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Registration No. 333-77079
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FIRST SIERRA FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0438432
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
600 TRAVIS STREET, SUITE 7050
HOUSTON, TEXAS 77002
(713) 229-6800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
THOMAS J. DEPPING
PRESIDENT
FIRST SIERRA FINANCIAL, INC.
600 TRAVIS STREET, SUITE 7050
HOUSTON, TEXAS 77002
(713) 229-6800
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copies To:
Scott N. Gierke, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED MAY 12, 1999
PROSPECTUS
$300,000,000
FIRST SIERRA FINANCIAL, INC.
DEBT SECURITIES AND COMMON STOCK
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We may sell from time to time for proceeds of up to $300,000,000:
o our debt securities;
o shares of our Common Stock; or
o any combination of the foregoing.
We will provide specific terms of the securities which we may offer in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
Our Common Stock is quoted on the NASDAQ National Market under the
symbol "BTOB".
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
FACTORS THAT YOU SHOULD CONSIDER BEFORE PURCHASING ANY SECURITIES.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is _______________, 1999.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC using a "shelf" registration process. Under this process, we may sell
any combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $300,000,000. This prospectus provides
you with a general description of the securities we may offer. Each time we
offer to sell securities, we will provide a supplement to this prospectus that
will contain specific information about the terms of that offering. The
prospectus supplement may also add, update, or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with the additional information described under the heading
WHERE YOU CAN FIND MORE INFORMATION, below.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy reports, statements or
other information at the SEC's public reference rooms in Washington, D.C., New
York, New York or Chicago, Illinois. You can call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov."
As noted above, we have filed with the SEC a registration statement on
Form S-3 to register the securities. This prospectus is part of that
registration statement and, as permitted by the SEC's rules, does not contain
all the information set forth in the registration statement. For further
information you should refer to the registration statement and to the exhibits
and schedules filed as part of the registration statement. You can review and
copy the registration statement and its exhibits and schedules at the public
reference facilities maintained by the SEC as described above. The registration
statement, including its exhibits and schedules, is also available on SEC's web
site.
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and the
information that we file with the SEC later will automatically update and
supersede this information. We incorporate by reference in this prospectus the
following:
o our Form 10-K Annual Report for the year ended December 31,
1998;
o our Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
o the description of our Common Stock included in our Form 8-A
Registration Statement;
o the description of our Rights to Purchase Shares of Junior
Preferred Stock, Series C, included in our Form 8-A
Registration Statement; and
o any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
until we sell all of the securities.
You may request a copy of these filings, at no cost, by writing or
telephoning us at First Sierra Financial, Inc., 600 Travis Street, Houston, TX
77002, Attention: Secretary; telephone no. (713) 229-6801.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. YOU SHOULD
NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this prospectus and any prospectus
supplement or in the information incorporated by reference may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such information may involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
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FIRST SIERRA FINANCIAL, INC.
First Sierra Financial, Inc. is a leading provider of equipment lease
financing products and services. We acquire and originate equipment leases and
offer servicing, consulting and technology solutions to our lease financing
customers. The leases we finance relate to a wide range of equipment, including
computers and peripherals, software, medical, dental, diagnostic,
telecommunications, office, automotive servicing, hotel security, food services,
tree service and industrial. The underlying equipment generally has a purchase
price of less than $250,000 with an average of approximately $31,000 for leases
financed in 1998.
We have established strategic alliances with a network of independent
leasing companies, lease brokers and equipment vendors, each of which acts as a
source from which we obtain access to equipment leases. We customize lease
financing products to meet the specific needs of our lease sources, including
automation and integration.
Since 1996, we have provided on-line financing products to our larger
customers. Through our April 1998 acquisition of Nexsoft, Inc., we greatly
expanded our ability to offer electronic commerce solutions to our customers'
lease financing needs. In February 1999, we announced the formation of a new
strategic services group called B2B Solutions, which is dedicated to providing
e-commerce technology solutions and on-line financing products for commercial
customers.
Our e-commerce technology enables us to make direct originations or
acquisitions of leases over the internet through an on-line application process
that provides customers with immediate access to our credit department and lease
documents. Our lease processing systems are linked directly to the vendor's
systems through our internet browser, allowing us to interface with the vendor's
web site, sales force and customers and providing customers with real-time
access to application status reports and portfolio and customer performance
data. We are also able to develop functional web sites for our vendors to
facilitate business-to-business e-commerce and offer maintenance and training
support.
We provide lease financing to different participants in the small
ticket equipment leasing industry through four general lease funding programs,
referred to as our Private Label, Wholesale, Retail and Captive Finance
programs. While the terms of the underlying leases are similar in all these
lease funding programs, the financing arrangement we offer varies depending on
the size and servicing capabilities of the lease source.
Our Private Label program is designed to provide financing to
established leasing companies that have demonstrated the ability to originate a
larger volume of leases, follow prudent underwriting guidelines that we have
established and undertake some of the more labor-intensive aspects of lease
servicing on an ongoing basis. Participants in our Private Label program also
provide us with protection from credit losses on the leases we acquire from
them. Through our Wholesale program, we finance equipment leases from small
ticket lease brokers who are unwilling or unable to provide the credit
protection and perform the servicing functions necessary to participate in our
Private Label program. Our Retail program focuses on providing lease financing
services directly to equipment lessees and on establishing formal and informal
relationships with manufacturers, dealers and other equipment vendors who are in
a position to recommend us to their customers as a preferred provider of lease
financing. Through our Captive Finance program, we focus on cultivating
partnerships with large equipment vendors to help them develop, implement and
administer a customized, sales-oriented lease finance program. In addition to
offering lease financing, we provide the training, sales tools, management and,
in some cases, personnel, necessary to support a dedicated lease finance
program.
We initially fund the acquisition or origination of our leases from
working capital or through our securitized funding facilities. From time to
time, depending on market conditions, we securitize the leases in our portfolio
that meet pre-established eligibility criteria by packaging them in to a pool
and selling beneficial interests in the leases through public offerings and
private placement transactions. From time to time, we also generate income by
acquiring lease portfolios and then reselling these portfolios at a premium. Our
goal is to maximize the spread between the yield received on our leases and our
cost of funds by obtaining favorable terms on our securitized funding
facilities, our securizations and our portfolio sales.
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RECENT DEVELOPMENTS
As part of our strategy to become a leading provider of e-commerce
financial products and services to the small business market, we plan to begin
offering accounts receivable financing to our business customers in the second
half of 1999.
We also intend to apply for regulatory approval to establish the first
internet-based business-to-business bank. Our internet bank will be devoted
exclusively to the banking and financing needs of small business customers. Our
goal in establishing the bank is to diversify our funding sources, lower our
cost of funds, and allow us to offer additional e-commerce products to our base
of business customers.
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RISK FACTORS
BEFORE YOU BUY ANY SECURITIES OFFERED BY THIS PROSPECTUS AND THE
RELATED PROSPECTUS SUPPLEMENT, YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS,
INCLUDING THOSE DESCRIBED BELOW AND THOSE WHICH MAY BE SET FORTH IN ANY
PROSPECTUS SUPPLEMENT. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS,
TOGETHER WITH ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS, ANY PROSPECTUS
SUPPLEMENT AND THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE BEFORE YOU
DECIDE TO ACQUIRE ANY SECURITIES.
WE DEPEND ON THE SECURITIZATION MARKET TO FINANCE OUR LEASES
From time to time, depending on market conditions, we securitize the
leases in our portfolio that meet pre-established eligibility criteria by
packaging them into a pool and selling beneficial interests in the leases
through public offerings and private placement transactions. In a securitization
transaction, we transfer a pool of leases to a wholly owned, special purpose
subsidiary of First Sierra. The special purpose subsidiary simultaneously
transfers an interest in the leases to a trust, which issues beneficial
interests in the leases in the form of senior and subordinated securities and
sells such securities through public offerings and private placement
transactions. We generally retain the right to receive any excess cash flows of
the trust, which right is represented by a trust certificate.
Gain on sale of securitized leases represented approximately 15% of our
revenues in 1996, approximately 35% of our revenues in 1997, and approximately
48% of our revenues during the period from January 1, 1998 through June 30,
1998. As a result of our decision to emphasize portfolio lending, effective July
1, 1998, we altered the structure of our securitizations so that we no longer
record an immediate gain on sale when we securitize lease financing receivables.
Rather, we will recognize net interest margin over the life of each of our
leases. Thus, we expect that our earnings per share will be negatively affected
until the interest income and other revenue generated from leases held on our
balance sheet exceed our operating expenses.
We depend on securitizations for refinancing of amounts outstanding
under our securitized funding facilities, which we utilize to acquire and
originate additional leases. Several factors affect our ability to complete
securitizations, including conditions in the securities markets generally,
conditions in the asset-backed securities markets, the credit quality of our
lease portfolio, compliance of our leases with the eligibility requirements
established in connection with the securitizations, our ability to obtain
third-party credit enhancement, our ability to adequately service our lease
portfolio, and the absence of any material downgrading or withdrawal of ratings
given to securities previously issued in our securitizations. Any substantial
reduction in the availability of the securitization market for our leases or any
adverse change in the terms of our securitizations could have a material adverse
effect on our business, financial condition and results to operations.
IF THE CASH FLOWS FROM OUR SECURITIZATION TRANSACTIONS ARE LESS THAN WE EXPECT,
IT WOULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS
The cash flows available to the trust certificates which we retain in
our securitization transactions are calculated as the difference between cash
flows received from the leases and the sum of interest and principal payable to
the holders of the senior and subordinated securities, trustee fees, third-party
credit enhancement fees, service fees, and backup service fees. Our right to
receive this excess cash flow is subject to certain conditions specified in the
related trust documents designed to provide additional credit enhancement to
holders of the senior and subordinated securities issued in the securitization.
We estimate the expected levels of cash flows available to the trust
certificate taking into consideration anticipated defaults, recoveries and other
factors which may affect the cash flows available to the holder of the trust
certificate. The cash flows ultimately available to the trust certificate
largely depend upon the actual default rates and recovery levels experienced on
the leases sold to the trust. Losses incurred on leases held by the trust are
borne solely by the holder of the trust certificate to the extent of the
holder's investment in the trust certificate.
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Because we are typically entitled to receive, as holder of the trust
certificates issued in our securitization transactions, from 2.0% to 6.5% of the
cash flows of the trust yet we bear the risk of loss based upon the performance
of the entire portfolio of leases held by the trust, relatively small
fluctuations in default rates, recovery levels and other factors impacting cash
flows of the leases could have a material adverse effect on our ability to
realize our recorded basis in the trust certificates. If any of these
fluctuations were to occur, we would be required to reduce the carrying amount
of our trust certificates and record a charge to earnings in the period in which
the event occurred or became known to management.
OUR ACQUISITION STRATEGY MAY NOT BE SUCCESSFUL
A key component of our growth strategy has been to acquire other
equipment leasing companies in strategic markets and locations. In the past, we
have financed these acquisitions by using a combination of common stock, cash
and debt. During 1998, we experienced a significant decline in the market price
of our common stock. As a result, our ability to complete acquisitions using our
Common Stock as currency, in a manner that was not dilutive to current
stockholders, was adversely affected. If our common stock does not maintain a
sufficient market value in the future, or if the owners of businesses we wish to
acquire are unwilling to accept common stock as part of the purchase price, we
may be required to use more of our cash resources, or seek additional capital,
in order to complete acquisitions. It is possible that we will not be able to
successfully consummate acquisitions in the future. If we are unable to pursue
an acquisition strategy in the future, we will be required to rely on internal
growth to expand our business.
Any acquisition we make may result in potentially dilutive issuances of
equity securities, the incurrence of additional debt and the amortization of
expenses related to goodwill and other intangible asses, any of which could have
a material adverse effect on our business, financial condition and results of
operations. We also may experience difficulties in the assimilation of the
operations, services, products and personnel of acquired companies, an inability
to sustain or improve the historical revenue levels of acquired companies, the
diversion of management's attention from ongoing operations and the potential
loss of key employees of such acquired companies.
WE DEPEND ON EXTERNAL FINANCING TO FUND OUR LEASES
We fund a large percentage of the equipment leases we acquire or
originate through our securitized funding facilities. The securitized funding
facilities are available to fund leases which satisfy eligibility criteria for
inclusion in our public securitizations. We repay borrowings under our
securitized funding facilities with the proceeds we receive from our public
securitization transactions. Any adverse impact on our ability to complete
public securitization transactions could have a material adverse effect on our
ability to obtain or maintain securitized funding facilities or the amount
available under such facilities. Any failure to renew our existing securitized
funding facilities or obtain additional facilities or other financings with
pricing, advance rates and other terms consistent with our existing facilities
could have a material adverse effect on our business, financial condition and
results of operations.
WE MAY NEED ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS
Our lease financing business is capital intensive and requires access
to substantial short-term and long-term credit to fund new equipment leases. We
expect to continue to require access to a large amount of capital to maintain
and expand our volume of leases funded. If future market conditions adversely
affect our ability to finance leases, we may require additional capital to fund
our operations.
INCREASES IN INTEREST RATES COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS
The leases we finance are non-cancelable and require payments to be
made by the lessee at fixed rates for specified terms. The rates we charge are
based on interest rates prevailing in the market at the time of lease approval.
Until we securitize or otherwise sell our leases, we generally fund the leases
under our securitized funding facilities or from working capital. If we were to
become unable to securitize or otherwise sell leases with
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fixed rates within a reasonable period of time after funding, our operating
margins could be adversely affected by increases in interest rates. Moreover,
increases in interest rates which cause us to raise the implicit rate we charge
to our customers could cause a reduction in demand for our lease financing. We
generally undertake to hedge against the risk of interest rate increases when
our equipment lease portfolio exceeds $10.0 million. These hedging activities
limit our ability to participate in the benefits of lower interest rates with
respect to our hedged portfolio of leases. In addition, our hedging activities
may not adequately insulate us from interest rate risks.
INCREASE IN LESSEE DEFAULTS COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL
CONDITION
We specialize in acquiring and originating equipment leases with a
purchase price of less than $250,000, generally involving small and mid-size
commercial businesses located throughout the United States. Small business
leases generally entail a greater risk of non-performance and higher
delinquencies and losses than leases entered into with larger more creditworthy
lessees. Because of our short operating history, we have limited performance
data with respect to leases we finance. Thus, our historical delinquency and
loss statistics do not necessarily predict our future performance.
We funded the vast majority of the leases we acquired or originated
through December 31, 1996 through a combination of the recourse and purchase
price holdback features of our Private Label program. During the year ended
December 31, 1998, we funded approximately 54% of the leases that we acquired or
originated through our Wholesale and Retail programs, which do not have these
credit protections. We believe that we will generate increasingly larger
percentages of our lease originations in the future through lease funding
programs that do not provide us with credit protection.
The failure of our lessees to comply with the terms of their leases
will result in the inability of these leases to qualify to serve as collateral
under our securitized funding facilities and securitization program and may have
a material adverse effect on our liquidity. Also, delinquencies and defaults in
excess of levels estimated by our management in determining our allowance for
credit losses and in valuing our right to receive excess cash flows under our
securitization program could have a material adverse effect on our ability to
obtain financing and effect public securitization transactions. Our inability to
effect public securitization transactions could, in turn, have a material
adverse effect on our business, financial condition and results of operations.
OUR QUARTERLY RESULTS MAY FLUCTUATE
We may experience significant fluctuations in quarterly operating
results due to a number of factors, including, among others, the interest rate
on the securities issued in connection with our securitization transactions,
variations in the volume of leases we finance, differences between our cost of
funds and the average implicit yield we receive on our leases prior to their
being securitized or otherwise sold, the effectiveness of our hedging strategy,
the degree to which we encounter competition in our markets and general economic
conditions. As a result of these fluctuations, you should not rely on our
results for any one quarter as predicting or guaranteeing our performance in
future quarters.
WE MAY BE UNABLE TO CONTINUE OUR GROWTH IN VOLUME OF LEASE FINANCING RECEIVABLES
Our ability to sustain continued growth depends upon our capacity to
attract, evaluate, finance and service increasing volumes of leases of suitable
yield and credit quality. Our ability to accomplish this on a cost-effective
basis is largely a function of our ability to market our products effectively,
to manage our credit evaluation process to assure adequate portfolio quality, to
provide competent, attentive and efficient servicing and to maintain access to
institutional financing sources to achieve an acceptable cost of funds for our
financing programs. Any failure to market our products effectively, to maintain
our portfolio quality, to effectively service our leases or to obtain
institutional financing at reasonable rates would have a material adverse effect
on business, financial condition and results of operations.
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WE RELY ON KEY EMPLOYEES WHOSE ABSENCE COULD ADVERSELY AFFECT OUR BUSINESS
We depend to a large extent upon the experience, abilities and
continued efforts of our senior management, including the management of
companies we have acquired. We have entered into employment agreements with our
principal executive officers. The loss of the services of one or more of the key
members of our senior management could have a material adverse effect on our
business, financial condition and results of operations. Our future success also
will depend upon our ability to attract and retain additional skilled management
personnel necessary to support anticipated future growth.
COMPETITION COULD ADVERSELY AFFECT OUR BUSINESS
The financing of small ticket equipment is highly competitive. We
compete for customers with a number of national, regional and local finance
companies. Our competitors also include those equipment manufacturers that
finance the sale of or lease of their products themselves and other traditional
types of financial services companies, such as commercial banks and savings and
loan associations, all of which provide financing for the purchase of equipment.
Many of our competitors and potential competitors possess substantially greater
financial, marketing and operational resources than we do. Our competitors and
potential competitors include many larger, more established companies that may
have a lower cost of funds than we do and access to capital markets and to other
funding sources that may be unavailable to us.
OUR LEASES ARE CONCENTRATED IN A SMALL NUMBER OF STATES AND INDUSTRIES; ADVERSE
ECONOMIC OR REGULATORY CONDITIONS IN THOSE STATES OR INDUSTRIES COULD ADVERSELY
AFFECT OUR BUSINESS
Although our portfolio of leases includes lessees located throughout
the United States, we acquire or originate a majority of our leases from sources
operating in five states: Texas, Florida, New York, New Jersey and California.
The ability of our lessees to honor their contracts may substantially depend on
economic conditions in these states. All of our leases are collateralized by the
related equipment. The recourse and holdback provisions of our Private Label
program mitigate, but do not eliminate, a significant portion of any economic
risk not recoverable through the sale of the related equipment.
Also, a substantial portion of our leases are concentrated in certain
industries, including the medical industry, the dental industry and the
veterinary industry. If the economic or regulatory conditions prevalent in such
industries were to change, our lessees may not be able to honor their lease
obligations.
If our major lease sources were to substantially reduce the number of
leases sold to us, and we were not able to replace the lost lease volume, this
reduction could have a material adverse effect on our business, financial
condition and results of operations.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH
We have grown dramatically since our inception in June 1994. The volume
of leases we acquired or originated was $4.5 million for the period from
inception to December 31, 1994, $65.2 million for the year ended December 31,
1995, $179.2 million for the year ended December 31, 1996, $383.1 million for
the year ended December 31, 1997, and $897.1 million for the year ended December
31, 1998. This growth has placed, and if sustained will continue to place, a
burden on our administrative and financial resources. If our management is
unable to effectively manage our future growth, this could have a material
adverse effect on our business, financial condition and results of operations.
IF WE ARE UNABLE TO REALIZE THE RECORDED RESIDUAL VALUES ON OUR EQUIPMENT, THIS
COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We retain a residual interest in the equipment covered by some of our
leases. We reflect the estimated fair market value of the equipment at the end
of the contract term of the lease as an asset on our balance sheet. Our results
of operations depend, to some degree, upon our ability to realize these residual
values. Realization of
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residual values depends on many factors, several of which are outside our
control, including general market conditions at the time of expiration of the
lease, whether there has been unusual wear and tear on, or use of, the
equipment, the cost of comparable new equipment, the extent, if any, to which
the equipment has become technologically or economically obsolete during the
contract term and the effects of any additional or amended government
regulations. If, upon the expiration of a lease, we sell or refinance the
underlying equipment and the amount realized is less than the recorded value of
the residual interest in the equipment, we realize a loss reflecting the
difference. If we were to fail to realize aggregate recorded residual values,
this could have a material adverse effect on our business, financial condition
and results of operations.
USE OF PROCEEDS
Except as we may otherwise specify in a prospectus supplement, we will
use the net proceeds from the sale of the securities offered by this prospectus
for working capital and general corporate purposes.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our Common Stock.
We currently intend to retain our earnings to finance the growth and development
of our business and we do not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. In addition, provisions in certain of our
credit facilities and the terms of our Series A Preferred Stock contain certain
restrictions on the payment of dividends on the Common Stock. Holders of shares
of Series A Preferred Stock are entitled to receive annual cash dividends of
$1.86 per share, such dividends being payable annually as declared by our Board
of Directors. See "Description of Capital Stock - Series A Preferred Stock." Any
future change in our dividend policy will be made at the discretion of our Board
of Directors in light of our financial condition, capital requirements, earnings
and prospects and any restrictions under our credit agreements or rights of the
Series A Preferred Stock, as well as other factors our Board of Directors may
deem relevant.
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RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated below
was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
The Company and subsidiaries................... * 3.90 1.82 1.78 *
</TABLE>
*The ratio is less than one-to-one. The coverage deficiency was as follows:
1998 - $8.6 million; and 1994 - $.8 million.
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
Fixed charges consist of interest on all indebtedness and one-third of rental
expense (approximate portion representing interest).
DESCRIPTION OF DEBT SECURITIES
We may offer debt securities under this prospectus, any of which may be
issued as convertible and/or exchangeable debt securities. The following
description of the terms of the debt securities sets forth certain general terms
and provisions of the debt securities to which any prospectus supplement may
relate. We will set forth the particular terms of the debt securities we offer
in a prospectus supplement. The extent, if any, to which the following general
provisions apply to particular debt securities, will be described in the
applicable prospectus supplement. The following description of general terms
relating to the debt securities and the Indenture (as defined below) are
summaries only and therefore are not complete. You should read the Indenture and
the prospectus supplement regarding any particular issuance of debt securities.
The debt securities will represent our unsecured general obligations,
unless otherwise provided in the prospectus supplement.
Our ability to service our indebtedness, including the debt securities,
is dependent to some extent upon the receipt of funds from our subsidiaries. The
payment of dividends or the making of loans and advances to us by our
subsidiaries are subject to contractual, statutory or regulatory restrictions,
are contingent upon the earnings of those subsidiaries and are subject to
various business considerations. Further, any right we may have to receive
assets of any of our subsidiaries upon liquidation or recapitalization of any
such subsidiaries (and the consequent right of the holders of debt securities to
participate in those assets) will be subject to the claims of our subsidiaries'
creditors. Even in the event that we are recognized as a creditor of a
subsidiary, our claims would still be subject to any security interest in the
assets of such subsidiary and any indebtedness of such subsidiary senior to our
claim.
The debt securities will be issued under an Indenture (the "Indenture")
that we will enter into with an indenture trustee (the "Trustee"). A copy of the
form of Indenture has been filed as an exhibit to the Registration Statement of
which this prospectus is a part, and is available as described above under
"Where You Can Find More Information." The Indenture is subject to, and is
governed by, the Trust Indenture Act of 1939, as amended.
Except as may be set forth in a prospectus supplement, the Indenture
does not contain any covenants or restrictions that afford holders of the debt
securities special protection in the event of a change of control or highly
leveraged transaction.
The following summary of certain provisions of the debt securities and
the Indenture is not complete. You should read carefully the provisions of
particular debt securities we may issue and the Indenture, including the
definitions in those documents of certain terms and of those terms made a part
of those documents by the Trust Indenture Act. All capitalized terms used but
not defined below have the meanings set forth in the Indenture.
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GENERAL
The Indenture does not limit the aggregate principal amount of debt
securities which may be issued under it and provides that debt securities may be
issued in one or more series, in such form or forms, with such terms and up to
the aggregate principal amount that we may authorize from time to time. We will
establish the terms of each series of debt securities and such terms will be set
forth or determined in the manner provided in an officers' certificate or by a
supplemental indenture. The particular terms of the debt securities offered
pursuant to any prospectus supplement will be described in such prospectus
supplement. All debt securities of one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the
consent of any holder, for issuances of additional debt securities of that
series.
Unless otherwise provided in the prospectus supplement, debt securities
may be presented for registration of transfer and exchange and for payment or,
if applicable, for conversion and/or exchange at the office of the applicable
Trustee. At our option, the payment of interest may also be made by check mailed
to the address of the person entitled to such payment as it appears in the debt
security register.
The applicable prospectus supplement will describe the following terms
of any debt securities (the "Offered Debt Securities") in respect of which this
prospectus is being delivered (to the extent applicable to the Offered Debt
Securities):
o the designation (including whether they are senior debt securities,
senior subordinated debt securities or subordinated debt securities
and whether such debt securities are convertible and/or
exchangeable) and aggregate principal amount of the Offered Debt
Securities;
o the percentage of the principal amount at which such Offered Debt
Securities will be issued;
o the date or dates (and whether fixed or extendable) on which the
principal of the Offered Debt Securities is payable or the method of
determination thereof;
o the rate or rates (which may be fixed, floating or adjustable) at
which the Offered Debt Securities will bear interest, if any, the
method of calculating such rates, the date or dates from which such
interest will accrue or the manner of determining such dates, the
interest payment dates on which such interest shall be payable and
the record dates for the determination of the holders of debt
securities to whom interest will be payable;
o the place where the principal of, premium, if any, and interest, if
any, on the Offered Debt Securities will be payable;
o any provisions relating to the issuance of the Offered Debt
Securities at an original issue discount;
o the terms and conditions upon which the Offered Debt Securities may
be redeemed (including the form or method of payment if other than
in cash, which may include securities of other issuers);
o the obligation, if any, that we may have to redeem, purchase or
repay the Offered Debt Securities pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of
the holder of any debt securities and the terms and conditions of
such redemption, purchase or repayment (including the form or method
of payment if other than in cash, which may include securities of
other issuers), and any provisions for the remarketing of such debt
securities;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Offered Debt Securities
shall be issuable;
o if other than the principal amount thereof, the portion of the
principal amount of the Offered Debt Securities which will be
payable upon declaration of acceleration of the maturity thereof or
in bankruptcy;
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o any Events of Default in lieu of or in addition to those described
in this prospectus and remedies relating to such Events of Default;
o whether the Offered Debt Securities are convertible or exchangeable
and, if so, the securities or rights into which they are convertible
or exchangeable and the terms and conditions upon which such
conversion or exchange will be effected;
o any trustees, authenticating or paying agents, transfer agents or
registrars or any other agents with respect to the Offered Debt
Securities;
o the currency or currencies, including composite currencies, in which
the Offered Debt Securities will be denominated if other than the
currency of the United States of America;
o if other than the coin or currency in which the Offered Debt
Securities are denominated, the coin or currency in which payment of
the principal of, premium, if any, or interest on the Offered Debt
Securities will be payable (and the manner in which the equivalent
of the principal amount thereof in the currency of the United States
is to be determined for any purpose, including for determining the
principal amount outstanding);
o if the principal of, premium, if any, or interest on the Offered
Debt Securities will be payable, at our election or the election of
a holder thereof, in a coin or currency other than that in which the
Offered Debt Securities are denominated and terms and conditions
upon which, such election may be made;
o if the amount of payments of principal of, premium, if any, and
interest on the Offered Debt Securities may be determined with
reference to the value, rate or price of one or more specified
commodities, currencies or indices, the manner in which such amounts
shall be determined;
o whether and under what circumstances we will pay additional amounts
on the Offered Debt Securities held by a person who is not a United
States of America person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether we will
have the option to redeem such debt securities rather than pay such
additional amounts;
o if receipt of certain certificates or other documents or
satisfaction of other conditions will be necessary for any purpose,
including, without limitation, as a condition to the issuance of the
Offered Debt Securities in definitive form (whether upon original
issue or upon exchange of a temporary Debt Security), the form and
terms of such certificates, documents or conditions;
o any other affirmative or negative covenants with respect to the
Offered Debt Securities;
o whether the Offered Debt Securities will be issued in whole or in
part in the form of one or more global securities and, in such case,
the depositary for such a global security and the circumstances
under which any global security may be exchanged for Offered Debt
Securities registered in the name of, and under which any transfer
of such global security may be registered in the name of, any person
other than the depositary;
o whether the debt securities are defeasible; and
o any other specific terms of the Offered Debt Securities.
