As filed with the Securities and Exchange Commission January 25, 1999.
File No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IBF VI - GUARANTEED INCOME FUND
(Exact name of registrant as specified in its charter)
Delaware 52-2139510
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1733 Connecticut Avenue, N.W.
Washington, DC 20009
(202) 588-7500
(Address and telephone number of registrant's principal offices)
Simon A. Hershon
IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, N.W.
Washington, DC 20009 (202) 588-7500
(Name, address and telephone number of agent for service)
Copies to:
Mark E. Lehman, Esq.
Lehman, Jensen & Donahue, L.C
8 East Broadway, Suite 620
Salt Lake City, UT 84111-2204
(801) 532-7858
(801) 363-1715 fax
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes
effective.
The securities being registered on the Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [X]
CALCULATION OF REGISTRATION FEE
Title of each class Amount to be Proposed Proposed Amount of
of securities to be Registered maximum maximum registration
offering price aggregtae fee
per certificate offering price
10% Income $50,000,000 100% $50,000,000 $13,900.00
Participating
Notes, Class A
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.
Cross-Reference Sheet Pursuant to Rule 404(a)
Cross-reference between Items of Part I of Form SB-2 and the
prospectus filed by the above Company as part of the registration
statement.
Registration Statement Item Prospectus Heading
Number and Heading
1. Forepart of the Registration FRONT COVER
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back INSIDE FRONT COVER and
Cover Pages of Prospectus OUTSIDE BACK COVER
3. Summary Information and Risk PROSPECTUS SUMMARY and
Factors RISK FACTORS
4. Use of Proceeds USE OF PROCEEDS
5. Determination of Offering Price NOT APPLICABLE
6. Dilution NOT APPLICABLE
7. Selling Security Holders NOT APPLICABLE
8. Plan of Distribution PLAN OF DISTRIBUTION
9. Legal Proceedings BUSINESS
10. Directors, Executive Officers, MANAGEMENT
Promoters, and Control Persons
11. Security Ownership of Certain PROSPECTUS SUMMARY
Beneficial Owners and Management AND MANAGEMENT
12. Description of Securities DESCRIPTION OF SECURITIES
13. Interest of Named Experts and EXPERTS and LEGAL MATTERS
Counsel
14. Disclosure of Commission PLAN OF DISTRIBUTION
Position on Indemnification for Securities Act
Liabilities
15. Organization Within Five Years PROSPECTUS SUMMARY and
BUSINESS
16. Description of Business BUSINESS
17. Management's Discussion and PLAN OF OPERATION
Analysis or Plan of Operation
18. Description of Property BUSINESS
19. Certain Relationships and PROSPECTUS SUMMARY, BUSINESS
Related Transactions AND MANAGEMENT
20. Market For Common Equity NOT APPLICABLE
and Related Stockholder Matters
21. Executive Compensation MANAGEMENT
22. Financial Statements FINANCIAL STATEMENTS
23. Changes in and Disagreements NOT APPLICABLE
with Accountants on Accounting and
Financial Disclosure
[Legend on cover page of preliminary prospectus]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION,
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED January 25, 1999
PROSPECTUS [LOGO]
$50,000,000
IBF VI - GUARANTEED INCOME FUND CLASS A 10% INCOME
PARTICIPATING NOTES DUE 2005
The Class A 10% Income Participating Notes due December 31,
2005 (the "Notes") offered hereby are general obligations of IBF
VI - Guaranteed Income Fund, a Delaware corporation (the
"Company"). If you purchase $15,000 or more in principal amount
of the Notes, the 10% interest is paid monthly or quarterly, as
you elect. If you purchase less than $15,000 of the Notes,
interest is paid quarterly. The Company's parent corporation
guarantees payment of fixed interest. You will receive annually
Additional Interest payable only out of 5% of the Company's Net
Income. The Notes may be subordinated to future Senior
Indebtedness of the Company.
Any amount of the Notes is redeemable at the Company's option
after January 1, 2001. Notes may be redeemed at your request
under limited circumstances. The redemption value of each Note
is equal to 100% of its principal amount plus accrued Interest
and, in certain cases, Additional Interest, if any. See
"Description of the Notes."
The minimum principal amount of Notes you can purchase is
$5,000, except for Individual Retirement Accounts and Keogh
Plans, for which the minimum purchase is $2,000. The Company has
no arrangement with any broker or market-maker for establishing a
public market for the Notes following the offering. Consequently,
a public market for the Notes may not develop after the Offering.
See "Risk Factors" beginning on page 6 for certain
information you should consider before you purchase Notes.
These securities have not been approved or disapproved by
the Securities and Exchange Commission or any state securities
commission nor has the Securities and Exchange Commission or any
state securities commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a
criminal offense.
Price To Sales Proceeds To
Public Commission Company (2)
(1)
Per Note 100% 8.0% 92%
Minimum (3 $1,000,000 $80,000 $920,000
Maximum $50,000,000 $4,000,000 $46,000,000
(Footnotes to table on following page.)
The date of this Prospectus is _______________, 1999.
<PAGE>
(Footnotes to table on previous page.)
(1) Sales commissions shown do not include additional
compensation to Coleman & Company Securities, Inc., of New York,
New York, which is an affiliate of the Company ("DealerManager").
This additional compensation includes a nonaccountable expense
allowance of 1% of the gross proceeds of the offering and 2.5% of
the Company's annual Net Income for each calendar year. The
Dealer-Manager will organize a selling group consisting of member
firms of the National Association of Securities Dealers, Inc., to
participate in the offering ("Selected Dealers"). It is expected
Notes will be sold primarily through the Selected Dealers and to
a limited extent by the Dealer-Manager. The Company has agreed
to indemnify the Dealer-Manager and Selected Dealers against
certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). See "Plan of
Distribution."
(2) The proceeds to the Company shown in the table are before
deducting offering expenses of the Company estimated at $150,000
if only the minimum is sold and $300,000 if the maximum is sold.
In addition, the Company will pay to IBF Management Corp., an
affiliate of the Company, a one-time organizational fee of 5% of
the gross proceeds of the offering to establish the
administrative facilities and systems required for the Company's
business. See "Plan of Operations" and "Management."
(3) The offering is made by the Dealer-Manager on a "$1,000,000
minimum, $50,000,000 maximum" basis. If less than $1,000,000 of
Notes are sold within three months following the date of this
prospectus (unless extended by the Company and Dealer-Manager for
an additional three months), all proceeds raised will be promptly
returned to investors, without paying interest and without
deducting any sales commissions or expenses of the offering. All
proceeds from the sale of Notes will be placed in escrow with
Continental Stock Transfer & Trust Company, no later than noon of
the next business day following receipt. You will not have the
use of your funds, will not earn interest on your funds in
escrow, and will not be able to obtain return of your funds in
escrow until the minimum offering period expires. If the minimum
amount of Notes is sold within the minimum offering period, then
the offering will continue until [18 months from Effective Date]
(unless extended by the Company for an additional three months),
all Notes are sold, or terminated by the Company, whichever
occurs first. See "Plan of Distribution."
________________________
The Notes are offered by the Dealer-Manager subject to prior
sale and to withdrawal, cancellation or modification of the
offering without notice, and subject to the right of the Dealer
Manager and Company to reject orders in whole or in part. The
Notes will be issued in certificated form.
The Company intends to distribute to holders of the Notes
annual reports containing audited financial statements. In
addition, the Company will distribute to holders any reports
required by the Trust Indenture governing the Notes and the Trust
Indenture Act of 1939.
PROSPECTUS SUMMARY
This summary does not contain all information that may be
important to you. You should read the entire prospectus
carefully before you decide to purchase Notes.
The Company
IBF VI - Guaranteed Income Fund ("Company"), is a Delaware
corporation formed on June 8, 1998. It is a wholly-owned
subsidiary of InterBank Funding Corporation, a Delaware
corporation ("IBF"). The stockholders of IBF are Simon A.
