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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) July 18, 1997
DELTA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-12109 11-3336165
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
1000 Woodbury Road, Suite 200, Woodbury, NY 11797
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (516) 364-8500
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Through a public offering (the "Offering") which closed on July 23,
1997, Delta Financial Corporation ("Delta Financial") issued $150,000,000
aggregate principal amount of its 9 1/2% Senior Notes due 2004 (the "Notes").
Each of the following subsidiaries of Delta Financial jointly and severally
guaranteed the Notes (the "Guarantees"): Delta Funding Corporation, DF Special
Holdings Corporation, Fidelity Mortgage, Inc. and Fidelity Mortgage (Florida),
Inc. (collectively, the "Subsidiary Guarantors").
On July 18, 1997, Delta Financial and each of the Subsidiary Guarantors
entered into an underwriting agreement with the underwriters of the Offering
(the "Underwriting Agreement") for the offer and sale of the Notes and the
Guarantees. The terms of the Offering, the Notes and the Guarantees are
described in the Delta Financial's Prospectus dated July 18, 1997 constituting a
part of the Registration Statement (hereinafter described). The Underwriting
Agreement is included as Exhibit 1.1 hereto. The Notes and the Guarantees were
issued pursuant to an indenture dated July 23, 1997 by and among The Bank of New
York, as trustee, Delta Financial and the Subsidiary Guarantors (the
"Indenture"). The Indenture is included as Exhibit 4.3 hereto.
The Notes and the Guarantees were issued pursuant to a Registration
Statement on Form S-1, Registration Nos. 333-28643, 333-28643-01, 333-28643-02,
333-28643-03, 333-28643-04, (the "Registration Statement"). The Registration
Statement was declared effective on July 18, 1997.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1.1 Underwriting Agreement dated July 18, 1997
with respect to the offering of the Notes
and the Guarantees.
4.1 Form of the Note (included in Exhibit 4.3).
4.2 Form of the Guarantee (included in Exhibit
4.3).
4.3 Indenture dated July 23, 1997 used in
connection with the issuance of the Notes
and the Guarantees.
99.1 News Release disseminated on July 21, 1997
regarding the sale of the Notes.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DELTA FINANCIAL CORPORATION
By: /s/ Richard Blass
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Richard Blass
Senior Vice President,
Chief Financial Officer and Treasurer
Dated: July 28, 1997
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$150,000,000
Delta Financial Corporation
9 1/2% Senior Notes due 2004
UNDERWRITING AGREEMENT
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July 18, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Delta Financial Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell $150,000,000 principal amount of its 9 1/2% Senior
Notes due 2004 (the "Notes") to the several underwriters named in Schedule I
hereto (the "Underwriters"). The Notes are to be fully and unconditionally
guaranteed (the "Guarantees," and together with the Notes, the "Securities"), on
a joint and several basis, by each subsidiary of the Company set forth on
Schedule II hereto (the "Guarantors," and together with the Company, the
"Registrants"). The Securities are to be issued pursuant to the provisions of an
Indenture to be dated as of July 23, 1997 (the "Indenture") among the
Registrants and The Bank of New York, as Trustee (the "Trustee").
SECTION 1. Registration Statement and Prospectus. The Registrants have
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1 (Registration
No. 333-28643), including a prospectus, relating to the Securities. The
registration statement, as amended at the time it became effective, including
the information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Act, is hereinafter
referred to as the "Registration Statement;" and the prospectus in the form
first used to confirm sales of Securities is hereinafter referred to as the
"Prospectus." If the Registrants have filed or are required pursuant to the
terms hereof to file a registration statement pursuant to Rule 462(b) under the
Act registering additional 9 1/2% Senior Notes due 2004 (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement.
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SECTION 2. Agreements to Sell and Purchase.
(a) On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Registrants agree
to issue and sell, and each Underwriter agrees, severally and not jointly, to
purchase from the Registrants the principal amount of Securities set forth
opposite the name of such Underwriter in Schedule I hereto at a price equal to
96.767% of the principal amount thereof (the "Purchase Price").
(b) The Registrants confirm their engagement of Smith Barney Inc.
("SBI"), one of the Underwriters, as, and SBI hereby confirms its agreement with
the Registrants to render services as, a "qualified independent underwriter,"
within the meaning of Section (b)(15) of Rule 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD") with respect to
the offering and sale of the Securities. SBI, solely in its capacity as
qualified independent underwriter and not otherwise, is referred to herein as
the "QIU." The Registrants agree that the yield at which the Securities are sold
to the public will be no lower than the yield recommended by SBI acting as QIU.
SECTION 3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Securities as soon after the execution and delivery of this
Agreement as in your judgment is advisable and ii) initially to offer the
Securities upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Securities shall be made at 9:00 A.M., New York City time, on
July 23, 1997 (the "Closing Date") at such place as you shall designate. The
Closing Date and the location of delivery of and payment for the Securitie may
be varied by agreement between you and the Registrants.
Certificates for the Securities shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date. Such certificates shall be made
available to you for inspection not later than 9:30 A.M., New York City time, on
the business day prior to the Closing Date. Certificates in definitive form
evidencing the Securities will be delivered to you on the Closing Date with any
transfer taxes thereon duly paid by the Registrants, for the respective accounts
of the several Underwriters, against payment to the Company of the Purchase
Price therefor by wire transfer of Federal or other funds immediately available
in New York City.
SECTION 5. Agreements of the Registrants. The Registrants, jointly and
severally, agree with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for such purposes, (iii) when any amendment to
the Registration Statement becomes effective, (iv) if the Registrants are
required to file a Rule 462(b) Registration Statement after the effectiveness of
this Agreement, when the Rule 462(b) Registration Statement has become effective
and (v) of the happening of any event during the period referred to in Section
5(d) below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
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therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Registrants will
use their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you, without charge, four signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may reasonably
request.
(c) To prepare the Prospectus in a form approved by you and to file the
Prospectus in such form with the Commission within the applicable period
specified in Rule 424(b) under the Act; not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
shall reasonably object after being so advised; and to prepare and file with the
Commission, promptly upon your reasonable request, any amendment to the
Registration Statement or amendment or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the Securities by
you, and to use its best efforts to cause any such amendment to the Registration
Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur as a result of which, in the opinion of counsel for the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to prepare
and file with the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with law, and to
furnish to each Underwriter and to such dealers as you shall specify, such
number of copies thereof as such Underwriter or dealers may reasonably request.
(f) Prior to any public offering of the Securities, to cooperate with
you and counsel for the Underwriters in connection with the registration or
qualification of the Securities for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such jurisdictions
as you may request, to continue such qualification in effect so long as required
for distribution of the Securities and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification.
(g) To mail and make generally available to its security holders as
soon as practicable an earnings statement that shall satisfy the provisions of
Section 11(a) of the Act, and to advise you in writing when such statement has
been so made available.
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(h) So long as the Securities are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Securities a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent certified public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(i) So long as the Securities are outstanding, to furnish to you as
soon as available a reasonable number of copies of all reports or other
communications furnished to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of any Registrant is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Registrants' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Registrants' counsel and the Registrants' accountants in connection with the
registration and delivery of the Securities under the Act and all other fees or
expenses in connection with the preparation, printing, filing and distribution
of the Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing prior to or during the period specified in Section 5(d),
including the mailing and delivering of copies thereof to the Underwriters and
dealers in the quantities specified herein, (ii) all costs and expenses related
to the transfer and delivery of the Securities to the Underwriters, including
any transfer or other taxes payable thereon, (iii) all costs of printing or
producing all agreements or documents in connection with the offering, purchase,
sale or delivery of the Securities (other than this Agreement, the Indenture and
the Securities), (iv) all expenses in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states and all costs of printing or producing any
Preliminary and Supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees and reasonable disbursements of
counsel for the Underwriters in connection with the review and clearance of the
offering of the Securities by the NASD, (vi) the cost of printing certificates
representing the Securities, (vii) the costs and charges of any transfer agent,
registrar and/or depositary (including the Depository Trust Company), (viii) any
fees charged by rating agencies for the rating of the Securities and (ix) and
all other reasonable costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Registrants or any
warrants, rights or options to purchase or otherwise acquire debt securities of
the Registrants substantially similar to the Securities (other than the
Securities), without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation.
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(l) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Registrants prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Securities.
(m) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Securities, to file a Rule 462(b)
Registration Statement with the Commission registering the Securities not so
covered in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the
date of this Agreement and to pay to the Commission the filing fee for such Rule
462(b) Registration Statement at the time of the filing thereof or to give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
SECTION 6. Representations and Warranties of the Registrants. The
Registrants, jointly and severally, represent and warrant to each Underwriter
that:
(a) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Registrants after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement filed
after the effectiveness of this Agreement will become effective no later than
10:00 P.M., New York City time, on the date of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement is in effect, and, to
the Registrants' knowledge, no proceedings for such purpose are pending before
or threatened by the Commission.
(b)(i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Registrants after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Registrants after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Registrants are required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement and any amendments thereto, when they become effective
(A) will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (B) will comply in all material respects with the
Act, (iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein, and (v) each
preliminary prospectus filed as part of the registration statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Act, complied when so filed in all material respects with the Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in any preliminary prospectus based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the
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corporate power and authority to carry on its business as described in the
Prospectus and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole. The Company has no subsidiaries other
than the Guarantors.
(d) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights.
(e) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and clear of
any security interest, mortgage, pledge, claim, lien, encumbrance or adverse
interest of any nature (each a "Lien"). Except as otherwise set forth in the
Registration Statement or the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or Liens related to or entitling any person, other than the
Company, to purchase or otherwise to acquire any shares of the capital stock of,
or other ownership interest in, any subsidiary of the Company.
(f) The Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and has been duly authorized
and, when executed and delivered by the Registrants, will be a valid and binding
agreement of each of the Registrants, enforceable in accordance with their terms
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (B) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(g) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable in accordance with their
terms except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (B) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The Securities and the Indenture conform as to legal matters to the
description thereof contained in the Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this Agreement, the
Indenture and the Securities by the Registrants, compliance by the Registrants
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require any consent,
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approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states) and will not conflict with or constitute
a breach of any of the terms or provisions of, or a default under, the charter
or by-laws of the Company or any of its subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, or violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over the Company,
any of its subsidiaries or their respective property.
(k) There are no legal or governmental proceedings pending or, to the
Registrants' knowledge, threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated thereunder, or any federal or state usury or consumer
credit laws, except for such violations which, singly or in the aggregate, would
not have a material adverse effect on the business, prospects, financial
condition or results of operation of the Company and its subsidiaries, taken as
a whole.
(m) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(n) This Agreement has been duly authorized, executed and delivered by
each of the Registrants.
(o) KPMG Peat Marwick LLP are independent public accountants with
respect to the Company and its subsidiaries as required by the Act.
(p) The consolidated financial statements, together with related
schedules and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) is, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
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(q) None of the Registrants is and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, none of the Registrants will be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(r) There are no contracts, agreements or understandings between any
Registrants and any person granting such person the right to require the
Registrants to file a registration statement under the Act with respect to any
securities of the Registrants or to require the Registrants to include such
securities with the Securities registered pursuant to the Registration
Statement.
(s) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent.
(t) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(u) All tax returns required to be filed by the Company or any of its
subsidiaries in any jurisdiction have been filed, other than those filings being
contested in good faith, and all material taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or claimed to be
due from such entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided or those currently
payable without penalty or interest.
(v) The Company and each of its subsidiaries maintain insurance
(subject to customary deductibles and retentions) with responsible insurance
companies in such amounts and against such risks as is customarily carried by
responsible companies engaged in similar businesses.