Unless otherwise indicated in the prospectus supplement relating to the
debt securities, principal of and any premium or interest on the debt securities
will be payable, and the debt securities will be exchangeable and transfers
thereof will be registrable, at the office of the Trustee at its principal
executive offices. However, at our option, payment of interest may be made by
check mailed to the address of the person entitled thereto as it appears in the
debt security register. Any payment of principal and any premium or interest
required to be made on an interest payment date, redemption date or at maturity
which is not a business day 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 applicable date, and no interest shall accrue for the period from and after
such date.
Unless otherwise indicated in the applicable prospectus supplement
relating to Offered Debt Securities, the debt securities will be issued only in
fully registered form, without coupons, in denominations of $1,000 or any
integral multiple thereof. No service charge will be made for any transfer or
exchange of the debt securities, but we may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection with a
transfer or exchange.
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Debt securities may be issued under the Indenture as Original Issue
Discount Securities (as defined below) to be offered and sold at a substantial
discount from their stated principal amount. In addition, under Treasury
Regulations it is possible that the debt securities which are offered and sold
at their stated principal amount would, under certain circumstances, be treated
as issued at an original issue discount for federal income tax purposes, federal
income tax consequences and other special considerations applicable to any such
Original Issue Discount Securities (or other debt securities treated as issued
at an original issue discount) will be described in the prospectus supplement
relating to such securities. "Original Issue Discount Security" means any debt
security that does not provide for the payment of interest prior to maturity or
which is issued at a price lower than its principal amount and which provides
that upon redemption or acceleration of its stated maturity an amount less than
its principal amount shall become due and payable.
GLOBAL SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
debt securities of a series will be issued in the form of one or more global
securities that will be deposited with a depositary or its nominees identified
in the prospectus supplement relating to the debt securities. In such a case,
one or more global securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding debt securities of the series to be represented by such global
security or securities.
Unless and until it is exchanged in whole or in part for debt
securities in definitive registered form, a global security may not be
registered for transfer or exchange except as a whole by the depositary for such
global security to a nominee of the depositary and except in the circumstances
described in the prospectus supplement relating to the Offered Debt Securities.
The specific terms of the depositary arrangement with respect to a series of
debt securities will be described in the prospectus supplement relating to such
series.
MODIFICATION OF THE INDENTURE
We and the Trustee may modify the Indenture with respect to the debt
securities of any series, with or without the consent of the holders of debt
securities, under certain circumstances to be described in a prospectus
supplement.
DEFEASANCE; SATISFACTION AND DISCHARGE
The prospectus supplement will outline the conditions under which we
may elect to have certain of our obligations under the Indenture discharged and
under which the Indenture obligations will be deemed satisfied.
DEFAULTS AND NOTICE
The debt securities will contain Events of Default to be specified in
the applicable prospectus supplement, including, without limitation:
o failure to pay the principal of, or premium, if any, on any debt
security of such series when due and payable (whether at maturity,
by call for redemption, through any mandatory sinking fund, by
redemption at the option of the holder, by declaration or
acceleration or otherwise);
o failure to make a payment of any interest on any debt security of
such series when due;
o failure to perform or observe any other covenants or agreements in
the Indenture or in the debt securities of such series;
o certain events of bankruptcy, insolvency or reorganization with
respect to us; and
o certain cross defaults.
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If an Event of Default with respect to debt securities of any series
shall occur and be continuing, the Trustee or the holders of not less than 25%
in aggregate principal amount of the then outstanding debt securities of such
series may declare the principal amount (or, if the debt securities of such
series are issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the debt securities of such series)
of all debt securities of such series and/or such other amount or amounts as the
debt securities or supplemental indenture with respect to such series may
provide, to be due and payable immediately.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default, give to holders of debt securities of any series notice
of all uncured defaults with respect to such series known to it. However, in the
case of a default that results from the failure to make any payment of the
principal of, premium, if any, or interest on the debt securities of any series,
or in the payment of any mandatory sinking fund installment with respect to debt
securities of such series, the Trustee may withhold such notice if it in good
faith determines that the withholding of such notice is in the interest of the
holders of debt securities of such series.
The Indenture contains a provision entitling the Trustee to be
indemnified by holders of debt securities before proceeding to exercise any
trust or power under the Indenture at the request of such holders. The Indenture
provides that the holders of a majority in aggregate principal amount of the
then outstanding debt securities of any series may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee, or
of exercising any trust or power conferred upon the Trustee with respect to the
debt securities of such series. However, the Trustee may decline to follow any
such direction if, among other reasons, the Trustee determines in good faith
that the actions or proceedings as directed may not lawfully be taken, would
involve the Trustee in personal liability or would be unduly prejudicial to the
holders of the debt securities of such series not joining in such direction.
The right of a holder to institute a proceeding with respect to the
Indenture is subject to certain conditions including, that the holders of a
majority in aggregate principal amount of the debt securities of such series
then outstanding make a written request upon the Trustee to exercise its power
under the Indenture, indemnify the Trustee and afford the Trustee reasonable
opportunity to act. Even so, the holder has an absolute right to receipt of the
principal of, premium, if any, and interest when due, to require conversion or
exchange of debt securities if the Indenture provides for convertibility or
exchangeability at the option of the holder and to institute suit for the
enforcement of such rights.
CONCERNING THE TRUSTEES
The prospectus supplement with respect to particular debt securities
will describe any relationship that we may have with the Trustee for such debt
securities.
REPORTS TO HOLDERS OF DEBT SECURITIES
We intend to furnish to holders of debt securities all quarterly and
annual reports which we furnish to holders of our Common Stock.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 share of common
stock, par value $.01 per share ("Common Stock") and 1,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock").
COMMON STOCK
As of March 11, 1999, 14,223,915 shares of Common Stock were
outstanding and held of record by 57 holders of record.
The holders of our Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of holders of Common Stock. The Common
Stock does not have cumulative voting rights, which means that
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<PAGE> 17
the holders of a majority of the voting power of shares of Common Stock
outstanding are able to elect all the directors and the holders of the remaining
shares are not able to elect any directors. Each share of Common Stock is
entitled to participate equally in dividends, if, as and when declared by our
Board of Directors, and in the distribution of assets in the event of
liquidation, subject in all cases to any prior rights of outstanding shares of
Preferred Stock. We have never declared or paid cash dividends on our Common
Stock. The shares of Common Stock have no preemptive rights, redemption rights,
or sinking fund provisions. The outstanding shares of Common Stock are, and any
shares of Common Stock which may be offered by this prospectus and a related
prospectus supplement will be upon issuance and sale, duly authorized, validly
issued, fully paid and nonassessable.
PREFERRED STOCK
Our Board of Directors may establish, without stockholder approval, one
or more classes or series of Preferred Stock having the number of shares,
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences, and limitations that they may designate. We believe that
this power to issue Preferred Stock will provide flexibility in connection with
possible corporate transactions. The issuance of Preferred Stock, however, could
adversely affect the voting power of holders of our Common Stock and restrict
their rights to receive payments upon liquidation of the Company. It could also
have the effect of delaying, deferring or preventing a change in control of the
Company. As of March 11, 1999, our authorized and outstanding Preferred Stock
consisted of 56,718 shares of Series A Preferred Stock. In addition, 300,000
shares of Junior Preferred Stock, Series C are authorized and reserved for
issuance in connection with our Stockholder Rights Plan which is described
below.
SERIES A PREFERRED STOCK
As of March 11, 1999, 38,437 shares of Series A Preferred Stock were
issued and outstanding. The following description is a summary of the
Certificate of Designation for the Series A Preferred Stock, and is qualified in
its entirety by reference to that document.
Dividends. The Series A Preferred Stock ranks, with respect to dividend
rights and distribution of assets on liquidation, senior and prior to the Common
Stock and junior to, or on parity with, as the case may be, any other stock of
the Company designated as senior to, or on parity with , as the case may be,
Series A Preferred Stock. Holders of Series A Preferred Stock are entitled to
receive non-cumulative annual cash dividends of $1.86 per share payable annually
when declared by the Board of Directors. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series A
Preferred Stock then outstanding will be entitled to receive an amount of cash
per share equal to $46.54607 before any distribution is made on the Common
Stock. As long as any shares of Series A Preferred Stock are outstanding, the
Company may not pay, declare or set apart a dividend or distribution on the
Common Stock (other than stock dividends or distributions payable in Common
Stock).
Redemption. The Series A Preferred Stock is mandatorily redeemable by
us on December 31, 2001 (subject to conversion rights at any time on or prior to
November 30, 2001) at a redemption price of $46.54607 per share.
Conversion. The Series A Preferred Stock is convertible, at the option
of the respective holders, at any time into Common Stock at a conversion rate of
5.47 shares of Common Stock for each share of Series A Preferred Stock, subject
to adjustment for stock dividends, stock splits and combinations.
Voting Rights. The shares of Series A Preferred Stock have general
voting rights on all issues submitted to the stockholders. Each share of Series
A Preferred Stock entitles the holder thereof to such number of votes per share
as shall equal the number of shares of Common Stock into which such shares of
Series A Preferred Stock are convertible.
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STOCKHOLDER RIGHTS PLAN
On December 15, 1998, our Board of Directors declared a dividend
distribution of one preferred stock purchase right (a "Right") for each share of
our Common Stock. The dividend was payable on December 30, 1998 to stockholders
of record at the close of business on December 28, 1998 (the "Record Date").
Each Right generally entitles the registered holder to purchase from us one
one-hundredth of a share of our Junior Preferred Stock, Series C, par value
$0.01 per share (the "Series C Preferred Stock"), at a purchase price of $65.25
per one one-hundredth of a share (the "Purchase Price"). The description and
terms of the Rights are set forth in the Rights Agreement (the "Rights
Agreement") between the Company and Harris Trust and Savings Bank as Rights
Agent.
The Rights will be evidenced by Common Stock certificates and not
separate certificates until the earliest of (I) ten days following the date of
public disclosure that a person or group (the "Acquiring Person") has acquired
or obtained the right to acquire beneficial ownership of 15% or more of the
outstanding shares of the Common Stock, or (ii) ten business days following the
commencement or disclosure of an intention to commence a tender offer or
exchange offer by a person or group other than the Company and certain related
entities if, upon consummation of such offer, such person or group would
beneficially own 15% or more of the outstanding shares of Common Stock (the
earlier of such dates being the "Distribution Date"). Until the Distribution
Date (or earlier redemption or expiration of the Rights), the transfer of Common
Stock will also constitute transfer of the associated Rights. The Rights will
expire at the close of business on December 30, 2008, unless earlier redeemed by
the Company.
If a person acquires beneficial ownership of 20% or more of our Common
Stock, or if we are the surviving corporation in a merger with an Acquiring
Person and the Common Stock remains outstanding and unchanged, the Rights will
"flip in" and entitle each holder of a Right, with certain exceptions, to
purchase (upon exercise at the then-current market price) that number of shares
of Common Stock having a market value of two times the Purchase Price.
In the event that, following the Distribution Date, we are acquired in
a merger or other business combination in which the Common Stock does not remain
outstanding or is changed or 50% or more of the Company's consolidated assets or
earning power is sold, leased, exchanged, or otherwise transferred or disposed
of (whether in one transaction or a series of related transactions), the Rights
will "flip over" and entitle each holder of a Right to purchase, upon the
exercise of the Right at the then-current Purchase Price, that number of shares
of common stock of the acquiring company (or, in certain circumstances, one of
its affiliates) which at the time of the transaction would have a market value
of two times the Purchase Price.
Series C Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Series C Preferred Stock will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per share, but will be
entitled to an aggregate dividend of 100 times the dividend declared per share
of Common Stock, if greater. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100 per share, but will be entitled to an aggregate payment of 100 times the
payment made per share of Common Stock, if greater. In the event of any merger
or other business combination in which Common Stock is exchanged, each share of
Preferred Stock will be entitled to receive 100 times the amount received per
share of Common Stock. Customary anti-dilution provisions protect these rights.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
We are a Delaware corporation and are subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
our outstanding voting stock) from engaging in a "business combination" (as
defined in Section 203) with us for three years following the date that person
becomes an interested stockholder unless (a) before that person became an
interested stockholder, our Board of Directors approved the transaction in which
the interested stockholder became an interested stockholder or approved the
business combination; (b) upon completion of the transaction that resulted in
the interested stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock outstanding at the time the
transaction commenced (excluding stock held by directors who are also
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officers of the Company and by employee stock plans that do not provide
employees with the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer); or (c) following
the transaction in which that person became an interested stockholder, the
business combination is approved by our Board of Directors and authorized at a
meeting of stockholders by the affirmative vote of the holders of at least
two-thirds of the outstanding voting stock not owned by the interested
stockholder.
Under Section 203, these restrictions do not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of one of certain extraordinary transactions involving us and a
person who was not an interested stockholder during the previous three years or
who became an interested stockholder with the approval of a majority of our
directors, if that extraordinary transaction is approved or not opposed by a
majority of the directors who were directors before any person became an
interested stockholder in the previous three years or who were recommended for
election or elected to succeed such directors by a majority of such directors
then in office.
Our Board of Directors is divided into three classes. The directors of
each class are elected for three-year terms, with the terms of the three classes
staggered so that directors from a single class are elected at each annual
meeting of stockholders. Stockholders may remove a director only for cause upon
the vote of at least 80% of the then outstanding shares of capital stock
entitled to vote upon the election of directors ("Voting Stock"). In general,
the Board of Directors, not the stockholders, has the right to appoint persons
to fill vacancies on the Board of Directors.
The Charter provides that special meetings of holders of Common Stock
may be called only by our Board of Directors and that only business proposed by
the Board of Directors may be considered at special meetings of holders of
Common Stock.
The Charter provides that the only business (including election of
directors) that may be considered at any annual meeting of holders of Common
Stock, in addition to business proposed (or persons nominated to be directors)
by the directors of the Company, is business proposed (or persons nominated to
be directors) by holders of Common Stock who comply with the notice and
disclosure requirements set forth in the Charter. In general, the Charter
requires that a stockholder give the Company notice of proposed business or
nominations no later than 60 days before the annual meeting of holders of Common
Stock (meaning the date on which the meeting is first scheduled and not
postponements or adjournments thereof) or (if later) ten days after the first
public notice of the annual meeting is sent to holders of Common Stock. In
general, the notice must also contain information about the stockholder
proposing the business or nomination, the stockholder's interest in the
business, and (with respect to nominations for director) information about the
nominee of the nature ordinarily required to be disclosed in public proxy
statements. The stockholder also must submit a notarized letter from each of the
stockholder's nominees stating the nominee's acceptance of the nomination and
indicating the nominee's intention to serve as a director if elected.
The Charter provides that the affirmative vote of at least two-thirds
of the Voting Stock shall be required to approve any of the following proposed
transactions: (i) a merger or consolidation in which the Company shall not be
the surviving entity or shall survive only as a subsidiary of an entity; (ii) a
sale, lease or exchange or an agreement to sell, lease or exchange all or
substantially all of our assets to any other person or entity; or (iii) the
dissolution or liquidation of the Company.
The Charter authorizes the Board of Directors, without any action by
our stockholders to issue up to 1,000,000 shares of Preferred Stock, in one or
more series and to determine the voting rights (including the right to vote as a
series on particular matters), preferences as to dividends and in liquidation
and the conversion and other rights of each such series. Because the terms of
the preferred stock may be fixed by the Board of Directors without stockholder
action, the preferred stock could be issued quickly with terms designed to make
more difficult a proposed takeover of the Company or the removal of its
management, thus affecting the market price of the Common stock and preventing
stockholders from obtaining any premium offered by the potential buyer. The
Board of Directors will make any determination to issue such shares based on its
judgment as to the best interests of the Company and its stockholders.
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The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or bylaws, unless
the corporation's certificate of incorporation or bylaws requires a grater
percentage. The Charter provides that approval by the holders of at least 80% of
the Voting Stock is required to amend the provisions of the Charter previously
discussed and certain other provisions.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Harris Trust
and Savings Bank.
PLAN OF DISTRIBUTION
We may sell securities on a negotiated or competitive bid basis to or
through one or more underwriters or dealers. We may also sell securities
directly to institutional investors or other purchasers or through agents. Any
underwriter, dealer or agent involved in the offer and sale of securities, and
any applicable commissions, discounts and other items constituting compensation
to such underwriters, dealers or agents, will be set forth in the prospectus
supplement.
We may effect distribution of securities from time to time in one or
more transactions at a fixed price or prices (which may be changed) or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
Unless otherwise indicated in a prospectus supplement, the obligations
of any underwriters to purchase securities will be subject to certain conditions
and the underwriters will be obligated to purchase all of the applicable
securities if any are purchased. If a dealer is used in a sale, we may sell the
securities to the dealer as principal. The dealer may then resell the securities
to the public at varying prices to be determined by the dealer at the time of
resale.
We or our agents may solicit offers to purchase securities from time to
time. Unless otherwise indicated in a prospectus supplement, any agent will be
acting on a best efforts basis for the period of its appointment.
In connection with the sale of securities, underwriters or agents may
receive compensation (in the form of discounts, concessions or commissions) from
us or from purchasers of securities for whom they may act as agents.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
securities may be deemed to be underwriters as that term is defined in the
Securities Act of 1933, and any discounts or commissions received by them from
us and any profits on the resale of the securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933. Any
such underwriter or agent will be identified, and any such compensation received
from us will be described, in the related prospectus supplement.
Underwriters, dealers and agents may be entitled, under agreements with
us, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the prospectus supplement, we will authorize agents
and underwriters to solicit offers by certain specified institutions to purchase
securities at the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Institutions with whom such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions but shall in all cases be subject to our approval. Such contracts
will be subject only to those conditions set forth in the prospectus supplement
and the prospectus supplement will set forth the commission payable for
solicitation of such contracts. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the securities
shall not be prohibited at the time of delivery under the laws of the
jurisdiction to which the purchaser is subject. The underwriters and other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
-18-
<PAGE> 21
Certain of the underwriters or agents and their associates may engage
in transactions with and perform services for us or our affiliates in the
ordinary course of their respective businesses.
The securities may or may not be listed on a national securities
exchange or traded in the over-the-counter market (other than the Common Stock,
which is quoted in the NASDAQ National Market). No assurance can be given as to
the liquidity of the trading market for any such securities.
If underwriters or dealers are used in the sale, until the distribution
of the securities is completed, SEC rules may limit the ability of any such
underwriters and selling group members to bid for and purchase the securities.
As an exception to these rules, representatives of any underwriters are
permitted to engage in certain transactions that stabilize the price of the
securities. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the securities. If the
underwriters create a short position in the securities in connection with the
offerings (i.e., if they sell more securities than are set forth on the cover
page of the prospectus supplement) the representatives of the underwriters may
reduce that short position by purchasing securities in the open market. The
representatives of the underwriters may also elect to reduce any short position
by exercising all or part of any over-allotment option described in the
prospectus supplement. The representatives of the underwriters may also impose a
penalty bid on certain underwriters and selling group members. This means that
if the representatives purchase securities in the open market to reduce the
underwriters' short position or to stabilize the price of the securities, they
may reclaim the amount of the selling concession from the underwriters and
selling group members who sold those shares as part of the offering. In general,
purchases of a security for the purpose of stabilization or to reduce a short
position could cause the price of the security to be higher than it might be in
the absence of such purchases. The imposition of a penalty bid might also have
an effect on the price of the securities to the extent that it discourages
resales of the securities. We make no representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the securities. In addition, the representatives of any
underwriters may determine not to engage in such transactions or that such
transactions, once commenced, may be discontinued without notice.
LEGAL MATTERS
McDermott, Will & Emery, Chicago, Illinois, will pass upon the legality
of the securities offered by this prospectus.
EXPERTS
The audited consolidated financial statements incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
-19-
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses (other than the SEC
registration fee) of the issuance and distribution of the securities being
registered, all of which will be paid by the Company.
<TABLE>
<S> <C>
SEC registration fee........................ $ 83,400
Printing expenses........................... 75,000
Fees and expenses of counsel................ 200,000
Fees and expenses of accountants............ 100,000
Trustees fees and expenses.................. 10,000
Rating agency fees.......................... 75,000
NASD fees................................... 30,000
Miscellaneous............................... 26,600
---------
Total.................................. $ 600,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (Section 102) allows a corporation
to eliminate the personal liability of directors of a corporation to the
corporation or to any of its stockholders for monetary damage for a breach of
his/her fiduciary duty as a director, except in the case where the director
breached his/her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of a
dividend or approved a stock repurchase in violation of Delaware corporate law
or obtained an improper personal benefit. The Company's Restated Certificate of
Incorporation contains a provision which eliminates directors' personal
liability as set forth above.
The Delaware General Corporation Law (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes the Company to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
The Company's Restated Certificate of Incorporation provides for
indemnification to the fullest extent authorized by Section 145 of the Delaware
General Corporation Law for directors, officers and employees of the Company and
also to persons who are serving at the request of the Company as directors,
officers or employees of other corporations (including subsidiaries); provided
that, with respect to proceedings initiated by such indemnitee, indemnification
shall be provided only if such proceedings were authorized by the Board of
Directors. This right of indemnification is not exclusive of any other right
which any person may acquire under any statute, bylaw, agreement, contract, vote
of stockholders or otherwise.
The Company maintains a directors' and officers' liability insurance
and corporate reimbursement policy insuring directors and officers against loss
arising from claims made arising out of the performance of their duties.
II-1
<PAGE> 23
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1 Forms of Underwriting Agreements(1)
4.1 Form of Indenture
4.2 Restated Certificate of Incorporation of the Company (incorporated
herein by reference to the Company's Annual Report on From 10-K for the
year ended December 31, 1998)
4.3 Amended and Restated Bylaws of the Company (incorporated herein by
reference to the Exhibit 3.1 to Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (Registration No. 333-22629))
5 Opinion of McDermott, Will & Emery regarding legality
*11 Statement regarding Computation of Ratio of Earnings to Fixed Charges
*23.1 Consent of Arthur Andersen LLP
23.2 Consent of McDermott, Will & Emery (included in Exhibit 5)
24 Power of Attorney (included with the signature page to the Registration
Statement.)
25 Statement of Eligibility of Trustee on from T-1(1)
</TABLE>
- -----------------
(1) To be filed subsequently as part of a Form 8-K.
* Previously filed.
ITEM 17. UNDERTAKINGS.
1. (a) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
II-2
<PAGE> 24
provided, however, that subparagraphs (a)(i) and (a)(ii) do not apply to the
extent that the information required to be included in a post-effective
amendment by those subparagraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in the Registration Statement.
(b) The undersigned registrant hereby undertakes that, for the purpose
of determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by the registrants is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
4. The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, (i) the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as of the time it
was declared effective, and (ii) each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
5. The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Houston, Texas, on the 12th day of
May, 1999.
First Sierra Financial, Inc.
By: /s/ Thomas J. Depping
----------------------------------------
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the 12th day of May, 1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Thomas J. Depping * President, Chief Executive Officer and Chairman of
--------------------------------------- the Board of Directors (principal executive officer)
(Thomas J. Depping)
/s/ Sandy B. Ho Executive Vice President and Chief Financial
--------------------------------------- Officer
(Sandy B. Ho) (principal financial officer and principal
accounting officer)
/s/ Richard J. Campo * Director
---------------------------------------
(Richard J. Campo)
/s/ Robert Ted Enloe, III * Director
---------------------------------------
(Robert Ted Enloe, III)
/s/ Brian E. McManus * Director
---------------------------------------
(Brian E. McManus)
/s/ Norman J. Metcalfe * Director
---------------------------------------
(Norman J. Metcalfe)
/s/ David C. Shindeldecker * Director
---------------------------------------
(David C. Shindeldecker)
/s/ David L. Solomon * Director
---------------------------------------
(David L. Solomon)
By: /s/ Sandy B. Ho
---------------------------------------
(Sandy B. Ho)
Attorney-in-fact
</TABLE>
II-4
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1 Forms of Underwriting Agreements(1)
4.1 Form of Indenture
4.2 Restated Certificate of Incorporation of the Company (incorporated
herein by reference to the Company's Annual Report on From 10-K for the
year ended December 31, 1998)
4.3 Amended and Restated Bylaws of the Company (incorporated herein by
reference to the Exhibit 3.1 to Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (Registration No. 333-22629))
5 Opinion of McDermott, Will & Emery regarding legality
*11 Statement regarding Computation of Ratio of Earnings to Fixed Charges
*23.1 Consent of Arthur Andersen LLP
23.2 Consent of McDermott, Will & Emery (included in Exhibit 5)
*24 Power of Attorney (included with the signature page to the Registration
Statement.)
25 Statement of Eligibility of Trustee on from T-1(1)
</TABLE>
- -----------------
(1) To be filed subsequently as part of a Form 8-K.
* Previously filed.
<PAGE> 1
EXHIBIT 4.1
FIRST SIERRA FINANCIAL, INC.
AND
, as Trustee
----------------------------------
-------------------
INDENTURE
Dated as of , 1999
-------------
-------------------
<PAGE> 2
FIRST SIERRA FINANCIAL, INC.