Hershon and Ehud D. Laska, who are both officers and directors of
the Company. The Company and IBF share offices at 1733
Connecticut Avenue, N.W., Washington, D.C. 20009, telephone
number (202) 588-7500.
The Company will engage in the business of acquiring,
holding, and disposing of loan assets and equity securities
("Portfolio Assets") issued by individuals and businesses. The
Company may acquire Portfolio Assets regardless of whether such
assets are publicly traded. The Company will exercise all of the
rights and privileges associated with ownership of the Portfolio
Assets. See "The Company".
The objective of the Company is to identify and commit its
funds to alternative financing opportunities outside those
targeted by traditional lending and investment banking
institutions. Nontraditional financing creates the opportunity
for higher returns than are generated by traditional lending and
capital finance activity. Management has broad discretion in
selecting the Portfolio Assets in which the Company will
ultimately invest.
The Company intends to use the proceeds of the Offering
primarily for:
Purchasing performing and non-performing loans;
Making loans secured by real estate, receivables, note
obligations, inventory, or equipment; and,
Making short-term facilitation loans to meet short-term
borrower needs until long term financing is obtained
from other sources.
In connection with its loan transactions, the Company may
have the opportunity to acquire preferred stock or equity
equivalents. Equity equivalents include options, warrants, or
conversion rights exercisable for common stock. These equity
investments offer the Company the opportunity for capital
appreciation over and above interest income. In no event will
the Company's investment in equity Portfolio Assets
exceed 30% of its total Portfolio Assets.
As soon as funds are available from the offering, the
Company will purchase three loans, at face value, from IBF. The
principal amount of one loan is $1.8 million, bears interest at
15% per annum, and is secured by a building located in Atlanta,
Georgia. The second loan is in the principal amount of $1.52
million, it is secured by undeveloped commercial real estate in
the U.S. Virgin Islands, and bears interest at the rate of 12%
per annum.
The principal amount of the third loan is $840,000, which
bears interest at 15% per annum and is secured by all of the
capital stock of the borrower, which is an affiliate of IBF.
The Company may participate with other parties, including
IBF and its affiliates, in its investments in Portfolio Assets.
The Company may borrow funds to leverage the returns achieved on
its investment in Portfolio Assets. The Company will not borrow
funds to purchase Portfolio Assets in excess of the total amount
of Notes sold in this offering. It is expected that payment of
the Notes will be subordinated to the debt resulting from these
leveraged investments.
The Company may acquire Portfolio Assets issued by companies
owned or controlled by IBF and its affiliates. IBF and its
affiliates may charge fees for originating investments for the
Company, which will be included in the amount of the loan made to
the borrower or deducted from the purchase price of equity
Portfolio Assets. Furthermore, IBF and its affiliates may
receive management or consulting fees from the businesses in
which the Company invests.
IBF contributed $250,000 to the capital of the Company when
it was formed. IBF will contribute additional capital to the
Company, so that the amount of its contributions equals 1% of the
amount of Notes sold in this offering. IBF Management Corp., an
affiliate of IBF ("IMC"), will receive a fee for certain
administrative and support services rendered to the Company.
Initially, IMC will receive an organizational fee of 5% of the
gross proceeds of the offering to establish the administrative
facilities and systems required for the Company's business. IMC
will also receive in each calendar year a management fee (the
"Management Fee"), equal to 2% of the gross assets of the
Company. The Management Fee covers wages and salaries of
employees of IMC responsible for the Company's daily operations,
fees and expenses of agents and independent contractors providing
administrative support for the Company's operations, office
space, and all overhead expenses, but does not cover the
Company's legal and accounting fees, fees paid to the Indenture
Trustee, filing fees, Portfolio Asset transaction costs, taxes,
officer and director liability insurance, and similar expenses.
The Offering
Notes Offered $50,000,000 aggregate principal amount of Class A
10% Income Participating Notes, due December 31,
2005, (the "Notes"). See "Description of the
Notes" for a more detailed description of the
Notes.
Denomination The minimum principal amount of Notes you can
purchase is $5,000. However, the minimum purchase
for Individual Retirement Accounts and Keogh Plans
is $2,000. After the minimum purchase, sales will
be made in increments of $1,000.
Maturity date December 31, 2005.
Interest Interest at the rate of 10% per annum is payable
monthly or quarterly, as you elect, if you
purchase at least $15,000 of the Notes, and
quarterly if you purchase less than $15,000 of
Notes. The first interest payment will represent
interest from the date your Note is issued to the
end of the first full calendar month or quarter,
as applicable. Payment of the fixed interest is
guaranteed by IBF.
Additional Interest You will receive Additional Interest payable
only out of 5% of the Company's Net Income. Net
Income is the gross revenue from operations of the
Company (excluding any net gain or credit of an
extraordinary nature under generally accepted
accounting principles), less all operating and non-
operating expenses of the Company (including taxes
on income) except the expense for Additional
Interest. In the event the Company has a loss for
a calendar year, such loss will reduce future
years' Net Income for the purpose of calculating
future Additional Interest.
Company Redemption The Company may redeem any portion of the
Notes from time to time after January 1, 2001.
Holder Redemption You may tender your Note for redemption under
hardship circumstances. A request for hardship
redemption can be made only during the months of
June and December of each year beginning in the
year 2000. If you request redemption of your
Note, that request is irrevocable and is a binding
commitment by you to tender the Note for
redemption. The request must provide information
on your financial difficulty or change of
circumstances, and you must provide any additional
information requested by the Company on the
hardship situation. The Company has complete
discretion on the basis of the information
provided or factors unrelated to your personal
circumstances to accept or reject the request for
hardship redemption. Your Note will be redeemed
as of the end of the month (June or December) in
which your request is made and accepted. In each
calendar year the Company will not redeem more
than 10% of the aggregate principal amount of the
Notes outstanding on the first day of the year.
If requests for hardship redemption during a year
exceed the 10% limit, redemption will be made on a
"first come - first served" basis among the
holders requesting redemption.
Redemption Value and Payment The redemption value of your Note
is 100% of the principal plus accrued fixed
interest through the date of redemption.
Additional Interest will also be paid on Company
redemptions. You will receive Additional Interest
if you request hardship redemption in December,
but not June. Additional Interest will be
calculated as of the date of redemption for
Company redemptions, and the end of the year for
hardship redemptions.
Subordination The Notes are unsecured and subordinated in right
of payment to all future Senior Indebtedness of
the Company. The Company has no Senior
Indebtedness at present. However, the Company may
acquire Portfolio Assets by borrowing a portion of
the purchase price and pledging the Portfolio
Assets acquired as collateral. It is likely that
these obligations will be senior in right of
payment to the Notes.
Rating The Notes are not rated.
Trading Market The Company has no understanding with any broker
or market-maker to establish a trading market in
the Notes. The Company does not expect that a
trading market in the Notes will develop in the
future.
Registration The Note you buy will be registered in your name
and issued in the form of a note certificate.
Use of Proceeds Proceeds from the sale of the Notes will be
used to acquire Portfolio Assets and for general
corporate purposes. See "Use of Proceeds."
Trustee, Payment Continental Stock Transfer & Trust Company
Agent and Registrar
Investment Risks Buying Notes involves a high degree of risk
and should only be considered if you can afford
the loss of your entire investment. See "Risk
Factors."
RISK FACTORS
You should carefully consider the risk factors set forth
below, as well as the other information contained in this
Prospectus. This Prospectus contains forward-looking statements
regarding events, conditions, and financial trends that may
affect the Company's plan of operation, business strategy,
operating results, and financial position. You are cautioned
that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties. Actual
results may differ materially from those included within the
forward-looking statements as a result of various factors.
Cautionary statements in this "Risk Factors" section and
elsewhere in this Prospectus identify important risks and
uncertainties affecting the Company's future, which could cause
actual results to differ materially from the forward-looking
statements made in this Prospectus.