(w) The Guarantees have been duly authorized by each of the Guarantors
and, when executed and authenticated in accordance with the provisions of the
Indenture, will conform in all material respects to the description thereof in
the Prospectus, will be valid and binding obligations of each of the Guarantors,
will be entitled to the benefits of the Indenture and enforceable in accordance
with their terms except as (A) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(B) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
SECTION 7. Indemnification. (a) Each Registrant, jointly and severally,
agrees to indemnify and hold harmless each Underwriter, its directors, its
officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with defending or investigating
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), the
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Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Company by such Underwriter through you
expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Registrants, their respective directors, officers who sign
the Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Registrants to such Underwriter but
only to the extent that an untrue statement or omission or alleged omission was
made in reliance upon or in conformity with written information furnished to the
Registrants by such Underwriter for use in the Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 7(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing, which authorization shall not be unreasonably withheld,
by the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin
& Jenrette Securities Corporation, in the case of parties indemnified pursuant
to Section 7(a), and by the Company, in the case of parties indemnified pursuant
to Section 7(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than ten business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
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consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 7 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Registrants on the one hand and the Underwriters on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause 7(d)(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 7(d)(i) above
but also the relative fault of the Registrants and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Registrants and
the Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Securities, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Registrants and the Underwriters 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 Registrants or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Registrants and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such indemnified party in connection with investigating or
defending any matter that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the 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 to
contribute pursuant to this Section 7(d) are several in proportion to the
respective principal amount of Securities purchased by each of the Underwriters
hereunder and not joint.
(e) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
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SECTION 8. Indemnification of Qualified Independent Underwriter.
(a) Each of the Registrants, jointly and severally, agrees to indemnify
and hold harmless the QIU and each person, if any, who controls the QIU within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities or judgments (including
without limiting the foregoing the reasonable legal and other expenses including
reasonable costs of investigation incurred in connection with any action, suit
or proceeding or any claim asserted) arising out of: (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities, judgments or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to the QIU furnished in
writing to the Registrants by the QIU expressly for use therein; or (ii) the QIU
having acted, failed to act or alleged to have failed to act in its capacity as
the "qualified independent underwriter" with respect to the offer and sale of
the Notes; provided, however, that to the extent that any such loss, claim,
damage, liability or judgment referred to in the foregoing clause (ii) is found
in a final judgment by a court of competent jurisdiction, not subject to further
appeal, to have resulted from the willful misconduct or gross negligence of the
QIU, the Registrants will not be liable to that extent; provided, however, that
the foregoing indemnity with respect to any untrue statements contained in or
omission from a preliminary prospectus shall not inure to the benefit of the QIU
(or any person controlling such QIU) to the extent that the person asserting any
such loss, liability, claim, damage or expense purchased any of the Securities
which are subject thereof if such person was not sent or given a copy of the
Prospectus at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such preliminary prospectus was corrected in the Prospectus. This indemnity
agreement will be in addition to any liability which the Registrants may
otherwise have to the persons referred to above in Section 7 and this Section
8(a).
(b) In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought against the QIU or any
person controlling the QIU (for purposes of this Section 8(b), the QIU and/or
such controlling person, as appropriate, shall hereinafter be referred to as the
"Indemnified"), based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Registrants shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
with reference to information relating to the QIU furnished to the Registrants
in writing by the QIU expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus
or (ii) the QIU having acted, failed to act or alleged to have failed to act in
its capacity as the "qualified independent underwriter" with respect to the
offer and sale of the Securities, and with respect to which indemnity may be
sought against the Registrants (each of the Registrants, as appropriate, for
purposes of this Section 8(b), are hereinafter referred to as the
"Indemnifier"), the QIU shall promptly notify the Registrants in writing and the
Registrants shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified to represent the Indemnified
and any others the Indemnifier may designate and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such action or
proceeding, the Indemnified shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of the Indemnified
unless (i) the Indemnifier and the Indemnified shall have mutually agreed to the
retention of such counsel, (ii) the Indemnifier shall have failed to assume the
defense and employ counsel or (iii) the named parties to
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any such proceeding (including any impleaded parties) include both an
Indemnifier and the Indemnified and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
among them. It is understood that the Indemnifier shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm (in addition to
local counsel) for the QIU and all persons, if any, who control the QIU within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act
and that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the QIU and such control persons of the
QIU, such firm shall be designated in writing by the QIU. The Indemnifier shall
not be liable for any settlement of any proceeding effected without its written
consent; but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifier agrees to indemnify the Indemnified from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the immediately preceding sentence, if in any case where the
fees and expenses of counsel are at the expense of the Indemnifier and the
Indemnified shall have requested the Indemnifier to reimburse the Indemnified
for such fees and expenses of counsel as incurred, the Indemnifier agrees that
it shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than ten business days after
the receipt by the Indemnifier of the aforesaid request and (ii) such
Indemnifier shall have failed to reimburse the Indemnified in accordance with
such request for reimbursement prior to the date of such settlement. No
Indemnifier shall, without the prior written consent of the Indemnified, effect
any settlement of any pending or threatened proceeding in respect of which the
Indemnified is or could have been a party and indemnity could have been sought
hereunder by the Indemnified, unless such settlement includes an unconditional
release of the Indemnified from all liability on claims that are the subject
matter of such proceeding.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities, judgments and expenses in such proportion as is
appropriate to reflect the relative fault of the Registrants on the one hand and
the QIU on the other hand in connection with the statements or omissions or
actions or failure to act which resulted in such losses, claims, damages,
liabilities, judgments or expenses, as well as any other relevant equitable
considerations. The relative fault of the Registrants on the one hand and the
QIU on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Registrants on the one hand or the QIU on the other hand and the party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission and whether the QIU's recommendation, advice
or services as QIU pursuant to Section 2(b) hereof involved any willful
misconduct or gross negligence on the part of the QIU.
(d) The Registrants and the QIU agree that it would not be just and
equitable if contribution pursuant to Section 8(a) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. 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.
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SECTION 9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Securities under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Registrants contained
in this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.
(b) If the Registrants are required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) On or after the date hereof there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating of any of the Registrants'
outstanding indebtedness (including, without limitation, the placing of any
securities on negative or developing watch or negative or developing outlook) by
any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act.
(d) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance of the Securities; and
no injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Securities.
(e) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(e)(i),
9(e)(ii) or 9(e)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Securities on the terms and in
the manner contemplated in the Prospectus.
(f) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Hugh Miller and Richard Blass, in their capacities as
the President and Chief Executive Officer and Chief Financial Officer of the
Company, respectively, confirming the matters set forth in Sections 9(a), 9(b),
9(c), 9(d) and 9(e).
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Stroock & Stroock & Lavan LLP, counsel for the Company, to the effect that:
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(i) each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in
the Prospectus and to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business
or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole;
(iii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights;
(iv) all of the outstanding shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, and, to the best of such
counsel's knowledge after due inquiry, are owned by the Company, free
and clear of any security interest, claim, lien or encumbrance;
(v) the Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and rights of acceleration and
the availability of equitable remedies may be limited by equitable
principles of general applicability;
(vi) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Registrants and is a valid and binding agreement of each of the
Registrants, enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability;
(vii) the Registrants have full corporate power and authority
to enter into this Agreement and consummate the transactions provided
for herein and this Agreement has been duly authorized, executed and
delivered by the Registrants and this Agreement, assuming due
authorization, execution and delivery by each other party hereto, is a
valid and binding agreement of the Registrants, enforceable against the
Registrants in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and rights of acceleration and
the availability of equitable remedies may be limited by equitable
principles of general applicability;
(viii) the Registration Statement has become effective under
the Act and, to the best of such counsel's knowledge after due inquiry,
no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission;
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(ix) the statements under the captions "Business-Regulation,"
"Business-Environmental Matters," "Business-Legal Proceedings" and
"Description of the Notes" in the Prospectus and Items 14 and 15 of
Part II of the Registration Statement, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings, provided that
the opinions as to "Business-Regulation" may be provided by The Law
Offices of William J. Horan;
(x) neither the Company nor any of its subsidiaries is in
material violation of its respective charter or by-laws;
(xi) the execution, delivery and performance of this
Agreement, the Indenture and the Securities by the Registrants,
compliance by the Registrants with all the provisions hereof and
thereof and the consummation of the transactions contemplated hereby
and thereby will not require any consent, approval, authorization or
other order of, or qualification with, any court or governmental body
or agency (except such as may be required under the securities or Blue
Sky laws of the various states) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its subsidiaries
or any indenture, loan agreement, mortgage, lease, or, to the best of
such counsel's knowledge after due inquiry, other agreement or
instrument that is material to the Company and its subsidiaries, taken
as a whole, to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or their respective
property is bound, or violate or conflict with any applicable law or
any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any
of its subsidiaries or their respective property;
(xii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is or could be a party or to which
any of their respective property is or could be subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described, or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not so described or filed as
required;
(xiii) to the best of such counsel's knowledge after due
inquiry, neither the Company nor any of its subsidiaries has violated
any Environmental Law or any provisions of the Employee Retirement
Income Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, except for such violations which, singly or in
the aggregate, would not have a material adverse effect on the
business, prospects, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole;
(xiv) none of the Registrants is and, after giving effect to
the offering and sale of the Notes and the application of the proceeds
thereof as described in the Prospectus, none of the Registrants will
be, an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
(xv) to the best of such counsel's knowledge after due
inquiry, there are no contracts, agreements or understandings between
the Registrants and any person granting such person the right to
require the Registrants to file a registration statement under the Act
with respect to any
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securities of the Registrants or to require the Registrants to include
such securities with the Securities registered pursuant to the
Registration Statement;
(xvi) each of the Guarantors has duly authorized the
Guarantees, which, when executed and authenticated in accordance with
the provisions of the Indenture, and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
valid and binding obligations of each of the Guarantors, enforceable
against each of them in accordance with the terms of the Guarantees
except as (a) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and
(b) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability
(regardless of whether such enforceability is considered in a
proceeding at law or in equity);
(xvii) to the best of such counsel's knowledge after due
inquiry, there are no actions, suits or proceedings pending or
threatened against the Company or any subsidiary or any of their
respective properties at law or in equity or before or by any
commission, board, body, authority or agency which are required to be
described in the Prospectus but are not so described;
(xviii) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for the financial statements
and other financial data included therein as to which no opinion need
be expressed) comply as to form with the Act; and
(xix) to the best of such counsel's knowledge after due
inquiry, neither the Company nor any subsidiary is in breach of, or in
default under (nor has any event occurred which with notice, lapse of
time or both would constitute a breach of or default under), any
indenture, mortgage (under which the Company or any subsidiary is
mortgagor), trust (under which the Company or any subsidiary is
trustor), lease, bank loan, credit agreement or any other agreement or
instrument to which the Company or any subsidiary is a party or by
which the Company or any subsidiary or their respective properties are
bound or affected or under any law, regulation or rule or any decree,
judgment or order applicable to the Company or any subsidiary, which
breach or default would have a material adverse effect on the business,
properties, assets, operations or condition (financial or otherwise) of
the Company and any subsidiary, taken as a whole.
The opinion of Stroock & Stroock & Lavan LLP described in Section 9(g)
above shall be rendered to you at the request of the Company and shall so state
therein.
(h) In addition, in the opinion of Stroock & Stroock & Lavan LLP
described in Section 9(g) above, Stroock & Stroock & Lavan LLP shall state that
such counsel has no reason to believe that at the time the Registration
Statement became effective or on the date of this Agreement, the Registration
Statement and the prospectus included therein (except for the financial
statements and other financial data as to which such counsel need not express
any belief and except for that part of the Registration Statement that
constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture
Act) contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and such counsel has no reason to believe that the
Prospectus, as amended or supplemented, if applicable (except for the financial
statements and other financial data, as aforesaid) contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
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(i) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Latham & Watkins, counsel for the Underwriters, as to the
matters referred to in Sections 9(g)(v), 9(g)(vi), 9(g)(vii), 9(g)(ix) (but only
with respect to the statements under the caption "Description of Notes" and
"Underwriting") and 9(h).
In giving such opinions with respect to the matters covered by Section
9(h), Stroock & Stroock & Lavan LLP and Latham & Watkins may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification except as specified.