Reconciliation and Tie between Indenture
and
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
310 (a)(1)..................................................................... 11.5
(a)(2)..................................................................... 11.5
(a)(3)..................................................................... Not applicable
(a)(4)..................................................................... Not applicable
(b)........................................................................ 11.4, 11.5
311 (a)........................................................................ 11.9(a), (c)
(b)........................................................................ 11.9(b), (c)
312 (a)........................................................................ 4.6(d), 11.1
(b)........................................................................ 11.11
(c)........................................................................ 11.11
313 (a)........................................................................ 11.10(a)
(b)(i)..................................................................... Not applicable
(b)(2)..................................................................... 11.10(b)
(c)........................................................................ 11.10(c)
(d)........................................................................ 11.10(c)
314 (a)(1)..................................................................... 4.6(a)
(a)(2)..................................................................... 4.6(b)
(a)(3)..................................................................... 4.6(c)
(b)........................................................................ Not applicable
(c)........................................................................ 3.8
(d)........................................................................ Not applicable
(e)........................................................................ 3.8
315 (a)........................................................................ 11.1(a), (b)
(b)........................................................................ 11.3
(c)........................................................................ 11.1(a)
(d)........................................................................ 11.1(a), 11.1(b), 13.3
(e)........................................................................ 7.7
316 (a)(1)(A).................................................................. 7.6, 13.3
(a)(1)(B).................................................................. 7.1, 7.5, 13.3
(a)(2)..................................................................... Not required
(b)........................................................................ 7.7
317 (a)........................................................................ 7.2
(b)........................................................................ 4.8
318 (a)........................................................................ 3.4
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 3
FIRST SIERRA FINANCIAL, INC.
INDENTURE
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS; TRUST INDENTURE ACT CONTROLLING....................................................1
SECTION 1.1. Definitions.......................................................................1
SECTION 1.2. Trust Indenture Act definitions controlling.......................................6
ARTICLE II FORM, ISSUE AND REGISTRATION OF DEBT SECURITIES.................................................6
SECTION 2.1. Forms generally and dating........................................................6
SECTION 2.2. Amount unlimited; Issuable in series..............................................7
SECTION 2.3. Denominations....................................................................10
SECTION 2.4. Execution of Debt Securities; Authentication.....................................11
SECTION 2.5. Issue of Debt Securities.........................................................13
SECTION 2.6. Transfer of Debt Securities......................................................14
SECTION 2.7. Persons deemed owners of Debt Securities.........................................14
SECTION 2.8. Provisions for Debt Securities in temporary form.................................14
SECTION 2.9. Mutilated, destroyed, lost or stolen Debt Securities.............................14
SECTION 2.10. Exchanges of Debt Securities.....................................................15
SECTION 2.11. Cancellation of surrendered Debt Securities......................................16
SECTION 2.12. Payment of interest; Defaulted interest..........................................16
SECTION 2.13. Global Securities; Depositary....................................................17
ARTICLE III MISCELLANEOUS PROVISIONS.......................................................................18
SECTION 3.1. Rights under Indenture limited to the parties and holders of Debt Securities.....18
SECTION 3.2. Certificate of independent accountants conclusive................................18
SECTION 3.3. Treatment of Debt Securities owned or held by the Company in determining
required percentages.............................................................18
SECTION 3.4. Remaining provisions not affected by invalidity of any other provisions -
required provisions of Trust Indenture Act of 1939 to control....................19
SECTION 3.5. Company released from Indenture requirements if entitled to have Indenture
cancelled........................................................................19
SECTION 3.6. Date of execution................................................................19
SECTION 3.7. Execution of documents furnished under the Indenture.............................19
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 3.8. Officers' Certificate and Opinions of Counsel to be furnished to Trustee........20
SECTION 3.9. Presentation of notices and demands..............................................20
SECTION 3.10. Successors and assigns bound by Indenture........................................21
SECTION 3.11. Descriptive headings for convenience only........................................21
SECTION 3.12. New York law to govern...........................................................21
SECTION 3.13. Indenture may be executed in counterparts........................................21
ARTICLE IV COVENANTS OF THE COMPANY.......................................................................21
SECTION 4.1. Payment of Principal and interest................................................21
SECTION 4.2. Maintenance of office or agency..................................................22
SECTION 4.3. Corporate existence..............................................................22
SECTION 4.4. Restrictions on mergers, sales and consolidations................................22
SECTION 4.5. Further assurances...............................................................22
SECTION 4.6. File certain reports and information with the Trustee and the Securities and
Exchange Commission - transmit to holders of Debt Securities summaries of
certain documents filed with the Trustee - furnish list of holders of Debt
Securities to the Trustee........................................................23
SECTION 4.7. File statement by officers annually with the Trustee.............................24
SECTION 4.8. Duties of Paying Agent...........................................................24
ARTICLE V REDEMPTION OF DEBT SECURITIES; SINKING FUND....................................................25
SECTION 5.1. Applicability of Article.........................................................25
SECTION 5.2. Notice of redemption to be given to Trustee - deposit of cash (or other form
of payment) with Trustee - selection by Trustee of Debt Securities to be
redeemed.........................................................................25
SECTION 5.3. Debt Securities called for redemption to become due - rights of holders of
redeemed Debt Securities - return of funds on conversion.........................26
SECTION 5.4. Credits against sinking fund.....................................................27
SECTION 5.5. Redemption through sinking fund..................................................27
SECTION 5.6. Debt Securities no longer Outstanding after notice to Trustee and deposit of
cash.............................................................................28
SECTION 5.7. Conversion arrangement on call for redemption....................................29
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VI SATISFACTION AND DISCHARGE OF INDENTURE........................................................30
SECTION 6.1. Satisfaction and discharge of Indenture with respect to Debt Securities
of any series....................................................................30
SECTION 6.2. Deposits for payment or redemption of Debt Securities to be held in trust........31
SECTION 6.3. Repayment of moneys..............................................................31
ARTICLE VII REMEDIES UPON DEFAULT..........................................................................31
SECTION 7.1. Events of Default defined-- acceleration of maturity upon default--waiver
of default after acceleration....................................................32
SECTION 7.2. Covenant of Company to pay to Trustee whole amount due on default in payment
of Principal or interest - Trustee may recover judgment for whole amount due -
application of moneys received by the Trustee....................................33
SECTION 7.3. Trustee may enforce rights of action without possession of Debt Securities.......36
SECTION 7.4. Delays or omissions not to impair any rights or powers accruing upon default.....36
SECTION 7.5. In Event of Default Trustee may protect and enforce its rights by appropriate
proceedings - holders of majority in aggregate Principal amount of Debt
Securities of a series may waive default.........................................36
SECTION 7.6. Holders of majority in aggregate principal amount of Debt Securities of any
series may direct exercise of remedies...........................................37
SECTION 7.7. Limitation on suits by holders of Debt Securities................................37
SECTION 7.8. No Debt Securities owned or held by, for the account of or for the
benefit of the Company to be deemed Outstanding for purpose of payment
or distribution..................................................................38
SECTION 7.9. Company and Trustee restored to former position on discontinuance or
abandonment of proceedings.......................................................38
ARTICLE VIII EVIDENCE OF ACTION BY HOLDERS OF DEBT SECURITIES...............................................38
SECTION 8.1. Evidence of action by holders of Debt Securities.................................38
ARTICLE IX IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS................................39
SECTION 9.1. Immunity of incorporators, stockholders, officers, directors and employees.......39
</TABLE>
-iii-
<PAGE> 6
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE X MERGER, CONSOLIDATION, SALE OR LEASE...........................................................40
SECTION 10.1. Documents required to be filed with the Trustee upon consolidation, merger,
sale, transfer or lease - execution of supplemental indentures - acts of
successor corporation............................................................40
SECTION 10.2. Trustee may rely upon Opinion of Counsel.........................................41
ARTICLE XI CONCERNING THE TRUSTEE.........................................................................41
SECTION 11.1. Acceptance of Trust - responsibilities of Trustee................................41
SECTION 11.2. Trustee to be entitled to compensation - Trustee not to be accountable for
application of proceeds - moneys held by Trustee to be trust funds...............44
SECTION 11.3. Trustee to give holders of Debt Securities notice of default.....................45
SECTION 11.4. Trustee acquiring conflicting interest must eliminate it or resign...............46
SECTION 11.5. Eligibility of Trustee...........................................................46
SECTION 11.6. Resignation or removal of Trustee................................................46
SECTION 11.7. Acceptance by successor Trustee..................................................47
SECTION 11.8. Successor to Trustee by merger or consolidation, etc.............................48
SECTION 11.9. Limitations on right of Trustee as a creditor to obtain payment of certain
claims...........................................................................49
SECTION 11.10. Trustee to make annual report to holders of Debt Securities - Trustee to make
other reports to holders of Debt Securities - holders of Debt Securities to
whom reports to be transmitted...................................................49
SECTION 11.11. Preservation of information by Trustee - Trustee to give certain information to
holders of Debt Securities upon application......................................50
SECTION 11.12. Trustee may hold Debt Securities and otherwise deal with Company.................51
SECTION 11.13. Trustee may comply with any rule, regulation or order of the Securities and
Exchange Commission..............................................................51
SECTION 11.14. Appointment of Authenticating Agent..............................................51
ARTICLE XII SUPPLEMENTAL INDENTURES........................................................................53
SECTION 12.1. Company and Trustee may enter into supplemental indenture for special purposes...53
SECTION 12.2. Modification of Indenture with consent of holders of Debt Securities.............55
</TABLE>
-iv-
<PAGE> 7
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 12.3. Effect of supplemental indentures................................................56
SECTION 12.4. Supplemental indentures to conform to Trust Indenture Act........................56
SECTION 12.5. Notation on or exchange of Debt Securities.......................................56
ARTICLE XIII CONVERSION OF DEBT SECURITIES..................................................................56
SECTION 13.1. Applicability of Article.........................................................56
SECTION 13.2. Right of holders of Debt Securities to convert Debt Securities...................56
SECTION 13.3. Issuance of shares of Capital Stock on conversion................................57
SECTION 13.4. No payment or adjustment for interest or dividends...............................58
SECTION 13.5. Adjustment of conversion rate....................................................58
SECTION 13.6. No fractional shares to be issued................................................62
SECTION 13.7. Preservation of conversion rights upon consolidation, merger, sale or
conveyance.......................................................................62
SECTION 13.8. Notice to holders of Debt Securities of a series prior to taking certain types
of action........................................................................63
SECTION 13.9. Covenant to reserve shares for issuance on conversion of Debt Securities.........64
SECTION 13.10. Compliance with governmental requirements........................................64
SECTION 13.11. Payment of taxes upon certificates for shares issued upon conversion.............64
SECTION 13.12. Trustee's duties with respect to conversion provisions...........................64
</TABLE>
-v-
<PAGE> 8
INDENTURE dated as of the ____ day of _________, 199__, among FIRST
SIERRA FINANCIAL, INC., a Delaware corporation (hereinafter called the
"COMPANY") and _______________________, a ___________ banking corporation with
its principal offices in ___________, ___________, as Trustee hereunder
(hereinafter called the "TRUSTEE");
WHEREAS, the Company for its lawful corporate purposes has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its debentures, notes or other evidences of
indebtedness (hereinafter called the "DEBT SECURITIES"), to be issued in one or
more series as herein provided; and
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
THAT, in consideration of the premises and of the mutual covenants
herein contained and of the purchase and acceptance of the Debt Securities by
the holders thereof, and for other valuable consideration the receipt whereof is
hereby acknowledged, and intending to be legally bound hereby, it is hereby
agreed between the Company and the Trustee, for the benefit of those who shall
hold the Debt Securities, as follows:
ARTICLE I
DEFINITIONS; TRUST INDENTURE ACT CONTROLLING
SECTION 1.1. Definitions. Unless otherwise specified or the context
otherwise requires, the terms defined in this Article I shall for all purposes
of this Indenture and of any indenture supplemental hereto have the meanings
herein specified, the following definitions to be equally applicable to both the
singular and plural forms of any of the terms herein defined. All accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles in the United States of
America, and the words "HEREIN", "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Affiliate
An "AFFILIATE" shall mean any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any other obligor under this Indenture.
Authenticating Agent
The term "AUTHENTICATING AGENT" means any Person authorized by the
Trustee pursuant to Section 11.14 to act on behalf of the Trustee to
authenticate Debt Securities of one or more series.
Authorized Newspaper
The term "AUTHORIZED NEWSPAPER" shall mean a newspaper in the English
language or in an official language of the country of publication, customarily
printed on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in the place in connection with which the
term is used or in the financial community of such place. If, because of
temporary suspension of publication or general circulation of any newspaper or
for
<PAGE> 9
any other reason, it is impossible or, in the opinion of the Trustee,
impracticable to make any publication of any notice required by this Indenture
in the manner herein provided, such publication or other notice in lieu thereof
which is made at the written direction of the Company by the Trustee shall
constitute a sufficient publication of such notice. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same
place meeting the foregoing requirements and in each case on any Business Day.
Bankruptcy Law
The term "BANKRUPTCY LAW" means Title 11 of the United States Code, as
now constituted or hereafter in effect, or any other applicable Federal or State
bankruptcy, insolvency or other similar law.
Board; Board of Directors
The term "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company or (i) the Executive Committee, if any, of such Board,
(ii) any other committee of such Board duly authorized to act hereunder, or
(iii) any officers of the Company duly authorized by such Board or by any duly
authorized committee of such Board to act hereunder.
Business Day
The term "BUSINESS DAY" shall mean, with respect to any series of Debt
Securities, a day that, in the city (or in any of the cities, if more than one)
in which amounts are payable, as specified in the terms of such Debt Securities,
is not a day upon which banking institutions are authorized or required by law,
or by executive order issued by a governmental authority or agency regulating
such banking institutions, to close.
Capital Stock
The term "CAPITAL STOCK" shall mean stock of any class of the Company.
Certified Resolution
The term "CERTIFIED RESOLUTION" shall mean a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification.
Closing Price
The term "CLOSING PRICE" on any day when used with respect to any class
of Capital Stock shall mean (i) if the stock is then listed or admitted to
trading on a national securities exchange in the United States, the last
reported sale price, regular way, for the stock as reported in the consolidated
transaction or other reporting system for securities listed or traded on such
exchange, or (ii) if the stock is listed on the National Association of
Securities Dealers, Inc. Automated Quotations System National Market System (the
"NASDAQ NATIONAL MARKET SYSTEM"), the last reported sale price, regular way, for
the stock, as reported on such list, or (iii)
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if the stock is not so admitted for trading on any national securities exchange
or the Nasdaq National Market System, the average of the last reported closing
bid and asked prices reported by the National Association of Securities Dealers,
Inc. Automated Quotations System as furnished by any member in good standing of
the National Association of Securities Dealers, Inc., selected from time to time
by the Company for that purpose or as quoted by the National Quotation Bureau
Incorporated. In the event that no such quotation is available for any day, the
Board of Directors shall be entitled to determine the current market price on
the basis of such quotations as it considers appropriate.
Code
The term "THE CODE" means the Internal Revenue Code of 1986, as
amended.
Common Stock
The term "COMMON STOCK" shall mean the Common Stock, par value $.01 per
share, of the Company.
Company
The term "COMPANY" shall mean First Sierra Financial, Inc., a Delaware
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
Company Order
The term "COMPANY ORDER" means a written order signed in the name of
the Company by its Chairman of the Board, President or any Vice President
(regardless of Vice Presidential designation), and by its Chief Financial
Officer, Treasurer, any Assistant Treasurer, Secretary or any Assistant
Secretary and delivered to the Trustee.
Debt Security
The term "DEBT SECURITY" shall mean one of the debentures, notes or
other evidences of indebtedness that are issued from time to time in one or more
series under this Indenture and, more particularly, any series of Debt
Securities authenticated and delivered under this Indenture.
holder of Debt Securities
The term "HOLDER OF DEBT SECURITIES" or other similar term shall mean
any person who shall at the time be the registered holder of any Debt Security
or Debt Securities as shown by the register or registers kept by the Company or
its agent for that purpose in accordance with the terms of this Indenture.
Depositary
The term "DEPOSITARY" has the meaning specified in Section 2.13.
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Event of Default
The term "EVENT OF DEFAULT" shall mean an event listed in Section 7.1,
continued for the period of time, if any, and after the required notices, if
any, therein designated.
Global Security
The term "GLOBAL SECURITY" has the meaning specified in Section 2.13.
Indenture
The term "INDENTURE" shall mean this instrument as originally executed
or, if amended or supplemented as herein provided, as so amended or supplemented
and, unless the context otherwise indicates, shall include the form and terms of
each particular series of Debt Securities established as contemplated hereunder.
Officers' Certificate
The term "OFFICERS' CERTIFICATE" shall mean a certificate signed by the
Chairman of the Board, President or any Vice President (regardless of Vice
Presidential designation), and by its Chief Financial Officer, Treasurer, any
Assistant Treasurer, Secretary or any Assistant Secretary of the Company, in
their capacities as such officers of the Company and delivered to the Trustee.
Each such certificate shall include the statements provided for in Section 3.8,
if and to the extent required by the provisions thereof.
Opinion of Counsel
The term "OPINION OF COUNSEL" shall mean an opinion in writing signed
by legal counsel (who may be an employee of the Company) acceptable in form and
substance to the Trustee and delivered to the Trustee. Such opinion shall
include the statements provided for in Section 3.8, if and to the extent
required by the provisions thereof.
Original Issue Discount
The term "ORIGINAL ISSUE DISCOUNT" with respect to any debt security,
including an Original Issue Discount Security, has the same meaning as set forth
in Section 1273 of the Code, or any successor provision, and the applicable
Treasury Regulations thereunder.
Original Issue Discount Security
The term "ORIGINAL ISSUE DISCOUNT SECURITY" means any series of a Debt
Security, including a series of a Debt Security that does not provide for the
payment of interest prior to maturity, which is issued at a price lower than the
principal amount thereof and which provides that upon redemption or acceleration
of the stated maturity thereof an amount less than the principal amount thereof
to be due and payable pursuant to Section 7.1.
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Outstanding
The term "OUTSTANDING," when used with respect to the Debt Securities,
shall, subject to Section 3.3, mean, as of the date of determination, all Debt
Securities theretofore authenticated and delivered under this Indenture, except:
(a) Debt Securities for the payment or redemption of which cash (or other form
of payment if permitted by the terms of such Debt Securities) in the necessary
amount shall have been deposited in trust with the Trustee or any paying agent
(other than the Company) provided that, if such Debt Securities are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been duly given or provision satisfactory to the Trustee shall have been made
for giving such notice; (b) Debt Securities converted into Capital Stock in
accordance with Article XIII hereof, if the terms of such Debt Securities
provide for convertibility pursuant to Section 2.2; (c) Debt Securities paid or
in lieu of or in substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.9, unless proof
satisfactory to the Trustee is presented that any such Debt Securities are held
by persons in whose hands such Debt Securities are valid, binding and legal
obligations; and (d) Debt Securities which have been cancelled by the Trustee or
delivered to the Trustee or its designee for cancellation.
Paying Agent
The term "PAYING AGENT" shall mean any person authorized by the Company
to pay the principal of, premium, if any, and interest on any Debt Securities.
Person
The term "PERSON" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a joint-stock company, a
trust, any unincorporated organization, or a government or political subdivision
thereof.
Preferred Stock
The term "PREFERRED STOCK" shall mean the Preferred Stock of the
Company.
Principal
The term "PRINCIPAL" of a debt security, including any series of Debt
Securities, on any day and for any purpose means the amount (including, without
limitation, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect to
such debt security as of such date and for such purpose (including, without
limitation, in connection with any sinking fund, upon any redemption at the
option of the Company upon any purchase or exchange at the option of the Company
or the holder of such debt security and upon any acceleration of the maturity of
such debt security).
Principal amount
The term "PRINCIPAL AMOUNT" of a debt security, including any series of
Debt Securities, means the principal amount as set forth on the face of such
debt security.
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Responsible Officer
The term "RESPONSIBLE OFFICER", when used with respect to the Trustee,
shall mean any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
Securities Exchange Act
The term "SECURITIES EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended.
Significant Subsidiary
The term "SIGNIFICANT SUBSIDIARY" shall mean any subsidiary (i) whose
revenues exceed 10% of the total revenues of the Company, in each case for the
most recent fiscal year, or (ii) whose net worth exceeds 10% of the total
stockholders' equity of the Company, in each case as of the end of the most
recent fiscal years.
Trustee; corporate principal office
The term "TRUSTEE" shall mean the trustee or trustees hereunder for the
time being, whether original or successor. "TRUSTEE" as used with respect to the
Debt Securities of any series shall mean the Trustee with respect to Debt
Securities of such series. The term "PRINCIPAL OFFICE" of the Trustee shall mean
the principal office of the Trustee at which, at any particular time, the
corporate trust business of the Trustee shall be administered, which office as
of the date hereof is at ______________________________________________________.
U.S. Government Obligations
The term "U.S. GOVERNMENT OBLIGATIONS" means direct obligations of, or
obligations entitled to the full faith and credit of, the United States of
America.
SECTION 1.2. Trust Indenture Act definitions controlling. All terms
used in this Indenture which are defined in the Trust Indenture Act of 1939, as
amended, or which are by reference therein defined in the Securities Act of 1933
(except as herein otherwise expressly provided or unless the context otherwise
requires) shall have the meanings assigned to such terms in such Trust Indenture
Act and such Securities Act as they were respectively in force at the date of
this Indenture, except as otherwise provided in Section 12.3.
ARTICLE II
FORM, ISSUE AND REGISTRATION OF DEBT SECURITIES
SECTION 2.1. Forms generally and dating. The Debt Securities of each
series shall be in the form or forms (including temporary or permanent global
form) established from time to time by or pursuant to a resolution of the Board
of Directors or in one or more indentures supplemental hereto, which shall set
forth the information required by Section 2.2. The Debt Securities and the
Trustee's certificate of authentication shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture or by
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a resolution of the Board of Directors and may have such notations, legends or
endorsements as the Company may deem appropriate and as are not inconsistent
with the provisions of this Indenture or as may be required by law, stock
exchange rule or usage. The Company shall approve and provide the form of the
Debt Securities and any notation, legend or endorsement thereon. If the form of
Debt Securities of any series is established by action taken pursuant to a
resolution of the Board of Directors, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 2.5 for the authentication and delivery of such
Debt Securities.
Each Debt Security shall be dated the date of its authentication. The
form of the Trustee's certificate of authentication to be borne by the Debt
Securities shall be substantially as follows:
[FORM OF TRUSTEE'S CERTIFICATE]
This is one of the Debt Securities of the series referred to on the
reverse hereof.
-----------------------------------,
as Trustee
By:
--------------------------------
Authorized Officer
SECTION 2.2. Amount unlimited; Issuable in series.
The aggregate principal amount of the Debt Securities which may be
authenticated and delivered under this indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established in or pursuant to one or more resolutions of the Board of Directors,
or established in or pursuant to one or more indentures supplemental hereto,
prior to the issuance of the Debt Securities of any series:
(1) the title and designation of the Debt Securities of the
series (which shall distinguish Debt Securities of the series from all
other Debt Securities) including whether such Debt Securities shall be
issued as senior Debt Securities, senior subordinated Debt Securities
or subordinated Debt Securities, any subordination provisions
particular to such series of Debt Securities, and whether such Debt
Securities are convertible and/or exchangeable;
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for the Debt Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Debt Securities of the series pursuant to Section 2.6,
2.8, 2.9, 2.10, 2.11, 5.2 or 12.5) and except for any Debt
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Securities which pursuant to Section 2.4 are deemed not to have been
authenticated and delivered hereunder;
(3) the date or dates (and whether fixed or extendable) on
which the principal of the Debt Securities of the series is payable or
the method of determination thereof;
(4) the rate or rates (which may be fixed, floating or
adjustable) at which the Debt Securities of the series shall bear
interest, if any, the method of calculating such rates, the date or
dates from which such interest shall accrue or the manner of
determining such dates, the interest payment dates on which such
interest shall be payable and the record dates for the determination of
holders of Debt Securities to whom interest is payable;
(5) the place or places where the principal of and premium, if
any, and interest on the Debt Securities, if any, of the series shall
be payable;
(6) any provisions relating to the issuance of the Debt
Securities of such series at an original issue discount;
(7) the price or prices at which, the period or periods within
which and the terms and conditions upon which the Debt Securities of
the series may be redeemed, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise (including, without
limitation, the form or method of payment thereof if other than in
cash);
(8) the obligation, if any, of the Company to redeem, purchase
or repay the Debt Securities of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a
holder of Debt Securities thereof and the price or prices at which and
the period or periods within which and the terms and conditions upon
which the Debt Securities of the series shall be redeemed, purchased or
repaid, in whole or in part, pursuant to such obligation (including,
without limitation, the form or method of payment thereof if other than
in cash), and any provisions for the remarketing of such Debt
Securities;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Debt Securities of the
series shall be issuable;
(10) if other than the principal amount thereof, the portion
of the principal amount of the Debt Securities of the series which
shall be payable upon declaration of acceleration of the maturity
thereof pursuant to Section 7.1 or provable in bankruptcy pursuant to
Section 7.2, or, if applicable, which is convertible in accordance with
Article XIII.
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(11) any Events of Default with respect to the Debt Securities
of a particular series, in lieu of or in addition to those set forth
herein and the remedies therefor;
(12) the obligations, if any, of the Company to permit the
conversion of the Debt Securities of such series into Preferred Stock
or Common Stock, or combination thereof, and the terms and conditions
upon which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period
and any other provision in addition to or in lieu of those set forth in
this Indenture relative to such obligation);
(13) any trustees, authenticating or paying agents, transfer
agents or registrars or any other agents with respect to the Debt
Securities of such series;
(14) the currency or currencies, including composite
currencies, in which the Debt Securities of the series shall be
denominated if other than the currency of the United States of America,
and, if so, whether the Debt Securities of the series may be satisfied
and discharged other than as provided in Article VI;
(15) if other than the coin or currency in which the Debt
Securities of that series are denominated, the coin or currency in
which payment of the principal of, premium, if any, or interest on the
Debt Securities of such series shall be payable (and the manner in
which the equivalent of the principal amount thereof in the currency of
the United States is to be determined for any purpose, including for
the determination of the principal amount outstanding);
(16) if the principal of, premium, if any, or interest on the
Debt Securities of such series are to be payable, at the election of
the Company or a holder of Debt Securities thereof, in a coin or
currency other than that in which the Debt Securities are denominated,
the period or periods within which, and the terms and conditions upon
which, such election may be made;
(17) if the amount of payments of principal of, premium, if
any, and interest on the Debt Securities of the series may be
determined with reference to an index, the manner in which such amounts
shall be determined;
(18) whether and under what circumstances the Company will pay
additional amounts on the Debt Securities of the series held by a
person who is not a United States of America person in respect of any
tax, assessment or governmental charge withheld or deducted and, if so,
whether the Company will have the option to redeem such Debt Securities
rather than pay such additional amounts;
(19) if receipt of certain certificates or other documents or
satisfaction of other conditions will be necessary for any purpose,
including, without limitation, as a condition to the issuance of the
Debt Securities of such series in definitive
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form (whether upon original issue or upon exchange of a temporary Debt
Security of such series), the form and terms of such certificates,
documents or conditions;
(20) any other affirmative or negative covenants with respect
to the Debt Securities of such series;
(21) whether the Debt Securities of such series shall be
issued in whole or in part in the form of one or more Global Securities
and in such case, (i) the Depositary for such Global Security or Debt
Securities, which Depositary must be a clearing agency registered under
the Securities Exchange Act, (ii) the circumstances under which any
such Global Security may be exchanged for Debt Securities registered in
the name of, and under which any transfer of such Global Security may
be registered in the name of, any Person other than such Depositary or
its nominee, if other than as set forth in Section 2.13 and (iii) any
other provisions regarding such Global Securities which provisions may
be in addition to or in lieu of, in whole or in part, the provisions of
Section 2.13;
(22) whether the Debt Securities are defeasible;
(23) any other terms of a particular series and any other
provisions expressing or referring to the terms and conditions upon
which the Debt Securities of such series are to be issued under the
Indenture, which terms and provisions are not in conflict with the
provisions of this Indenture; provided, however, that the addition to
or subtraction from or variation of Articles IV, V, VI, VII, and X (and
Section 1.1, insofar as it relates to the definition of certain terms
as used in such Articles) with regard to the Debt Securities of a
particular series shall not be deemed to constitute a conflict with the
provisions of those Articles.