Recently Organized Company; No Present Source of Revenues
The Company, which is recently incorporated, has not engaged
in any business. Consequently, the Company does not have a
history of operations on which to predict future operations.
There is no assurance that the Company will be successful in
fully implementing its business plan or achieving profitable
operations. Furthermore, it is expected that the Company will be
subject to uncertainties and risks associated with a new or
startup venture. See "Business" and "Plan of Operation."
Discretionary Use of Proceeds
The Company has broad discretion in applying the net
proceeds of this offering. The Company has identified loan
investments totaling $4.16 million. Assuming all Notes are sold,
the Company will have approximately $38.54 million available to
purchase Portfolio Assets yet to be identified. Therefore, you
will not be able to evaluate a large portion of the Portfolio
Assets purchased with these funds before you invest. You must
rely upon the ability of the Company's management to identify and
acquire Portfolio Assets consistent with the Company's investment
objectives. There is no assurance that management will be able
to locate suitable investment opportunities in Portfolio Assets.
See "Business," "Use of Proceeds" and "Plan of Operation."
Risks of Capital Investments
The Company's Portfolio Assets will have a higher degree of
risk than traditional financing transactions. The Company's
Portfolio Assets will include non-performing loans, loans to
companies needing capital to support expansion or maintain a
competitive position, and loans to companies operating at a loss
or with substantial variations in operating results from period
to period. While the Company will endeavor to mitigate these
risks, both through analysis of the prospective investment and
the form of the investment, there is no assurance that the
Company will not realize significant losses. See "Business."
Time Required to Maturity of Investment; Liquidity of Portfolio
Investments
Management will be devoting substantial resources to finding
and evaluating loan opportunities as quickly as possible.
Nevertheless, a significant period of time may elapse before the
proceeds of this offering will be fully invested in Portfolio
Assets. These investments may typically take from one to three
years from the date of initial investment to reach maturity.
Equity Portfolio Assets may consist of securities that are
subject to restrictions on sale by the Company because they were
acquired from the issuer in a "private placement" transaction.
Generally, the Company cannot sell these securities publicly
without the expense and time required to register the securities
under the Securities Act of 1933. If an exemption from
registration is available under Rule 144 (which requires at least
a one year holding period for the securities), and there is an
established market for the securities, neither of which is
assured, the Company would be permitted only limited sales under
specified conditions.
The Company will look for opportunities to liquidate its
Portfolio Assets in 2004 with a view to having sufficient capital
to pay the Notes on maturity. However, the nature of the
Company's Portfolio Assets, general economic conditions, or other
factors beyond the Company's control may inhibit its ability to
liquidate its assets without substantial discounts. In these
circumstances, the Company might not be able to meet its payment
obligations under the Notes. See "Business."
Creditworthiness of Borrowers
The Company will engage primarily in the business of
purchasing and collecting performing and non-performing loans
from lending institutions, making asset-backed loans, and making
short-term facilitation loans. Non-performing loans entail a
high risk of non-performance, higher delinquencies, and
potentially higher losses than loans from more creditworthy
borrowers. The Company expects that the market for loans
originated by the Company will be borrowers who are unable to
obtain similar financing from traditional lenders, which may
entail loans to less creditworthy borrowers. While the Company
will employ underwriting criteria and collection methods it
believes will control risks inherent in its investments, there is
no assurance that such criteria and methods will prevent the
Company from realizing losses. Since the Company does not
presently have any Portfolio Assets, there is no information on
which to evaluate the Company's future performance. In the event
the Company experiences greater defaults, higher delinquencies,
or higher losses than expected, the Company's earnings will be
negatively impacted. See "Business."
Interest Rate Fluctuations May Adversely Affect Results Of
Operations
The Company's results of operations are likely to be
adversely affected by unexpected changes in interest rates.
Fluctuations in interest rates will affect the Company's ability
to earn a spread between interest received on its Portfolio
Assets and the cost of its operations. For example, a substantial
or sustained increase in interest rates will negatively impact
the value of fixed-rate loans held in inventory by the Company.
Decreases in interest rates could cause loans in the portfolio to
prepay more quickly. This could result in the Company
accelerating the amortization of the premium it paid for the
loans and, therefore, decreasing net interest income.
A rapid decrease in short-term interest rates would also
affect the Company with respect to its adjustable-rate loans. The
Company's operating expenses, including any interest expense on
Senior Indebtedness, are likely to be fixed. Hence, in a period
of rapidly decreasing interest rates, the Company could also
experience a decrease in net interest income or a net loss in the
absence of effective hedging because the Company's expenses
remain fixed while the interest rates on the Company's adjustable
rate loans decrease.
Variations In Anticipated Mortgage Prepayment Rates May Adversely
Affect Results Of Operations
Loan prepayment rates vary from time to time and may cause
changes in the amount of the Company's net interest income.
Prepayments of loans usually increase when interest rates fall
below the then-current interest rates on such loans. Prepayments
decrease when interest rates exceed the then-current interest
rate on the loans. Prepayment experience also may be affected by
the geographic location of the properties securing the loans, the
credit standing of borrowers, assumability of mortgage loans,
conditions in the housing and financial markets, competition, and
general economic conditions. In addition, prepayments on
adjustable rate loans are affected by the ability of the
borrowers to convert to fixed-rate loans and by conditions in the
fixed-rate loan market. If the interest rates on adjustable rate
loans increase at a rate greater than the interest rates on fixed-
rate loans, prepayments on adjustable rate loans may tend to
increase. If prepayments increase at a time when interest rates
have decreased, then the Company may not be able to reinvest in
loans with a similar yield. The Company will seek to minimize
prepayment risk through a variety of means, which may include (to
the extent capable of being implemented at reasonable cost)
structuring a diversified portfolio with a variety of prepayment
characteristics and investing in and making loans with prepayment
prohibitions and penalties. No strategy can completely insulate
the Company from prepayment risks arising from interest rate
changes.
Business Risks of Investments
Holding Portfolio Assets issued by companies and other
businesses means that the Company's ability to recoup its capital
and realize a gain is subject to all of the general and specific
risks of the industry and business activity of those companies,
which are beyond the control of the Company. Originating secured
loan transactions affords the Company some protection against
these risks, but there is no assurance that the Company will be
able to recoup its investment through collateral on the loans.
Where the investment is made through equity securities, the
Company will not have the status of a secured or unsecured
creditor, so its risk of loss is much greater. See "Business."
General Economic Risk
A major risk of financial service businesses such as the
Company is the possibility that it will not generate income
sufficient to meet operating expenses and debt service. The
revenues of the Company from its transactions in Portfolio Assets
may be affected by many factors, including: (a) bad debts,
insolvency, and bankruptcy; (b) adverse changes in general
economic conditions; (c) adverse changes in consumer financing
laws or in credit laws and regulations; (d) adverse changes in
federal and state securities laws and regulations; (e)
unanticipated increases in the costs of collection or other
operating costs; (f) increases in business and real estate taxes;
(g) legal restrictions on interest rates, financing charges, and
on the forms of disclosure; (h) natural disasters and other
factors beyond reasonable control; and (i) increases in interest
rates on funds borrowed by the Company not offset by increases in
revenues. See "Business."
Competition
The Company's proposed business is highly competitive. The
Company will compete for the acquisition of performing and non-
performing loans with a number of national, regional, and local
companies. With respect to loans originated by the Company and
equity investments, it will also compete with national, regional
and local nontraditional lenders and investment bankers. Many of
the Company's competitors and potential competitors possess have
greater financial, marketing, and operational resources than the
Company. There can be no assurance that the Company will be able
to compete successfully in its targeted markets. See "Business."
