereof of the Company)
may determine, and assuming that the Company at such time has a
sufficient number of authorized but unissued shares of Common Stock
remaining under its certificate of incorporation, will be validly
issued, fully paid and nonassessable.
3. The Preferred Stock, when (a) duly issued and sold in accordance with
the Registration Statement and applicable Prospectus Supplement and
the provisions of an applicable Certificate of Designation that has
been duly adopted by the Board of Directors of the Company and duly
filed in accordance with Delaware law and (b) delivered to the
purchaser or purchasers thereof upon receipt by the Company of such
lawful consideration therefor as the Company's Board of Directors (or
a duly authorized committee thereof or a duly authorized officer of
the Company) may determine, and assuming that the Company at such time
has a sufficient number or authorized but unissued shares of Preferred
Stock remaining under its certificate of incorporation, will be
validly issued, fully paid and nonassessable.
In rendering the foregoing opinions, we have assumed that (i) the
definitive terms of each class and series of the Securities not presently
provided for in the Registration Statement or the Company's certificate of
incorporation will have been established in accordance with all applicable
provisions of law, the Indentures, the Company's certificate or incorporation
and by-laws, and the authorizing resolutions of the Company's Board of
Directors, and reflected in appropriate documentation approved by us and, if
applicable, duly executed and delivered by the Company and any other appropriate
party, (ii) the interest rate on the Debt Securities will not be higher than the
maximum lawful rate permitted from time to time under applicable law, (iii) any
Securities consisting of Common Stock or Preferred Stock, and any Common Stock
or Preferred Stock for or into which any other Securities are exercisable,
exchangeable or convertible, will have been duly authorized and reserved for
issuance, (iv) the Registration Statement and any amendments thereto, will have
become effective, (v) a Prospectus Supplement describing each class or series of
Securities offered pursuant to the Registration Statement will have been filed
with the Commission, (vi) the resolutions authorizing the Company to register,
offer, sell, and issue the Securities will remain in effect unchanged at all
times during which the Securities are offered, sold or issued by the Company,
(vii) all Securities will be issued in compliance with the applicable federal
and state securities laws, and (viii) the Indentures will have been duly
qualified under the Trust Indenture Act of 1939.
In rendering the foregoing opinions, we have relied as to certain
factual matters upon certificates of officers of the Company, and we have not
independently verified the accuracy of the statements contained therein. In
rendering he foregoing opinions, our examination of matters of law has been
limited to the laws of the State of New York, the General Corporation Law of the
State of Delaware, and the federal laws of the United States of America, as in
effect on the date hereof.
<PAGE>
We understand that prior to offering for sale any Securities you will
advise us in writing of the terms of such offering and of such Securities, will
afford us an opportunity to review the operative documents (including the
applicable Prospectus Supplement and any applicable Underwriting Agreement,
Indenture or Supplemental Indenture) pursuant to which the Securities are to be
offered, sold, and issued, and will file as an exhibit to the Registration
Statement such supplement or amendment to this opinion (if any) as we may
reasonably consider necessary or appropriate by reason of the terms of such
Securities or any changes in the Company's capital structure or other pertinent
circumstances.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us in the Prospectus under the
caption "LEGAL MATTERS".