All Debt Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such resolution of the Board of Directors or in any such indenture
supplemental hereto. Not all Debt Securities of any one series need be issued at
the same time, and, unless otherwise so provided, a series may be reopened for
issuances of additional Debt Securities of such series.
If any of the terms of the Debt Securities of a series are established
by action taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee with an
Officers' Certificate setting forth the terms of the Debt Securities of such
series. With respect to Debt Securities of a series which are not to be issued
at one time, such resolution of the Board of Directors or action may provide
general terms or parameters for Debt Securities of such series and provide
either that the specific terms of particular Debt Securities of such series
shall be specified in a Company Order or that such terms shall be determined by
the Company or its agents in accordance with a Company Order as contemplated by
the proviso clause of Section 2.5.
SECTION 2.3. Denominations. The Debt Securities of each series shall be
registered Debt Securities without coupons, in such denominations as shall be
specified as contemplated by
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Section 2.2. In the absence of any such provisions with respect to the Debt
Securities of any series, the Debt Securities of such series shall be issuable
in denominations of $1,000 or of any integral multiple of $1,000.
SECTION 2.4. Execution of Debt Securities; Authentication. The Debt
Securities shall be executed on behalf of the Company by its President, its
Treasurer or one of its Executive Vice Presidents or Vice Presidents, whose
signatures may be manual or facsimile, and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries. In case any
officer of the Company who shall have signed any of the Debt Securities shall
cease to be such officer before the Debt Securities so signed and attested shall
actually have been authenticated and delivered by the Trustee or the
Authenticating Agent or disposed of by the Company, such Debt Securities
nevertheless may be authenticated, issued and delivered or disposed of with the
same force and effect as though the person or persons who signed or attested
such Debt Securities had not ceased to be such officer of the Company; and any
such Debt Security may be signed and attested on behalf of the Company by such
persons, as at the actual date of the execution of such Debt Security, shall be
the proper officers of the Company, although at the date of such Debt Security
or the date of execution of this Indenture any such person was not such officer.
No Debt Security of any series shall be entitled to the benefits hereof
or shall be or become valid or obligatory for any purpose unless there shall
appear on the Debt Security a certificate of authentication, substantially in
the form hereinbefore recited, manually executed by the Trustee for such series
or an Authenticating Agent; and such certificate on any series of Debt
Securities issued by the Company shall be conclusive evidence that it has been
duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any series of Debt Securities shall
have been duly authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Debt Security to the Trustee
or its designee for cancellation as provided in Section 2.11 together with a
written statement (which need not be accompanied by an Opinion of Counsel)
stating that such Debt Security has not been issued and sold by the Company, for
all purposes of this Indenture such Debt Security shall be deemed not to have
been authenticated and delivered hereunder and shall not be entitled to the
benefits of this Indenture.
If the form or forms or terms of the Debt Securities of any series have
been established in or pursuant to one or more resolutions of the Board of
Directors or indentures supplemental hereto as permitted by Sections 2.1 and
2.2, in authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee and the Authenticating Agent shall be entitled to receive, and (subject
to Section 11.2) shall be fully protected in relying upon, a copy of such
resolution or resolutions delivered to the Trustee and the Authenticating Agent
and certified by the Secretary or Assistant Secretary of the Company to have
been duly adopted by the Board of Directors of the Company and to be in full
force and effect on the date of such certification, and an Opinion of Counsel
stating:
(1) if the form or forms of such Debt Securities have been
established by or pursuant to a resolution of the Board of Directors or
indenture supplemental
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<PAGE> 19
hereto, that such form or forms have been established in conformity
with the provisions of this Indenture;
(2) if the terms of such Debt Securities have been established
by or pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such terms have been established in
conformity with the provisions of this Indenture;
(3) that such Debt Securities, when authenticated and
delivered by the Trustee or an Authenticating Agent and issued by the
Company and the Guarantors in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to general equity
principles (or such other similar matters as in the opinion of such
counsel shall not materially adversely affect such enforceability); and
(4) that the issuance and authentication of such Debt
Securities to be issued will not conflict with, result in a breach or
constitute a default or with the giving of notice or the passage of
time or both, would not constitute a default, under the articles of
incorporation or bylaws of the Company or result in such a default or
violation;
provided, however, that, with respect to Debt Securities of a series which are
not to be issued at one time, the Trustee and the Authenticating Agent shall be
entitled to receive such Opinion of Counsel only once at or prior to the time of
the first authentication of Debt Securities of such series and that the opinions
described in clauses (2) and (3) above may state, respectively,
(a) that, when the terms of such Debt Securities shall have
been established pursuant to a Company Order or pursuant to such
procedures as may be specified from time to time by a Company Order,
all as contemplated by and in accordance with a resolution of the Board
of Directors or an Officers' Certificate pursuant to a resolution of
the Board of Directors or indenture supplemental hereto, as the case
may be, such terms will have been established in conformity with the
provisions of this Indenture; and
(b) that such Debt Securities, when (i) executed by the
Company, (ii) completed, authenticated and delivered by the Trustee or
Authenticating Agent in accordance with this Indenture, (iii) issued
and delivered by the Company, and (iv) paid for, all as contemplated by
and in accordance with the aforesaid Company Order or specified
procedures, as the case may be, will constitute valid and legally
binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization and other laws or general applicability relating to or
affecting the enforcement of creditors' rights and to general equitable
principles (or such other similar matters as in the opinion of such
counsel shall not materially adversely affect such enforceability).
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Notwithstanding the provisions of Sections 2.1, 2.2, 3.8 and this
Section, if all the Debt Securities of a series are not to be originally issued
at one time, the resolution of the Board of Directors or indenture supplemental
hereto, the certified copy of the record of action taken pursuant to such
resolution or supplemental indenture, the Officers' Certificate, the Company
Order and any other documents otherwise required pursuant to such Sections need
not be delivered at or prior to the time of authentication of each Debt Security
of such series if such documents are delivered at or prior to the authentication
upon original issuance of the first Debt Security of such series to be issued;
provided, however, that any subsequent request by the Company to the Trustee or
the Authenticating Agent to authenticate Debt Securities of such series shall
constitute a representation and warranty by the Company that, as of the date of
such request, the statements made in the Officers' Certificate delivered
pursuant to Section 3.8 at or prior to authentication of the first such Debt
Security shall be true and correct on the date thereof as if made on and as of
the date thereof.
The Trustee or the Authenticating Agent shall not be required to
authenticate such Debt Securities if the issue of such Debt Securities pursuant
to this Indenture will adversely affect the Trustee's or the Authenticating
Agent's own rights, duties or immunities under the Debt Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee or the Authenticating Agent.
With respect to Debt Securities of a series which are not all issued at
one time, the Trustee and the Authenticating Agent may conclusively rely, as to
the authorization by the Company of any such Debt Securities, the form and terms
thereof and the legality, validity, binding effect and enforceability thereof,
upon the Opinion of Counsel, Officers' Certificate and other documents delivered
pursuant to Sections 2.1, 2.2, 3.8 and this Section, as applicable, at or prior
to the time of the first authentication of Debt Securities of such series unless
and until such opinion, certificate or other documents have been superseded or
revoked in a writing delivered to the Trustee. In connection with the
authentication and delivery of Debt Securities of a series which are not all
issued at one time, the Trustee and the Authenticating Agent shall be entitled
to assume that the Company's instructions to authenticate and deliver such Debt
Securities do not violate any rules, regulations or orders of any governmental
agency or commission having jurisdiction over the Company.
SECTION 2.5. Issue of Debt Securities. The Trustee and the
Authenticating Agent, forthwith upon the execution and delivery of this
Indenture and from time to time thereafter, upon the execution and delivery to
it of Debt Securities of any series by the Company as herein provided, and
without any further action on the part of the Company, shall authenticate such
Debt Securities up to a maximum amount, if any, designated for such series
pursuant to Section 2.2 and deliver them to or upon the receipt of a Company
Order; provided, however, that if not all the Debt Securities of a series are to
be issued at one time and if the resolution of the Board of Directors or
indenture supplemental hereto establishing such series as contemplated by
Sections 2.1 and 2.2 shall so permit, such Company Order may set forth
procedures acceptable to the Trustee for the issuance of such Debt Securities
and for determining the form or forms or terms of particular Debt Securities of
such series including, but not limited to, interest rate, if any, maturity date,
date of issuance and date from which interest, if any, shall accrue.
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SECTION 2.6. Transfer of Debt Securities. The transfer of any series of
Debt Securities may be registered by the registered owner thereof, in person or
by his attorney duly authorized in writing, at the office or agency of the
Company to be maintained by it as provided in Section 4.2, by delivering such
Debt Security for cancellation, accompanied by delivery of a duly executed
instrument of transfer, in form approved by the Company and satisfactory to the
Trustee or its designee, and thereupon the Company shall execute in the name of
the transferee or transferees, and the Trustee or the Authenticating Agent shall
authenticate and deliver, a new Debt Security or Debt Securities of the same
series and of like form for the same aggregate principal amount.
SECTION 2.7. Persons deemed owners of Debt Securities. Prior to due
presentation of any series of Debt Securities for registration of transfer, the
person in whose name a Debt Security of any series shall be registered, on books
kept for such purpose in accordance with Section 4.2, shall be deemed the
absolute owner thereof for all purposes of this Indenture, whether or not such
Debt Security is overdue, and neither the Company, the Trustee nor any Paying
Agent or conversion agent nor any series of Debt Securities registrar shall be
affected by notice to the contrary. Subject to the provisions of Section 2.12,
payment of or on account of the principal, premium, if any, and interest shall
be made only to or upon the order in writing of such registered owner thereof,
but such registration may be changed as above provided. All such payments shall
be valid and effectual to satisfy and discharge the liability upon such Debt
Security to the extent of the sum or sums so paid.
SECTION 2.8. Provisions for Debt Securities in temporary form. Until
Debt Securities of any series in definitive form are ready for delivery, the
Company may execute and, upon its request in writing, the Trustee or the
Authenticating Agent shall authenticate and deliver, in lieu thereof and subject
to the same conditions, one or more printed or lithographed Debt Securities in
temporary form, substantially of the tenor of Debt Securities of the same
series, without a recital of specific redemption prices and with such other
appropriate omissions, variations and insertions, all as may be determined by
the Board of Directors. Until exchanged for Debt Securities of the same series
in definitive form such Debt Securities in temporary form shall be entitled to
the benefits of this Indenture. The Company shall, without unreasonable delay
after the issue of Debt Securities in temporary form, prepare, execute and
deliver definitive Debt Securities of the same series to the Trustee, and upon
the presentation and surrender of Debt Securities in temporary form, the Trustee
or the Authenticating Agent shall authenticate and deliver, in exchange
therefor, Debt Securities of the same series in definitive form for the same
aggregate principal amount as the Debt Securities in temporary form surrendered.
Such exchange shall be made by the Company at its own expense and without any
charge therefor.
SECTION 2.9. Mutilated, destroyed, lost or stolen Debt Securities. Upon
receipt by the Company, the Trustee and the Authenticating Agent of evidence
satisfactory to them that any Debt Security of any series has been mutilated,
destroyed, lost or stolen, and upon receipt of indemnity (and in case of a
destroyed, lost or stolen Debt Security, proof of ownership) satisfactory to
them, the Company shall, in the case of a mutilated Debt Security, and may in
the case of a lost, stolen or destroyed Debt Security, execute, and thereupon
the Trustee or the Authenticating Agent shall authenticate and deliver, a new
Debt Security of the same series of like tenor bearing a serial number not
contemporaneously outstanding (bearing such notation, if any, as may be required
by the rules of any stock exchange upon which the Debt Securities of the same
series are listed or are to be listed), in exchange and substitution for, and
upon surrender
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and cancellation of, the mutilated Debt Security, or in lieu of and in
substitution for the Debt Security so destroyed, lost or stolen; or, if any
mutilated, destroyed, lost or stolen Debt Security of any series shall have
matured or be about to mature, instead of issuing a new Debt Security, the
Company, upon written notice to the Trustee or the Authenticating Agent, may pay
the same without surrender of the destroyed, lost or stolen Debt Security. The
Company may require payment of the expenses which may be incurred by the Company
or any agent thereof and the charges and expenses of the Trustee and the
Authenticating Agent in the premises. Any series of Debt Securities issued under
the provisions, of this Section 2.9 in lieu of any series of Debt Securities
alleged to have been destroyed, lost or stolen, shall constitute an additional
contractual obligation of the Company, whether or not the Debt Security alleged
to have been destroyed, lost or stolen shall be found at any time, and shall be
equally and proportionately entitled to the benefits of this Indenture with all
other Debt Securities of the same series issued under this Indenture.
All Debt Securities shall be held and owned upon the express condition
that the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities, and shall
preclude, to the extent lawful, any and all other rights or remedies,
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 2.10. Exchanges of Debt Securities. Debt Securities of any
series may, upon surrender thereof as hereinafter provided in this Section 2.10,
be exchanged for one or more Debt Securities of the same series of the same
aggregate principal amount, in authorized denominations. The Debt Securities to
be exchanged shall be surrendered at the office or agency of the Company to be
maintained by it as provided in Section 4.2, accompanied by duly executed
instruments of transfer in a form acceptable to the Company, the Trustee and the
registrar, and the Company and the Guarantors shall execute and the Trustee or
the Authenticating Agent shall authenticate and deliver, in exchange therefor,
the Debt Security or Debt Securities of the same series, bearing numbers not
contemporaneously outstanding, which the holder of Debt Securities making the
exchange shall be entitled to receive. Every exchange of Debt Securities of any
series shall be effected in such manner as may be prescribed by the Company with
the approval of the Trustee and registrar, and as may be necessary to comply
with the regulations of any stock exchange upon which Debt Securities of such
series are listed or are to be listed or to conform to usage in respect thereof.
Upon every exchange or registration of transfer of Debt Securities, no
service charge shall be made but the Company may require the payment of any
taxes or other governmental charges required to be paid with respect to such
exchange or registration, as a condition precedent to the exercise of the
privilege of such exchange or registration.
All Debt Securities executed, authenticated and delivered in exchange
or upon registration of transfer shall be the valid obligations of the Company,
evidencing the same debt as the Debt Securities surrendered, and shall be
entitled to the benefits of this Indenture to the same extent as the Debt
Securities in exchange for which they were authenticated and delivered.
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The Company shall not be required to make exchanges or registrations of
transfer under any provision of this Article II of: (a) the Debt Securities of
any series for the period of 15 days next preceding the date of any designation
of Debt Securities of such series to be redeemed, as provided in Article V, or
(b) any series of Debt Securities or portion thereof called or to be called for
redemption.
SECTION 2.11. Cancellation of surrendered Debt Securities. All Debt
Securities of any series surrendered for the purpose of payment, exchange,
conversion or cancellation (including Debt Securities authenticated which the
Company has not issued and sold) shall, if surrendered to the Company or any
Paying Agent or conversion agent, be delivered to the Trustee or its designee
and cancelled by it, or, if surrendered to the Trustee or its designee, shall be
cancelled by it, and no Debt Securities shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Indenture or as
otherwise provided in the resolution of the Board of Directors or indenture
supplemental hereto establishing such series as contemplated by Section 2.2. All
Debt Securities of any series surrendered for the purpose of redemption or
credit against any sinking fund shall similarly be delivered to the Trustee or
its designee for cancellation, and no Debt Securities shall be issued in lieu
thereof except Debt Securities of the same series in the case of redemption of a
Debt Security in part only. If the Company shall acquire any of the Debt
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Debt Securities unless and until the
same are delivered to the Trustee or its designee for cancellation. Unless
otherwise directed in writing by the Company, the Trustee or its designee shall
destroy all cancelled Debt Securities and furnish to the Company a certificate
evidencing such destruction.
SECTION 2.12. Payment of interest; Defaulted interest. Except as
provided in Section 13.4, interest (except defaulted interest) on the Debt
Securities of any series which is payable on any interest payment date shall be
paid to the persons who are holders of Debt Securities of such series at the
close of business on the record date specified for that purpose as contemplated
by Section 2.2. At the option of the Company, payment of interest on any series
of Debt Securities may be made by check mailed to the holder's registered
address.
If the Company defaults in a payment of interest on the Debt Securities
of any series, it shall pay the defaulted interest to the persons who are
holders of Debt Securities of such series at the close of business on a
subsequent special record date. The Company shall fix the record date (which
shall be not less than five Business Days prior to the date of payment of such
defaulted interest) and payment date. At least 15 days before the record date,
the Company shall mail to each holder of Debt Securities of such series a notice
that states the record date, the payment date and the amount of defaulted
interest to be paid. The Company shall notify the Trustee in writing of the
amount of defaulted interest proposed to be paid on each Debt Security of such
series and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee or any paying agent for such series an amount of
money in immediately available funds by 10:00 a.m. New York time on the payment
date equal to the aggregate amount proposed to be paid in respect of such
defaulted interest or shall make arrangements satisfactory to any Paying Agent
for such series for such deposit prior to the date of the proposed payment. The
Company may pay defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Debt Security may
be listed, and upon notice as may be
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required by such exchange if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such payment shall be deemed
practicable by the Trustee.
SECTION 2.13. Global Securities; Depositary. For the purpose of this
Section, the term "AGENT MEMBER" means a member of, or participant in, a
Depositary; the term "DEPOSITARY" means, with respect to Debt Securities
issuable or issued in whole or in part in the form of one or more Global
Securities, the entity designated as Depositary by the Company pursuant to
Section 2.2, and, if at any time there is more than one such person,
"DEPOSITARY" as used with respect to the Debt Securities shall mean the
respective Depositary with respect to a particular series of Debt Securities;
and the term "GLOBAL SECURITY" means a global certificate evidencing all or part
of the series of Debt Securities as shall be specified herein, issued to the
Depositary for the series or such portion of the series, and registered in the
name of such Depositary or its nominee. The Global Security may provide that it
shall represent the aggregate amount of Outstanding Debt Securities from time to
time endorsed thereon which may from time to time be reduced to reflect
exchanges. Any endorsement to reflect the amount, or any increase or decrease in
the amount, of Outstanding Debt Securities shall be made by the Trustee.
Notwithstanding Section 2.10, except as otherwise specified as
contemplated by Section 2.2, hereof, any Global Security shall be exchangeable
only as provided in this paragraph. A Global Security shall be exchangeable
pursuant to this Section 2.13 if (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security or if
at any time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act, (ii) the Company in its sole discretion determines that
all Global Securities of any series then outstanding under this Indenture shall
be exchangeable for definitive Debt Securities of such series in registered form
or (iii) an Event of Default with respect to the Debt Securities of the series
represented by such Global Security has occurred and is continuing. Any Global
Security of such series exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive Debt Securities of such series in registered form,
bearing interest (if any) at the same rate or pursuant to the same formula,
having the same date of issuance, redemption, conversion (if any) and other
provisions, and of differing denominations aggregating a like amount. Such
definitive Debt Securities of such series shall be registered in the names of
the owners of the beneficial interests in such Global Securities of such series
as such names are from time to time provided by the relevant participants in the
Depositary holding such Global Securities (as such participants are identified
from time to time by such Depositary).
No Global Security may be transferred except as a whole by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor of the Depositary or a nominee of
such successor. Except as provided above, owners solely of beneficial interests
in a Global Security shall not be entitled to receive physical delivery of Debt
Securities of such series in definitive form and will not be considered the
holders of Debt Securities thereof for any purpose under this Indenture.
Any Global Security that is exchangeable pursuant to the preceding
paragraph shall be exchangeable for Debt Securities of such series in authorized
denominations and registered in such names as the Depositary that is the holder
of Debt Securities of such Global Securities of such series shall direct.
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In the event that a Global Security is surrendered for redemption in
part pursuant to Section 5.2 or 5.5, the Company shall execute, and the Trustee
or the Authenticating Agent shall authenticate and deliver to the Depositary for
such Global Security, without service charge, a new Global Security in a
denomination and tenor equal to and in exchange for the unredeemed portion of
the principal for the Global Security so surrendered.
The Agent Members shall have no rights under this Indenture with
respect to any Global Security held on their behalf by a Depositary, and such
Depositary may be treated by the Company, the Trustee, and any agent of the
Company or the Trustee as the owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of a Debt Security of any series, including without limitation the
granting of proxies or other authorization of participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action which a holder of Debt Securities is entitled to give or take under this
Indenture.
The Trustee shall not be required to authenticate Global Securities
until it has received documentation satisfactory to it.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1. Rights under Indenture limited to the parties and holders
of Debt Securities. Nothing in this Indenture or the Debt Securities, express or
implied, is intended or shall be construed to confer upon, or to give to, any
person or corporation, other than the parties hereto, their successors and
assigns, and the holders of the Debt Securities, any right, remedy or claim
under or by reason of this Indenture or any provision hereof; and the provisions
of this Indenture are for the exclusive benefit of the parties hereto, their
successors and assigns, and the holders of the Debt Securities.
SECTION 3.2. Certificate of independent accountants conclusive. Unless
otherwise specifically provided, the certificate or opinion of an independent
firm of public accountants of recognized standing selected by the Board of
Directors and acceptable to the Trustee in the exercise of reasonable care
(which firm may be regular independent accountants to the Company ), shall be
conclusive evidence of the correctness of any computation made under the
provisions of this Indenture, and wherever reference is made in this Indenture
to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" the certificate or opinion of such
a firm shall be conclusive evidence thereof. The Company shall furnish to the
Trustee upon its request a copy of any such certificate or opinion.
SECTION 3.3. Treatment of Debt Securities owned or held by the Company
in determining required percentages. For all purposes of this Indenture, in
determining whether the holders of a required percentage or proportion of the
principal amount of Debt Securities of one or more series have concurred in any
request, waiver, vote, direction or consent, Debt Securities
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owned or held by or for the account or for the benefit of the Company or any
other obligor under this Indenture or any Affiliate shall be disregarded and
deemed not Outstanding, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such request, waiver, direction or
consent, only Debt Securities which the Trustee knows to be so owned or held
shall be so disregarded. Debt Securities so owned which have been pledged in
good faith to secure an obligation may be regarded as Outstanding for all such
purposes, if the Trustee receives an Officers' Certificate stating that said
Debt Securities have been so pledged, that the pledgee is entitled to vote with
respect to such Debt Securities and that the pledgee is not the Company or any
other obligor on the Debt Securities, an Affiliate of the Company or an
Affiliate of such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be conclusive,
and, subject to the provisions of Section 11.1 of this Indenture, shall afford
full protection to the Trustee.
SECTION 3.4. Remaining provisions not affected by invalidity of any
other provisions - required provisions of Trust Indenture Act of 1939 to
control. In case any one or more of the provisions contained in this Indenture
or in the Debt Securities of any series shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, but
this Indenture shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
If any provision of this Indenture limits, qualifies or conflicts with
any other provision of this Indenture which is required to be included in an
indenture qualified under the Trust Indenture Act of 1939, such provision which
is so required to be included shall control. If any provisions of this Indenture
modifies or excludes any provisions of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or excluded, as the case may be.
SECTION 3.5. Company released from Indenture requirements if entitled
to have Indenture cancelled. Whenever by the terms of this Indenture the Company
shall be required to do or not to do anything so long as any of the Debt
Securities shall be Outstanding of any series, the Company shall,
notwithstanding any such provision, not be required to comply with such
provision with respect to such series if it shall be entitled to have this
Indenture satisfied and discharged pursuant to the provisions hereof, even
though in either case the holders of any of the Debt Securities of such series
shall have failed to present and surrender such Debt Securities for payment
pursuant to the terms of this Indenture.
SECTION 3.6. Date of execution. Although this Indenture, for
convenience and for the purpose of reference, is dated as of the date first
above written, the actual date of execution by the Company and by the Trustee is
as indicated by their respective acknowledgements hereto annexed.
SECTION 3.7. Execution of documents furnished under the Indenture.
Unless otherwise expressly provided, any order, notice, request, demand,
certificate or statement of the Company required or permitted to be made or
given under any provision hereof shall be sufficiently executed if signed by its
Chairman of the Board, President or any Vice President (regardless of Vice
Presidential designation), and by its Chief Financial Officer, Treasurer, any
Assistant Treasurer, Secretary or any Assistant Secretary.
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<PAGE> 27
SECTION 3.8. Officers' Certificate and Opinions of Counsel to be
furnished to Trustee. Upon any application, demand or request by the Company to
the Trustee to take any action under any of the provisions of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent have been complied
with and that such action is in compliance with applicable law.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture 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 complied with; and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters, information with respect to which is in the possession of
the Company, upon the certificate, statement or opinion of or representations by
an officer or officers of the Company unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous. Any certificate or
opinion of any independent firm of public accountants filed with the Trustee
shall contain a statement that such firm is independent.
SECTION 3.9. Presentation of notices and demands. All notices to or
demands upon the Trustee shall be in writing and may be served or presented at
the principal office of the Trustee. Any notice to or demand upon the Company
shall be deemed to have been sufficiently given or served by the Trustee or the
holders of Debt Securities, for all purposes, by being mailed by first class
mail addressed to the Company, attention of the President, at 600 Travis Street,
Suite 7050, Houston, Texas 77002, or at such other address or to such other
counsel, as may be filed in writing by the Company with the Trustee.
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Except as otherwise expressly provided herein, where this Indenture
provides for notice to holders of Debt Securities of any event, such notice
shall be sufficiently given to holders of Debt Securities if in writing and
mailed, first-class postage prepaid, to each holder of a Debt Security affected
by such event, at the address of such holder as it appears in the Debt Security
register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
holders of Debt Securities by mail, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case where notice to holders of Debt Securities is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular holder of a Debt Security shall affect the
sufficiency of such notice with respect to other holders of Debt Securities.