Dependence on Management
The Company is dependent upon its officers and directors for
selecting the Portfolio Assets to acquire. The officers and
directors of the Company, particularly Simon A. Hershon and Ehud
D. Laska, have prior experience in debt and equity financing
transactions. The ability of the Company to implement its
business will depend on their continued participation in the
management of the Company. If any of the officers and directors
become unavailable, there is no assurance that the Company will
be able to find a replacement with the same degree of ability and
experience. See "Management."
Lack of Control; Conflicts of Interest
You will have no right to participate in the management of
the Company. IBF, as the sole stockholder of the Company, has
the right to elect all of the directors. Simon A. Hershon and
Ehud D. Laska, both officers and directors of the Company, are
the owners of IBF. IBF is also the owner of other business
entities that are engaged in the business of investing in debt
and equity securities. The Company may acquire Portfolio Assets
in conjunction with affiliates of IBF or management. The Company
may also acquire Portfolio Assets issued by affiliates of IBF or
management. Furthermore, IBF and its affiliates may receive fees
for originating transactions for the Company, which are included
in the financing. Conflicts of interest are inherent in the
foregoing relationships. These conflicts may be difficult, if
not impossible, to resolve in all cases in the best interests of
the Company, which could adversely affect the business of the
Company. See "Management - Conflicts of Interest."
Payment of Principal and Interest
The Company, as a newly formed corporation, has minimal
assets and equity value. Accordingly, it is unlikely the initial
interest payments will be from the Company's earned income. The
payment of principal and interest is dependent on the Company's
profitability over the course of its operations. Although IBF has
guaranteed payment of the 10% Interest on the Notes, the Company
has not set up a sinking fund and there is no assurance that the
Company will be able to make the interest and principal payments
when due. See "Plan of Operation."
Subordination of the Notes and Encumbrances on the Company's
Assets
The Notes are unsecured and subordinated in right of payment
to all future Senior Indebtedness of the Company. If the Company
liquidates or reorganizes, then the assets of the Company will be
used first to pay Senior Indebtedness and second to pay the Notes
(and any other obligations on an equal footing with the Notes).
Therefore, there may not be sufficient assets to pay any or all
amounts due on the Notes. If payment of Senior Indebtedness is
accelerated due to a default, then the lenders under any secured
Senior Indebtedness are entitled to the Company's assets pledged
as security. Therefore, these assets would not be available to
pay the Notes. See "Description of the Notes."
Potential for Additional Indebtedness
Under the Indenture, the Company can incur substantial
additional Senior Indebtedness and unsecured indebtedness equal
in right of payment to the Notes. The interest expense on the
Notes and the potential interest expense arising from additional
indebtedness could substantially increase the Company's fixed
charge obligation and limit the Company's ability to meet its
obligations under the Notes. See "Description of the Notes."
Tax Classification of Securities
Interest on the Notes is paid partly out of the Company's
assets and partly out of the Company's Net Income. Whether the
Additional Interest paid out of Net Income represents interest
deductible by the Company for income tax purposes or is a
distribution on equity depends on a number of factors, and there
is no assurance on how the Internal Revenue Service or a court
would interpret those factors in these circumstances. The
Internal Revenue Service does not ordinarily issue advance
rulings on this issue, because the issue is one primarily of
fact. In the event the Internal Revenue Service sought to
recharacterize all interest payments or just the Additional
Interest payments as distributions on equity, the Company could
lose all or some of its interest deductions. This would increase
the Company's expense for income taxes and decrease Net Income
and Additional Interest paid on the Notes.
Limited Covenants In the Indenture
The Indenture limits the Company's ability to pay dividends
to stockholders, incur additional indebtedness above certain
amounts, and engage in certain transactions, including
consolidations, mergers, or transfers of all or substantially all
of its assets. The covenants in the Indenture are limited and
are not designed to protect you in the event of an adverse change
in the Company's financial condition or operations. See
"Description of the Notes."
No Market for Notes
There is no public market for the Notes and there is no
assurance a market will develop following the offering.
Accordingly, you should purchase the Notes only as a long-term
investment with the expectation of holding the Notes until
maturity.
No Rating for Notes
The Notes are not rated by any financial rating organization
and may be characterized as "high-yield" securities. The lack of
a rating will inhibit the development of a public market for the
Notes and your ability to sell the Notes to anyone else.
USE OF PROCEEDS
This table shows how the Company intends to use the gross
proceeds of this offering during the year following sale of the
minimum amount of Notes. See "Plan of Operation."
Assuming Minimum Assuming Maximum
Amount of Notes Sold Amount of Notes Sold
Gross Offering Proceeds $1,000,000 $50,000,000
Costs of this Note offering 240,000 4,800,000
Organization Fee paid to IMC 50,000 2,500,000
Total Available to acquire
Portfolio Assets and pay
fixed iterest and the
Management Fee $710,000 $42,700,000
The Company has identified three loan acquisitions totaling
$4,160,000, which it will make as soon as it receives sufficient
capital from this Note offering. These loans will be purchased,
at cost, from IBF, the Company's sole stockholder. If only the
minimum is sold, then the Company will invest all of the proceeds
and its existing equity capital of approximately $250,000 to
purchase one of the loans for $840,000.
If the Company realizes revenue from its business activity
during the first year following the offering, then the Company
will use such revenue to cover its fixed costs and apply more of
the net proceeds of the Offering to investment in Portfolio
Assets. Net proceeds of the Offering will be invested in low-
risk liquid investments until used for Portfolio Asset
investments.
PLAN OF OPERATION
Proposed Operations and Capital requirements
The Company will use the net proceeds from this offering to
acquire performing and non-performing loans, and to make loans.
To a limited extent the Company may, at its discretion, invest in
equity securities. In no event will the Company's investment in
equity securities represent more than 30% of its total investment
in Portfolio Assets. See "Business."
The Company will lend to companies that are unable to obtain
financing through commercial banks and lending institutions
because they cannot satisfy the restrictive lending criterion of
these institutions. Consequently, the Company's loans will have
higher potential yields, but also higher risk of loss. The
Company will attempt to mitigate its risk through the
underwriting process and by obtaining collateral for its loans
with a fair value of at least 125% of the loan.
A significant period of time may elapse before the net
proceeds of the offering will be fully invested in Portfolio
Assets. Consequently, the Company may use a portion of the net
proceeds in the first year after the offering to pay Interest on
the Notes, the Management Fee to IMC, and transaction costs
arising from the Company's acquisition of Portfolio Assets. This
will reduce the amount of capital available for investment.
Management estimates that it will take at least one year for the
Company to generate sufficient revenue from its Portfolio Assets
to cover interest expense, the Management Fee, and transaction
costs.
Management believes that the Company's capital obtained
through this offering and internally generated revenue is
adequate to meet the Company's obligations and conduct its
business operations over the one-year period following completion
of the offering. Inflation to the extent reflected in rising
interest rates could have an adverse impact on the margins
realized by the Company on its investment in Portfolio Assets and
its ability to maintain adequate earnings spreads on its
investments.
Year 2000 Compliance
The Company will rely on the internal computer information
system used by IMC, which is Year 2000 compliant. The Company
does not expect to incur any costs associated with Year 2000
compliance.
BUSINESS
General
Prior to August 1998 the capital markets placed high values
on companies with annual gross revenue less than $50 million
because of the robust stock market and economy. The stock market
volatility that began in August 1998 greatly diminished the value
of these companies because of investor preference for larger
companies with more stable market values. As a result, the
availability of equity capital to companies with less than $50
million in revenue for expansion or working capital has decreased
leaving debt financing as the most viable alternative. The
competition among smaller companies for debt financing has
increased substantially. As such, banks and similar lending
institutions can impose more stringent underwriting criteria for
their loans. Management believes there is a substantial demand
for financing from smaller companies unable to obtain financing
from traditional lenders ("Portfolio Companies"). As a result of
these market forces, Portfolio Companies are seeking alternative
financing sources and are willing to pay more for that financing.