(j) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from KPMG Peat Marwick LLP, independent
public accountants, containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(k) The Registrants shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Registrants at or prior to the
Closing Date.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) any outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus, (ii)
the suspension or material limitation of trading in securities on the New York
Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities on any such
exchange or the Nasdaq National Market, (iii) the suspension of trading of any
securities of the Registrants on any exchange or in the over-the-counter market,
(iv) 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 your opinion materially and adversely affects, or will
materially and adversely affect, the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, (v)
the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the Underwriters shall fail
or refuse to purchase the Securities which it or they have agreed to purchase
hereunder on such date and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Securities to be purchased on such date by all Underwriters,
each non-defaulting Underwriter shall be obligated severally, in the proportion
which the principal amount of Securities set forth opposite its name
17
<PAGE>
in Schedule I bears to the aggregate principal amount of Securities which all
the non-defaulting Underwriters, as the case may be, have agreed to purchase, or
in such other proportion as you may specify, to purchase the Securities which
such defaulting Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase on such date; provided that in no event shall the
aggregate principal amount of Securities which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such principal amount of Securities without
the written consent of such Underwriter. If on the Closing Date any Underwriter
or Underwriters shall fail or refuse to purchase Securities and the aggregate
principal amount of Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Securities to be purchased
by all Underwriters and arrangements satisfactory to you and the Registrants for
purchase of such Securities are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Registrants. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
SECTION 11. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to Hugh
Miller, Delta Financial Corporation, 1000 Woodbury Road, Suite 200, Woodbury,
New York 11797-9003 and (ii) if to any Underwriter or to you, to you c/o
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Registrants and the several Underwriters
set forth in or made pursuant to this Agreement shall remain operative and in
full force and effect, and will survive delivery of and payment for the
Securities, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the officers or directors of
any Underwriter, any person controlling any Underwriter, the Registrants, the
officers or directors of the Registrants or any person controlling the
Registrants, (ii) acceptance of the Securities and payment for them hereunder
and (iii) termination of this Agreement.
If for any reason the Securities are not delivered by or on behalf of
the Registrants as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Registrants agree to reimburse the
several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Registrants, the
Underwriters, the Underwriters' directors and officers, any controlling persons
referred to herein, the Registrants' directors and the Registrants' officers who
sign the Registration Statement and their respective successors and assigns, all
as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Securities
from any of the several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
18
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This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
19
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Registrants and the several Underwriters.
Very truly yours,
DELTA FINANCIAL CORPORATION
By: /s/ MARC E. MILLER
---------------------------------------
Name: MARC E. MILLER
Title: VICE PRESIDENT
DELTA FUNDING CORPORATION
By: /s/ MARC E. MILLER
---------------------------------------
Name: MARC E. MILLER
Title: VICE PRESIDENT
FIDELITY MORTGAGE, INC.
By: /s/ MARC E. MILLER
---------------------------------------
Name: MARC E. MILLER
Title: VICE PRESIDENT
FIDELITY MORTGAGE (FLORIDA), INC.
By: /s/ MARC E. MILLER
---------------------------------------
Name: MARC E. MILLER
Title: VICE PRESIDENT
DF SPECIAL HOLDINGS CORPORATION
By: /s/ MARC E. MILLER
---------------------------------------
Name: MARC E. MILLER
Title: VICE PRESIDENT
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
BY DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BY: /s/ WILLIAM ADDAS
---------------------------
NAME: WILLIAM ADDAS
TITLE: SENIOR VICE PRESIDENT
<PAGE>
SCHEDULE I
----------
Principal Amount of
Securities
Underwriters to be Purchased
- ---------------- ----------------------------
Donaldson, Lufkin & Jenrette $ 90,000,000.00
Securities Corporation
Lehman Brothers Inc. $ 30,000,000.00
Smith Barney Inc. $ 30,000,000.00
---------------------------
$ 150,000,000.00
<PAGE>
SCHEDULE II
-----------
Delta Funding Corporation
Fidelity Mortgage, Inc.
Fidelity Mortgage (Florida), Inc.
DF Special Holdings Corporation
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DELTA FINANCIAL CORPORATION
and
DELTA FUNDING CORPORATION
DF SPECIAL HOLDINGS CORPORATION
FIDELITY MORTGAGE, INC.
FIDELITY MORTGAGE (FLORIDA), INC.
$150,000,000
9 1/2% SENIOR NOTES DUE 2004
-----------------
INDENTURE
Dated July 23, 1997
-----------------
-----------------
THE BANK OF NEW YORK
-----------------
Trustee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions....................................................... 1
Section 1.2. Other Definitions................................................. 13
Section 1.3. Incorporation by Reference of Trust Indenture Act................. 14
Section 1.4. Rules of Construction............................................. 14
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating................................................... 15
Section 2.2. Execution and Authentication...................................... 15
Section 2.3. Registrar and Paying Agent........................................ 16
Section 2.4. Paying Agent to Hold Money in Trust............................... 16
Section 2.5. Holder Lists...................................................... 16
Section 2.6. Transfer and Exchange............................................. 17
Section 2.7. Replacement Notes................................................. 17
Section 2.8. Outstanding Notes................................................. 18
Section 2.9. Treasury Notes.................................................... 18
Section 2.10. Temporary Notes................................................... 18
Section 2.11. Cancellation...................................................... 19
Section 2.12. Defaulted Interest................................................ 19
Section 2.13. CUSIP Number...................................................... 19
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee................................................ 19
Section 3.2. Selection of Notes to Be Redeemed................................. 20
Section 3.3. Notice of Redemption.............................................. 20
Section 3.4. Effect of Notice of Redemption.................................... 21
Section 3.5. Deposit of Redemption Price....................................... 21
Section 3.6. Notes Redeemed in Part............................................ 21
Section 3.7. Optional Redemption............................................... 21
Section 3.8. Mandatory Redemption.............................................. 22
Section 3.9. Offer to Purchase by Application of Excess Proceeds............... 22
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.................................................. 24
Section 4.2. Maintenance of Office or Agency................................... 24
Section 4.3. Reports........................................................... 25
Section 4.4. Compliance Certificate............................................ 25
Section 4.5. Taxes............................................................. 26
Section 4.6. Stay, Extension and Usury Laws.................................... 26
Section 4.7. Restricted Payments............................................... 27
Section 4.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries...................................................... 29
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock........ 30
Section 4.10. Asset Sales....................................................... 32
Section 4.11. Transactions with Affiliates...................................... 33
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<PAGE>
Section 4.12. Liens............................................................. 34
Section 4.13. Business Activities............................................... 34
Section 4.14. Payments for Consent.............................................. 34
Section 4.15. Corporate Existence............................................... 34
Section 4.16. Offer to Repurchase Upon Change of Control........................ 35
Section 4.17. Additional Subsidiary Guaranties.................................. 36
ARTICLE 5
SUCCESSORS
Section 5.1. Merger, Consolidation, or Sale of Assets.......................... 36
Section 5.2. Successor Corporation Substituted................................. 36
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default................................................. 37
Section 6.2. Acceleration...................................................... 39
Section 6.3. Other Remedies.................................................... 39
Section 6.4. Waiver of Past Defaults........................................... 40
Section 6.5. Control by Majority............................................... 40
Section 6.6. Limitation on Suits............................................... 40
Section 6.7. Rights of Holders of Notes to Receive Payment..................... 41
Section 6.8. Collection Suit by Trustee........................................ 41
Section 6.9. Trustee May File Proofs of Claim.................................. 41
Section 6.10. Priorities........................................................ 42
Section 6.11. Undertaking for Costs............................................. 42
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee................................................. 42
Section 7.2. Rights of Trustee................................................. 43
Section 7.3. Individual Rights of Trustee...................................... 44
Section 7.4. Trustee's Disclaimer.............................................. 44
Section 7.5. Notice of Defaults................................................ 45
Section 7.6. Reports by Trustee to Holders..................................... 45
Section 7.7. Compensation and Indemnity........................................ 45
Section 7.8. Replacement of Trustee............................................ 46
Section 7.9. Successor Trustee by Merger, etc.................................. 47
Section 7.10. Eligibility; Disqualification..................................... 47
Section 7.11. Preferential Collection of Claims Against Company................. 48
Section 7.12. Money Held in Trust............................................... 48
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.......... 48
Section 8.2. Legal Defeasance and Discharge.................................... 48
Section 8.3. Covenant Defeasance............................................... 49
Section 8.4. Conditions to Legal or Covenant Defeasance........................ 49
Section 8.5. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions............................. 50
Section 8.6. Repayment to the Company.......................................... 51
Section 8.7. Reinstatement..................................................... 51
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<PAGE>
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes............................... 52
Section 9.2. With Consent of Holders of Notes.................................. 52
Section 9.3. Compliance with Trust Indenture Act............................... 54
Section 9.4. Revocation and Effect of Consents................................. 54
Section 9.5. Notation on or Exchange of Notes.................................. 54
Section 9.6. Trustee to Sign Amendments, etc................................... 55
ARTICLE 10
SUBSIDIARY GUARANTEE
Section 10.1. Subsidiary Guarantee.............................................. 55
Section 10.2. Execution and Delivery of Subsidiary Guarantee.................... 56
Section 10.3. Guarantors May Consolidate, etc., on Certain Terms................ 56
Section 10.4. Releases Following Sale of Assets................................. 57
Section 10.5. "Trustee" to Include Paying Agent................................. 58
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls...................................... 58
Section 11.2. Notices........................................................... 58
Section 11.3. Communication by Holders with Other Holders....................... 59
Section 11.4. Certificate and Opinion as to Conditions Precedent................ 60
Section 11.5. Statements Required in Certificate or Opinion..................... 60
Section 11.6. Rules by Trustee and Agents....................................... 60
Section 11.7. No Personal Liability of Directors, Officers, Employees
and Stockholders.................................................. 61
Section 11.8. Governing Law..................................................... 61
Section 11.9. No Adverse Interpretation of Other Agreements..................... 61
Section 11.10. Successors and Assigns............................................ 61
Section 11.11. Severability...................................................... 61
Section 11.12. Legal Holidays.................................................... 62
Section 11.13. Counterpart Originals............................................. 62
Section 11.14. Table of Contents, Headings, etc.................................. 62
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUBSIDIARY GUARANTEE
iv
<PAGE>
INDENTURE dated as of July 23, 1997 among Delta Financial Corporation,
a Delaware corporation (the "Company"), as issuer, each of Delta Funding
Corporation, a New York corporation, DF Special Holdings Corporation, a Delaware
corporation, Fidelity Mortgage, Inc., a Delaware corporation, and Fidelity
Mortgage (Florida), Inc., a Delaware corporation (collectively, the "Subsidiary
Guarantors"), and The Bank of New York, as trustee (the "Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders of the Company's 9 1/2% Senior Notes due 2004 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, that, for
purposes of Section 4.11, beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or coregistrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
of any assets (including, without limitation, by way of a sale and leaseback and
the sale or other disposition of any Residual Receivables) other than sales of
Receivables in connection with Securitizations or Warehouse Facilities and sales
of foreclosed assets, in each case in the ordinary course of business (provided
that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole will be governed by the provisions of Section 4.16 hereof and/or the
provisions Article V and not by the provisions of Section 4.10), and (ii) the
issuance by the Company or any of its Restricted Subsidiaries of Equity
Interests, or the sale by the Company or any Restricted Subsidiary of any Equity
Interests, in each case, of their Subsidiaries (other than directors qualifying
shares), in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following will not be deemed to be
Asset Sales: (i) an issuance of Equity Interests by a Wholly-Owned Restricted
Subsidiary to the Company or to another Wholly-Owned Restricted Subsidiary; (ii)
a Restricted Payment that is permitted by Section 4.7; and (iii) a disposition
by a Restricted Subsidiary to the Company or a Wholly-Owned Restricted
Subsidiary or by the Company to a Wholly-Owned Restricted Subsidiary of the
Company.
<PAGE>
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any authorized committee thereof.
"Business Day" means any day other than a Legal Holiday.