SECTION 3.10. Successors and assigns bound by Indenture. All the
covenants, promises and agreements in this Indenture contained by or on behalf
of the Company or by or on behalf of the Trustee, shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed or not.
SECTION 3.11. Descriptive headings for convenience only. The
descriptive headings of the several Articles of this Indenture are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
SECTION 3.12. New York law to govern. This Indenture and each Debt
Security shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws of
said jurisdiction, and the rights, obligations, duties, immunities and
limitations of rights of the Trustee shall be construed in accordance with the
laws of the State of New York.
SECTION 3.13. Indenture may be executed in counterparts. This Indenture
may be simultaneously executed in any number of counterparts, each of which when
so executed and delivered shall be an original, but such counterparts shall
together constitute but one and the same instrument. __________________________,
as Trustee, hereby accepts the trusts in this Indenture declared and provided
upon the terms and conditions hereinbefore set forth.
ARTICLE IV
COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
SECTION 4.1. Payment of Principal and interest. The Company will for
the benefit of each series of Debt Securities duly and punctually pay or cause
to be paid the principal of, premium, if any, and interest on the Debt
Securities of such series at the times and place and in the manner specified in
this Indenture and in the Debt Securities of such series. At the option of the
Company, interest on the Debt Securities shall be payable without presentation
of such Debt
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Securities by a check to the registered holder. Any payment of principal and any
premium or interest required to be made on an interest payment date, redemption
date or at maturity which is not a Business Day 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 such interest payment date, redemption date or at maturity,
as the case may be, and no interest shall accrue for the period from and after
such interest payment date, redemption date or maturity.
SECTION 4.2. Maintenance of office or agency. So long as any of the
Debt Securities of any series remain unpaid, the Company will at all times keep
an office or agency in New York, New York, where Debt Securities of such series
may be presented for registration of transfer and exchange as in this Indenture
provided, where notices and demands with respect to the Debt Securities and this
Indenture may be served and where the Debt Securities may be presented for
payment or, for Debt Securities of each series that is convertible, for
conversion. The principal office of the Trustee shall be the office or agency
for all of the aforesaid purposes unless otherwise provided in a supplemental
indenture or unless the Company shall maintain some other office or agency with
respect to the Debt Securities of any series for such purposes and shall give
the Trustee written notice of the location thereof. In case the Company shall
fail to maintain such office or agency, presentations may be made and notices
and demands may be served at the principal office of the Trustee.
The Company shall keep, at said office or agency, a register or
registers in which, subject to such reasonable regulations as it may prescribe,
the Company shall register or cause to be registered Debt Securities of each
series and shall register or cause to be registered the transfer or exchange of
Debt Securities of each series as in Article II provided. Such register or
registers shall be in written form in the English language or any other form
capable of being converted into written form within a reasonable time. At all
reasonable times, such register or registers shall be open for inspection by the
Trustee.
SECTION 4.3. Corporate existence. Subject to Article X hereof, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the rights (charter and
statutory) and franchises of the Company; provided, however, that the Company
shall not be required to preserve any such right or franchise if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business and that the loss thereof is not disadvantageous in any
material respect to the holders of Debt Securities.
SECTION 4.4. Restrictions on mergers, sales and consolidations. So long
as any of the Debt Securities remain unpaid, the Company will not consolidate or
merge with or sell, convey or lease all or substantially all of its property to
any other corporation, partnership or limited liability company except (a) to
the extent expressly permitted pursuant to the terms of any supplemental
indenture governing any series of the Debt Securities and (b) as otherwise
permitted in Article X hereof.
SECTION 4.5. Further assurances. From time to time whenever requested
by the Trustee, the Company will execute and deliver such further instruments
and assurances and do such further acts as may be reasonably necessary or proper
to carry out more effectually the
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purposes of this Indenture or to secure the rights and remedies hereunder of the
holders of the Debt Securities of any series.
SECTION 4.6. File certain reports and information with the Trustee and
the Securities and Exchange Commission transmit to holders of Debt Securities
summaries of certain documents filed with the Trustee - furnish list of holders
of Debt Securities to the Trustee. The Company will:
(a) file with the Trustee, within 15 days after the Company
files the same with the Securities and Exchange Commission, copies of
the annual reports and of the information, documents and other reports
which the Company may be required to file with the Securities and
Exchange Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (or copies of such portions thereof as
may be prescribed by the Securities and Exchange Commission); or, if
the Company is not required to file with the Securities and Exchange
Commission information, documents or reports pursuant to either Section
13 or Section 15(d) of the Securities Exchange Act of 1934, then the
Company will file with the Trustee and will file with the Securities
and Exchange Commission, in accordance with rules and regulations
prescribed by the Securities and Exchange Commission, such of the
supplementary and periodic information, documents and reports required
pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the Securities and Exchange
Commission, in accordance with the rules and regulations prescribed
from time to time by the Securities and Exchange Commission, such
additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required by such rules and regulations;
(c) transmit to the holders of Debt Securities, in the manner
and to the extent provided in subdivision (c) of Section 11.10, such
summaries of any information, documents and reports required to be
filed with the Trustee pursuant to the provisions of subdivisions (a)
and (b) of this Section 4.6 as may be required by the rules and
regulations of the Securities and Exchange Commission; and
(d) furnish or cause to be furnished to the Trustee, not more
than 15 days after each record date (but in no event less frequently
than every six months) for the payment of interest with respect to Debt
Securities of any series, and at such other times as the Trustee may
request in writing, within 30 days after receipt by the Company of any
such request, a list in such form as the Trustee may reasonably require
containing all information in the possession or control of the Company
or of any Paying Agent, other than the Trustee, as to the names and
addresses of the holders of Debt Securities of such series obtained
since the date as of which the next previous list, if any, was
furnished; provided, that so long as the Trustee is Debt Security
registrar for such series, no such list need be furnished. Any such
list may be dated as of a date not more than 15 days prior to the time
such information is furnished or caused to be furnished, and need not
include
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information received after such date (excluding from any such list
names and addresses received by the Trustee in its capacity as Debt
Security registrar).
SECTION 4.7. File statement by officers annually with the Trustee.
Within 120 days after the close of the fiscal year ending February 28, 1999, and
within 120 days after the close of each fiscal year thereafter, the Company will
file with the Trustee a brief certificate from the chief executive officer,
chief financial officer or treasurer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture. For purposes
of this paragraph, such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Indenture.
SECTION 4.8. Duties of Paying Agent. The Company will cause each Paying
Agent for the Debt Securities of any series other than the Trustee to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee:
(a) that it will hold all sums held by it as such agent for
the payment of the principal of, premium, if any, or interest on the
Debt Securities of such series (whether such sums have been paid to it
by the Company or by any other obligor on the Debt Securities of such
series) in trust for the benefit of the holders of the Debt Securities
of such series;
(b) that it will give the Trustee written notice of any
failure by the Company (or by any other obligor on the Debt Securities
of such series) to make any payment of the principal of, premium, if
any, or interest on the Debt Securities of such series when the same
shall be due and payable; and
(c) that it will, at any time during the continuance of any
Event of Default with respect to such series, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust
by such Paying Agent.
If the Company acts as its own Paying Agent for the Debt Securities of any
series, it will, on or before each due date of the principal of, premium, if
any, or interest on the Debt Securities of such series, set aside and segregate
and hold in trust for the benefit of the holders of the Debt Securities of such
series a sum sufficient to pay such principal, premium, if any, or interest and
will notify the Trustee of such action or any failure to take such action.
Whenever the Company shall have one or more Paying Agents for any
series of Debt Securities, it will, on or before each due date of the principal
of, premium, if any, or interest on any Debt Securities of such series, deposit
with the Paying Agent or Agents for the Debt Securities of such series a sum, by
10:00 a.m. New York time in immediately available funds on the payment date,
sufficient to pay the principal, premium, if any, or interest so becoming due
with respect to the Debt Securities of such series, and (unless such paying
agent is the Trustee) the Company will promptly notify the Trustee in writing of
any failure so to act.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture with respect to the Debt Securities
of one or more series or for any other purpose, pay, or by Company order direct
any Paying Agent for such series to pay, to the
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Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such payment.
Anything in this Section 4.8 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.8 shall be subject
to the provisions of Section 6.3.
ARTICLE V
REDEMPTION OF DEBT SECURITIES; SINKING FUND
SECTION 5.1. Applicability of Article. Debt Securities of any series
which are redeemable before their stated maturity at the election of the Company
or through the operation of any sinking fund for the retirement of Debt
Securities of such series shall be redeemable in accordance with their terms
established pursuant to Section 2.2 and (except as otherwise established
pursuant to Section 2.2 for Debt Securities of such series) in accordance with
this Article.
SECTION 5.2. Notice of redemption to be given to Trustee - deposit of
cash (or other form of payment) with Trustee - selection by Trustee of Debt
Securities to be redeemed. Not less than 30 days (or such lesser number of days
as the Trustee shall approve) nor more than 60 days (or such greater number of
days as the Trustee shall approve) prior to the date fixed by the Company for
the redemption at the option of the Company of any Debt Securities of any series
which are subject to redemption or portions thereof, the Company shall give
written notice, by delivering a Company Order to the Trustee, stating the
aggregate principal amount of Debt Securities of such series which the Company
elects to redeem and the date and place fixed for redemption, that the Company,
in the case of any redemption of Debt Securities subject to any restrictions on
such redemption provided in the terms of Debt Securities of such series
established pursuant to Section 2.2 or elsewhere in this Indenture, is in
compliance with such restrictions. On or before 10:00 a.m. New York time of the
date fixed for redemption, the Company shall deposit with the Trustee or the
Paying Agent money in immediately available funds on such redemption date (or
other form of payment if permitted by the terms of such Debt Securities) in an
amount sufficient to redeem on the date fixed for redemption all the Debt
Securities of such series or portions thereof to be redeemed, other than any
Debt Securities of such series called for redemption on such date which have
been converted prior to the date of such deposit, at the appropriate redemption
price, together with any accrued interest to the date fixed for redemption. If
less than all the Debt Securities then Outstanding of such series are to be
redeemed, the Trustee shall select, substantially pro rata or by lot, in such
manner as it shall deem appropriate and fair, in its sole discretion, the
numbers of the Debt Securities to be redeemed as a whole or in part, and shall
thereafter promptly notify the Company in writing of the numbers of the Debt
Securities to be redeemed; provided, however, that Debt Securities of such
series registered in the name of the Company shall be excluded from any such
selection for redemption until all Debt Securities of such series not so
registered shall have been previously selected for redemption. For the purpose
of such selection in case of redemption of less than all of the Debt Securities
of any series, the Trustee and the Company shall have the option to treat as
Outstanding Debt Securities any Debt Securities of such series which are
surrendered for
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conversion after the fifteenth day immediately preceding the mailing of the
notice of such redemption, and need not treat as Outstanding Debt Securities any
Debt Securities authenticated and delivered during such period in exchange for
the unconverted portion of any Debt Securities converted in part during such
period. In case any series of Debt Securities shall be redeemed in part only,
the notice of redemption shall specify the principal amount thereof to be
redeemed and shall state that, upon surrender thereof for redemption, a new Debt
Security or new Debt Securities of the same series of an aggregate principal
amount equal to the unredeemed portion of such Debt Security will be issued in
lieu thereof; and in such case the Company shall execute and the Trustee or the
Authenticating Agent shall authenticate and deliver such new Debt Security or
Debt Securities of such series to or upon the written order of the holder of
Debt Securities, at the expense of the Company. Provisions of this Indenture
that apply to Debt Securities called for redemption also apply to portions of
Debt Securities called for redemption.
Upon or after the receipt of such notice, the Trustee, in the name of
the Company and as its agent, shall mail by first-class mail, postage prepaid,
to each registered holder of a Debt Security to be redeemed in whole or in part
at his last address appearing on the registration books of the Company, a notice
of redemption. Such notice of redemption shall identify the Debt Securities to
be so redeemed in whole or in part and whether such Debt Securities are to be
redeemed in whole or in part and shall state: (i) the date fixed for redemption;
(ii) the redemption price at which Debt Securities are to be redeemed and method
of payment, if other than in cash; (iii) if applicable, the current conversion
price or rate; (iv) if applicable, that the right of the holder of Debt
Securities to convert Debt Securities called for redemption shall terminate at
the close of business on the date fixed for redemption (or such other day as may
be specified as contemplated by Section 2.2 for Debt Securities of any series);
(v) if applicable, that holders of Debt Securities who want to convert Debt
Securities called for redemption must satisfy the requirements for conversion
contained in such Debt Securities; (vi) that, subject to Section 13.4, interest,
if any, accrued to the date fixed for redemption will be paid as specified in
said notice and that on and after said date interest thereon shall cease to
accrue; (vii) the provision of the Debt Security or this Indenture under which
the redemption is being made; and (viii) that the Company so elects to redeem
such Debt Securities or portions thereof at the place or places specified in
such notice. Such notice shall be mailed not later than the tenth, and not
earlier than the sixtieth, day before the date fixed for redemption. Any notice
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice; and
failure duly to give such notice by mail, or any defect in such notice, to the
holder of any series of Debt Securities designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Debt Security.
The Company shall pay to the Trustee the cost of mailing notices of
redemption and any other necessary expenses incurred by the Trustee in
connection therewith.
SECTION 5.3. Debt Securities called for redemption to become due -
rights of holders of redeemed Debt Securities return of funds on conversion. The
notice of election to redeem having been mailed as hereinbefore provided, the
Debt Securities or portions thereof called for redemption shall become due and
payable on the redemption date at the applicable redemption price, together with
interest accrued to the date fixed for redemption, at the place or places
specified in such notice, and if cash (or other form of payment if permitted by
the terms of such
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Debt Securities) in the amount necessary to redeem such Debt Securities or
portions thereof has been deposited with the Trustee, interest on such Debt
Securities or portions thereof shall cease to accrue from and after the date
fixed for redemption (unless the Company shall default in the payment of the
redemption price, plus accrued interest, if any) and the right to convert such
Debt Securities or portions thereof, if the terms of such Debt Securities
provide for conversion pursuant to Section 2.2, shall terminate at the close of
business on the date fixed for redemption or such other day as may be specified
as contemplated by Section 2.2 for Debt Securities of such series. The
respective registered holders of Debt Securities or portions thereof so called
for redemption shall be entitled to receive payment of the applicable redemption
price, together with interest accrued to the date fixed for redemption on or
after the date fixed for redemption (unless the Company shall default in the
payment of the redemption price, plus accrued interest, if any), upon
presentation and surrender at the place or places of payment specified in such
notice. Notwithstanding the foregoing, subject to Section 13.4, if the record
date for payment of interest is on or prior to the redemption date, such
interest shall be payable to the persons who are holders of such Debt Securities
on such record date according to the terms of such Debt Securities and Section
2.12.
If any series of Debt Securities called for redemption pursuant to
Section 5.1 is converted pursuant to Article XIII, any monies deposited with the
Trustee for the purpose of paying or redeeming any such Debt Security shall be
promptly paid to the Company.
SECTION 5.4. Credits against sinking fund. Against any one or more
sinking fund payments to be made pursuant to the terms of the Debt Securities of
any series providing for a sinking fund, the Company may elect, by delivery of
an Officers' Certificate to the Trustee, at least 45 days prior to the sinking
fund payment date (or such shorter period as may be acceptable to the Trustee or
is otherwise specified as contemplated by Section 2.2 for Debt Securities of any
series), to take credit for any Debt Securities of such series or portions
thereof acquired or redeemed by the Company, pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, which have not
previously been used by the Company for the purposes permitted in this Section
5.4 and for any Debt Securities which have been converted pursuant to the terms
of such Debt Securities. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the redemption price specified in such Debt
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. Upon any such
election the Company shall receive credit against such sinking fund payments
required to be made in the order in which they are to be made. Any series of
Debt Securities for which credit is elected to be taken which shall not
theretofore have been delivered to the Trustee for cancellation shall at the
time of such election be delivered to the Trustee for cancellation by the
Trustee.
SECTION 5.5. Redemption through sinking fund. Each sinking fund payment
made under the terms of the Debt Securities of any series established pursuant
to Section 2.2 shall be applied to the redemption of Debt Securities of such
series on the date for redemption specified in the Debt Securities of such
series next succeeding such sinking fund payment date; provided, however, if at
any time the amount of cash to be paid into the sinking fund for such series on
the next succeeding such sinking fund payment date; provided, however, if at any
time the amount of cash to be paid into the sinking fund for such series on the
next succeeding sinking fund
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payment date, together with any unused balance of any preceding sinking fund
payment or payments for such series, shall not exceed in the aggregate $10,000,
the Trustee, unless requested by the Company, shall not give notice of the
redemption of Debt Securities of such series through the operation of the
sinking fund on the succeeding date for redemption specified in the Debt
Securities of such series. At least 45 days (or such lesser number of days as
the Trustee shall approve) prior to the date on which a sinking fund payment
with respect to the Debt Securities of any series is due, the Company shall give
written notice to the Trustee of the principal amount of Debt Securities of such
series registered in the name of the Company (which shall be excluded from such
redemption) and the Trustee shall select, substantially pro rata or by lot, in
such manner as it shall deem appropriate and fair, the principal amount of Debt
Securities of such series to be redeemed in accordance with the terms of the
Debt Securities of such series after allowance for any credit elected under
Section 5.4 and shall, in the name and at the expense of the Company and as its
agent, give notice of such redemption, all in the manner provided for in Section
5.2, except that such notice shall state that the Debt Securities of such series
are being redeemed for the sinking fund. The notice of redemption having been
mailed as hereinbefore provided, the Debt Securities or portions thereof called
for redemption shall become due and payable on the next succeeding date for
redemption specified in the Debt Securities of such series at the sinking fund
redemption price thereof, all in the manner and with the effect provided for in
Section 5.3.
Any sinking fund payment not so required to be applied to the
redemption of Debt Securities of any series on the date for redemption specified
in the Debt Securities of such series next succeeding any sinking fund payment
date may, at the direction of the Company as evidenced by a Company Order, be
applied by the Trustee prior to the forty-fifth day preceding the next following
sinking fund payment date for such series, in such manner and from time to time,
in such amount as the Company may direct the Trustee in writing, so far as such
moneys shall be adequate, to the purchase for the sinking fund of Debt
Securities of such series or portions thereof, in the open market, from the
Company or otherwise, at prices (exclusive of accrued interest and brokerage
commissions) not in excess of the sinking fund redemption price for such series.
The Company agrees to pay to the Trustee, upon request, accrued interest and
brokerage commissions paid by the Trustee with respect to any Debt Securities of
such series so purchased by the Trustee and such accrued interest and brokerage
commissions shall not be charged against the sinking fund for such series.
Any unused balance of sinking fund moneys with respect to Debt
Securities of any series remaining in the hands of the Trustee on the
forty-fifth day preceding the sinking fund payment date for such series in any
year shall be added to any sinking fund payment for such series to be made in
cash in such year, and together with such payment, if any, shall be applied to
the redemption or purchase of Debt Securities of such series in accordance with
the provisions of this Section 5.5, provided that any sinking fund moneys so
remaining in the hands of the Trustee after the date specified in the Debt
Securities of such series and not utilized in the purchase of Debt Securities of
such series as provided in this Section 5.5 shall be applied by the Trustee to
the payment of Debt Securities at maturity.
SECTION 5.6. Debt Securities no longer Outstanding after notice to
Trustee and deposit of cash. If the Company, having given notice to the Trustee
as provided in Section 5.1 or 5.2, shall have deposited with the Trustee or the
Paying Agent, for the benefit of the holders of any
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Debt Securities of any series or portions thereof called for redemption in whole
or in part cash or other form of payment if permitted by the terms of such Debt
Securities (which amount shall be immediately due and payable to the holders of
such Debt Securities or portions thereof) in the amount necessary so to redeem
all such Debt Securities or portions thereof on the date fixed for redemption
and provision satisfactory to the Trustee shall have been made for the giving of
notice of such redemption, such Debt Securities, or portions thereof, shall
thereupon, for all purposes of this Indenture, be deemed to be no longer
Outstanding, and the holders thereof shall be entitled to no rights thereunder
or hereunder, except the right to receive payment of the applicable redemption
price, together with interest accrued to the date fixed for redemption, on or
after the date fixed for redemption of such Debt Securities or portions thereof
and the right to convert such Debt Securities or portions thereof, if the terms
of such Debt Securities provide for convertibility pursuant to Section 2.2, at
or prior to the close of business on the date fixed for redemption.
SECTION 5.7. Conversion arrangement on call for redemption. In
connection with any redemption of Debt Securities, the Company may arrange for
the purchase and conversion of any Debt Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Debt Securities by paying to the Trustee or the Paying Agent in trust for
the holders of Debt Securities, on or before 10:00 a.m. New York time on the
redemption date, an amount no less than the redemption price, together with
interest, if any, accrued to the redemption date of such Debt Securities, in
immediately available funds. Notwithstanding anything to the contrary contained
in this Article V, the obligation of the Company to pay the redemption price of
such Debt Securities, including all accrued interest, if any, shall be deemed to
be satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any Debt Securities not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XIII) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the last day on which Debt
Securities of such series called for redemption may be converted in accordance
with this Indenture and the terms of such Debt Securities, subject to payment of
the above amount aforesaid. The Trustee or the Paying Agent shall hold and pay
to the holders of Debt Securities whose Debt Securities are selected for
redemption any such amount paid to it in the same manner as it would moneys
deposited with it by the Company for the redemption of Debt Securities. Without
the Trustee's and the Paying Agent's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of any
Debt Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Trustee from, and hold it harmless
against, any loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Debt Securities between
the Company and such purchasers, including the costs and expenses incurred by
the Trustee and the Paying Agent in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
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ARTICLE VI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 6.1. Satisfaction and discharge of Indenture with respect to
Debt Securities of any series. If (a) the Company shall deliver to the Trustee
for cancellation all Debt Securities of any series theretofore authenticated
(other than any such Debt Securities which shall have been destroyed, lost or
stolen and in lieu of or in substitution for which other such Debt Securities
shall have been authenticated and delivered or Debt Securities for whose payment
money (or other form of payment if permitted by the terms of such Debt
Securities) has theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 6.3) and not theretofore cancelled, or (b) the
Company shall irrevocably deposit (subject to Section 6.3) with the Trustee or
Paying Agent as trust funds the entire amount in cash or U.S. Government
Obligations sufficient to pay at maturity or upon redemption all of the Debt
Securities of such series (other than any Debt Securities which shall have been
destroyed, lost or stolen and in lieu of or in substitution for which other Debt
Securities shall have been authenticated and delivered or Debt Securities for
whose payment money (or other form of payment if permitted by the terms of such
Debt Securities) has theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 6.3) not theretofore paid, surrendered or
delivered to the Trustee for cancellation, including the principal, premium, if
any, and interest due or to become due to such date of maturity or redemption
date, as the case may be, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company and the Company
shall deliver to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that in the opinion of the signers all conditions precedent to the
satisfaction and discharge of this Indenture with respect to the Debt Securities
of such series have been complied with (and, in the event that such deposit
shall be made more than one year prior to the maturity of the Debt Securities of
such series, such Opinion of Counsel shall also state that such deposit will not
result in an obligation of the Company, the Trustee or the trust fund created by
such deposit to register as an investment company under the Investment Company
Act of 1940, as amended) and a certificate (upon which the Trustee may rely) of
a firm of independent public accounts of recognized national standing selected
by the Board of Directors (who may be the regular accountants employed by the
Company) stating that the cash, if any, and U.S. Government Obligations, if any,
deposited as set forth above are sufficient to pay at maturity or upon
redemption all of the Debt Securities of such series as set forth above, then,
except with respect to the remaining rights of conversion of any Debt Securities
the terms of which provide for conversion (which shall continue in full force
and effect pursuant to the terms set forth in Article XIII to the extent
provided for in such terms) or to rights of exchange or registration of transfer
or of the Company's right of optional redemption of any Debt Securities of such
series, this Indenture shall cease to be of further effect with respect to the
Debt Securities of such series, and the Trustee, on demand of and at the cost
and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture with respect to the Debt
Securities of such series. Notwithstanding the satisfaction and discharge of
this Indenture with respect to the Debt Securities of such series, the
obligations of the Company to the Trustee under Section 11.2 shall survive, and
if moneys or U.S. Government Obligations shall have been irrevocably deposited
with the Trustee or Paying Agent pursuant to clause (b) of this Section, the
obligations of the Trustee under Section 6.2 and the first paragraph of Section
6.3 shall survive.
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In order to have money available on a payment date to pay the principal
of, premium, if any, or interest, if any, on the Debt Securities, the U.S.
Government Obligations shall be payable as to principal or interest on or before
such payment date in such amounts as will provide the necessary money. Such U.S.
Government Obligations shall not be callable at the issuer's option.
SECTION 6.2. Deposits for payment or redemption of Debt Securities to
be held in trust. Subject to the provisions hereinafter contained in this
Article VI, any moneys or U.S. Government Obligations (or other form of payments
if permitted by the terms of such Debt Security) which at any time shall be
deposited by the Company, or on its behalf with the Trustee or Paying Agent, for
the purpose of paying or redeeming any of the Debt Securities of any series
shall be held in trust and applied by the Trustee to the payment to the holders
of the particular Debt Securities for the payment or redemption of which such
moneys (or other form of payments if permitted by the terms of such Debt
Security) have been deposited, of all sums due and to become due thereon for
principal, premium, if any, and interest, upon presentation and surrender of
such Debt Securities at the office or agency of the Company maintained as
provided in this Indenture. Neither the Company nor the Trustee (except as
provided in Section 11.2) nor any Paying Agent shall be required to pay interest
on any moneys so deposited.
SECTION 6.3. Repayment of moneys. Any moneys or U.S. Government
Obligations deposited with the Trustee or any Paying Agent remaining unclaimed
by the holders of Debt Securities for two years after the date upon which the
principal of or interest on such Debt Securities shall have become due and
payable, shall (unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law) be repaid to the Company by the
Trustee or Paying Agent and such holders shall (unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law) thereafter be entitled to look to the Company only for payment thereof;
provided, however, that, before being required to make any such payment to the
Company, the Trustee or Paying Agent may, at the expense and written direction
of the Company, cause to be published once, in an Authorized Newspaper, a notice
that such moneys remain unclaimed and that, after the date set forth in said
notice, the balance of such moneys then unclaimed will be returned to the
Company.
Upon satisfaction and discharge of this Indenture, all moneys then held
by any Paying Agent other than the Trustee hereunder shall, upon demand of the
Company, be repaid to it and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
The Trustee or any Paying Agent shall deliver or pay to the Company
from time to time upon a request in writing by the Company any moneys or U.S.
Government Obligations (or the principal or interest on such U.S. Government
Obligations) held by it as provided in Section 6.1 which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof to the Trustee, are then in excess of the amount
thereof which then would have been required to be deposited for the purpose for
which such money or U.S. Government Obligations were deposited or received.