Very truly yours,
/s/ DEWEY BALLANTINE LLP
<PAGE>
Exhibit 12.1
ContiFinancial Corporation
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Nine Months
ended
December 31,
1997 Fiscal 97 Fiscal 96 Fiscal 95 Fiscal 94 Fiscal 93
------------
<S> <C> <C> <C> <C> <C> <C>
Summary
Earnings 279,864 297,981 197,996 77,895 42,334 17,078
Fixed Charges 119,913 120,636 74,770 29,635 12,124 6,529
-------- -----------------------------------------------------------
Ratio 2.33 2.47 2.65 2.63 3.49 2.62
======== ===========================================================
Earnings
Pretax income 163,059 117,041 126,536 56,988 35,286 12,149
Less: equity income on unconsol subs (3,053)
Plus: interest expense 119,913 120,636 74,770 29,635 12,124 6,529
Less: Minority interest (55) 304 (3,310) (8,728) (5,076) (1,600)
-------- -----------------------------------------------------------
Total "Earnings" 279,864 297,981 197,996 77,895 42,334 17,078
======== ===========================================================
Fixed Charges
Interest expense 119,913 120,636 74,770 29,635 12,124 6,529
</TABLE>
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-3 of ContiFinancial
Corporation (the "Registration Statement") of our reports dated May 8, 1997
(except with respect to the matter discussed in Note 14, as to which date is
June 4, 1997), related to the consolidated balance sheets of ContiFinancial
Corporation and subsidiaries as of March 31, 1997 and 1996, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended March 31, 1997, which is
included in ContiFinancial Corporation's Form 10-K for the year ended March 31,
1997, and to all references to our Firm included in the Registration Statement.
/s/ Arthur Andersen LLP
New York, New York
March 4, 1998
<PAGE>
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
ContiFinancial Corporation
(Exact name of obligor as specified in its charter)
Delaware 13-3852588
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
277 Park Avenue
New York, New York 10172
(Address of principal executive offices) (Zip code)
______________________
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-
1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 4th day of March, 1998.
THE BANK OF NEW YORK
By: /s/ VAN K. BROWN
--------------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT 7
---------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........................... $ 7,769,502
Interest-bearing balances.................................................... 1,472,524
Securities:
Held-to-maturity securities.................................................. 1,080,234
Available-for-sale securities................................................ 3,046,199
Federal funds sold and Securities purchased under agreements to resell......... 3,193,800
Loans and lease financing receivables:
Loans and leases, net of unearned income ....................... 35,352,045
LESS: Allowance for loan and lease losses ...................... 625,042
LESS: Allocated transfer risk reserve........................... 429
Loans and leases, net of unearned income, allowance, and reserve........... 34,726,574
Assets held in trading accounts................................................ 1,611,096
Premises and fixed assets (including capitalized leases)....................... 676,729
Other real estate owned........................................................ 22,460
Investments in unconsolidated subsidiaries and associated companies............ 209,959
Customers' liability to this bank on acceptances outstanding................... 1,357,731
Intangible assets.............................................................. 720,883
Other assets................................................................... 1,627,267
-----------
Total assets................................................................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices.......................................................... $26,875,596
Noninterest-bearing ............................................ 11,213,657
Interest-bearing ............................................... 15,661,939
In foreign offices, Edge and Agreement subsidiaries, and IBFs................ 16,334,270
Noninterest-bearing ............................................ 596,369
Interest-bearing ............................................... 15,737,901
Federal funds purchased and Securities sold under agreements to repurchase..... 1,583,157
Demand notes issued to the U.S. Treasury....................................... 303,000
Trading liabilities............................................................ 1,308,173
Other borrowed money:
With remaining maturity of one year or less.................................. 2,383,570
With remaining maturity of more than one year through three years............ 0
With remaining maturity of more than three years............................. 20,679
Bank's liability on acceptances executed and outstanding....................... 1,377,244
Subordinated notes and debentures.............................................. 1,018,940
Other liabilities.............................................................. 1,732,792
-----------
Total liabilities.............................................................. 52,937,421
-----------
EQUITY CAPITAL
Common stock................................................................... 1,135,284
Surplus........................................................................ 731,319
Undivided profits and capital reserves......................................... 2,721,258
Net unrealized holding gains (losses) on available-for-sale
securities................................................................... 1,948
Cumulative foreign currency translation adjustments............................ ( 12,272)
-----------
Total equity capital........................................................... 4,577,537
-----------
Total liabilities and equity capital .......................................... $57,514,958
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi }
J. Carter Bacot } Directors
Alan R. Griffith }