"capital lease" means, at the time any determination thereof is to be
made, any lease of property, real or personal, in respect of which the present
value of the minimum rental commitment would be capitalized on a balance sheet
of the lessee in accordance with GAAP.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership (whether general or limited) or membership
interests and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (iii) certificates of deposit
and Eurodollar time deposits with maturities of one year or less from the date
of acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having one of the two
highest ratings obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group and in each case maturing within nine months after the date
of acquisition, and (vi) money market funds, the portfolios of which are limited
to investments described in clauses (i) through (v) above.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation and excluding sales, leases, transfers, conveyances or
other dispositions pursuant to Securitizations, Warehouse Facilities or Residual
Receivables financing arrangements otherwise permitted by this Indenture entered
into in the ordinary course of business), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than a Permitted Holder, (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above) other than a Permitted Holder becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the Voting Stock of the Company (measured by
general voting power rather than number of shares), (iv) the
2
<PAGE>
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors or (v) the Company consolidates with, or
merges with or into, any Person, or any Person consolidates with, or merges with
or into, the Company, in any such event pursuant to a transaction in which any
of the outstanding Voting Stock of the Company is converted into or exchanged
for cash, securities or other property, other than any such transaction where
the Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance). For
purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring Voting Stock of the Company will be
deemed to be a transfer of such portion of such Voting Stock as corresponds to
the portion of the equity of such entity that has been so transferred.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of all consolidated Indebtedness of the
Company and its Restricted Subsidiaries excluding (A) Permitted Warehouse Debt,
and (B) Hedging Obligations permitted to be incurred pursuant to Section
4.9(b)(vii) to (ii) the Consolidated Net Worth of the Company.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries (for such period, on a consolidated basis, determined in accordance
with GAAP); provided, that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly-Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern made within 12 months after the
acquisition of such business) subsequent to the date of this Indenture in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person,
3
<PAGE>
(y) all Investments as of such date in unconsolidated Restricted Subsidiaries
and in Persons that are not Restricted Subsidiaries and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Directors constituting Continuing Directors who were members of such Board at
the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may give
notice to the Company.
"Credit Enhancement Agreements" means, collectively, any documents,
instruments or agreements entered into by the Company or, any of its Restricted
Subsidiaries with any Person exclusively for the purpose of providing credit
support for asset-backed securities issued in connection with Securitizations.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that either (A) 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, in whole or in part, pursuant to a sinking fund
obligation or otherwise or, (ii) is convertible into or exchangeable for
Indebtedness or Disqualified Stock, in whole or in part, or (iii) is redeemable,
in whole or in part, at the option of the Holder thereof at any time, in any
such case, on or prior to the date that is 91 days after the date on which the
Notes mature, or (B) is designated by the Company (in a resolution of the Board
of Directors delivered to the Trustee) as Disqualified Stock.
"Eligible Receivables" means, at the time of determination, Receivables
meeting the sale or loan eligibility criteria set forth in one or more of the
Warehouse Facilities to which the Company or any of its Restricted Subsidiaries
is a party at such time and is eligible for sale in a Securitization.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire such Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, such Capital Stock).
"Excess Spread" means, over the life of a pool of Receivables that have
been sold by the Company or a Restricted Subsidiary in a Securitization, the
rights, other than servicing rights, retained by the Company or such Restricted
Subsidiary at or subsequent to the closing of such Securitization or sale with
respect to such pool, to receive cash flows attributable to such pool.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing
4
<PAGE>
seller and an informed and willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. Notwithstanding the foregoing, the term "Guarantee" does not
include obligations pursuant to representations, warranties, covenants and
indemnities in connection with a Securitization or Warehouse Facility.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate or currency swap agreements,
cap agreements, collar agreements and related agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in value of assets owned, financed or sold, or of liabilities incurred or
assumed, or of pre-funding arrangements, in any case in the ordinary course of
business of such Person and not for speculative purposes.
"Holder" means a person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the unpaid deferred balance of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, (ii) all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person), (iii) without duplication, all Warehouse Debt, (iv) all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock and, in the case of any Subsidiary
Guarantor, preferred stock (but excluding in each case any accrued dividends
thereon), and (v) to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person to the extent of any Guarantee of
such indebtedness provided by such Person. Except in the case of Warehouse Debt
(the amount of which shall be determined in accordance with the definition
thereof) and except in the case of Hedging Obligations (the amount of which
shall be determined on a net basis after rights of set-off and related
positions), 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
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foregoing, the term "Indebtedness" does not include obligations pursuant to
representations, warranties, covenants and indemnities in connection with a
Securitization or Warehouse Facility.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company (other than
Disqualified Stock) shall not be deemed to be an Investment.
"Issue Date" means July 23, 1997.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate Cash Equivalent proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any Cash Equivalent received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
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deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), or (b) is directly or indirectly liable (as a
guarantor or otherwise); and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Note" or "Notes" means the Notes described above issued under this
Indenture.
"Obligations" means any principal, interest, penalties, fees and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice
President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 11.4 and 11.5 hereof.
"Permitted Businesses" means any consumer or commercial finance
business or any financial service business.
"Permitted Holder" means any of Messrs. Sidney A. Miller, Hugh Miller,
Marc E. Miller and Lee Miller, any spouse or lineal descendant thereof or any
trust all of the beneficiaries of which are any of the foregoing.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary that is a Subsidiary Guarantor; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary in a
Person if, as a result of such Investment, (i) such Person becomes (x) a
Wholly-Owned Restricted Subsidiary and (y) a Subsidiary Guarantor that is
engaged in a Permitted Business or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly-Owned Restricted
Subsidiary that is a Subsidiary Guarantor and that is engaged in a Permitted
Business; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under Section 4.10
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hereof; (e) any Investment in Receivables, Residual Receivables or Servicing
Receivables made in the ordinary course of business; and (f) other Investments
in any Person (other than an Affiliate of the Company that is not also a
Subsidiary of the Company) that do not exceed $10.0 million in the aggregate
since the Issue Date.
"Permitted Liens" means (i) Liens on Receivables or other assets (other
than Residual Receivables) securing Warehouse Debt or Hedging Obligations (or
Guarantees of Warehouse Debt or Hedging Obligations); (ii) Liens on Servicing
Receivables, Residual Receivables and on the Capital Stock of Restricted
Subsidiaries of the Company substantially all of the assets of which are
Residual Receivables; provided, however, that, (x) all Retained Residual
Receivables shall remain unencumbered by any Lien unless after giving effect to
such sale, conveyance or other disposition the aggregate amount of Senior
Residual Receivables of the Company and its Restricted Subsidiaries which are
unencumbered by any Lien (of which no more than 25% of the aggregate book value
thereof shall constitute Retained Residual Receivables) would be greater than or
equal to 250% of all Senior Indebtedness of the Company and its Restricted
Subsidiaries, and (y) after giving effect to the incurrence of such Lien the
aggregate amount of Senior Residual Receivables of the Company and its
Restricted Subsidiaries which are unencumbered by any Lien (of which not more
than 25% of the aggregate book value thereof shall constitute Retained Residual
Receivables) would be greater than or equal to 150% of all Senior Indebtedness
of the Company and its Restricted Subsidiaries; (iii) Liens in favor of the
Company or any Restricted Subsidiary; (iv) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the Company
or any Restricted Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company or such Restricted Subsidiary; (v) Liens on property existing
at the time of acquisition thereof by the Company or any Restricted Subsidiary
of the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition; (vi) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vii)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
Section 4.9(b)(i) hereof covering only the assets acquired with such
Indebtedness; (viii) Liens existing on the Issue Date; (ix) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings, provided that
any reserve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor; (x) Liens (including, without
limitation, Liens on Residual Receivables) in favor of a monoline insurance
company or other provider of credit enhancement pursuant to a Credit Enhancement
Agreement; (xi) Liens incurred in the ordinary course of business of the Company
or any Restricted Subsidiary of the Company with respect to obligations that do
not exceed $1.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Restricted Subsidiary; (xii) Liens imposed by law, including but not
limited to 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 the Company or any of its
Restricted Subsidiaries with respect to which the Company or such Restricted
Subsidiary shall then be proceeding with an appeal or other proceedings for
review; (xiii) survey exceptions, easements and other restrictions on the use of
property; (xiv) Liens securing Indebtedness the
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proceeds of which were utilized by the Company or a Restricted Subsidiary solely
to fund any advances to Securitization Trusts permitted by clause (v) of the
second paragraph of Section 4.7 hereof, provided that such Liens encumber no
assets other than the contractual right of the Company or such Restricted
Subsidiary, as the case may be, to be reimbursed in respect of any advances
funded by such Indebtedness; (xv) Liens on assets of Unrestricted Subsidiaries
of the Company that secure Non-Recourse Debt of Unrestricted Subsidiaries of the
Company; and (xvi) Liens to secure any Refinancing (or successive Refinancings),
in whole or in part, of any Indebtedness (or commitment for Indebtedness)
existing on the Issue Date; provided, however, that (x) any such new Lien shall
be a Lien on the same asset class or interest securing the original Lien and (y)
the Indebtedness secured by such Lien is not, solely by virtue of the
Refinancing (unless otherwise permitted by this Indenture), increased to an
amount greater than the greater of (A) the outstanding principal amount of the
Indebtedness existing on the Issue Date secured by such Lien, or (B) if such
Lien secures Indebtedness under a line of credit, the commitment amount of such
line of credit existing on the Issue Date. Any determination of Senior Residual
Receivable shall be based on the consolidated balance sheet of the Company and
its Restricted Subsidiaries for the most recently ended fiscal quarter for which
financial statements are available, after giving pro forma effect to the Lien
for which such determination is being made and to any other sale of or Lien on
or reduction of Residual Receivable since the date of such balance sheet.
"Permitted Refinancing Indebtedness" means any Indebtedness or
Disqualified Stock of the Company or any of its Restricted Subsidiaries issued
in exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness or Disqualified Stock of
the Company or any of its Restricted Subsidiaries (other than Indebtedness
incurred pursuant to Sections 4.9(b)(ii), (iii), (vii), (ix), (x) and (xi));
provided that: (i) the principal amount (or accreted value, if applicable) or
mandatory redemption amount of such Permitted Refinancing Indebtedness does not
exceed the principal amount of (or accreted value, if applicable) or mandatory
redemption amount, plus accrued interest or dividends on, the Indebtedness or
Disqualified Stock so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of contractual prepayment charges and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity or final redemption date later than the final
maturity or final redemption date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness or Disqualified Stock
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to, the Notes on terms at least
as favorable to the Holders of the Notes as those contained in the documentation
governing the Indebtedness or Disqualified Stock being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred
or such Disqualified Stock is issued either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness or Disqualified Stock being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Warehouse Debt" means Warehouse Debt of the Company or a
Restricted Subsidiary outstanding under one or more Warehouse Facilities
(excluding any Guarantees issued by the Company or a Restricted Subsidiary in
connection therewith); provided, however, that (i) the assets purchased with
proceeds of such Warehouse Debt are or, prior to any funding under the Warehouse
Facility with respect to such assets, were eligible to be recorded as held for
sale on the consolidated
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balance sheet of the Company and its Restricted Subsidiaries in accordance with
GAAP, (ii) such Warehouse Debt will be deemed Permitted Warehouse Debt (a) in
the case of a Purchase Facility, only to the extent the holder of such Warehouse
Debt has no contractual recourse to the Company or any of its Restricted
Subsidiaries to satisfy claims in respect of such Warehouse Debt in excess of
the realizable value of the Eligible Receivables financed thereby, and (b) in
the case of any other Warehouse Facility, at the time such Warehouse Debt is
incurred, only to the extent of the lesser of (A) the amount advanced by the
lender with respect to the Eligible Receivables financed under such Warehouse
Facility, and (B) 100% of the aggregate principal amount of such Eligible
Receivables and (iii) any such Indebtedness incurred under such Warehouse
Facility has not been outstanding 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.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Purchase Facility" means any Warehouse Facility in the form of a
purchase and sale facility pursuant to which the Company or a Restricted
Subsidiary sells Receivables to a financial institution, commercial paper
facility or conduit and retains a right of first refusal or other repurchase
arrangement upon the subsequent resale of such Receivables by such financial
institution, commercial paper facility or conduit.