The Company's goal is to take advantage of this situation through
loan and equity investments ("Portfolio Assets").
Portfolio Assets will consist primarily of performing and
non-performing loans, and loans made by the Company. To a
limited extent the Company may, at its discretion, invest in
equity and equity related securities issued by Portfolio
Companies that the Company believes demonstrate the opportunity
for favorable growth or have unrecognized earnings or asset
value. In the search for investment opportunities, the Company
will focus on Portfolio Companies with established operations and
assets, rather than start-up ventures. The Company's business
strategy will involve assuming risks in order to realize income
and capital growth.
Specifically, the Company's Portfolio Assets will include:
- non-performing loans purchased from other lenders
secured by real estate, receivables, equipment, or inventory;
- performing loans purchased from other lenders, which
may be secured or unsecured;
- loans made by the Company secured by real estate,
receivables, note obligations, securities, inventory, or
equipment; and,
- short-term facilitation loans made by the Company to
meet short-term borrower needs until long term financing is
obtained from other sources.
Portfolio Assets may also include registered and
unregistered securities of both public and non-public companies,
such as common equity, preferred stock, or equity equivalents.
Opportunities may arise in the Company's loan transactions to
acquire equity securities directly, or options, warrants, or
conversion rights. Equity participation gives the Company the
opportunity for capital appreciation over and above interest
income. In no event will the Company's investment in equity
Portfolio Assets represent more than 30% of its total investment
in Portfolio Assets.
In the acquisition of Portfolio Assets, the Company may
participate with unaffiliated or affiliated parties. The Company
may also acquire Portfolio Assets issued by affiliates of IBF or
management. Furthermore, IBF and its affiliates may receive fees
for originating transactions for the Company, which are included
in the amount of the financing.
The Company's business goals are as follows:
Current Income: The Company will endeavor to achieve a
return of at least 18% on each investment.
Capital Growth: The Company will seek capital appreciation
of its underlying investments. Special Situations and
Special Returns: The Company will pursue particular
investments where it can obtain enhanced returns on special
situations at higher rates.
The Company's business strategy is as follows:
Purchase of Debt at Discount: The Company intends to
purchase performing and nonperforming loans at discounts arising
from the quality of the loans, sellers' needs, or other
circumstances.
Mezzanine Capital: Based on cash flow analysis, the Company
will make loans to Portfolio Companies that need to enhance their
capital structure for acquisitions and growth. Particular
emphasis will be placed on investments in Portfolio Companies in
which the Company holds, or can acquire, equity participation and
provide management assistance.
Acquisitions: The Company will provide debt and equity
capital to facilitate acquisitions by Portfolio Companies which
have prospects for enhanced returns through consolidation, sale,
or public offering. Typically, the Company will provide the
mezzanine debt to complete the acquisitions and acquire an equity
interest as partial consideration for the financing.
Consolidation: The Company will provide add-on debt or
equity to its Portfolio Companies for the purpose of acquisitions
and consolidation within their respective industries.
Growth Financing: Additional lending to Portfolio Companies
will be provided by the Company for the purpose of internal
growth and build up. Short-Term Facilitation Loans: On a
selected and secured basis, the Company will provide short-term
loans to facilitate special needs. Such needs might occur when
there are timing differences between services provided and
collections, or in the event of imminent closure on a sale or
financing.
Going Private Transactions: With the decline in the stock prices
of many companies, there will be an opportunity to assist
companies which are converting to private ownership through a
market tender offer. The Company will endeavor to identify and
participate in such opportunities.
Following its initial transaction, the
Company may also participate in subsequent rounds of financing
for its Portfolio Companies. Such follow-on investments will
depend on the progress of these companies and availability of
funds in the Company.
The Company anticipates financing opportunities will
develop from IBF's business relationships with others, such as
capital and investment banking firms, commercial banks,
government agencies, and other sources. Further opportunities
may be presented directly by individuals or firms seeking funds.
The Company does not intend to publicly solicit potential
Portfolio Companies for investment.
Loan Acquisitions
The Company will purchase non-performing and
performing loans from government agencies and financial
institutions. Government agencies such as the Federal Deposit
Insurance Corporation, Department of Housing and Urban
Development, Department of Agriculture, and The Department of
Education have defaulted loan assets, which are sold at discounts
to businesses like the Company that rehabilitate the loans or
foreclose on existing collateral. In addition to government
suppliers, government bank regulations have prompted many
traditional lending institutions to sell defaulted loan assets on
the open market, rather than rehabilitate the loans. Acquiring
nonperforming loans at discounts will provide opportunities to
generate substantially higher returns than can be obtained from
traditional performing loans. Accordingly, the Company intends
to focus its efforts on locating and acquiring non-performing
loans that meet its criteria.
The Company will also seek to acquire performing loans.
There is a well-established market for sale of performing loan
packages, and the Company will attempt to acquire performing
loans that can provide a sufficient return to the Company. It
may be expected that some performing loans acquired by the
Company may be unsecured, because the returns on these types of
loans are higher than returns on secured obligations.
Before acquiring any loan asset, the Company intends to
review all loan documents related to the asset, collateral value
(if applicable), payment history, and the borrowers'
financial condition. Based on this review, the Company will formulate
a strategy for servicing, rehabilitating, and ultimately selling the
loan assets. After completing this evaluation, the Company will
determine a bid price for the loan asset using a 30% return to the
Company on the bid price (the "Target Return") as a general guideline.
The Target Return may vary based on the factors evaluated by the
Company. For example, if the Company believes the value of
underlying collateral is high compared to the debt obligation, a
higher bid price at a lower projected return rate may be
acceptable to the Company.
Once the Company has acquired nonperforming loans, it will
attempt to restructure or refinance the loans through workouts
with borrowers. If restructuring or refinancing is not possible,
the Company will seek ownership of the underlying collateral
through foreclosure and collection proceedings. Non-performing
loans restructured or refinanced will be serviced by the Company
and packaged for sale as performing loans. Assets acquired
through foreclosure will be liquidated.
Opportunities may arise where the Company can leverage its
loan investments by borrowing a portion of the purchase price.
Generally, the Company does not intend to make leveraged
investments unless it expects the return on the loans will be
sufficient to service the debt incurred to make the investment
and provide an acceptable return to the Company. It should be
excepted that any leveraged investment will be secured by the
loan acquired and that repayment of the obligation incurred will
be senior in priority to payment of the Notes.
Loan Origination
The Company intends to look for opportunities to use the
proceeds of the offering to originate assetbacked or
collateralized loans and short-term facilitation loans. The
targeted market will include Portfolio Companies that, because of
credit history or other circumstances, are unable to obtain
similar financing from traditional lenders. The Company will
identify these loans through institutions such as banks, general
lenders of corporate obligations, mortgage lenders, and real
estate and finance companies.
Before originating a loan, the Company intends to perform a
thorough review of the value of the underlying security, which
might include the examination of the underlying collateral value
and payment history, as well as the borrower's financial
condition. In some cases, the Company will retain a third party
appraiser to complete an evaluation of the collateral. The
Company will only originate a loan in those cases where the
underlying collateral is equal to, or exceeds, the amount of the loan.
Typically, repayment will be made from cash flow of the
Portfolio Company. In those few cases when this method of
repayment becomes unfeasible, the Company will attempt to
restructure or refinance the loan. If restructuring or
refinancing is not possible, the Company will seek ownership of
the underlying security through sale, liquidation, or collection
of the outstanding collateral. Specific Loan Transactions
The Company will use the proceeds of this
offering to purchase three loans from IBF and its affiliates.
The loans will be purchased at cost, which is the unpaid
principal amount of the loans on the date of purchase. The
Company will not purchase an identified loan if a default has
occurred at the time of purchase.