ARTICLE VII
REMEDIES UPON DEFAULT
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SECTION 7.1. Events of Default defined -- acceleration of maturity upon
default -- waiver of default after acceleration. The following events are hereby
defined for all purposes of this Indenture (except where the term is otherwise
defined for specific purposes) as Events of Default with respect to Debt
Securities of a particular series, unless it is either inapplicable to a
particular series or is specifically deleted or modified as contemplated by
Section 2.2 for the Debt Securities of such series, in addition to any other
events as may be defined as Events of Default pursuant to Section 2.2 for the
Debt Securities of such series:
(a) Failure of the Company to pay or provide for payment of
the principal of or premium, if any, on any of the Debt Securities of
such series, when and as the same shall become due and payable, whether
at maturity thereof, by call for redemption, through any mandatory
sinking fund, by redemption at the option of the holder of any series
of Debt Securities pursuant to the terms of such Debt Security, by
declaration of acceleration or otherwise; or
(b) Failure of the Company to pay or provide for payment of
any installment of interest on any of the Debt Securities of such
series, when and as the same shall become due and payable, which
failure shall have continued for a period of 30 days; or
(c) Failure of the Company to perform or observe any other of
the covenants or agreements on the part of the Company in this
Indenture or in the Debt Securities of such series (other than a
covenant or agreement which has expressly been included in this
Indenture solely for the benefit of Debt Securities of any series other
than that series or is expressly made inapplicable to the Debt
Securities of such series pursuant to Section 2.2), which failure shall
have continued for a period of 90 days after written notice by
certified or registered mail given to the Company by the Trustee
hereunder or to the Company and to the Trustee from the holders of not
less than 25% of the aggregate principal amount of Debt Securities then
Outstanding of such series under this Indenture specifying such Event
of Default or failure and requesting that it be remedied and stating
that such notice is a notice of an event which, if continued for 90
days after such written notice, will become an Event of Default;
(d) The institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking relief under
any Bankruptcy Law or the consent by it to the institution of
proceedings thereunder or consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the
Company or of any substantial part of its property, or the making by
the Company of an assignment for the benefit of creditors, or the
admission by the Company in writing of its inability to pay its debts
generally as they become due; or
(e) The entry of a decree or order by a court having
jurisdiction for relief in respect of the Company, or adjudging the
Company a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any Bankruptcy Law or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the
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Company or of any substantial part of its property, or ordering the
winding-up or liquidation of its affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 180
consecutive days.
If one or more Events of Default shall occur and be continuing with
respect to Debt Securities then Outstanding of any series, then, and in each and
every such case, either the Trustee, by notice in writing to the Company, or the
holders of not less than 25% in aggregate principal amount of the Debt
Securities then Outstanding of such series, by notice in writing to the Company
and to the Trustee, may declare the principal amount (or, if the Debt Securities
of such series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of the Debt Securities of such
series) of all Debt Securities of such series and/or such other amount or
amounts as the Debt Securities or supplemental indenture with respect to such
series may provide, if not already due and payable, to be immediately due and
payable; and upon any such declaration all Debt Securities of such series shall
become and be immediately due and payable, anything in this Indenture or in any
of the Debt Securities of such series contained to the contrary notwithstanding.
This provision, however, is subject to the condition that if, at any time after
the principal of (and/or such other specified amount on) the Debt Securities of
such series shall so become due and payable, and before any judgement or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Debt
Securities of such series and the principal of (and/or such other specified
amount) and premium, if any, on any and all Debt Securities of such series which
shall have become due otherwise than by acceleration, with interest on such
principal (and/or such other specified amount) and premium, if any, and (to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, at the rate specified in the Debt Securities of
such series (or, if no such rate is specified, at the rate borne by the Debt
Securities of such series), to the date of such payment or deposit, and the
reasonable compensation and expenses of the Trustee, and any and all defaults
under this Indenture with respect to the Debt Securities of such series, other
than the nonpayment of principal of (and/or such other specified amount) or
premium, if any, and accrued interest on Debt Securities of such series which
shall have become due by acceleration, shall have been remedied, then and in
every such case the Trustee shall, upon written request or consent of the
holders of a majority in aggregate principal amount of the Debt Securities then
Outstanding of such series delivered to the Company and to the Trustee, waive
such default and its consequences and rescind or annul such declaration and its
consequences, but no such waiver, rescission or annulment shall extend to or
affect any subsequent default, or impair any right consequent thereon.
For all purposes under this Indenture, if the portion of the principal
amount as may be specified in the terms of any Original Issue Discount
Securities shall have been accelerated and declared due and payable pursuant to
the provisions hereof, then, from and after such declaration, unless such
declaration has been rescinded and annulled, payment of such portion of the
principal amount thereof, together with interest, if any, thereon and all other
amounts owing thereunder, shall constitute payment in full of such Original
Issue Discount Securities.
SECTION 7.2. Covenant of Company to pay to Trustee whole amount due on
default in payment of Principal or interest - Trustee may recover judgment for
whole amount due -
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application of moneys received by the Trustee. In case the Company shall commit
an Event of Default with respect to the Debt Securities of any series described
in Section 7.1(a) or (b), then, upon demand of the Trustee, the Company shall
pay to the Trustee, for the benefit of the holders of the Debt Securities then
Outstanding of such series, the whole amount which then shall have become due on
all such Debt Securities of such series for principal, premium, if any, and
interest, with interest on the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law)
upon overdue installments of interest, at the rate specified in the Debt
Securities of such series (or, if no such rate is specified, at the rate borne
by the Debt Securities of such series), and in addition thereto, such additional
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, liabilities, disbursements and
advances of the Trustee, any predecessor Trustee, their agents and counsel. In
case the Company shall pay the same in accordance with the provisions of this
Section 7.2 and, prior to such payment neither the Trustee nor the holders of
the Debt Securities then Outstanding of such series shall have taken any steps
to begin enforcing their rights under this Indenture and so long as no
additional Event of Default with respect to the Debt Securities of such series
shall have occurred, from and after such payment, the Event of Default giving
rise to the demand by the Trustee pursuant to this Section 7.2 shall be deemed
to be no longer continuing and shall be deemed to have thereupon been remedied,
cured or waived without further action upon the part of either the Trustee or
any of the holders of Debt Securities. In case the Company shall fail to pay the
same forthwith upon such demand, the Trustee, in its own name and as trustee of
an express trust, may institute any judicial proceedings at law or in equity for
the collection of the sums so due and unpaid and may prosecute such proceedings
to judgment or final decree, and may enforce the same against the Company or any
other obligor upon the Debt Securities of such series and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Debt Securities of such
series, wherever situated. The right of the Trustee to recover such judgment
shall not be affected by the exercise of any other right, power or remedy for
the enforcement of the provisions of this Indenture.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Debt
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of any Debt
Securities shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered to file and prove a claim for the whole amount
of principal, premium, if any, and interest owing and unpaid in respect of the
Debt Securities of any series for which it serves as Trustee and to file such
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, any predecessor Trustee,
their agents and counsel) and of the holders of Debt Securities of such series
allowed in such judicial proceeding, and to receive payment of or on account of
such claims and to distribute the same after the deduction of its charges and
expenses; and any receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any judicial proceeding is hereby irrevocably
authorized and instructed by each of the holders of Debt Securities of such
series to make such payments to the Trustee, and,
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in the event that the Trustee shall consent to the making of such payments
directly to the holders of Debt Securities of such series, to pay to the Trustee
any amount due it or any predecessor Trustee, for compensation and expenses,
including counsel fees incurred up to the date of such distribution. Nothing
contained in this Indenture shall be deemed to give to the Trustee any right to
accept or consent to any plan of reorganization, arrangement, adjustment or
composition affecting the holders of Debt Securities or the rights of any holder
of Debt Securities, or to authorize the Trustee to vote in respect of the claim
of any holder of Debt Securities in any such proceeding; provided, however, that
the Trustee may, on behalf of the holders of Debt Securities, vote for the
election of a trustee in bankruptcy or similar official and may be a member of
any creditors' committee.
Any moneys or property received by the Trustee under this Section 7.2
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys or property on account
of principal, premium, if any, or interest, upon presentation of the several
Debt Securities of the series in respect of which such moneys were received, and
stamping thereon the payment, if only partially paid, and upon surrender thereof
if fully paid:
First: To the payment of costs and expenses of collections,
and reasonable compensation to the Trustee, its agents, attorneys and
counsel, and all advances made and expenses and liabilities incurred by
the Trustee, except as a result of its negligence or bad faith and all
other amounts owing to the Trustee or any predecessor Trustee pursuant
to Section 11.2 hereof;
Second: In case the principal of the Outstanding Debt
Securities in respect of which such moneys were received shall not have
become due and be unpaid, to the payment of interest on such Debt
Securities, in the order of the maturity of the installments of such
interest, with interest (so far as may be lawful) upon the overdue
installments of interest at the rate specified in such Debt Securities
(or, if no such rate is specified, at the rate borne by the Debt
Securities of such series), such payments to be made ratably to the
persons entitled thereto;
Third: In case the principal of the Outstanding Debt
Securities in respect of which such moneys were received and/or such
other amount or amounts as the Debt Securities or supplemental
indenture with respect to such series shall provide, shall have become
due, by declaration or otherwise, to the payment of the whole amount
then owing and unpaid upon such Debt Securities for principal (and/or
such other specified amount), premium, if any, and interest, with
interest on the overdue principal (and/or such other specified amount),
premium, if any, and (so far as may be lawful) upon overdue
installments of interest, at the rate specified in such Debt Securities
(or, if no such rate is specified, at the rate borne by the Debt
Securities of such series), and in case such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon
such Debt Securities, then to the payment of such principal (and/or
such other specified amount), premium, if any, and interest, with
interest on the overdue principal (and/or such other specified amount),
premium, if any, and (so far as may be lawful) upon overdue
installments of interest, at the rate specified in such Debt Securities
(or, if no such rate is specified, at the rate borne by the Debt
Securities of such series), without preference or priority of principal
(and/or such other specified amount) and premium, if
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any, over interest, or of interest over principal (and/or specified
amount) and premium, if any, or of any installment of interest over any
other installment of interest, or of any such Debt Security over any
other such Debt Security, ratably to the aggregate of such principal
(and/or such other specified amount), premium, if any, and accrued and
unpaid interest; and
Fourth: To the payment of the remainder, if any, to the
Company, its successors or assigns, or to whomever may be so lawfully
entitled to receive the same, or as a court of competent jurisdiction
may direct.
SECTION 7.3. Trustee may enforce rights of action without possession of
Debt Securities. All rights of action under this Indenture or any of the Debt
Securities Outstanding of any series hereunder enforceable by the Trustee may be
enforced by the Trustee without the possession of any of the Debt Securities or
the production thereof at the trial or other proceedings relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought for the
ratable benefit of the holders of the Debt Securities with respect to which the
rights are being exercised, subject to the provisions of this Indenture.
SECTION 7.4. Delays or omissions not to impair any rights or powers
accruing upon default. No delay or omission of the Trustee or of the holders of
Debt Securities to exercise any rights or powers accruing upon any default which
shall not have been remedied shall impair any such right or power, or shall be
construed to be a waiver of any such default or acquiescence therein; and every
power and remedy given by this Article VII to the Trustee and the holders of the
Debt Securities of any series may be exercised from time to time and as often as
may be deemed expedient by the Trustee or by the holders of the Debt Securities
of such series.
SECTION 7.5. In Event of Default Trustee may protect and enforce its
rights by appropriate proceedings - holders of majority in aggregate Principal
amount of Debt Securities of a series may waive default. If any one or more
Events of Default shall happen and be continuing, the Trustee may, in its
discretion, proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee, being advised
by its counsel, shall deem most effectual to protect and enforce any of said
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific performance of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Provided the Debt Securities of any series shall not then be due and
payable by reason of a declaration pursuant to Section 7.1 hereof, the holders
of a majority in aggregate principal amount of the Debt Securities of such
series then Outstanding may on behalf of the holders of all of the Debt
Securities of such series waive by written notice any past default hereunder and
its consequences, except a default in the payment of interest on or principal
and premium, if any, of any of the Debt Securities of such series. In the case
of any such waiver, the Company, the Trustee and the holders of the Debt
Securities of such series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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SECTION 7.6. Holders of majority in aggregate principal amount of Debt
Securities of any series may direct exercise of remedies. The holders of a
majority in aggregate principal amount of the Debt Securities then Outstanding
of any series shall have the right, by an instrument in writing executed and
delivered to the Trustee, to direct the time, method and place of conducting any
proceedings for any remedy available to the Trustee, or of exercising any power
or trust conferred upon the Trustee under this Indenture, with respect to the
Debt Securities of such series; provided, however, that subject to the
provisions of Section 11.1 of this Indenture, the Trustee shall have the right
to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action or proceedings so directed may not lawfully
be taken or if the Trustee in good faith shall, by Responsible Officers,
determine that the action or proceedings so directed would involve the Trustee
in personal liability, or would be unduly prejudicial to the holders of the Debt
Securities of such series not joining in such direction, it being understood
that the Trustee (subject to Section 11.1) shall have no duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such
holders, and the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 7.7. Limitation on suits by holders of Debt Securities. No
holder of any Debt Security of any series shall have the right to institute any
suit, action or proceeding, in equity or at law for the execution of any trust
or power hereof, or for the enforcement of any other remedy under or upon this
Indenture or the Debt Securities of such series, unless the holders of a
majority in aggregate principal amount of the Debt Securities then Outstanding
of such series shall have made written request upon the Trustee and shall have
afforded to it a reasonable opportunity either to proceed to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own
name, as Trustee hereunder, and shall have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee shall have refused or neglected to comply with such
request for 60 days after its receipt of such request and no direction
inconsistent with such request shall have been given to the Trustee pursuant to
Section 7.6; it being understood and intended that no one or more holders of
Debt Securities of any series shall have any right under this Indenture or under
the Debt Securities, by his or their action, to enforce any right hereunder
except in the manner herein provided, and that all proceedings hereunder, at law
or in equity, shall be instituted, had and maintained in the manner herein
provided and for the ratable benefit of all holders of the Debt Securities of
such series. Notwithstanding any provision of this Indenture to the contrary,
the right, which is absolute and unconditional, of any holder of Debt Securities
to receive the payment of the principal of, premium, if any, and interest on his
Debt Securities at and after the respective due dates (including maturity by
call for redemption, through any sinking fund, declaration unless annulled
pursuant to Section 7.1 hereof, or otherwise), of such principal, premium, if
any, or interest, or the right, which is also absolute and unconditional, of any
holder of Debt Securities to require conversion of his Debt Securities pursuant
to Article XIII hereof if the terms of such Debt Securities provide for
convertibility pursuant to Section 2.2, or the right to institute suit for the
enforcement of any such payment at or after such due dates or of such right to
convert, shall not be impaired or affected without the consent of such holder,
and the obligation of the Company, which is also absolute and unconditional, to
pay the principal of, premium, if any, and interest on each of the Debt
Securities to the respective holders thereof at the times and places in the Debt
Securities expressed shall not be impaired or affected.
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Notwithstanding anything to the contrary contained in this Section 7.7,
the parties to this Indenture and the holders of Debt Securities agree as
follows:
Any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided, however, that the provisions of this paragraph
shall not apply to any suit instituted, directly or through an agent or agents,
by the Trustee, to any suit instituted by any holder of Debt Securities of any
series, or group of holders of Debt Securities of any series, holding in the
aggregate more than 10% in aggregate principal amount of the Debt Securities
then Outstanding of such series or to any suit instituted by any holder of Debt
Securities of any series for the enforcement of the payment of the principal of,
premium, if any, or interest on, any Debt Security of such series at or after
the respective due dates of such principal, premium, if any, or interest
expressed in his Debt Security of such series.
SECTION 7.8. No Debt Securities owned or held by, for the account of or
for the benefit of the Company to be deemed Outstanding for purpose of payment
or distribution. No Debt Securities owned or held by, for the account of or for
the benefit of the Company or any Affiliate (other than Debt Securities pledged
in good faith which would be deemed Outstanding under the provisions of Section
3.3) shall be deemed Outstanding for the purpose of any payment or distribution
provided for in this Article VII.
SECTION 7.9. Company and Trustee restored to former position on
discontinuance or abandonment of proceedings. If the Trustee shall have
proceeded to enforce any right under this Indenture with respect to the Debt
Securities of any series, and such proceedings shall have been discontinued or
abandoned because of waiver, or for any other reason, or shall have been
determined adversely to the Trustee, then, and in any such case, the Company,
the Trustee and the holders of Debt Securities of such series shall each be
restored to their former positions and rights hereunder, and all rights,
remedies and powers of the Trustee shall continue as though no such proceeding
had been taken.
ARTICLE VIII
EVIDENCE OF ACTION BY HOLDERS OF DEBT SECURITIES
SECTION 8.1. Evidence of action by holders of Debt Securities. Any
demand, request, consent, proxy or other instrument which this Indenture may
require or permit to be signed and executed by the holders of Debt Securities of
any series may be in any number of concurrent instruments of similar tenor, and
may be signed or executed by such holders of Debt Securities in person or by an
attorney duly authorized in writing. Proof of the execution of any such demand,
request, consent, proxy or other instrument, or of a writing appointing any such
attorney, shall be sufficient for any purpose of this Indenture if made in the
following manner: the fact and date of the execution by any person of such
demand, request, consent, proxy or other instrument or writing may be proved by
the certificate of any notary public, or other officer authorized to take
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acknowledgments of deeds to be recorded in any state or country, that the person
signing such request or other instrument or writing acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution. Where such
execution is by an officer of a corporation or association or a member of a
partnership on behalf of such corporation, association or partnership, or by a
trustee or other fiduciary, such certificate or affidavit shall also constitute
sufficient proof of his authority. The Trustee may nevertheless in its
discretion accept such other proof or require further proof of any matter
referred to in this Section 8.1 as it shall deem reasonable. The ownership of
Debt Securities shall be proved by the registry books or by a certificate of the
registrar thereof.
The Trustee shall not be bound to recognize any person as a holder of
Debt Securities of any series unless and until his title to the Debt Securities
of such series held by him is proved in the manner in this Article VIII
provided.
Any demand, request, discretion, waiver, consent, vote or other action
of the holder of any series of Debt Securities shall be conclusive and shall
bind all future holders of the same Debt Security and of any series of Debt
Securities issued in exchange or substitution therefor irrespective of whether
or not any notation in regard thereto is made upon such Debt Security. Any such
holder, however, may revoke the consent as to his Debt Security or portion
thereof. Such revocation shall be effective only if the Trustee receives the
notice of revocation before the date the amendment, supplement, waiver or other
action becomes effective. An amendment, supplement, waiver or other action shall
become effective on receipt by the Trustee of written consents from the holders
of Debt Securities of the requisite percentage in aggregate principal amount of
the Outstanding Debt Securities of the relevant series. After an amendment,
supplement, waiver or other action becomes effective, it shall bind every holder
of Debt Securities of each series of Debt Securities so affected.
The Company or the Trustee, as applicable, may set a date for the
purpose of determining the holders of Debt Securities entitled to consent, vote
or take any other action referred to in this Section 8.1, which date shall be
not less than 10 days nor more than 60 days prior to the taking of the consent,
vote or other action.
ARTICLE IX
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 9.1. Immunity of incorporators, stockholders, officers,
directors and employees. No recourse shall be had for the payment of the
principal of, premium, if any, or interest on any series of Debt Securities or
for any claim based thereon or otherwise in any manner in respect thereof, or in
respect of this Indenture, to or against any subsidiary, incorporator,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or any subsidiary, incorporator, stockholder, officer, director or
employee, as such, past, present or future, of any predecessor or successor
corporation, partnership or limited liability company either directly or through
the Company or such predecessor or successor corporation, partnership or limited
liability company, whether by virtue of any constitutional
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provision or statute or rule of law, or by the enforcement of any assessment or
penalty, or in any other manner, all such liability being expressly waived and
released by the acceptance of any series of Debt Securities and as part of the
consideration for the issue thereof.
ARTICLE X
MERGER, CONSOLIDATION, SALE OR LEASE
SECTION 10.1. Documents required to be filed with the Trustee upon
consolidation, merger, sale, transfer or lease execution of supplemental
indentures - acts of successor corporation. Nothing in this Indenture or in the
Debt Securities shall prevent any consolidation or merger of the Company with or
into any other corporation, partnership or limited liability company, or any
consolidation or merger of any other corporation, partnership or limited
liability company with or into the Company, or any sale, transfer or lease of
all or substantially all of the property and assets of the Company to any other
corporation, partnership or limited liability company lawfully entitled to
acquire the same; provided, however, and the Company hereby covenants and
agrees, that any consolidation or merger of the Company with or into any other
corporation, partnership or limited liability company or the sale, transfer or
lease of all or substantially all of the property and assets of the Company and
its subsidiaries on a consolidated basis shall be upon the condition that (a)
the due and punctual payment of the principal of, premium, if any, and interest
on all the Debt Securities according to their tenor, and the due and punctual
performance and observance of all the terms, covenants and conditions of this
Indenture to be kept or performed by the Company shall, by an indenture
supplemental hereto complying with the provisions of Section 12.1, executed and
delivered to the Trustee, be expressly assumed by the corporation, partnership
or limited liability company (other than the Company) formed by or resulting
from any such consolidation or merger, or which shall have received the transfer
or lease of all or substantially all of the property and assets of the Company
and its subsidiaries on a consolidated basis, just as fully and effectually as
if such successor corporation, partnership or limited liability company had been
an original party hereto; and (b) the Company or such successor corporation,
partnership or limited liability company, as the case may be, shall not,
immediately after such consolidation, merger, sale, transfer or lease be in
default in the performance of any such covenant or condition. Thereafter, unless
otherwise specified pursuant to Section 2.2 for the Debt Securities of any
series, all obligations of the predecessor corporation, partnership or limited
liability company under the Debt Securities of such series shall terminate. In
the event of any such sale, transfer or lease, the predecessor Company may be
dissolved, wound up and liquidated at any time thereafter.
Every such successor corporation, partnership or limited liability
company, upon executing an indenture supplemental hereto as provided in this
Section 10.1 in form satisfactory to the Trustee, shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company; and any order, certificate or resolution of the Board or
officers of the Company provided for in this Indenture may be made by like
officials of such successor corporation, partnership or limited liability
company. Such successor corporation, partnership or limited liability company
may thereupon cause to be signed, either in its own name or in the name of the
Company, with such suitable reference, if any, to such consolidation, merger,
sale, transfer or lease as may be required by the Trustee, any or all of the
Debt Securities which shall not theretofore have been signed by the Company and
authenticated by the Trustee
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or any Authenticating Agent; and upon the written order of such successor
corporation, partnership or limited liability company in lieu of the Company
signed by the President or any Vice President (regardless of Vice Presidential
designation) and the Chief Financial Officer, Treasurer or any Assistant
Treasurer of such successor corporation, partnership or limited liability
company, and subject to all the terms, conditions and restrictions herein
prescribed with respect to the authentication and delivery of the Debt
Securities, the Trustee or any Authenticating Agent shall authenticate and
deliver any and all Debt Securities which shall have been previously signed by
the proper officers of the Company and delivered to the Trustee or any
Authenticating Agent for authentication and any of such Debt Securities which
such successor corporation, partnership or limited liability company shall
thereafter, in accordance with the provisions of this Indenture, cause to be
signed and delivered to the Trustee or any Authenticating Agent for such
purpose. All Debt Securities of any series so authenticated and delivered shall
in all respects have the same rank as the Debt Securities of such series
theretofore or thereafter authenticated and delivered in accordance with the
terms of this Indenture.
Notwithstanding the foregoing, this Section 10.1 shall not apply in the
event, and to the extent, that any such consolidation, merger, sale, transfer or
lease described above is expressly permitted pursuant to the terms of any
supplemental indenture governing any series of Debt Securities, provided that
the Company complies with all conditions set forth in such supplemental
indenture for any such consolidation, merger, sale, transfer or lease.
SECTION 10.2. Trustee may rely upon Opinion of Counsel. The Trustee may
receive and shall, subject to the provisions of Section 11.1 of this Indenture,
be fully protected in relying upon an Officers' Certificate and Opinion of
Counsel as conclusive evidence that any supplemental indenture executed under
the foregoing Section 10.1 complies with the foregoing conditions and provisions
of this Article X.
ARTICLE XI
CONCERNING THE TRUSTEE
SECTION 11.1. Acceptance of Trust - responsibilities of Trustee. (a)
The Trustee, prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture or in the Trust Indenture Act of 1939, and no implied covenants or
conditions shall be read into this Indenture against the Trustee. In case an
Event of Default with respect to the Debt Securities of a particular series has
occurred (but only during the continuance thereof), the Trustee shall exercise
with respect to the Debt Securities of such series such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee pursuant to any provision of this Indenture, shall examine them to
determine whether they conform to the requirements of this Indenture.
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(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(i) prior to the occurrence of an Event of Default with
respect to the Debt Securities of any series hereunder and after the
curing or waiving of all Events of Default with respect to the Debt
Securities of such series which may have occurred, the Trustee shall
not be liable with respect to the Debt Securities of such series except
for the performance of such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee, but the duties and obligations
of the Trustee with respect to the Debt Securities of such series,
prior to the occurrence of an Event of Default with respect to the Debt
Securities of such series and after the curing or waiving of all Events
of Default with respect to the Debt Securities of such series which may
have occurred, shall be determined solely by the express provisions of
this Indenture;
(ii) Subject to the limitations contained in subsection (a) of
this Section 11.1, prior to the occurrence of an Event of Default with
respect to the Debt Securities of any series hereunder and after the
curing or waiving of all Events of Default with respect to the Debt
Securities of such series which may have occurred, and in the absence
of bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed herein, upon certificates or opinions conforming to
the requirements of this Indenture;
(iii) the Trustee shall not be personally liable for any error
of judgment made in good faith by a Responsible Officer or Officers of
the Trustee unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iv) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the holders of not less than
a majority in aggregate principal amount of the Debt Securities then
Outstanding of any series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Debt Securities of such series.
(c) Subject to the limitations contained in subsections (a) and (b) of
this Section 11.1, the recitals contained herein and in the Debt Securities
(except in the Trustee's certificate of authentication) shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Debt Securities except that the
Trustee represents that it is duly authorized to execute and deliver this
Indenture and to perform its obligations hereunder.