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Company or any Restricted Subsidiary;
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 extend,
refinance, renew, replace, defease, refund, repay, prepay, redeem, or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Residual Receivables" of the Company means at any time, the
capitalized asset value of Excess Spread of the Company and its Restricted
Subsidiaries (including, without limitation, subordinated, interest-only and
residual certificates of a Securitization Trust), with respect to any Receivable
pool of any Securitization Trust, calculated in accordance with GAAP.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Retained Residual Receivables" has the meaning specified in Section
4.10.
"SEC" means the Securities and Exchange Commission.
"Securitization" means a public or private transfer of Receivables in
the ordinary course of business and by which the Company or a Restricted
Subsidiary directly or indirectly securitizes a pool of specialized Receivables,
including any such transaction involving the sale of specialized Receivables to
a Securitization Trust.
"Securitization Trust" means any Person that is not a Restricted
Subsidiary established exclusively for the purpose of issuing securities in
connection with any Securitization, the obligations of which are without
recourse to the Company or any of its Subsidiaries (other than obligations
constituting Indebtedness incurred in accordance with Section 4.9(a) hereof).
"Senior Indebtedness" means all Indebtedness of any Person that is not
subordinated in right of payment to any other Indebtedness or other obligations
of such Person, excluding Permitted Warehouse Debt and Hedging Obligations
permitted to be incurred under this Indenture and, in the case of Indebtedness
secured by Senior Residual Receivables, the lesser of (x) the amount of such
Indebtedness and (y) the amount of the Senior Residual Receivables securing such
Indebtedness.
"Senior Residual Receivables" means Residual Receivables which have not
been created as the result of or in connection with the sale, securitization or
other disposition of other Residual Receivables.
"Servicing Receivables" means the servicing rights or any interest
therein with respect to any Receivables.
"Significant Subsidiary" means any subsidiary that would be a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock 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 such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership or limited liability company (a) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (b) the only general partners or
managing members of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
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"Subsidiary Guarantee" means the Guarantees, substantially in the form
attached as Exhibit B hereto, of (i) the Subsidiary Guarantors and (ii) any
other Person that executes such a Guarantee in accordance with the provisions of
the Indenture, and their respective successors and assigns.
"Subsidiary Guarantor" means any Subsidiary of the Company that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.1 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Trust Officer" means the Chairman of the Board, the President, any
Vice President or any other officer or assistant officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary that those that might be obtained at the time from Persons
who are not Affiliates of the Company; (b) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (other than obligations constituting Indebtedness incurred
in accordance with Section 4.9 hereof) (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; and (c)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted Section 4.7
hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant in Section 4.9
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness and issuance of preferred stock by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
and preferred stock is permitted under Section 4.9 hereof (ii) such Subsidiary
becomes a Subsidiary Guarantor, and (iii) no Default or Event of Default would
exist following such designation.
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"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote generally in the election of
the Board of Directors of such Person.
"Warehouse Debt" means Indebtedness of the Company or a Restricted
Subsidiary equal to the greater of (x) the consideration received by the Company
or its Restricted Subsidiaries under a Warehouse Facility and (y) in the case of
a Purchase Facility, the book value of the Eligible Receivables financed under
such Warehouse Facility, until such time as such Eligible Receivables are (i)
securitized, (ii) repurchased by the Company or its Restricted Subsidiaries or
(iii) sold by the counterparty under the Warehouse Facility to a Person who is
not an Affiliate of the Company, including any Guarantees issued by the Company
or a Restricted Subsidiary in connection therewith.
"Warehouse Facility" means any funding arrangement, including Purchase
Facilities, with a financial institution or other lender or purchaser or any
conduit or special purpose vehicle used in connection with such funding
arrangement, to the extent (and only to the extent) that the Company or any of
its Restricted Subsidiaries incurs Warehouse Debt thereunder exclusively to
finance or refinance the purchase or origination of Receivables by the Company
or a Restricted Subsidiary prior to securitization.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity (or final redemption,
in the case of Disqualified Stock), in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness or mandatory redemption amount of Disqualified Stock.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
SECTION 1.2. OTHER DEFINITIONS.
Term Defined in Section
---- ------------------
"Affiliate Transaction".........................................4.11
"Asset Sale Offer"..............................................4.10
"Asset Sale Offer Amount"........................................3.9
"Asset Sale Offer Period"........................................3.9
"Bankruptcy Law".................................................6.1
"Change of Control Offer".......................................4.16
"Change of Control Payment".....................................4.16
"Change of Control Payment Date"............................... 4.16
"Covenant Defeasance"............................................8.3
"Custodian"......................................................6.1
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"Event of Default"...............................................6.1
"Incur"..........................................................4.9
"Legal Defeasance"...............................................8.2
"Paying Agent"...................................................2.3
"Registrar"......................................................2.3
"Restricted Payments"............................................4.7
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and the Subsidiary Guarantors.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) words in the singular include the plural, and in the plural include
the singular;
(d) provisions apply to successive events and transactions; and
(e) the words "he," "his," and "him" refer to both the masculine and
feminine gender.
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ARTICLE 2
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, which is part of this Indenture.
The Notes may have notations, legends or endorsements required by law or usage
or required by a securities exchange. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes and the Subsidiary
Guarantees shall constitute, and are hereby expressly made, a part of this
Indenture and the Company, the Subsidiary Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. However, to the extent any provision of any
Note or Subsidiary Guarantee conflicts with the express provisions of this
Indenture, the provisions of this indenture shall govern and be controlling.
SECTION 2.2. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes for the Company by
manual or facsimile signature. An officer of each Subsidiary Guarantor shall
sign the Subsidiary Guarantee for such Subsidiary Guarantor by manual or
facsimile signature.
If an Officer of the Company or a Subsidiary Guarantor whose signature
is on a Note or a Subsidiary Guarantee no longer, as the case may be, holds that
office at the time the Note is authenticated, the Note or the Subsidiary
Guarantee, as the case may be, shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The Trustee's signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall authenticate Notes for original issue up to the
aggregate principal amount stated in the Notes, upon a written order of the
Company signed by two Officers. The aggregate principal amount of Notes
outstanding at any time may not exceed the amount set forth in the Notes except
as provided in Section 2.7 hereof.
The Trustee shall have the right to decline to authenticate and deliver
any Notes under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.
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An authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more coregistrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar or coregistrar.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as agent for service of notices and demands in
connection with the Notes and the Subsidiary Guarantees.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company or a Subsidiary Guarantor in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary
of the Company) shall have no further liability for the money delivered to the
Trustee. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders and the
Company shall otherwise comply with TIA ss. 312(a). The Trustee may destroy any
list of the names and addresses of Holders furnished to it upon receipt of a new
list so furnished.
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SECTION 2.6. TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar with a request to register
the transfer or to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; provided, however, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or by his attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Company shall issue and the Trustee shall
authenticate Notes at the Registrar's request, subject to such rules as the
Trustee may reasonably require.
Neither the Company nor the Registrar shall be required (i) to issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection of
Notes for redemption under Section 3.2 and ending at the close of business on
the day of selection, (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, being redeemed in part or (iii) to
register the transfer or exchange of a Note between the record date and the next
succeeding interest payment date.
No service charge shall be charged to any Holder of a Note for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company or the Trustee may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge payable
upon exchanges pursuant to Sections 2.10, 3.6, or 9.5 hereof, which shall be
paid by the Company).
Prior to due presentment to the Trustee for registration of the
transfer of any Note, the Trustee, any Agent, the Company or any Subsidiary
Guarantor may deem and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving payment of
principal of, or premium, if any, on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and neither the Trustee, any
Agent, the Company or any Subsidiary Guarantor shall be affected by notice to
the contrary.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, and the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue, and the Trustee, upon the written
order of the Company signed by two Officers, shall authenticate a replacement
Note if the Trustee's requirements are met. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an original additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
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SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee, except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding. Except
as set forth in Section 2.9 hereof, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of any thereof) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, any Subsidiary of the Company or any of their respective Affiliates
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee knows are so owned shall
be so disregarded. Notwithstanding the foregoing, Notes that are to be acquired
by the Company, any Subsidiary of the Company or any Affiliate of the Company
pursuant to an exchange offer, tender offer or other agreement shall not be
deemed to be owned by the Company, a Subsidiary of the Company or an Affiliate
of the Company until legal title to such Notes passes to the Company, such
Subsidiary or such Affiliate, as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee, upon a written order of the Company signed by two Officers of
the Company, shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return
cancelled Notes to the Company upon written direction of the Company. The
Company may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Notes 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 Notes or as contained in any notice of redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, 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 3
REDEMPTION
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee at
least 30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
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SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes on
a pro rata basis or by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.9 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date,
upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion will be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed;
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(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes;
and
(i) the CUSIP number of the Note.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee, at least 15 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.1 hereof.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
The Company shall not have the option to redeem the Notes pursuant to
this Section 3.7 prior to August 1, 2001. Thereafter, the Company shall have the
option to redeem the Notes, in whole or in part, at any time or from time to
time, upon not less than 30 nor more than 60 days' prior notice
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to each Holder, at the following redemption prices (expressed as percentages of
principal amount) plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
1 of the years indicated below:
Year Percentage
---- ----------
2001.............................................. 104.750%
2002.............................................. 102.375%
2003 and thereafter .............................. 100.000%
Any redemption pursuant to this Section 3.7 shall be made pursuant to
the provisions of Sections 3.1 through 3.6 hereof.
SECTION 3.8. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.9. OFFER TO REDEEM BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law (the "Asset Sale Offer Period"). No later than five
Business Days after the termination of the Asset Sale Offer Period (the "Asset
Sale Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Asset Sale Offer
Amount") or, if less than the Asset Sale Offer Amount has been tendered, all
Notes tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Asset Sale Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
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(a) that the Asset Sale Offer is being made pursuant to this Section
3.9 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Asset Sale Offer Amount, the purchase price and the Asset Sale
Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Asset Sale Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Asset Sale Purchase
Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Asset Sale Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such
Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Asset Sale Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Asset Sale Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis, to the extent necessary,
the Asset Sale Offer Amount of Notes or portions thereof tendered pursuant to
the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been
tendered, all such Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.9. The
Company, the depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Asset Sale Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and
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accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of any Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act ("Rule 14e-1") and any other
securities laws or regulations in connection with the repurchase of any Notes
pursuant to this Section 3.9. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section 3.9,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 3.9 by
virtue thereof.
Other than as specifically provided in this Section 3.9, any purchase
pursuant to this Section 3.9 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds, as of 10:00 a.m. Eastern Time on the due date, money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy law) on overdue principal at the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interests (without regard to any applicable grace
period) at the same rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee, Registrar or
coregistrar) where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to 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
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furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall 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.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.3.
SECTION 4.3. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any of the Notes are outstanding, the Company will furnish to the
Holders of the Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
the consolidated Subsidiaries of the Company (showing in reasonable detail,
either on the face of the financial statements or in the notes thereto and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, if applicable, the financial condition and results of operations of
the Company and its Restricted Subsidiaries separately from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company) and, with respect to the annual information only, a report thereon by
the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the SEC, the Company will file a copy of all such information
and reports with the SEC for public availability (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.
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 4.4. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year of the Company (which ends on December 31 of each year),
commencing December 31, 1997, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company and its Subsidiaries have kept, observed,
performed and fulfilled their
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obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
and each of its Subsidiaries has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what action the
Company is taking or proposes to take with respect thereto) and that, to the
best of his knowledge, no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Notes are prohibited or if such event has occurred, a description of the event
and what action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, and so long as the Company's
independent public accountants agree, the year-end financial statements
delivered pursuant to Section 4.3 above shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 of this Indenture or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, as soon as possible and in any event within five days
after any Officer becoming aware of any Default or Event of Default an Officers'
Certificate specifying such Default or Event of Default what action the Company
is taking or proposes to take with respect thereto.