The Company will purchase a loan in the
principal amount of $1.8 million made to a borrower unrelated to
IBF and its affiliates. The loan bears interest at the rate of
15% per annum and is secured by a hotel located in Atlanta. An
independent appraisal of the hotel placed its value at
approximately $2.7 million. The loan matures at the end of June
1999. The loan was used by the borrower to purchase the hotel
property. The borrower paid a fee of $90,000 to the lender for
making the loan, which was included in the principal amount of
the loan.
The Company will purchase a $1.52 million
loan to a borrower unrelated to IBF and its affiliates, which was
used to acquire a parcel of undeveloped commercial land in the
U.S Virgin Islands. The loan bears interest at the rate of 12%
per annum, and is secured by the land purchased with the loan.
An independent appraisal of the land placed its value at $13.0
million. The loan matures in September 2000. The lender received
a fee of $78,700 for making the loan, which was included in the
loan principal.
The Company will purchase a loan that was
made for $840,000 in November 1998, to a corporation controlled
by Simon A. Hershon and Ehud D. Laska, both officers and
directors of the Company. The loan matures in November 1999, and
bears interest at the rate of 15% per annum. It is secured by all
of the capital stock of the borrower. Based on the discounted cash
flow of the borrower over a period of three years from the date
of the loan, the value of the borrower is $1.25 million.
The loan was used by the borrower to acquire an employee benefit
administration business located in California. A fee of $85,000
was paid to IBF for making the loan, which is included in the
principal amount of the loan.
Equity Investment
Where the Company believes there are
opportunities for capital appreciation of the Portfolio Companies
to which it makes loans, the Company may seek to acquire options,
warrants, conversion rights, or preferred stock.
Typically options, warrants, and conversion rights have a nominal
initial cost, and are exercised only after the Company determines
that the value of the underlying security equals or exceeds the
cost of exercise and there is, or expected to be, an opportunity
to liquidate the investment. The Company will only consider
investing in preferred stock when it is part of a larger
financing package, which includes a loan from the Company, so
that the total projected return on the
loan and preferred stock is acceptable to the Company.
The Company will consider acquiring an equity
right or interest in Portfolio Companies that have the potential
for significant capital appreciation. The Company will evaluate
a number of factors to determine the capital appreciation
potential of Portfolio Companies. These factors include, the
asset base of the Portfolio Company, operating history; the
market for its products or services, management, the potential
for growth, and other elements that may be evaluated in specific
instances.
Equity investments will require varying
lengths of time to mature but, in general, one to three years or
longer may well elapse before an investment appreciates in value.
The ability to liquidate an investment once it has appreciated in
value is critical to realizing returns on the Company's
investments. Realizing the appreciation in equity Portfolio
Assets will also be highly dependent on general economic and
financial market conditions, which are beyond the control of the
Company. Methods for liquidating the Company's investment
include, repurchase or redemption of the Portfolio Assets by the
Portfolio Company, sale or merger of the Portfolio Company, and
public or private sale of the equity securities.
Competition
The finance business of the Company is
highly competitive. The Company will compete with a number of
national, local, and regional companies that pursue the same
Portfolio Assets as the Company. Many of the Company's
competitors and potential competitors possess substantially
greater financial, marketing, technical, personnel and other
resources than the Company. In addition, the Company's future
profitability will be directly related to the availability and
costs of its capital relative to that of its competitors. The
Company's competitors may have access to capital at a lower cost
than the capital available to the Company through the Notes
described in this prospectus. The lower cost of capital could
give competitors an advantage in bidding for performing and non-
performing loan assets, the terms of financing offered to
prospective customers on new loan transactions, and the price the
Company can pay for equity securities.
Employees
The Company does not have, and does not
expect to have, any full time employees. No salaries will be
paid to the executive officers of the Company. All employee
support services required for the Company's operations will be
provided by IMC and is included in the Management Fee.
Legal Proceedings
The Company is not a party to any pending legal proceedings. To
the knowledge of management, no legal proceedings are threatened
against the Company.
Offices
The principal offices of the Company will be located at the
offices of IMC, which are also the offices of IBF, at 1733
Connecticut Avenue, N.W., Washington, DC 20009. Management
believes that the office space available at this
location is adequate for its foreseeable needs.
IBF PRIOR LOAN HISTORY
InterBank Funding Corporation ("IBF"), is a Delaware
corporation in which Simon A. Hershon and Ehud D. Laska are the
controlling stockholders. IBF is the parent of the Company. IBF
is also the parent of five other private funds formed for the
purpose of acquiring performing and non performing loans,
originating loans, and investing in equity and debt securities.
Each of the funds obtained capital by offering and selling notes
to investors in private placements. The total amount of capital
invested in Notes issued by the funds is approximately
$20,000,000, which was contributed by approximately 600
investors.
The funds have completed forty-eight transactions totaling
$22,615,540. The average loan amount is $471,157 and the average
loan maturity is 11 months. The average loan return is
32.25%. The collateral value of these transactions totals $86,839,354.
The funds have made thirteen loans to affiliated entities,
which totaled $5,460,800. Seven loans in the amount of $1,705,000
have been repaid. Six loans in the amount of $3,755,800 remain
outstanding. The funds originating the loans received $171,000
in origination fees from these loans. On all other transactions,
the originating funds received $687,000 in origination fees.
Appendix I to this prospectus lists each loan made by
the funds owned by IBF and shows for each loan, the loan purpose,
loan amount, fair value of collateral, repayment status and
revenue achieved or anticipated to be achieved. None of the funds
has invested in equity securities to date. To the extent that the
Company may invest a portion of its capital in equity Portfolio
Assets, the information presented on the loan activity of the
funds is not relevant to how well the Company may perform in its
equity investments.
MANAGEMENT
The Company's business will be managed by
IMC and the Company's officers and directors. The following
persons are the officers and directors of the Company:
Name Age Position
Simon A. Hershon 51 CEO, President and Director
Ehud D. Laska 49 Executive Vice President and Director
Ivan M. Krasner 47 Senior Vice President and Director
David C. Chabut 40 Chief Financial Officer
Laura J. Quinting 26 Vice-President and Secretary
Biographies
The following are brief biographies of the officers and directors:
Simon A. Hershon has, for the past 21 years, been the
President and C.E.O. of the InterBank Companies, three separate
but closely related divisions that offer financial advisory,
asset management, merchant banking, and investment services to
business, institutions and individuals in the hospitality, real
estate, finance, and communications industries. Mr. Hershon's
education and professional experience combine to provide
InterBank's clientele with an in depth understanding of
institutional and corporate finance, real estate finance and
development, and hospitality turn-arounds. Mr. Hershon graduated
from the U.S. Naval Academy and subsequently served in nuclear
powered submarines in the U.S. Navy. He received both a Masters
and Doctorate in Business Administration from Harvard University
where he concentrated in finance and graduated with honors.
Ehud D. Laska is the President of American Eagle
Funding and is a founding partner and Managing Director of the
InterBank Capital Group. Through these firms, Mr. Laska
specializes in building up companies through same industry
consolidation and acquisitions. Mr. Laska is also the Chairman of
Coleman & Company Securities, Inc., a member firm of the National
Association of Securities Dealers, Inc., and the Dealer-Manager
for this offering. Mr. Laska has also served as a director of
Headway Corporate Resources, Inc., a publicly held corporation
engaged in human resource management, since August 1993. From
August 1994 to February 1996, Mr. Laska served as a managing director at the
investment banking firm of Continuum Capital, Inc. While serving
as a Managing Director with Tallwood Associates, Inc., a boutique
investment banking firm, from May 1992 to August 1994, Mr. Laska
founded the Private Equity Finance Group, which merged with
Continuum Capital, Inc. in August 1994. Prior to 1992, Mr. Laska
was a senior investment banker with the Wall Street firms of
CS/First Boston, Drexel Burnham Lambert, Paine Webber, and
Laidlaw Equities. Mr. Laska graduated from the University of
Massachusetts with a BSc in Engineering and holds an M.S. degree
in engineering from Brown University and an MBA from Stanford
University.