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(d) Subject to the limitations contained in subsections (a) and (b) of
this Section 11.1:
(i) the Trustee may rely and shall be protected in acting or
refraining from action upon any resolution, certificate, opinion,
notice, consent, request, order, appraisal, report, bond or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) before the Trustee acts or refrains from acting, the
Trustee may consult with counsel and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(iii) whenever in the administration of the trusts of this
Indenture, prior to an Event of Default hereunder and after the curing
or waiving of all Events of Default which may have occurred, the
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Trustee,
and such certificate shall be full warrant to the Trustee for any
action taken, suffered or omitted by it under the provisions of this
Indenture upon the faith thereof;
(iv) the Trustee shall be under no obligation to exercise any
of the trusts or powers hereof at the request, order or direction of
any of the holders of Debt Securities, pursuant to the provisions of
this Indenture, unless such holders of Debt Securities shall have
offered to the Trustee reasonable indemnity against all the costs,
expenses and liabilities which might be incurred therein;
(v) the Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or power conferred upon it by this
Indenture;
(vi) prior to the occurrence of an Event of Default with
respect to the Debt Securities of any series hereunder and after the
curing or waiving of all Events of Default with respect to the Debt
Securities of such series which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, opinion, notice, consent, request,
order, appraisal, report, bond or other document or instrument
concerning such series, unless requested in writing to do so by the
holders of not less than a majority in aggregate principal amount of
the Debt Securities then Outstanding of such series; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee (subject
to the limitations contained in subsections (a) and (b) of this Section
11.1), not reasonably assured to the Trustee by the security afforded
to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or
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liability as a condition to so proceeding; and provided, further, that
nothing in this subdivision (d)(vi) shall require the Trustee to give
the holders of Debt Securities any notice other than that required by
Section 11.3 hereof. The reasonable expense of every such investigation
shall be paid by the Company or, if paid by the Trustee, shall be
repaid by the Company upon demand;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder;
(viii) except for (i) a default under Sections 7.1(a) or (b)
hereof, or (ii) any other event which the Trustee has "actual
knowledge" and which event, with the giving of notice or the passage of
time or both, would constitute an Event of Default under this
Indenture, the Trustee shall not be deemed to have notice of any
default or Event of Default unless specifically notified in writing of
such event by the Company or the holders of not less than 25% aggregate
principal amount of the Debt Securities then outstanding; as used
herein, the term "actual knowledge" means the actual fact or statement
of knowing, without any duty to make any investigation with regard
thereto;
(ix) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(x) none of the provisions of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any personal
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
SECTION 11.2. Trustee to be entitled to compensation - Trustee not to
be accountable for application of proceeds moneys held by Trustee to be trust
funds. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for services rendered by it in the execution of the trusts hereby
created, and shall also be entitled to payment of reasonable expenses and
disbursements actually made or incurred hereunder, including the reasonable fees
and expenses of counsel, accountants and of all persons not regularly in its
employ, and all taxes which may have been assessed against the Trustee as such
or any funds on deposit with the Trustee. The Company also agrees to indemnify
each of the Trustee and any predecessor Trustee for and hold it harmless against
loss, liability or expense incurred arising out of or in connection with the
acceptance or administration of this trust or performance of its duties
hereunder, including the costs and expenses of defending itself against any
claim of liability in the premises and the costs and expenses of enforcing this
Section 11.2, except to the extent that such loss, liability or expense is
incurred due to the negligence or willful misconduct of the Trustee or
predecessor Trustee. If any property other than cash shall at any time be
subject to a lien in favor of the holders of Debt
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Securities, the Trustee, if and to the extent authorized by a receivership or
bankruptcy court of competent jurisdiction or by the supplemental instrument
subjecting such property to such lien, shall be entitled to make advances for
the purpose of preserving such property or of discharging tax liens or other
prior liens or encumbrances thereon. The obligations of the Company under this
Section 11.2 to compensate the Trustee and to indemnify, pay or reimburse the
Trustee or any predecessor Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder and shall survive the
resignation or removal of the Trustee, the termination of this Indenture, and
the satisfaction and discharge or any other termination pursuant to any
Bankruptcy Law hereof. Such additional indebtedness shall be secured by a lien
prior to that of the Debt Securities of all series with respect to which the
Trustee acts as Trustee upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Debt Securities.
The Trustee shall not be accountable for the use or application by the
Company of any Debt Securities authenticated and delivered hereunder or of the
proceeds of such Debt Securities, or for the use or application of any moneys
paid over by the Trustee in accordance with any provision of this Indenture, or
for the use or application of any moneys received by any paying agent.
All moneys received by the Trustee in trust under or pursuant to any
provision of this Indenture shall constitute trust funds for the purposes for
which they were paid or were held, but need not be segregated in any manner from
any other moneys and may be deposited by the Trustee, under such conditions as
may be prescribed by law, in its general banking department, and the Trustee
shall not be liable for any interest thereon, except as otherwise agreed with
the Company.
The parties hereto, and the holders of Debt Securities by their
acceptance of their Debt Securities, hereby agree, that when the Trustee incurs
expenses and renders services after an Event of Default occurs, such expenses
and the compensation for such services are intended by the holders of the Debt
Securities and Company to constitute expenses of administration under any
Bankruptcy Law.
SECTION 11.3. Trustee to give holders of Debt Securities notice of
default. The Trustee shall give to the holders of Debt Securities of any series
notice of the happening of all defaults with respect to the Debt Securities of
such series known to it, within 90 days after the occurrence thereof unless such
defaults shall have been cured before the giving of such notice; provided,
however, that, except in the case of a default resulting from the failure to
make any payment of principal of, premium, if any, or interest on the Debt
Securities of any series, or in the payment of any mandatory sinking fund
installment with respect to the Debt Securities of such series, the Trustee may
withhold the giving of such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the holders of Debt Securities of such series. For
the purpose of this Section 11.3, the term "DEFAULT" means any event which is,
or after notice or lapse of time or both would become, an Event of Default. Such
notice shall be given to the holders of Debt Securities of such series in the
manner and to the extent provided in subsection (c) of Section 11.10.
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SECTION 11.4. Trustee acquiring conflicting interest must eliminate it
or resign. Reference is made to Section 310(b) of the Trust Indenture Act of
1939, as amended. There shall be excluded under Section 310(b)(1) thereof this
Indenture with respect to the Debt Securities of any series other than the Debt
Securities of the first series.
SECTION 11.5. Eligibility of Trustee. There shall times be a corporate
Trustee under this Indenture which shall be a bank or trust company organized
and doing business under the laws of the United States or of any State or the
District of Columbia and having a combined capital and surplus of not less than
$50,000,000 which is authorized under the laws of its jurisdiction of
incorporation to exercise corporate trust powers and is subject to supervision
or examination by Federal, State or District of Columbia authority and which has
an office or agency in New York, New York. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, the combined capital of the
Trustee shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If the Trustee shall at any
time cease to meet the foregoing standards of eligibility, then such Trustee
shall resign immediately in the manner and with the effect specified in Section
11.6.
SECTION 11.6. Resignation or removal of Trustee. (a) Subject to the
limitations contained in subsection (d) of this Section 11.6, the Trustee may
resign and be discharged from the trust hereby created with respect to the Debt
Securities of one or more series by giving notice thereof to the Company and by
giving notice thereof to the holders of Debt Securities of such series, in the
manner and to the extent provided in subsection (c) of Section 11.10. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees (it being understood that any such successor
trustee may be appointed with respect to the Debt Securities of one or more or
all of such series with respect to which the resigning trustee has resigned and
that at any time there shall be only one trustee with respect to the Debt
Securities of any particular series) by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the resigning trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 60 days after the mailing of such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee, or any holder of Debt Securities of such series who has
been a bona fide holder of a Debt Security or Debt Securities of such series for
at least six months may on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 11.4 with respect to the Debt Securities of any series after
written request therefor by the Company or by any holder of Debt
Securities of such series who has been a bona fide holder of a Debt
Security or Debt Securities of such series for at least six months; or
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(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.5 with respect to the Debt Securities of
any series and shall fail to resign after written request therefor by
the Company or by any such holder of Debt Securities; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs
then, in any such case, the Company may remove the Trustee with respect to all
Debt Securities of such series and appoint a duly qualified successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors of
the Company, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee so appointed, or, subject to the
provisions of Section 7.7, any holder of Debt Securities who has been a bona
fide holder of a Debt Security or Debt Securities of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect
to all Debt Securities of such series and the appointment of a successor
trustee. Such court may thereupon after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a duly qualified successor
trustee with respect to the Debt Securities of such series.
(c) The holders of a majority in aggregate principal amount of the Debt
Securities then Outstanding of any series may at any time remove the Trustee and
appoint a duly qualified successor trustee with respect to such series by
delivery to the Trustee so removed, to the successor trustee and to the Company
of the evidence provided for in Section 8.1 of the action in that regard taken
by holders of Debt Securities.
(d) Any resignation or removal of the Trustee and any appointment of a
duly qualified successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 11.7.
SECTION 11.7. Acceptance by successor Trustee.
(a) In case of the appointment hereunder of a successor trustee with
respect to all Debt Securities, every duly qualified successor trustee so
appointed under any of the methods herein provided shall execute, acknowledge
and deliver to its predecessor trustee and to the Company an instrument in
writing accepting such appointment hereunder and thereupon such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with the rights, powers, trusts, duties and obligations of its predecessor in
the trust hereunder with like effect as if originally named as Trustee herein.
The predecessor trustee shall, nevertheless, at the written request of the
successor trustee, pay over to the successor trustee all moneys at the time held
by it herein; and the Company and the predecessor trustee upon payment or
provision therefor of any amounts then due the predecessor trustee pursuant to
the provisions of Section 11.2, shall execute and deliver such instruments and
do such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers, trusts,
duties and obligations. The Company shall promptly give notice of the
appointment of such successor trustee to the holders of Debt Securities in the
manner and to the extent provided in subsection (c) of Section 11.10.
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(b) In case of the appointment hereunder of a successor trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the predecessor trustee and each successor trustee with respect to the Debt
Securities of such series shall execute and deliver an indenture supplemental
hereto wherein each successor trustee shall accept such appointment and which
(i) shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor trustee all the rights, powers,
trusts and duties of the predecessor trustee with respect to the Debt Securities
of such series to which the appointment of such successor trustee relates, (ii)
if the predecessor trustee is not retiring with respect to all Debt Securities
of such series, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
predecessor trustee with respect to the Debt Securities of such series as to
which the predecessor trustee is not retiring shall continue to be vested in the
predecessor trustee, and (iii) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the predecessor trustee shall become effective to the extent provided
therein and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the predecessor trustee with respect to the Debt Securities of such series to
which the appointment of such successor trustee relates; but, on request of the
Company or any successor trustee, such predecessor trustee upon payment of its
charges shall duly assign, transfer and deliver to such successor trustee all
property and money held by such predecessor trustee hereunder with respect to
the Debt Securities of such series to which the appointment of such successor
trustee relates. 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 referred
to in this subsection (b) of this Section.
SECTION 11.8. Successor to Trustee by merger or consolidation, etc. Any
corporation or national banking association into which the Trustee may be
merged, or with which it may be consolidated, or to which the Trustee transfers
all or substantially all of its corporate trust assets, or any corporation or
national banking association resulting from any merger or consolidation or
conversion to which the Trustee shall be a party, shall be the successor trustee
under this Indenture without the execution or filing of any instruments or any
further act on the part of any of the parties hereto.
In case at the time such successor trustee shall succeed to the trusts
created by this Indenture any of the Debt Securities shall have been
authenticated but not delivered, any such successor trustee may adopt the
certificate of authentication of its predecessor trustee, and deliver such Debt
Securities so authenticated; and in case at that time any of the Debt Securities
shall not have been authenticated, any successor trustee may authenticate such
Debt Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of authentication of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor
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trustee or authenticate Debt Securities in the name of any predecessor trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 11.9. Limitations on right of Trustee as a creditor to obtain
payment of certain claims. Reference is made to Section 311 of the Trust
Indenture Act of 1939, as amended, for purposes of which the following terms
shall have the following meanings:
(i) the term "CASH TRANSACTION" shall mean any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand;
and
(ii) the term "SELF-LIQUIDATING PAPER" shall mean any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the
goods, wares, or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising from
the making, drawing, negotiating or incurring of the draft, bill of
exchange, acceptance or obligation.
SECTION 11.10. Trustee to make annual report to holders of Debt
Securities - Trustee to make other reports to holders of Debt Securities -
holders of Debt Securities to whom reports to be transmitted. (a) The Trustee
shall, so long as any Debt Securities are Outstanding of any series with respect
to which it acts as Trustee, transmit to the holders of Debt Securities of such
series, any report which is required to be transmitted to the holders of Debt
Securities of such series pursuant to Section 313(a) of the Trust Indenture Act
of 1939, as amended.
(b) The Trustee shall, so long as any Debt Securities of any series
with respect to which it acts as Trustee shall be Outstanding, also transmit to
the holders of Debt Securities of such series, as hereinafter provided, within
the times hereinafter specified, a brief report with respect to the character
and amount of any advances (and if the Trustee elects so to state the
circumstances surrounding the making thereof) made by the Trustee, as such,
since the date of the last report transmitted pursuant to the provisions of
subsection (a) of this Section 11.10 (or if no such report has been so
transmitted, since the date of the execution of this Indenture), for the
reimbursement of which it claims or may claim a lien or charge prior to that of
the Debt Securities of such series, on property or funds held or collected by
the Trustee, as such, and which it has not previously reported pursuant to this
subsection (b), if such advances remaining unpaid at any time aggregate more
than 10% of the principal amount of the Debt Securities of such series then
Outstanding, such report to be so transmitted within 90 days after such time.
(c) All reports required by this Section 11.10, and all other reports
or notices which are required by any other provision of this Indenture to be
transmitted in accordance with the provisions of this Section 11.10, shall be
transmitted by mail: (i) to all registered holders of Debt Securities of such
series, as the names and addresses of such holders appear upon the Debt
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Security register; (ii) to such holders of Debt Securities of such series as
have, within the two years preceding such transmission, filed their names and
addresses with the Trustee for that purpose; and (iii) except in the case of
reports pursuant to subsection (b) of this Section 11.10, to all holders of Debt
Securities of such series whose names and addresses have been furnished to or
received by the Trustee pursuant to Section 4.6(d).
(d) The Trustee shall, at the time of the transmission to the holders
of Debt Securities of any report or notice pursuant to this Section 11.10, file
a copy thereof with the Securities and Exchange commission. The Company will
notify the Trustee if and when the Debt Securities of any series become listed
on any stock exchange and the Trustee will thereafter file a copy of any such
report or notice with such stock exchange.
SECTION 11.11. Preservation of information by Trustee - Trustee to give
certain information to holders of Debt Securities upon application. The Trustee
shall preserve, in as current a form as is reasonably practicable, all
information furnished it pursuant to Section 4.6(d) hereof or received by it as
Debt Security registrar hereunder. The Trustee may destroy such information upon
receipt of new information updating information previously furnished.
Within five Business Days after receipt by the Trustee or its designee
of a written application by any three or more holders of Debt Securities stating
that the applicants desire to communicate with other holders of Debt Securities
with respect to their rights under this Indenture or under the Debt Securities,
and accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, and by reasonable proof that each such applicant
has owned a Debt Security or Debt Securities for a period of at least six months
preceding such application, the Trustee or its designee shall, at its election,
either (a) afford to such applicants access to all information so furnished to
or received by the Trustee or its designee and not destroyed pursuant to the
provisions of this Section 11.11, or (b) inform such applicants as to the
approximate number of holders of Debt Securities according to the most recent
information so furnished to or received by the Trustee or its designee, and as
to the approximate cost of mailing to the holders of Debt Securities the form of
proxy or other communication, if any, specified in such application. If the
Trustee or its designee shall elect not to afford to such applicants access to
such information, the Trustee or its designee shall, upon the written request of
such applicants, mail to all holders of Debt Securities whose names and
addresses are contained in the then current information filed with the Trustee
or its designee as aforesaid copies of the form of proxy or other communication
which is specified in such request, with reasonable promptness after a tender to
the Trustee or its designee of the material to be mailed and the payment, or
provision for the payment, of the reasonable expenses of such mailing, unless
within five Business Days after such tender, the Trustee or its designee shall
mail to such applicants, and file with the Securities and Exchange Commission,
together with a copy of the material to be mailed, a written statement to the
effect that, in the opinion of the Trustee or its designee, such mailing would
be contrary to the best interests of the holders of Debt Securities or would be
in violation of applicable law. Such written statement shall specify the basis
of such opinion. If the Securities and Exchange Commission, after granting
opportunity for a hearing upon the objections specified in said written
statement and on notice to the Trustee or its designee, shall enter an order
refusing to sustain any of such objections, or, if, after the entry of an order
sustaining one or more of such objections, the Securities and Exchange
Commission shall find, after notice and opportunity for a hearing, that all
objections sustained have been met
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and shall enter an order so declaring, the Trustee or its designee shall mail
copies of such material to all such holders of Debt Securities with reasonable
promptness after such determination and the renewal of the aforesaid tender;
otherwise the Trustee or its designee shall be relieved of any obligation or
duty to such applicants respecting their application.
Neither the Company, the Trustee or its designee nor any person acting
as Debt Security registrar or paying agent shall be liable or accountable to the
Company or to any holder of Debt Securities by reason of the disclosure of any
such information as to the names and addresses of holders of Debt Securities in
accordance with the provisions of this Section 11.11, regardless of the source
from which such information was derived, nor by reason of the mailing of any
material pursuant to a request made under this Section 11.11.
SECTION 11.12. Trustee may hold Debt Securities and otherwise deal with
Company. The Trustee, the Debt Security registrar, any paying agent or any other
agent of the Company in its individual or any other capacity may buy, own, hold
and sell any of the Debt Securities or any other evidences of indebtedness or
other securities, whether heretofore or hereafter created or issued, of the
Company or any subsidiary or Affiliate with the same rights it would have if it
were not Trustee, Debt Security registrar, paying agent or such other agent; and
subject to the provisions of this Article XI, the Trustee may engage or be
interested in any financial or other transaction with the Company or any
subsidiary or Affiliate, including, without limitation, secured and unsecured
loans to the Company or any subsidiary or Affiliate; and may maintain any and
all other general banking and business relations with the Company and any
subsidiary or Affiliate with like effect and in the same manner and to the same
extent as if the Trustee were not a party to this Indenture; and no implied
covenant shall be read into this Indenture against the Trustee in respect of any
such matters.
SECTION 11.13. Trustee may comply with any rule, regulation or order of
the Securities and Exchange Commission. The Trustee may comply in good faith
with any rule, regulation or order of the Securities and Exchange Commission
made pursuant to the terms and provisions of the Trust Indenture Act of 1939 and
shall be fully protected in so doing notwithstanding that such rule, regulation
or order may thereafter be amended or rescinded or determined by judicial or
other authority to be invalid for any reason, but nothing herein contained shall
require the Trustee to take any action or omit to take any action in accordance
with such rule, regulation or order, except as is in this Indenture otherwise
required.
SECTION 11.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Debt Securities which shall be authorized to act on behalf of the Trustee to
authenticate Debt Securities of such series issued upon exchange, registration
of transfer or partial redemption or partial conversion thereof, and if the
Trustee is required to appoint one or more Authenticating Agents with respect to
any series of Debt Securities, to authenticate Debt Securities of such series
and to take such other actions as are specified in Sections 2.4, 2.8, 2.11, 5.2
and 13.3, and Debt Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Debt Securities by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf
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of the Trustee by an Authenticating Agent (except in respect of original issue
and Section 2.9). Each Authenticating Agent shall be acceptable to the Company
and shall at all times be a corporation organized and doing business under the
laws of the United States of America, any State thereof or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $1,000,000 and subject to
supervision or examination by Federal or State authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section 11.14, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 11.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 11.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 11.14, without the execution or filing of any paper or any
further act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice or
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 11.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall provide
notice to the holders of the Debt Securities of the series as to which the
Authenticating Agent will serve as provided in Section 3.9. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 11.14.
The Trustee agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 11.2.
If an appointment with respect to one or more series is made pursuant
to this Section 11.14, the Debt Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
___________________________, as Trustee
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By:
As Authenticating Agent
By:
Authorized Officer
If all of the Debt Securities of a series may not be originally issued
at one time, and if the Trustee does not have an office capable of
authenticating Debt Securities upon original issuance located where the Company
wishes to have Debt Securities of such series authenticated upon original
issuance, the Trustee, if so requested by the Company in writing (which writing
need not comply with Section 3.8 and need not be accompanied by an Opinion of
Counsel), shall appoint in accordance with this Section 11.14 an Authenticating
Agent having an office in a place designated by the Company with respect to such
series of Debt Securities.
ARTICLE XII
SUPPLEMENTAL INDENTURES
SECTION 12.1. Company and Trustee may enter into supplemental indenture
for special purposes Without the consent of any of the holders of Debt
Securities, the Company, when authorized by resolution of its Board of
Directors, and, upon receipt of an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture, is
duly authorized by all necessary corporate action, constitutes the legal, valid
and binding obligation of the Company and is in compliance with applicable law,
the Trustee from time to time and at any time, subject to the conditions and
restrictions in this Indenture contained, may enter into an indenture or
indentures supplemental hereto in form satisfactory to the Trustee, which
thereafter shall form a part hereof, for any one or more of the following
purposes:
(a) to add to the covenants and agreements of the Company in
this Indenture contained, other covenants and agreements thereafter to
be observed for the benefit of the holders of all or any series of Debt
Securities (and if such covenants and agreements are to be for the
benefit of less than all series of Debt Securities, stating that such
covenants and agreements are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
reserved to or conferred upon the Company; or
(b) to cure any ambiguity or to cure, correct or supplement
any defect or inconsistent provision contained in this Indenture or in
any supplemental indenture; or
(c) to make such provisions in regard to matters or questions
arising under this Indenture which may be necessary or desirable, or
otherwise change this Indenture in any manner which shall not adversely
affect the interests of the holders of Debt Securities of any series;
or
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(d) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article X and to provide for the adjustment of conversion
rights pursuant to Section 13.7; or
(e) to establish the form or terms of the Debt Securities of
any series as permitted by Sections 2.1 and 2.2; or
(f) to change or eliminate any of the provisions of this
Indenture, provided that, except as otherwise contemplated by Section
2.2(11), any such change or elimination shall become effective only
when there is no Debt Security outstanding of any series created prior
thereto which is entitled to the benefit of such provision; or
(g) to add or change any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
issuance of Debt Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to provide for uncertificated Debt Securities in addition to
certificated Debt Securities (so long as any "REGISTRATION-REQUIRED
OBLIGATION" within the meaning of Section 163(f)(2) of the Code is in
registered form for purposes of the Code); or
(h) to amend or supplement any provision contained herein,
which was required to be contained herein in order for this Indenture
to be qualified under the Trust Indenture Act of 1939, if the Trust
Indenture Act of 1939 or regulations thereunder change what is so
required to be included in qualified indentures, in any manner not
inconsistent with what then may be required for such qualification; or
(i) to add any additional Events of Default (and if such
Events of Default are to be applicable to less than all series of Debt
Securities, stating that such Events of Default are expressly being
included solely to be applicable to such series); or
(j) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Debt Securities of one or more series any
property or assets; or
(k) to add to or change any of the provisions of this
Indenture as contemplated in Section 11.7(b);
and the Company hereby covenants that it will fully perform all the requirements
of any such supplemental indenture which may be in effect from time to time.
Nothing in this Article XII contained shall affect or limit the right or
obligation of the Company to execute and deliver to the Trustee any instrument
of further assurance or other instrument which elsewhere in this Indenture it is
provided shall be delivered to the Trustee.
The Trustee shall join with the Company in the execution of any such
supplemental indenture, make any further appropriate agreements and stipulations
which may be therein contained and accept the conveyance, transfer, assignment,
mortgage or pledge of any property thereunder, but the Trustee shall not be
obligated to enter into any such supplemental indenture
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which adversely affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
12.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Debt Securities at the time Outstanding, notwithstanding
any of the provisions of Section 12.2.
SECTION 12.2. Modification of Indenture with consent of holders of Debt
Securities. With the consent (evidenced as provided in Section 8.1) of the
holders of more than 50% in aggregate principal amount of the Debt Securities at
the time Outstanding of each series affected by such supplement, the Company
when authorized by a resolution of its Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provision to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of such series of the Debt Securities; provided, however, that no such
supplemental indenture shall (i) extend the time or times of payment of the
principal of, premium, if any, or the interest on, any series of Debt
Securities, or reduce the principal amount of, premium, if any, or the rate of
interest on, any series of Debt Securities (and/or such other amount or amounts
as any Debt Securities or supplemental indentures with respect thereto may
provide to be due and payable upon declaration of acceleration of the maturity
thereof pursuant to Section 7.1) or change the currency of payment of principal
of, premium, if any, or interest on, any series of Debt Securities or reduce any
amount payable on redemption thereof or alter or impair the right to convert the
same at the rate and upon the terms provided in the Indenture or alter or impair
the right to require redemption at the option of the holder, without the consent
of the holder of each Debt Security so affected, or (ii) reduce the percentage
of Debt Securities of any series, the vote or consent of the holders of which is
required for such modifications and alterations, without the consent of the
holders of all Debt Securities then Outstanding of such series under the
Indenture. Notwithstanding the foregoing, no consent of the holders of Debt
Securities shall be necessary to permit the execution of supplemental indentures
pursuant to Section 13.7.
Upon the request of the Company, accompanied by a copy of a resolution
of its Board of Directors certified by the Secretary or an Assistant Secretary
of the Company authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of holders of Debt
Securities as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such 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 supplemental indenture.
It shall not be necessary for the consent of the holders of Debt
Securities under this Section 12.2 to approve the particular form of any
proposed supplemental indenture, but is shall be sufficient if such consent
shall approve the substance thereof.
A supplemental indenture which changes or eliminates any provision of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Debt Securities, or which modifies the rights of
the holders of Debt Securities of such series with
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respect to such provision, shall be deemed not to affect the rights under this
Indenture of the holders of Debt Securities of any other series.
SECTION 12.3. Effect of supplemental indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article XII, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debt Securities shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
The Trustee, subject to the provisions of Section 11.1, may receive an
Opinion of Counsel as conclusive evidence that any such supplemental indenture
complies with the provisions of this Article XII.
SECTION 12.4. Supplemental indentures to conform to Trust Indenture
Act. Any supplemental indenture executed and delivered pursuant to the
provisions of this Article XII shall conform in all respects to the requirements
of the Trust Indenture Act of 1939 as then in effect.
SECTION 12.5. Notation on or exchange of Debt Securities. If an
amendment, supplement or waiver changes the terms of a Debt Security of any
series, the Trustee may require the holder of the Debt Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Debt Security
about the changed terms and return it to the holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Debt
Security of any series shall issue and the Trustee shall authenticate a new Debt
Security of such series that reflects the changed terms.