SECTION 4.5. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies,
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not reasonably expected to be
adverse in any material respect to the Holders of the Notes.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that they may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that they
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
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SECTION 4.7. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company)
other than dividends or other payments or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or other
payments or distributions payable to the Company or any Wholly-Owned Restricted
Subsidiary of the Company; (ii) purchase, redeem or otherwise acquire or retire
for value (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company (other than any such Equity Interests owned by any Wholly-Owned
Restricted Subsidiary of the Company) or any direct or indirect parent of the
Company; (iii) make any principal payment on or with respect to, purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Notes or any Guarantee (other than intercompany
Indebtedness payable to the Company or a Restricted Subsidiary by any Restricted
Subsidiary), except at its stated maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto, have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the test set forth in Section
4.9(a) hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (ii) and (iii) of the next succeeding paragraph), is less than
the sum of (i) 25% of the aggregate cumulative Consolidated Net Income of
the Company for the period (taken as one accounting period) from and after
the last day of the first fiscal quarter ending immediately following the
Issue Date to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit); plus (ii) 100% of the aggregate net
cash proceeds received by the Company from the issue or sale since the
Issue Date of Equity Interests of the Company (other than Disqualified
Stock) or of Disqualified Stock or Indebtedness represented by securities
of the Company that have been converted into such Equity Interests (other
than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company and other than Disqualified
Stock or other Indebtedness represented by securities that have been
converted into Disqualified Stock); plus (iii) to the extent that any
Restricted Investment that was made after the Issue Date is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment.
The provisions of this Section 4.7 shall not prohibit the following
Restricted Payments:
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(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would have complied with the provisions of this Indenture;
(ii) the purchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company in exchange
for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of other Equity Interests
of the Company (other than any Disqualified Stock); provided, that the
amount of any such net cash proceeds that are utilized for such
redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the preceding paragraph;
(iii) the payment of principal on, or purchase, redemption,
defeasance or other acquisition or retirement for value of Indebtedness
with the net cash proceeds from an incurrence of, Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other
than Disqualified Stock); provided, that the amount of any such net
cash proceeds from any such sale of Equity Interests that are utilized
for such redemption, repurchase, retirement or other acquisition shall
be excluded from clause (c)(ii) of the preceding paragraph;
(iv) payments in an amount not to exceed $500,000 in the
aggregate during any fiscal year of the Company (plus any such amount
not utilized in the preceding fiscal year) in connection with the
repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company held by an employee or director of
the Company or any of its Subsidiaries, related to compensation or
severance arrangements;
(v) advances to a Securitization Trust required to be made by
the Company or any Restricted Subsidiary (in its capacity or the holder
of the residual interest in such trust) if such advances rank senior in
right of payment to all other interests in, and Indebtedness of, such
trust; and
(vi) the making and consummation of any offer to repurchase
any Indebtedness upon the occurrence of a change of control under and
as defined in the documents governing such Indebtedness; provided, that
in connection with Indebtedness incurred after the Issue Date, the
definition of "change of control" is the same in all material respects
as the definition of "Change of Control" set forth in this Indenture
and payments pursuant thereto are not required to be made prior to the
date on which the Change of Control Payment is required to be made
under this Indenture and, with respect to any Indebtedness subordinated
in right of payment to the Notes, no sooner than 30 days after the date
such Change of Control Offer is required to be made.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this
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Section 4.7. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments other than cash shall be the fair
market value (evidenced by an Officers' Certificate on the date of the
Restricted Payment) of the asset(s) or securities proposed to be transferred or
issued by the Company or such Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. The fair market value of any non-cash
Restricted Payment in excess of $1.0 million shall be determined by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed.
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(A) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (B) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) agreements relating to
Indebtedness as in effect as of the Issue Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
additions (including additional Warehouse Facilities), replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, additions,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the agreements
relating to Indebtedness as in effect on the Issue Date, (b) applicable law, (c)
any instrument governing Acquired Debt or Capital Stock of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Acquired Debt was incurred or such
Capital Stock was issued or its terms amended in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the property or assets of any Person, other than
the Person or the property or assets of the Person, so acquired, provided that
such Person is not taken into account in determining on a pro forma basis
whether such acquisition subject to such Acquired Debt was permitted by the
terms of this Indenture, (d) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (e) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, and (f) Permitted Refinancing
Indebtedness; provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced.
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SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) or issue
Disqualified Stock, and the Company shall not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock except for preferred stock
issued to and held by the Company or any Wholly-Owned Restricted Subsidiary of
the Company, provided that any subsequent issuance or transfer of Capital Stock
that results in such Wholly-Owned Restricted Subsidiary ceasing to be a
Wholly-Owned Restricted Subsidiary of the Company or any subsequent transfer of
such preferred stock (other than to the Company or any of its Wholly-Owned
Restricted Subsidiaries) will be deemed, in each case, to constitute the
issuance of such preferred stock by the issuer thereof; provided, however, that
the Company or any Subsidiary Guarantor may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock and any Subsidiary Guarantor may
issue preferred stock if, on the date of such incurrence or issuance and after
giving effect thereto, the Consolidated Leverage Ratio does not exceed 2.0 to
1.0.
(b) The foregoing provisions will not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount
not to exceed $15.0 million in the aggregate since the Issue Date;
(ii) the existence of Warehouse Facilities, regardless of
amount, and the incurrence of Permitted Warehouse Debt by the Company
or any of its Restricted Subsidiaries; provided, however, that to the
extent any such Indebtedness of the Company or a Restricted Subsidiary
of the Company ceases to constitute Permitted Warehouse Debt, to such
extent such Indebtedness shall be deemed to be incurred by the Company
or such Restricted Subsidiary of the Company, as the case may be, at
such time;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness owing to the Company or any
of its Restricted Subsidiaries; provided, however, that (x)(A) any
subsequent issuance or transfer of any Capital Stock which results in
any such Indebtedness being held by a Person other than a Restricted
Subsidiary of the Company and (B) any sale or transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary of the Company, shall be deemed, in each case, to constitute
the incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, and (y) any Indebtedness of the Company
to any Restricted Subsidiary is permitted by Section 4.7 hereof;
(iv) the incurrence by the Company of Indebtedness represented
by the Notes and the incurrence by the Subsidiary Guarantors of
Guarantees;
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(v) Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness with respect to
Indebtedness that was permitted by this Indenture to be incurred or
that was outstanding at the Issue Date;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations directly related to (w)
Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted by this Indenture to be incurred, (x) Receivables
held by the Company or a Restricted Subsidiary pending sale in a
Securitization, (y) Receivables of the Company or a Restricted
Subsidiary that have been sold pursuant to a Warehouse Facility; or (z)
Receivables that the Company or a Restricted Subsidiary reasonably
expects to purchase or commit to purchase, finance or accept as
collateral; provided, however, that, in the case of each of the
foregoing clauses (w) through (z), such Hedging Obligations are
eligible to receive hedge accounting treatment in accordance with GAAP
as applied by the Company and its Restricted Subsidiaries on the Issue
Date;
(viii) the incurrence of Acquired Debt by the Company or any
Subsidiary Guarantor in a principal amount not to exceed $15.0 million
in the aggregate since the Issue Date (reduced by the amount of
Acquired Debt repaid with Net Proceeds of Asset Sales of the Restricted
Subsidiary acquired subject to such Acquired Debt) that is without
recourse to the Company or any of its Restricted Subsidiaries or any of
their respective assets (other than the Subsidiary Guarantor acquired
subject to such Acquired Debt), and is not guaranteed by any such
Person;
(ix) the Guarantee by the Company or any of the Subsidiary
Guarantors of the Indebtedness of the Company or another Subsidiary
Guarantor that was permitted to be incurred by another provision of
this Section 4.9;
(x) the incurrence by the Company and the Subsidiary
Guarantors of Indebtedness in an aggregate principal amount at any time
outstanding not to exceed $10.0 million; and
(xi) (A) the incurrence by an Unrestricted Subsidiary of the
Company of Non-Recourse Debt (including, without limitation,
Non-Recourse Debt that would constitute Permitted Warehouse Debt if
incurred by a Restricted Subsidiary of the Company); provided, however,
that if any such Indebtedness ceases to be Non-Recourse Debt of the
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary and (B) the
issuance by an Unrestricted Subsidiary of the Company of preferred
stock.
(c) The Company shall not, and shall not permit any Subsidiary
Guarantor to, incur any Indebtedness that is contractually subordinated to any
Indebtedness of the Company or any such Subsidiary Guarantor unless such
Indebtedness is also contractually subordinated to the Notes, or the Subsidiary
Guarantee of such Subsidiary Guarantor (as applicable), on substantially
identical terms; provided, however, that no Indebtedness shall be deemed to be
contractually subordinated to any other Indebtedness solely by virtue of being
unsecured or of limited recourse.
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(d) For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Indebtedness described in clauses (i) through (xi) of Section
4.9(b) above or is entitled to be incurred pursuant to Section 4.9(a), the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to Section 4.9(a).
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by an
Officers' Certificate delivered to the Trustee and, with respect to any Asset
Sale involving consideration in excess of $5.0 million, a resolution of the
Company's Board of Directors) of the assets or Equity Interests issued or sold
or otherwise disposed of and (ii) at least 85% (or, in the case of the sale or
other disposition of any Residual Receivables (or interest therein), 50%) of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of Cash Equivalents; provided that the amount of (x) any liabilities
(as shown on the Company's or such Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any Guarantee thereof) that are expressly assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (y) any currencies,
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into Cash Equivalents within 30 days after receipt
(to the extent of the cash received), shall be deemed to be Cash Equivalents for
purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset
Sale subject to this covenant, the Company or the Restricted Subsidiary, as the
case may be, may apply an amount equal to 100% of such Net Proceeds to (i) an
Investment (other than in Receivables that, at the time of purchase, are not
Eligible Receivables), or (ii) the purchase of Receivables that are, at the time
of purchase, Eligible Receivables, or (iii) the making of any capital
expenditure, or (iv) the acquisition of any other tangible assets, in each case,
in or with respect to a Permitted Business. Pending the final application of any
such Net Proceeds, the Company or such Restricted Subsidiary may temporarily
reduce outstanding Indebtedness or otherwise invest such Net Proceeds in any
manner not prohibited by this Indenture. Any Net Proceeds from Asset Sales not
applied or invested as provided in the preceding sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, Company shall make an offer to all Holders of
the Notes (an "Asset Sale Offer") to purchase the maximum principal amount of
the Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon to the date of purchase, in accordance with the
procedures set forth in this Indenture.
Notwithstanding the foregoing, the Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly sell or
otherwise convey or dispose of any Residual
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Receivables or interest therein for consideration of which less than 85% is in
the form of Cash Equivalents, unless: (i) from and after the Issue Date, upon
the creation of any Senior Residual Receivables by the Company or any Restricted
Subsidiary, the Company shall designate, by an Officers' Certificate delivered
to the Trustee, Senior Residual Receivables with an aggregate book value equal
to 25% of the book value of the Senior Residual Receivables so created as
Retained Residual Receivables ("Retained Residual Receivables") and no such
designation shall have been revoked except as provided below; (ii) none of the
Residual Receivables sold, conveyed or otherwise disposed of constitute Retained
Residual Receivables unless after giving effect to such sale, conveyance or
other disposition the aggregate amount of Senior Residual Receivables of the
Company and its Restricted Subsidiaries which are unencumbered by any Lien (of
which no more than 25% of the aggregate book value thereof shall constitute
Retained Residual Receivables) would be greater than or equal to 250% of all
Senior Indebtedness of the Company and its Restricted Subsidiaries; and (iii)
after giving effect to any such sale, conveyance or other disposition of
Residual Receivables the aggregate amount of Senior Residual Receivables of the
Company and its Restricted Subsidiaries which are unencumbered by any Lien (of
which not more than 25% of the aggregate book value thereof shall constitute
Retained Residual Receivables) would be greater than or equal to 150% of all
Senior Indebtedness of the Company and its Restricted Subsidiaries. From time to
time, the Company may revoke the designation of any Senior Residual Receivable
as a Retained Residual Receivable if the Company simultaneously designates as
Retained Residual Receivables (in addition to any other such designation
otherwise required by this Indenture) Senior Residual Receivables (not subject
to any Lien) with an aggregate book value equal to or greater than that of the
Senior Residual Receivables as to which such designation has been revoked. Any
determination of the amount of Residual Receivables shall be based on the
consolidated balance sheet of the Company and its Restricted Subsidiaries for
the most recently ended fiscal quarter for which financial statements are
available, after giving pro forma effect to the Asset Sale for which such
determination is being made and to any other sale of or Lien on or reduction of
Residual Receivables since the date of such balance sheet.