Ivan M. Krasner has been employed since September, 1998, by
IBF and its affiliates to coordinate financing for their
respective business activities. Mr. Krasner is also a registered
representative with Coleman & Company Securities, Inc. Mr.
Krasner has over 20 years experience in business development,
strategic positioning and marketing expertise. Most recently, Mr.
Krasner was Vice President of Orbitex Management, a Europeanbased
mutual fund group specializing in global sector funds. For over
10 years prior to 1995, Mr. Krasner served in a number of
positions, most recently Senior Vice President, with PLM
International, a major originator of equipment leasing direct
participation programs.
David C. Chabut is the Chief Financial Officer of the
Company and InterBank Capital Group only. He became Chief
Financial Officer of InterBank Capital Group in August 1998. From
October 1995 to May 1998, Mr. Chabut was the Chief Financial
Officer of UNIVEC, Inc., a publicly-held medical device
manufacturer. Prior to October 1995, Mr. Chabut was an independent financial
consultant. During 1993, he was Chief Operating Officer of
MediMax, Inc., which participated in accounts receivable
financing for health care providers. For 11 years prior to 1993,
Mr. Chabut was a senior consultant for Coopers & Lybrand.
Laura J. Quinting has served as a Vice President of the
Company since its inception and of the InterBank Companies since
August, 1994. In this capacity, Ms. Quinting provides oversight
in the areas of operations, investor and broker relations and
fund management. For the InterBank Companies, Ms. Quinting has
also managed the development of a residential community, which
included the coordination between joint venture partners, capital
sources, builders and contractors. She has also served as
director of marketing for the InterBank Companies since January,
1994. Ms. Quinting has also provided asset management services
to the City of Richmond, Virginia since December, 1994. Ms.
Quinting graduated from the University of Delaware with a
Bachelor's degree in political science and economics in June
1994.
Compensation
IMC is a Delaware corporation in which Simon A. Hershon is
the sole officer, director, and stockholder. No executive
compensation will be paid directly by the Company to its
officers. IMC will bear all costs of operating the Company. IMC
will receive an annual Management Fee for its services equal to
2% of the gross assets of the Company for providing all
administrative support required to operate the Company,
including, wages and salaries of employees of IMC responsible for
the Company's daily operations, fees and expenses of agents and
independent contractors providing administrative support for the
Company's operations, office space, and all overhead expenses.
The Management Fee does not cover the Company's legal and
accounting fees, filing fees, investment transaction costs,
taxes, officer and director liability insurance, and other
administrative expenses. The Company's executive officers do
receive compensation from IMC.
Conflicts Of Interest
Investors will have no right to participate in the
management of the Company. IBF, as the sole stockholder of the
Company, has the right to manage the business affairs of the
Company and to appoint all directors. IBF is the sole equity
owner of five other companies engaged in activities similar to
the proposed business of the Company, and may participate as a
controlling stockholder in other corporations or partnerships
formed in the future to pursue business activities similar to
that of the Company. IBF also participates in various loan
transactions for its own account. Simon A. Hershon and Ehud D.
Laska, directors and officers of the Company, are the owners of
IBF. Furthermore, Mr. Hershon is the sole owner of IMC, which
provides management services to the Company. The Company may
participate with one or more affiliates of IBF, Mr. Hershon, or
Mr. Laska in its investment activities. The Company may invest
in Portfolio Companies in which these affiliates have an
interest. In addition, fees for originating the Company's
investment in Portfolio Assets may be paid to IBF, officers and
directors of the Company, or the affiliates of these persons.
Certain conflicts of interest are inherent in the foregoing
relationships, including the selection of investment
opportunities for the Company, allocation of management time and
resources to the operations of the Company, and the use of the
Company's capital to pay fees to affiliates. Although the
Indenture provides that the Company may not participate in a
transaction with an affiliate, except in good faith and on terms
that are no less favorable to the Company than those that could
have been obtained from a person not an affiliate of the Company,
no other policy or restriction has been adopted by management to
resolve conflicts of interest that might arise.
DESCRIPTION OF THE NOTES
The Notes will be issued under an Indenture between the
Company and Continental Stock Transfer & Trust Company as trustee
(the "Trustee"). The Indenture is an exhibit to the Registration
Statement of which this prospectus is a part. The Indenture is
governed by the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The following summary does not contain
all information that may be important to you. You are welcome to
review the Indenture by obtaining a copy in the manner described
under "Additional Information", below.
General
The Notes are general, unsecured obligations of the
Company and are limited to $50,000,000 aggregate principal
amount. The Notes will be subordinated to all future Senior
Indebtedness of the Company as described under "-Subordination"
below. The Notes will mature on December 31, 2005, subject to
redemption in limited circumstances. See "- Redemption."
Fixed interest at the rate of 10% per annum will be
paid on the Notes. IBF guarantees payment of fixed
interest. If you purchase at least $15,000 of Notes, the fixed
interest is paid to you monthly or quarterly, as you elect. If
you purchase less than $15,000 of Notes, then you will be paid fixed interest
quarterly. The interest payment will be made to the holder of
record as of the close of business on the 10th day prior to the
interest payment date, which is the end of the applicable monthly
or quarterly period. In the event an interest payment date falls
on a day other than a business day, interest will be paid on the
next business day. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months. Principal and
interest will be payable at an office or agency maintained by the
Company in New York, New York.
You will receive additional interest (the "Additional
Interest"), within 120 days following the end of each calendar
year. Additional Interest is payable only out of five percent of
the Net Income of the Company. Net Income is gross revenue from
operations of the Company, less all operating and non-operating
expenses of the Company, including taxes on income and excluding
Additional Interest, all determined in accordance with generally
accepted accounting principles applied on a consistent basis. In
the event the Company has a loss for a calendar year, such loss
will reduce future years' Net Income for the purpose of
calculating future Additional Interest.
The Company will issue the Notes in denominations of
$1,000 and integral multiples thereof. The Notes will be issued
in certificated form.
The Company will furnish to holders of the Notes annual
reports containing audited financial statements of the Company.
Redemption
After January 1, 2001, the Company may redeem any portion of
the Notes from time to time on not less than 30 days' advance
notice to you. After the redemption date specified in the
notice, your Note ceases to accrue Interest and Additional
Interest. Partial redemptions will be allocated among holders of
the Notes by lot.
You may tender your Note for redemption
under hardship circumstances beginning in the year 2000. A
request for hardship redemption may only be delivered to the
Company during the months of June and December. The request is
irrevocable and represents a binding commitment by you to tender
the Note for redemption. The request must provide information on
your financial difficulty or change of circumstances and you must
provide any additional information requested by the Company on
the hardship situation. The Company has complete discretion on
the basis of the information provided or factors unrelated to
your personal circumstances to accept or reject the request for
hardship redemption. Notes will be redeemed as of the end of the
month in which the request for redemption is made. The amount of
Notes redeemed in each calendar year may not exceed 10% of the
aggregate principal amount of the Notes outstanding on the first
day of each calendar year. In the event requests for redemption
during a year exceed the 10% limitation, redemption will be made
on a "first come - first served" basis among the holders of the
Notes requesting redemption. The Indenture does not contain any
other provision that permits you to require that the Company
redeem your Note.
The redemption value is equal to 100% of
the principal amount of your Note plus accrued Interest through
the date of redemption. Furthermore, Additional Interest will be
paid on Company redemptions and hardship redemptions effected in
December, but not June. Additional Interest will be calculated
as of the date of redemption, in the case of Company redemptions,
and the end of the year, in the case of December hardship
redemptions. Payment of principal and Interest will be made on
the redemption date with respect to a Company redemption. In the
case of a hardship redemption, payment of principal and Interest
will be made on or before the end of the following month. For
both a Company redemption and December hardship redemption,
Additional Interest will be paid on its scheduled annual payment
date.