ARTICLE XIII
CONVERSION OF DEBT SECURITIES
SECTION 13.1. Applicability of Article. Debt Securities of any series
which are convertible into Capital Stock at the option of the holder of Debt
Securities shall be convertible in accordance with their terms and (unless
otherwise specified as contemplated by Section 2.2 for Debt Securities of any
series) in accordance with this Article. Each reference in this Article XIII to
"A DEBT SECURITY" or "THE DEBT SECURITIES" refers to the Debt Securities of the
particular series that is convertible into Capital Stock. Each reference in this
Article to "CAPITAL STOCK" into which Debt Securities of any series are
convertible refers to the class of Capital Stock into which the Debt Securities
of such series are convertible in accordance with their terms (as specified as
contemplated by Section 2.2). If more than one series of Debt Securities with
conversion privileges are outstanding at any time, the provisions of this
Article XIII shall be applied separately to each such series.
SECTION 13.2. Right of holders of Debt Securities to convert Debt
Securities. Subject to and upon compliance with the terms of the Debt Securities
and the provisions of Section 5.7
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and this Article XIII, at the option of the holder thereof, any series of Debt
Securities of any series of any authorized denomination, or any portion of the
principal amount thereof which is $1,000 or any integral multiple of $1,000,
may, at any time during the period specified in the Debt Securities of such
series, or in case such Debt Security or portion thereof shall have been called
for redemption, then in respect of such Debt Security or portion thereof until
and including, but not after (unless the Company shall default in payment due
upon the redemption thereof) the close of business on the date fixed for
redemption except that in the case of redemption at the option of the holder of
Debt Securities, if specified in the terms of such Debt Securities, such right
shall terminate upon receipt of written notice of the exercise of such option,
be converted into duly authorized, validly issued, fully paid and nonassessable
shares of the class of Preferred Stock or Common Stock, or combination thereof,
as specified in such Debt Security, at the conversion rate for each $1,000
principal amount of Debt Securities (such initial conversion rate reflecting an
initial conversion price specified in such Debt Security) in effect on the
conversion date, or, in case an adjustment in the conversion rate has taken
place pursuant to the provisions of Section 13.5, then at the applicable
conversion rate as so adjusted, upon surrender of the Debt Security or Debt
Securities, the principal amount of which is so to be converted, to the Company
at any time during usual business hours at the office or agency to be maintained
by it in accordance with the provisions of Section 4.2, accompanied by a written
notice of election to convert as provided in Section 13.3 and, if so required by
the Company and the Trustee, by a written instrument or instruments of transfer
in form satisfactory to the Company and the Trustee duly executed by the
registered holder or his attorney duly authorized in writing. All Debt
Securities surrendered for conversion shall, if surrendered to the Company or
any conversion agent, be delivered to the Trustee for cancellation and cancelled
by it, or shall, if surrendered to the Trustee, be cancelled by it, as provided
in Section 2.11.
The initial conversion price or conversion rate in respect of a series
of Debt Securities shall be as specified in the Debt Securities of such series.
The conversion price or conversion rate will be subject to adjustment on the
terms set forth in Section 13.5 or such other or different terms, if any, as may
be specified by Section 2.2 for Debt Securities of such series. Provisions of
this Indenture that apply to conversion of all of a Debt Security also apply to
conversion of a portion of it.
SECTION 13.3. Issuance of shares of Capital Stock on conversion. As
promptly as practicable after the surrender, as herein provided, of any series
of Debt Securities or Debt Securities for conversion, the Company shall deliver
or cause to be delivered at its said office or agency to or upon the written
order of the holder of the Debt Security or Debt Securities so surrendered a
certificate or certificates representing the number of duly authorized, validly
issued, fully paid and nonassessable shares of Capital Stock into which such
Debt Security or Debt Securities may be converted in accordance with the terms
thereof and the provisions of this Article XIII. Prior to delivery of such
certificate or certificates, the Company shall require a written notice at its
said office or agency from the holder of the Debt Security or Debt Securities so
surrendered stating that the holder irrevocably elects to convert such Debt
Security or Debt Securities, or, if less than the entire principal amount
thereof is to be converted, stating the portion thereof to be converted. Such
notice shall also state the name or names (with address and social security or
other taxpayer identification number) in which said certificate or certificates
are to be issued. Such conversion shall be deemed to have been made at the time
that such Debt Security or Debt Securities shall have been surrendered for
conversion and such notice shall have
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been received by the Company or the Trustee, the rights of the holder of such
Debt Security or Debt Securities as a holder of Debt Securities shall cease at
such time, the person or persons entitled to receive the shares of Capital Stock
upon conversion of such Debt Security or Debt Securities shall be treated for
all purposes as having become the record holder or holders of such shares of
Capital Stock at such time and such conversion shall be at the conversion rate
in effect at such time. In the case of any series of Debt Securities of any
series which is converted in part only, upon such conversion, the Company shall
execute and the Trustee or an Authenticating Agent shall authenticate and
deliver to the holder thereof, as requested by such holder, a new Debt Security
or Debt Securities of such series of authorized denominations in aggregate
principal amount equal to the unconverted portion of such Debt Security.
If the last day on which a Debt Security may be converted is not a
Business Day in a place where a conversion agent is located, the Debt Security
may be surrendered to that conversion agent on the next succeeding day that is a
Business Day.
The Company will not be required to deliver certificates for shares of
Capital Stock upon conversion while its stock transfer books are closed for a
meeting of stockholders or for the payment of dividends or for any other
purpose, but certificates for shares of Capital Stock shall be delivered as soon
as the stock transfer books shall again be opened.
SECTION 13.4. No payment or adjustment for interest or dividends.
Unless otherwise specified as contemplated by Section 2.2 for Debt Securities of
such series, Debt Securities surrendered for conversion during the period from
the close of business on any regular record date (or special record date for
payment of defaulted interest) next preceding any interest payment date to the
opening of business on such interest payment date (except Debt Securities called
for redemption on a redemption date within such period) when surrendered for
conversion must be accompanied by payment of an amount equal to the interest
thereon which the registered holder is to receive on such interest payment date.
Payment of interest shall be made, as of such interest payment date or such
date, as the case may be, to the holder of record of the Debt Securities as of
such regular, or special record date, as applicable. Except where Debt
Securities surrendered for conversion must be accompanied by payment as
described above, no interest on converted Debt Securities will be payable by the
Company on any interest payment date subsequent to the date of conversion. No
other payment or adjustment for interest or dividends is to be made upon
conversion. Notwithstanding the foregoing, upon conversion of any series of Debt
Securities with original issue discount, the fixed number of shares of Capital
Stock into which such Debt Security is convertible delivered by the Company to
the holder thereof shall be applied, first, to pay the accrued original issue
discount attributable to the period from the date of issuance to the date of
conversion of such Debt Security, and, second, to pay the balance of the
principal amount of such Debt Security.
SECTION 13.5. Adjustment of conversion rate. Unless otherwise specified
as contemplated by Section 2.2 for Debt Securities of such series, the
conversion rate for Debt Securities in effect at any time shall be subject to
adjustment as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the class of Capital Stock into which Debt Securities
of such series are convertible in shares of its Capital Stock, (ii)
subdivide the outstanding shares of the class of Capital Stock into
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which Debt Securities of such series are convertible into a greater
number of shares, (iii) combine the outstanding shares of the class of
Capital Stock into which Debt Securities of such series are convertible
into a smaller number of shares, or (iv) issue by reclassification of
the shares of the class of Capital Stock into which Debt Securities of
such series are convertible (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing corporation) any shares, the conversion rate for the Debt
Securities of such series in effect at the time of the record date for
such dividend or distribution, or the effective date of such
subdivision, combination or reclassification, shall be proportionately
adjusted so that the holder of any series of Debt Securities of such
series surrendered for conversion after such time shall be entitled to
receive the number and kind of shares which he would have owned or have
been entitled to receive had such Debt Security been converted
immediately prior to such time. Similar adjustments shall be made
whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of the class of Capital
Stock into which Debt Securities of such series are convertible
entitling them (for a period expiring within 45 days after such record
date) to subscribe for or purchase shares of such class of Capital
Stock (or securities convertible into shares of such class of Capital
Stock) at a price per share (or, in the case of a right or warrant to
purchase securities convertible into such class of Capital Stock,
having a conversion price per share, after adding thereto the exercise
price, computed on the basis of the maximum number of shares of such
class of Capital Stock issuable upon conversion of such convertible
securities, per share of such class of Capital Stock, so issuable) less
than the current market price per share of such class of Capital Stock
(as defined in subsection (d) below) on the date on which such issuance
was declared or otherwise announced by the Company (the "DETERMINATION
DATE"), the number of shares of such class of Capital Stock into which
each $1,000 principal amount of Debt Securities shall be convertible
after such record date shall be determined by multiplying the number of
shares of such class of Capital Stock into which such principal amount
of Debt Securities was convertible immediately prior to such record
date by a fraction, of which the numerator shall be the number of
shares of such class of Capital Stock outstanding on the Determination
Date plus the number of additional shares of such class of Capital
Stock offered for subscription or purchase (or in the case of a right
or warrant to purchase securities convertible into such class of
Capital Stock, the aggregate number of additional shares of such class
of Capital Stock into which the convertible securities so offered are
initially convertible), and of which the denominator shall be the
number of shares of such class of Capital Stock outstanding on the
Determination Date plus the number of shares of such class of Capital
Stock obtained by dividing the aggregate offering price of the total
number of shares so offered (or, in the case of a right or warrant to
purchase securities convertible into such class of Capital Stock, the
aggregate initial conversion price of the convertible securities so
offered, after adding thereto the aggregate exercise price of such
rights or warrants computed on the basis of the maximum number of
shares of such class of Capital Stock issuable upon conversion of such
convertible securities) by such current market price. Shares of such
class of Capital Stock of the Company owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any
such computation. Such
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adjustment shall be made successively whenever such a record date is
fixed; and to the extent that shares of such class of Capital Stock are
not delivered (or securities convertible into shares of such class of
Capital Stock are not delivered) after the expiration of such rights or
warrants (or, in the case of rights or warrants to purchase securities
convertible into such class of Capital Stock once exercised, the
expiration of the conversion right of such securities) the conversion
rate shall be readjusted to the conversion rate which would then be in
effect had the adjustments made upon the issuance of such rights or
warrants (or securities convertible into shares) been made upon the
basis of delivery of only the number of shares actually delivered. In
the event that such rights or warrants are not so issued, the
conversion rate shall again be adjusted to the conversion rate which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the class of Capital Stock into
which Debt Securities of such series are convertible (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of its
indebtedness or assets (excluding any cash dividends paid from retained
earnings and dividends payable in Capital Stock for which adjustment is
made pursuant to subsection (a) above) or subscription rights or
warrants (excluding subscription rights or warrants to purchase the
class of Capital Stock into which Debt Securities of such series are
convertible), the number of shares of such class of Capital Stock into
which each $1,000 principal amount of Debt Securities of such series
shall be convertible after such record date shall be determined by
multiplying the number of shares of such class of Capital Stock into
which such principal amount of Debt Securities was convertible
immediately prior to such record date by a fraction, of which the
numerator shall be the fair market value of the assets of the Company,
after deducting therefrom all liabilities of the Company and all
preferences (including accrued but unpaid dividends) in respect of
classes of Capital Stock having a preference with respect to the assets
of the Company over such class of Capital Stock (all as determined by
the Board of Directors, whose determination shall be conclusive, and
described in a certificate signed by any Chairmen of the Board,
President or any Vice President (regardless of Vice Presidential
designation) and the Chief Financial Officer or Treasurer of the
Company, filed with the Trustee and each conversion agent) on such
record date, and of which the denominator shall be such fair market
value after deducting therefrom such liabilities and preferences, less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a statement filed
with the Trustee and each conversion agent) of the assets or evidences
of indebtedness, so distributed or of such subscription rights or
warrants applicable, so distributed. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the conversion rate shall again
be adjusted to the conversion rate which would then be in effect if
such record date had not been fixed.
(d) For the purpose of any computation under subsection (b)
above and Section 13.6, the current market price per share of the
Capital Stock on any date as of which such price is to be computed
shall mean the average of the Closing Prices for the 30 consecutive
Business Days commencing 45 Business Days before such date.
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(e) No adjustment in the conversion rate shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in such rate; provided, however, that any adjustments
which by reason of this subsection (e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment, and provided, further, that adjustments shall be required
and made in accordance with the provisions of this Article XIII (other
than this subsection (e)) not later than such time as may be required
in order to preserve the tax-free nature of a distribution for United
States income tax purposes to the holders of Debt Securities or the
class of Capital Stock into which such Debt Securities are convertible.
All calculations under this Article XIII shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
Anything in this Section 13.5 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the conversion
rate, in addition to those required by this Section 13.5, as it in its
discretion shall determine to be advisable in order that any stock
dividend, subdivision of shares, distribution of rights to purchase
stock or securities, or distribution of securities convertible into or
exchangeable for stock hereafter made by the Company to its
stockholders shall not be taxable for United States income tax
purposes.
(f) Whenever the conversion rate is adjusted, as herein
provided, the Company shall promptly file with the Trustee and with the
office or agency maintained by the Company for the conversion of Debt
Securities of such series pursuant to Section 4.2, a certificate of a
firm of independent public accountants of recognized national standing
selected by the Board of Directors (who may be the regular accountants
employed by the Company) setting forth the conversion rate after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment and a computation thereof. Such certificate shall be
conclusive evidence of the correctness of such adjustment. Neither the
Trustee nor any conversion agent shall be under any duty or
responsibility with respect to any such certificate or any facts or
computations set forth therein, except to exhibit said certificate from
time to time to any holder of Debt Securities of such series desiring
to inspect the same. The Company shall promptly cause a notice setting
forth the adjusted conversion rate to be mailed to the holders of Debt
Securities of such series, as their names and addresses appear upon the
registration books of the Company.
(g) In the event that at any time, as a result of shares of
any other class of Capital Stock becoming issuable in exchange or
substitution for or in lieu of shares of the class of Capital Stock
into which such Debt Securities are convertible or as a result of an
adjustment made pursuant to subsection (a) above, the holder of any
series of Debt Securities of such series thereafter surrendered for
conversion shall become entitled to receive any shares of the Company
other than shares of the class of Capital Stock into which the Debt
Securities of such series are convertible, thereafter the number of
such other shares so receivable upon conversion of any series of Debt
Securities shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the class of Capital Stock into which the Debt Securities of
such series are convertible contained in subsections (a) to (f),
inclusive, above, and the provisions of this Article XIII with respect
to the class of Capital Stock into which the Debt Securities of such
series are convertible shall apply on like terms to any such other
shares.
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(h) The conversion rate with respect to any Debt Securities
with original issue discount, the terms of which provide for
convertibility, shall not be adjusted during the term of such Original
Issue Discount Securities for accrued original issue discount.
(i) In the event that the Debt Securities of any series are
convertible into more than one class of Capital Stock, the provisions
of this Section 13.5 shall apply separately to events affecting each
such class.
SECTION 13.6. No fractional shares to be issued. No fractional shares
of Capital Stock shall be issued upon conversions of Debt Securities. If more
than one Debt Security of any series shall be surrendered for conversion at one
time by the same holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of Debt Securities of such series (or specified portions thereof to the
extent permitted hereby) so surrendered. Instead of a fraction of a share of
Capital Stock which would otherwise be issuable upon conversion of any series of
Debt Securities or Debt Securities (or specified portions thereof), the Company
shall pay a cash adjustment in respect of such fraction of a share in an amount
equal to the same fractional interest of the current market price (as defined in
Section 13.5) per share of Capital Stock on the Business Day next preceding the
day of conversion.
SECTION 13.7. Preservation of conversion rights upon consolidation,
merger, sale or conveyance. In case of any consolidation of the Company with, or
merger of the Company into, any other corporation (other than a consolidation or
merger in which the Company is the continuing corporation), or in the case of
any sale or transfer of all or substantially all of the assets of the Company,
the corporation formed by such consolidation or the corporation into which the
Company shall have been merged or the corporation which shall have acquired such
assets, as the case may be, shall execute and deliver to the Trustee, a
supplemental indenture, subject to the provisions of Article X and XII as they
relate to supplemental indentures, providing that the holder of each Debt
Security then Outstanding of a series which was convertible into Capital Stock
shall have the right thereafter to convert such Debt Security into the kind and
amount of shares of stock and other securities and property, including amount of
shares of stock and other securities and property, including cash, receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Capital Stock of the Company into which such Debt Securities might
have been converted immediately prior to such consolidation, merger, sale or
transfer. Such supplemental indenture shall conform to the provisions of the
Trust Indenture Act of 1939 as then in effect and shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XIII. Neither the Trustee nor any conversion agent
shall be under any responsibility to determine the correctness of any provision
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property receivable by holders
of Debt Securities upon the conversion of their Debt Securities after any such
consolidation, merger, sale or transfer, or to any adjustment to be made with
respect thereto and, subject to the provisions of Section 11.1, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, an Opinion of Counsel with respect thereto. If in the
case of any such consolidation, merger, sale or transfer, the stock or other
securities and property receivable by a holder of the Debt Securities includes
stock or other securities and property of a
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corporation other than the successor or purchasing corporation, then such
supplemental indenture shall also be executed by such other corporation and
shall contain such additional provisions to protect the interests of the holders
of the Debt Securities as the Board of Directors shall reasonably consider
necessary. The above provisions of this Section 13.7 shall similarly apply to
successive consolidations, mergers, sales or transfers.
SECTION 13.8. Notice to holders of Debt Securities of a series prior to
taking certain types of action. With respect to the Debt Securities of any
series, in case:
(a) the Company shall authorize the issuance to all holders of
the class of Capital Stock into which Debt Securities of such series
are convertible of rights or warrants to subscribe for or purchase
shares of its Capital Stock or of any other right:
(b) the Company shall authorize the distribution to all
holders of the class of Capital Stock into which Debt Securities of
such series are convertible of evidences of its indebtedness or assets
(except for the exclusions with respect to certain dividends set forth
in Section 13.5(c));
(c) of any subdivision, combination or reclassification of the
class of Capital Stock into which Debt Securities of such series are
convertible or of any consolidation or merger to which the Company is a
party and for which approval by the stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed with the Trustee and at the office or
agency maintained for the purpose of conversion of Debt Securities of such
series pursuant to Section 4.2, and shall cause to be mailed to the holders of
Debt Securities of such series, at their last addresses as they shall appear
upon the registration books of the Company, at least ten days prior to the
applicable record date hereinafter specified, a notice stating (i) the date as
of which the holders of such class of Capital Stock to be entitled to receive
any such rights, warrants or distribution are to be determined, or (ii) the date
on which any such subdivision, combination, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, winding up or other action is
expected to become effective, and the date as of which it is expected that
holders of record of such class of Capital Stock shall be entitled to exchange
their Capital Stock of such class for securities or other property, if any,
deliverable upon such subdivision, combination, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, winding up or other action.
The failure to give the notice required by this Section 13.8 or any defect
therein shall not affect the legality or validity of any distribution, right,
warrant, subdivision, combination, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up or other action, or the
vote upon any of the foregoing. Such notice shall also be published by and at
the expense of the Company not later than the aforesaid filing date at least
once in an Authorized Newspaper.
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SECTION 13.9. Covenant to reserve shares for issuance on conversion of
Debt Securities. The Company covenants that at all times it will reserve and
keep available out of each class of its authorized Capital Stock, free from
preemptive rights, solely for the purpose of issue upon conversion of Debt
Securities of any series as herein provided, such number of shares of Capital
Stock of such class as shall then be issuable upon the conversion of all
Outstanding Debt Securities of such series. The Company covenants that all
shares of Capital Stock which shall be so issuable shall, when issued or
delivered, be duly and validly issued shares of the class of authorized Capital
Stock into which Debt Securities of such series are convertible, and shall be
fully paid and nonassessable, free of all liens and charges and not subject to
preemptive rights and that, upon conversion, the appropriate capital stock
accounts of the Company will be duly credited.
SECTION 13.10. Compliance with governmental requirements. The Company
covenants that if any shares of Capital Stock required to be reserved for
purposes of conversion of Debt Securities hereunder require registration or
listing with or approval of any governmental authority under any Federal or
State law, pursuant to the Securities Act of 1933, as amended, or the Securities
Exchange Act, or any national or regional securities exchange on which such
Capital Stock is listed at the time of delivery of any shares of such Capital
Stock, before such shares may be issued upon conversion, the Company will use
its best efforts to cause such shares to be duly registered, listed or approved,
as the case may be.
SECTION 13.11. Payment of taxes upon certificates for shares issued
upon conversion. The issuance of certificates for shares of Capital Stock upon
the conversion of Debt Securities shall be made without charge to the converting
holders of Debt Securities for any tax (including, without limitation, all
documentary and stamp taxes) in respect of the issuance and delivery of such
certificates, and such certificates shall be issued in the respective names of,
or in such names as may be directed by, the holders of the Debt Securities
converted; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
Debt Security converted, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 13.12. Trustee's duties with respect to conversion provisions.
The Trustee and any conversion agent shall not at any time be under any duty or
responsibility to any holder of Debt Securities to determine whether any facts
exist which may require any adjustment of the conversion rate, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same. Neither the Trustee nor any conversion agent shall
be accountable with respect to the registration under securities laws, listing,
validity or value (or the kind or amount) of any shares of Capital Stock, or of
any other securities or property, which may at any time be issued or delivered
upon the conversion of any series of Debt Securities; and neither the Trustee
nor any conversion agent makes any representation with respect thereto. Neither
the Trustee nor any conversion agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
stock or stock certificates or other securities or property upon the surrender
of any series of Debt Securities for the purpose
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of conversion; and the Trustee, subject to the provisions of Section 11.1, and
any conversion agent shall not be responsible for any failure of the Company to
comply with any of the covenants of the Company contained in this Article XIII.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
FIRST SIERRA FINANCIAL, INC.
By:
-----------------------------------------
Name:
Title:
Attest:
----------------------------
Name:
Title:
, as
-------------------------------------
Trustee
By:
----------------------------------------
Name:
Title:
Attest:
----------------------------
Name:
Title:
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<PAGE> 73
STATE OF NEW YORK )
) ss.:
COUNTY OF _______________ )
On the ____ day of ____________, ____, before me personally came
__________, to me known, who, being by me duly sworn, did depose and say that he
resides at _______________________________________: that he is _________________
of FIRST SIERRA FINANCIAL, INC., a Delaware corporation, the corporation
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
[NOTARIAL SEAL]
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<PAGE> 74
STATE OF ________________ )
) ss.:
COUNTY OF _______________ )
On the _____ day of ________________, ____, before me personally came
______________ to me known, who, being by me duly sworn, did depose and say that
he or she resides at _________________, that he or she is ______________________
of _____________________________, a __________ banking corporation described in
and which executed the above instrument; that she knows the seal of said
corporation; that the seal affixed to the said instrument is such seal; that it
was so affixed by authority of the Board of Directors of said corporation; and
that he or she signed his or her name thereto by like authority.
[NOTARIAL SEAL]
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<PAGE> 1
EXHIBIT 5
May 12, 1999
First Sierra Financial, Inc.
600 Travis Street, Suite 7050
Houston, Texas 77002
Re: Registration Statement on Form S-3 (Reg No. 333-77079)
Ladies and Gentlemen:
We have acted as counsel to First Sierra Financial, Inc. (the
"Company") in connection with the above-referenced registration statement on
Form S-3, as amended (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), relating to the proposed public offering of up to $300,000,000 in
aggregate amount of (i) its debt securities ("Debt Securities") and (ii) shares
of its Common Stock, par value $.01 per share (the "Common Stock" and, together
with the Debt Securities, the "Securities"), all of which Securities may be sold
by the Company from time to time as set forth in the prospectus which forms a
part of the Registration Statement (the "Prospectus"), and as to be set forth in
one or more supplements to the Prospectus (each, a "Prospectus Supplement"). The
Debt Securities will be issued under an indenture (the "Indenture"), the form of
which is filed as an exhibit to the Registration Statement, to be entered into
between the Company and a trustee to be subsequently appointed.
In arriving at the opinion expressed below, we have assumed that the
issuance, sale, amount and terms of the Securities to be offered from time to
time will be duly authorized and determined by proper action of the Board of
Directors of the Company consistent with the procedures and terms described in
the Registration Statement (each, a "Board Action") and in accordance with the
Company's Restated Certificate of Incorporation, as amended (the "Certificate"),
and applicable Delaware law. In addition, we have examined and relied, to the
extent we deemed proper, on certificates of officers of the Company as to
factual matters, and on originals or copies certified or otherwise identified to
our satisfaction, of all such corporate records of the Company and such other
instruments and certificates of public officials and other persons as we have
deemed appropriate. In our examination, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the original documents
<PAGE> 2
First Sierra Financial, Inc.
May 12, 1999
Page 2
of all documents submitted to us as copies, the genuineness of all signatures on
documents reviewed by us and the legal capacity of natural persons.
Based upon, subject to and limited by the foregoing, we are of the
opinion that, as of the date hereof:
1. When the Registration Statement has become effective under the Act,
when the Indenture has been duly executed on behalf of the Company and
the trustee thereunder (the "Trustee"), and when the Debt Securities
have been (a) duly established by the Indenture or any supplemental
indenture thereto, (b) duly authorized and established by applicable
Board Action and duly authenticated by the Trustee, and (c) duly
executed and delivered on behalf of the Company against payment
therefor in accordance with the terms of such Board Action, any
applicable underwriting agreement, the Indenture and any applicable
supplemental indenture, and as contemplated by the Registration
Statement and/or the applicable Prospectus Supplement, the Debt
Securities will constitute binding obligations of the Company,
enforceable in accordance with their terms, except that the
enforceability thereof may be limited by or subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium or other
similar laws now or hereafter existing which affect the rights and
remedies of creditors generally and equitable principles of general
applicability.
2. When the Registration Statement has become effective under the Act,
upon due authorization by Board Action of an issuance of Common Stock,
and upon issuance and delivery of the Common Stock against payment of
valid consideration therefor in accordance with the terms of such Board
Action and any applicable underwriting or purchase agreement, and as
contemplated by the Registration Statement and/or the applicable
Prospectus Supplement, such shares of Common Stock will be legally
issued, fully paid and non-assessable.
To the extent that the obligations of the Company under the Indenture
may be dependent upon such matters, we have assumed for purposes of this opinion
(i) that the trustee is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and is duly qualified to
engage in the activities contemplated by the Indenture and (ii) that Indenture
has been duly authorized, executed and delivered by and constitutes the legal,
valid and binding obligation of the Trustee, enforceable in accordance with its
terms, except that the enforceability thereof may be limited by or subject to
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
other similar laws now or hereafter existing which affect the rights and
remedies of creditors generally and equitable principles of general
applicability.
We express no opinion as to the applicability of, compliance with or
effect of, the law of any jurisdiction other than United States Federal law, the
General Corporation Law of the State of Delaware and the laws of New York.
<PAGE> 3
First Sierra Financial, Inc.
May 12, 1999
Page 3
We hereby consent to the references to our firm under the caption
"Legal Opinions" in the Registration Statement and any Prospectus Supplement and
to the use of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not hereby admit that we come within the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ McDermott, Will & Emery