To the extent that the aggregate amount of the Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company or the
Restricted Subsidiary, as the case may be, may use any remaining Excess Proceeds
for general corporate purposes. If the aggregate principal amount of the Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing an "Affiliate Transaction"), unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies
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with clause (i) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors and (b) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Company or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that Affiliate
Transactions shall not include (A) any employment agreement, stock option,
employee benefit, indemnification, compensation (including the payment of
reasonable fees to Directors of the Company or its Restricted Subsidiaries who
are not employees of the Company or its Restricted Subsidiaries), business
expense reimbursement or other employment-related agreement, arrangement or plan
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business of the Company or such Restricted Subsidiary, (B)
transactions between or among the Company and/or its Restricted Subsidiaries not
otherwise prohibited by this Indenture, (C) loans or advances to employees in
the ordinary course of business of the Company or its Restricted Subsidiaries,
but in any event not to exceed $500,000 in aggregate principal amount
outstanding at any one time, and (D) Restricted Payments other than Restricted
Investments that are permitted by Section 4.7 hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.
SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses.
SECTION 4.14. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any of the Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture, the Notes or any Subsidiary Guarantee unless such
consideration is offered to be paid or is paid to all Holders of Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
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corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of the
Notes will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
the Notes on the date specified in such notice, which date shall be no earlier
than the earliest date permitted under Rule 14e-1 and no later than 60 days from
the date such notice is mailed (the "Change of Control Payment Date"), pursuant
to the procedures required by this Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.16, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all the Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all the
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of the Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
the Notes so tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided that each such new Note will
be in a principal amount of $1,000 or an integral multiple thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(c) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer and purchases
all the Notes validly tendered and not withdrawn under such Change of Control
Offer.
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SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture, then the Company shall
cause such newly acquired or created Subsidiary to execute a Subsidiary
Guarantee and deliver an Opinion of Counsel, in accordance with the terms of
this Indenture, except this Section 4.17 shall not apply to any Subsidiaries
that have properly been designated as Unrestricted Subsidiaries in accordance
with this Indenture for so long as they continue to constitute Unrestricted
Subsidiaries.
ARTICLE 5
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate, or merge with or into (whether or
not the Company is the surviving corporation) or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation, or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction, no
Default or Event of Default exists; (iv) each of the Subsidiary Guarantors
confirms its obligations under the Subsidiary Guarantees and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee and (v) except in the case of a merger of the Company with or into a
Wholly Owned Subsidiary of the Company, the Company or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in the first paragraph of Section
4.9.(a)
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale,
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lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation and
not to the Company) and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein; provided, however, that the predecessor Company shall not
be relieved from the obligation to pay the principal of and interest on the
Notes except in the case of a sale of all of the Company's assets that meet the
requirements of Section 5.1 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the
Notes and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.7, 4.9, 4.10, 4.12, 4.16 or 5.1 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness
under which there has been a Payment Default or, together with the
principal amount of any other such Indebtedness the maturity of which has
been so accelerated, aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant
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Subsidiary and such judgment or judgments remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $5.0
million;
(g) the Company or any of its Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Restricted
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors,
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Restricted Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) any Subsidiary Guarantee shall be held in any judicial
proceeding to be invalid or unenforceable or shall cease for any reason
to be in full force and effect or any Subsidiary Guarantor or any
Person acting on behalf of any Subsidiary Guarantor shall deny or
disaffirm its obligations under its Guarantee.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
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SECTION 6.2. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.1 hereof with respect to the Company, any
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Restricted Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.1 hereof occurs with respect to the Company, any of its
Restricted Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Restricted Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after August 1, 2001, by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.7 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 1, 2001,
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 1 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount to the date of payment that would otherwise be due but for the provisions
of this sentence):
Year Percentage
---- ----------
1997........................................... 109.500%
1998........................................... 108.250%
1999........................................... 107.000%
2000........................................... 105.750%
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal or interest on the
Notes, to enforce the performance of any provision of the Notes, this Indenture
or the Subsidiary Guarantees.
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The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured 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 6.5. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may 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
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders of Notes, or that may involve the Trustee in
personal liability.
SECTION 6.6. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the
Notes only if:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
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A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder. Holders of the Notes may
not enforce this Indenture or the Notes except as provided in this Indenture.
SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Note, on or after the respective due dates expressed in the Note
including in connection with an offer to purchase, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any and interest,
respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, 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 of a
Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform 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 mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and
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complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) 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, 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
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this indenture.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds
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from the Notes or any money paid to the Company or upon the Company's direction
under any provision of this Indenture, it shall not be responsible for the use
or application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement herein or any statement in the
Notes or any other document in connection with the sale of the Notes or pursuant
to this Indenture other than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each February 1st beginning with February 1, 1998,
and for so long as Notes remain outstanding, the Trustee shall mail to the
Holders of the Notes a brief report dated as of such reporting date that
complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC in accordance with
TIA ss. 313(d).
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as shall from time to time be agreed to in writing for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses, including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee) incurred by it arising out of or
in connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.7) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may
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seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
The provisions of this Section 7.7 shall survive the termination of
this Indenture.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee. The Holders of Notes of a majority in principal amount of
the then outstanding Notes may remove the Trustee at any time by so notifying
the Trustee and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject to its lien provided for in Section 7.7
hereof. Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article 7.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee, provided that such corporation shall be otherwise qualified and
eligible under this Article 7. In case any Notes shall have been authenticated,
but not delivered by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal
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or state authorities and that has a combined capital and surplus of at least
$100.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b). If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.10, it shall resign immediately in the
manner provided for in this Article.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee that has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
SECTION 7.12. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
form other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.5 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section 8.4
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due,
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(b) the Company's obligations with respect to such Notes under Article 2 and
Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.2 notwithstanding the prior exercise of
its option under Section 8.3 hereof.
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.16 and 5.1 hereof with respect to the outstanding Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, 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 covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.1 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.1 hereof of the option applicable to this
Section 8.3 hereof, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, Sections 6.1(c) through 6.1(f) hereof shall not constitute
Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit or cause to be deposited with
the Trustee, in trust, for the benefit of the Holders, cash in United
States dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes on the
stated date for payment thereof or on the applicable redemption date, as
the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the
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Internal Revenue Service a ruling or (B) since the date 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 of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article 8 concurrently with such incurrence) or insofar as Sections 6.1(g)
or 6.1(h) hereof is concerned, at any time in the period ending on the 91st
day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
the Subsidiary Guarantors with the intent of defeating, hindering, delaying
or defrauding creditors of the Company, the Subsidiary Guarantors or
others; 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 or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of
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this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of
the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, 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 cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal 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 Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6. REPAYMENT TO THE COMPANY.
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, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured 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 the New York Times and The Wall Street Journal (national
edition), 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
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the
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Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency, provided that such
action shall not adversely affect the interests of the Holders in any
material respect;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of
the Code) or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's and the Subsidiary
Guarantors' obligations to the Holders in the case of a merger or
consolidation not prohibited by this Indenture;
(d) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
hereunder of any Holder; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
(including Section 3.9, 4.10 and 4.16 hereof) and the Subsidiary Guarantees and
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.4
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and 6.7 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture, the
Subsidiary Guarantees or the Notes may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for the
Notes).
Upon the request of the Company and each Subsidiary Guarantor
accompanied by a resolution of its Board of Directors authorizing the execution
of any such amended or supplemental Indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.2 hereof, the Trustee shall join with the Company and the
Subsidiary Guarantors in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company or the Subsidiary Guarantors
with any provision of this Indenture, the Subsidiary Guarantees or the Notes.
However, without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the percentage in principal amount of Notes, the consent of
whose Holders is required for an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.9, 4.10 and 4.16
hereof;
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(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in currency other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 4.10 or 4.16 hereof);
(h) release any Subsidiary Guarantor from its obligations under this
Indenture or its Guarantee of the Notes (other than in accordance with this
Indenture);
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(j) modify the provisions of this Section 9.2.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.1. SUBSIDIARY GUARANTEE.
Each of the Subsidiary Guarantors hereby, jointly and severally, fully
and unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. The Subsidiary Guarantors hereby agree
that their obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that the Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise to
return to the Company or Subsidiary Guarantors, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the Company or
Subsidiary Guarantors, any amount paid by any such entity to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. Each Subsidiary Guarantor agrees that it
shall not be entitled to any
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right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 for the purposes of the Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purpose of this
Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the exercise of
such right does not impair the rights of the Holders under the Subsidiary
Guarantee.
SECTION 10.2. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 10.1, each
Subsidiary Guarantor hereby agrees that a notation on such Subsidiary Guarantee
substantially in the form of Exhibit B, which is part of this Indenture, shall
be endorsed by an officer of such Subsidiary Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 10.1 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
SECTION 10.3. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor,
or shall prevent any sale or conveyance of the property of a Guarantor as an
entirety, or substantially as an entirety, to the Company, unless immediately
after giving effect to such transaction, a Default or Event of Default exists.
(b) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into (whether or not such Subsidiary Guarantor is
the surviving Person) another corporation, Person or entity, whether or not
affiliated with such Subsidiary Guarantor, or successive consolidations or
mergers in which a Subsidiary Guarantor or its successor or successors shall be
a party or parties, or shall prevent any sale
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or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety or any sale or other disposition of all the capital
stock of any Subsidiary Guarantor, to a corporation other than the Company
(whether or not affiliated with the Subsidiary Guarantor) authorized to acquire
and operate the same if immediately after giving effect to such transaction, no
Default or Event of Default exists; provided, however, that each Subsidiary
Guarantor hereby covenants and agrees that, upon any such consolidation, merger,
sale or conveyance, the Subsidiary Guarantee endorsed on the Notes, and the due
and punctual performance and observance of all of the covenants and conditions
of this Indenture to be performed by such Subsidiary Guarantor, shall be
expressly assumed (in the event that the Subsidiary Guarantor is not the
surviving corporation in the merger), by supplemental indenture satisfactory in
form and substance to the Trustee, executed and delivered to the Trustee, by the
corporation formed by such consolidation or into which the Subsidiary Guarantor
shall have been merged, or by the corporation which shall have acquired such
property. In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form and substance to the
Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Subsidiary Guarantor, such successor corporation shall
succeed to and be substituted for the Subsidiary Guarantor with the same effect
as if it had been named herein as a Subsidiary Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
SECTION 10.4. RELEASES FOLLOWING SALE OF ASSETS.
(a) If the assets sold in any Asset Sale permitted by this Indenture
include all or substantially all of the assets of any Subsidiary Guarantor or
all of the capital stock of any Subsidiary Guarantor, then such Subsidiary
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Subsidiary Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all or substantially all of the
assets of a Subsidiary Guarantor) shall be released and relieved of its
obligations under its Subsidiary Guarantee made to any Person that is not an
Affiliate of the Company; provided that in the event of such an Asset Sale, the
Net Proceeds from such sale or other disposition are treated in accordance with
the provisions of Section 4.10 hereof. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee. Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Subsidiary Guarantor under this Indenture as provided in this Article 10.
(b) Upon the designation of a Subsidiary Guarantor as an Unrestricted
Subsidiary in accordance with the terms of this Indenture, such Subsidiary
Guarantor shall be released and relieved of
57
<PAGE>
its obligations under its Subsidiary Guarantee and this Indenture. Upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion of
Counsel to the effect that such designation of such Subsidiary Guarantor as an
Unrestricted Subsidiary was made by the Company in accordance with the
provisions of this Indenture, also including without limitation Section 4.7 of
the Indenture, the Trustee shall execute any documents reasonably required in
order to evidence the release of such Subsidiary Guarantor from its obligations
under its Subsidiary Guarantee. Any Subsidiary Guarantee not released from its
obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Notes and for the other obligations
of any Subsidiary Guarantee under the Indenture as provided in this Article 10.
SECTION 10.5. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 10 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 10 in place of the Trustee.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 11.2. NOTICES.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company:
Delta Financial Corporation
1000 Woodbury Road, Suite 200
Woodbury, New York 11797-9003
Attention: Marc E. Miller
Telecopier No.: (516) 364-9450
58
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If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopier No.: (212) 815-5915
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
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.
SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
59
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SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
11.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(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 such Person, 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
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 11.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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SECTION 11.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company or a Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company or the Subsidiary Guarantors under the Notes, this
Indenture, the Guarantees or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of the Notes by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
SECTION 11.8. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS .
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS AND ASSIGNS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors and assigns. All agreements of the Trustee in this Indenture
shall bind its successors and assigns.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes 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.
61
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SECTION 11.12. LEGAL HOLIDAYS.
In any case where any interest payment date, redemption date, purchase
date or stated maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Notes) 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 with the same force and effect
as if made on the interest payment date, redemption date, purchase date or at
the stated maturity, provided that no interest shall accrue for the period from
and after such interest payment date, redemption date, purchase date or at the
stated maturity, as the case may be.
SECTION 11.13. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
62
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SIGNATURES
DATED JULY 23, 1997 DELTA FINANCIAL CORPORATION
BY: /s/ HUGH MILLER
-------------------------------
NAME: HUGH MILLER
TITLE: CHIEF EXECUTIVE OFFICER
DATED JULY 23, 1997 DELTA FUNDING CORPORATION
BY: /s/ HUGH MILLER
-------------------------------
NAME: HUGH MILLER
TITLE: CHIEF EXECUTIVE OFFICER
DATED JULY 23, 1997 DF SPECIAL HOLDINGS CORPORATION
BY: /s/ HUGH MILLER
-------------------------------
NAME: HUGH MILLER
TITLE: CHIEF EXECUTIVE OFFICER
DATED JULY 23, 1997 FIDELITY MORTGAGE, INC.
BY: /s/ HUGH MILLER
-------------------------------
NAME: HUGH MILLER
TITLE: CHIEF EXECUTIVE OFFICER
<PAGE>
DATED JULY 23, 1997 FIDELITY MORTGAGE (FLORIDA), INC.
BY: /s/ HUGH MILLER
-------------------------------
NAME: HUGH MILLER
TITLE: CHIEF EXECUTIVE OFFICER
DATED JULY 23, 1997 THE BANK OF NEW YORK
BY: /s/ MARY LAGUMINA
-------------------------------
NAME: MARY LAGUMINA
TITLE: Authorized Signatory
<PAGE>
EXHIBIT A
(Face of Note)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP/CINS ____________
9 1/2% Senior Notes due 2004
REGISTERED REGISTERED
No. R-___ $___________
DELTA FINANCIAL CORPORATION
promises to pay to _________________________________________________
or registered assigns,
the principal sum of $ ( DOLLARS)
------------------------------------------
on August 1, 2004.
Interest Payment Dates: August 1 and February 1
Record Dates: January 15 and July 15
DATED:
DELTA FINANCIAL CORPORATION
BY:
------------------------------
NAME:
TITLE:
This is one of the Notes referred to in the within-mentioned Indenture:
DATED:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-1
<PAGE>
(Back of Note)
DELTA FINANCIAL CORPORATION
9 1/2% Senior Notes due 2004
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Delta Financial Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 9
1/2% per annum from July 23, 1997 until maturity. The Company will pay interest
semi-annually on February 1 and August 1 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be February 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interests (without regard to any applicable grace period) at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the January 15th or July 15th next preceding the
Interest Payment Date, even if such Notes are cancelled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium, if any, and interest at the office or agency of the
Company maintained for such purpose within or without The City and State of New
York, or, at the option of the Company, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium on, all Notes and
all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
July 23, 1997 ("Indenture") between the Company, the Subsidiary Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such
A-2
<PAGE>
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $150,000,000.00
in aggregate principal amount.
5. OPTIONAL REDEMPTION. The Company shall not have the option to redeem
the Notes pursuant to Section 3.7 of the Indenture prior to August 1, 2001.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, at any time or from time to time, upon not less than 30 nor more than
60 days' prior notice to each Holder, at the following redemption prices
(expressed as percentages of principal amount) plus accrued and unpaid interest
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on August 1 of the years indicated below:
Year Percentage
---- ----------
2001.............................................. 104.750%
2002.............................................. 102.375%
2003 and thereafter .............................. 100.000%
Any redemption pursuant to Section 3.7 of the Indenture shall
be made pursuant to the provisions of Sections 3.1 through 3.6 thereof.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of the
Notes will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase. Within ten days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sale, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer to all
Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.9 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
thereon to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
(or the Restricted Subsidiary) may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the subject
of an offer to purchase will receive an Asset Sale Offer from the Company prior
to any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes.
A-3
<PAGE>
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
with Section 4.7, 4.9, 4.10, 4.12, 4.16 or 5.1 of the Indenture; (iv) failure by
the Company for 30 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding to
comply with certain other agreements in the Indenture or the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company which
default constitutes a Payment Default or results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries; and (viii) certain events relating to the failure of
any Subsidiary Guarantee. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any
A-4
<PAGE>
trust or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
DELTA FINANCIAL CORPORATION
1000 WOODBURY ROAD, SUITE 200
WOODBURY, NEW YORK 11797-9003
ATTENTION: HUGH MILLER
A-5
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note, for value received, to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
attorney to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
------------------------------------------------------
Your Signature:
---------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:*
*NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever and must be guaranteed. The signature(s)
should be guaranteed by an eligible guarantor institution (banks, stockholders,
savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended.
A-6
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.16 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.16
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$
-----------
Date: Your Signature:
--------------------------- --------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
------------------------
Signature Guarantee:*
*NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever and must be guaranteed. The signature(s)
should be guaranteed by an eligible guarantor institution (banks, stockholders,
savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended.
A-7
<PAGE>
EXHIBIT B
(Form of Subsidiary Guarantee)
SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor, hereby, jointly and
severally with the other Subsidiary Guarantors, fully and unconditionally
guarantees to each Holder of Notes authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Notes or the Obligations of the Company
to the Holders or the Trustee under the Notes or under the Indenture, that: (a)
the principal of, and premium, if any, and interest on the Notes shall be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on overdue principal of interest on the Note, if any,
if lawful and all other Obligations of the Company to the Holders or the Trustee
under the Indenture or under the Notes shall be promptly paid in full or
performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
for whatever reason, the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately.
The Obligations of the Subsidiary Guarantors to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 10 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 10 of the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder, as such,
past, present or future, of the Subsidiary Guarantor shall have any personal
liability under this Subsidiary Guarantee by reason of his or its status as such
director, officer, employee, incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Subsidiary Guarantor and its
respective successors and assigns to the extent set forth in the Indenture until
full and final payment of all of the Company's Obligations under the Notes and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder of or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This a
Subsidiary Guarantee of payment and not a guarantee of collection.
In certain circumstances more fully described in the Indenture, any
Subsidiary Guarantor may be released from its liability under this Subsidiary
Guarantee, and any such release will be effective whether or not noted hereon.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
B-1
<PAGE>
For purposes hereof, each Subsidiary Guarantor's liability will be that
amount from time to time equal to the aggregate liability of such Subsidiary
Guarantor hereunder, but shall be limited to the lesser of (i) the aggregate
amount of the Obligations of the Company under the Notes and the Indenture and
(ii) the amount, if any, which would not have (A) rendered such Subsidiary
Guarantor "insolvent" (as such term is defined in the federal Bankruptcy Law and
in the Debtor and Creditor Law of the State of New York) or (B) left it with
unreasonably small capital at the time its Subsidiary Guarantee of the Notes was
entered into, after giving effect to the incurrence of existing Indebtedness
immediately prior to such time; provided that, it shall be a presumption in any
lawsuit or other proceeding in which such Subsidiary Guarantor is a party that
the amount guaranteed pursuant to its Subsidiary Guarantee is the amount set
forth in clause (i) above unless any creditor, or representative of creditors of
such Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of
such Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate
liability of such Subsidiary Guarantor is limited to the amount set forth in
clause (ii). The Indenture provides that, in making any determination as to the
solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with
the previous sentence, the right of such Subsidiary Guarantor to contribution
from other Subsidiary Guarantors and any other rights such Subsidiary Guarantor
may have, contractual or otherwise, shall be taken into account.
This Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any part of the Company's assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Notes is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any Holder of the Notes, whether as a "voidable preference,"
"fraudulent transfer," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Notes shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
The Subsidiary Guarantors or any particular Subsidiary Guarantor shall
be released from this Guarantee upon the terms and subject to certain conditions
provided in the Indenture and any supplemental indentures thereto.
By delivery of a supplemental indenture to the Trustee in accordance
with the terms of the Indenture, each Person that becomes a Subsidiary Guarantor
after the date of the Indenture will be deemed to have executed and delivered
this Subsidiary Guarantee for the benefit of the Holder of the Notes upon which
this Subsidiary Guarantee is endorsed with the same effect as if such Subsidiary
Guarantor was named below and has executed and delivered this Subsidiary
Guarantee.
Subject to the next following paragraph, each Subsidiary Guarantor
hereby certifies and warrants that all acts, conditions and things required to
be done and performed and to have happened precedent to the creation and
issuance of this Subsidiary Guarantee and to constitute the same valid
obligation of the Subsidiary Guarantor have been done and performed and have
happened in due compliance with all applicable laws.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is endorsed shall have been executed by the Trustee under
the Indenture.
B-2
<PAGE>
Reference is made to the Indenture for further provisions with respect
to this Subsidiary Guarantee.
THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
B-3
<PAGE>
SIGNATURES
DATED JULY 23, 1997 DELTA FUNDING CORPORATION
BY:
-----------------------------
NAME: MARC E. MILLER
TITLE: VICE PRESIDENT
DATED JULY 23, 1997 DF SPECIAL HOLDINGS CORPORATION
BY:
-----------------------------
NAME: MARC E. MILLER
TITLE: VICE PRESIDENT
DATED JULY 23, 1997 FIDELITY MORTGAGE, INC.
BY:
-----------------------------
NAME: MARC E. MILLER
TITLE: VICE PRESIDENT
<PAGE>
DATED JULY 23, 1997 FIDELITY MORTGAGE (FLORIDA), INC.
BY:
-----------------------------
NAME: MARC E. MILLER
TITLE: VICE PRESIDENT
<PAGE>
[Letterhead of Delta Financial Corporation]
NEWS ANNOUNCEMENT
CONTACT:
Hugh Miller
President and Chief Executive Officer David C. Collins
Delta Financial Corporation Jaffoni & Collins Incorporated
516/364-8500 212/505-3015 or [email protected]
FOR IMMEDIATE RELEASE
DELTA FINANCIAL PRICES $150 MILLION OF SENIOR NOTES
Woodbury, NY, (July 21, 1997) - Delta Financial Corporation (NYSE: DFC)
announced that it has commenced a $150 million offering of senior notes with a
coupon of 9.5% and a maturity of August 1, 2004. The notes were priced at 99.517
to yield 9.595%. It is anticipated that the notes will be rated B+ by Standard &
Poor's Ratings Service, B1 by Moody's Investors Services and BB- by Fitch
Investors Service.
The net proceeds from the offering will be used to repay outstanding
indebtedness, to fund future loan originations and purchases, to support
securitization transactions, to fund the expansion of Delta's Fidelity Mortgage
retail network and for general corporate purposes.
The offering is being managed by an underwriting group led by Donaldson, Lufkin
& Jenrette Securities Corporation, Lehman Brothers and Smith Barney Inc.
Founded in 1982, Delta Financial Corporation is a Woodbury, NY-based specialty
consumer finance company engaged in originating, acquiring, selling and
servicing non-conforming home equity loans. Delta's loans are primarily secured
by first mortgages on one- to four-family residential properties. The Company
originates home equity loans primarily in 21 states through a network of
approximately 1,000 brokers and correspondents as well as through its recently
acquired Fidelity Mortgage retail operations.
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