Subordination
The Notes will be subordinated to the prior
payment in full of all Senior Indebtedness of the Company, which
includes fees and expenses of the Trustee. The Company may not
incur Senior Indebtedness in an amount exceeding the total
amount of Notes sold in this offering.
After the receipt by the Trustee of a written notice
specifying that a payment default under any Senior Indebtedness
has occurred (a "Senior Event of Default"), the Company may not
make any principal or interest payments on your Note and neither
the Trustee nor the holders of the Notes may accelerate the
maturity of the Notes until: (i) the Senior Event of Default is cured,
(ii) the Senior Event of Default is waived by the holders of the
Senior Indebtedness, or (iii) the expiration of 180 days after the date
the Default Notice is received by the Trustee, if the maturity of the Senior
Indebtedness has not been accelerated. Upon cure of the Senior Event of
Default, payment to you of principal, Interest, and Additional
Interest will resume.
Upon a distribution of assets, dissolution,
winding up, liquidation or reorganization of the Company, upon an
assignment for the benefit of creditors, or if the principal of the Notes
has been declared due and payable and such declaration has not been
rescinded or annulled, then in any such instance all Senior
Indebtedness must be repaid in full before any payment of
principal or interest on the Notes can be made. Any
subordination will not prevent the occurrence of an Event of
Default under the Indenture. See "--Events of Default; Notice
and Waiver."
As stated above, by reason of the
subordination of the Notes, in the event of liquidation of the
Company, the Holders of the Notes will not receive payment until
Senior Indebtedness is paid in full. Also, by reason of the
subordination provisions, the holders of the Notes may receive
payments less ratably than other creditors of the Company.
Although the Company presently has no outstanding Senior
Indebtedness, Senior Indebtedness may be
issued or incurred in the future, subject only to the limitation
set forth above on the amount of Senior Indebtedness.
Limitation On Restricted Payments
The Company can not (i) declare or pay any dividend, either
in cash or property, on any shares of its capital stock (except
dividends or other distributions payable solely in shares of capital
stock of the Company), (ii) purchase, redeem or retire any shares of
its capital stock or any warrants, rights or options to purchase or
acquire any shares of its capital stock, or (iii) make any other payment or
distribution, either directly or indirectly, in respect of its capital stock,
if an Event of Default will occur after giving effect to the
transaction. Notwithstanding the foregoing, the Company may make
a previously declared distribution on its capital
stock if at the date of the declaration the distribution was
permitted under this restriction.
Limitations on Transactions with Affiliates
The Company may not participate in a transaction with an
affiliate, except in good faith and on
terms that are no less favorable to the Company than those that
could have been obtained in a comparable transaction on an arm's
length basis from a person not an affiliate of the Company.
Limitations On Mergers, Consolidations, etc.
The Company may not liquidate or dissolve itself, sell or
dispose of substantially all of its assets except to create
liquidity to pay the Notes, or make any material change in its
business. The Company may merge or consolidate with another
entity; provided that such merger or consolidation will not
materially change the business of the Company, the new entity
fully assumes all obligations of the Company, and after giving
effect to the transaction no default shall exist.
Events of Default, Notice and Waiver
An event of default under the Indenture includes:
(i) failure to pay the principal on the Notes when due at
maturity, upon redemption, or upon repayment, as provided in the
Indenture;
(ii) failure to pay any interest on the Notes
when due, which default continues for 30 days;
(iii) failure to perform any other covenant set
forth in the Indenture for 30 days after receipt of written notice from
the Trustee or holders of at least 30% in principal amount of the
outstanding Notes under the Indenture specifying the default and
requiring the Company to remedy such default;
(iv) default in the payment of any indebtedness of the Company
having an outstanding principal amount of $5,000,000 and such
default results in acceleration of the indebtedness;
(v) certain events of insolvency, receivership, or
reorganization of the Company, and
(vi) entry of a final judgment, decree or order
against the Company for the payment of money in excess of
$5,000,000 in certain circumstances.
If an event of default shall occur and be continuing, the
Trustee may at its discretion proceed to protect and enforce its
rights and the rights of the holders. The Trustee is
required to enforce such rights at the written request of holders
of a majority of the outstanding Notes and upon being indemnified
to its satisfaction. If an event of default shall occur and be
continuing, subject to the subordination provisions of the
Indenture, either the Trustee or the holders of at least 30% of
the outstanding Notes may accelerate the maturity of all outstanding
Notes. Prior to any judgment or decree for the payment of money
being obtained, the holders of a majority of the outstanding Notes
may waive an event of default resulting in acceleration of the Notes,
but only if all events of default have been remedied or waived.
The Company must furnish quarterly, to the Trustee an Officers'
Certificate stating whether, to the best of the knowledge of the
officers executing such certificate, the Company is in default
under any of the provisions of the Indenture and describing any
existing defaults.
A holder will not have any right to institute
any proceeding with respect to the Indenture or for any remedy
thereunder, unless
(i) the holder has previously given to the Trustee
written notice of a continuing event of default,
(ii) the holders of at least 30% of the outstanding Notes have
made a written request and offered reasonable indemnity to the
Trustee to institute such proceedings,
(iii) the Trustee has failed to institute such proceeding
within 60 days, and
(iv) the Trustee has not received from the holders of a majority of
the outstanding Notes a direction inconsistent with such request.
However, you have an absolute right to receive payment of
principal and interest on your Note on or after the
due dates and to institute suit for the enforcement of any such
payments.
Modification And Waiver
With certain limited exceptions which permit
modification of the Indenture by the Company and Trustee without
the consent of any holders of the Notes, the Indenture may be
modified by the Company with the consent of holders of not less
than a majority of the outstanding Notes, if the Notes are
affected by the modification. No change can be made without your
consent if the effect is to:
(i) change the maturity date of principal or the payment date of
any interest on your Note,
(ii) reduce the principal of, or the rate of interest on, your Note,
(iii) change the coin or currency in which any portion
of the principal of, or interest on, your Note is payable,
(iv) impair your right to institute suit for the enforcement of
any such payment,
(v) reduce the percentage of holders of the outstanding Notes necessary to
modify the Indenture, or
(vi) modify the foregoing requirements or reduce the percentage of
outstanding Notes necessary to waive any past default.
The holders of a majority of the outstanding Notes may waive
compliance by the Company with certain restrictive provisions of
the Indenture.
Satisfaction And Discharge Of Indenture; Defeasance
The Indenture provides that the Company may terminate its
obligations under the Indenture with respect to all Notes which
have become due and payable by delivering to the
Trustee, in trust for such purpose, money
and/or Government Obligations which, through the payment of
interest and principal, will provide money in an amount
sufficient to discharge the entire indebtedness on the Notes.
Defeasance of the Notes is subject to delivery to the Trustee of
an opinion of independent counsel that holders of the outstanding
Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and termination and
certain other conditions.
The Trustee
Continental Stock Transfer & Trust Company is the Trustee under
the Indenture. Its principal corporate trust office is located at
2 Broadway, New York, NY 10004. The Trustee is not responsible for
any investment decisions of the Company and shall not be held
responsible or liable for any such decisions.
PLAN OF DISTRIBUTION
Subject to the conditions set forth in
this prospectus and in accordance with the terms and conditions of the
Indenture and the Dealer-Manager Agreement between the Company
and the DealerManager, the Company will offer through the Dealer-
Manager, on a best efforts basis, a maximum
$50,000,000 in principal amount of the Notes. The minimum
subscription is $5,000 ($2,000 for IRAs and Qualified Plans,
including Keogh plans) except in certain states. See "Investor
Suitability And Minimum Investment Requirements." The Dealer-
Manager is an affiliate of IBF, the sole stockholder of the
Company.
The sales commission paid to the Dealer-Manager is 8% of the
gross offering proceeds. In addition, the Company will pay a
nonaccountable expense allowance of 1% of the gross proceeds of
the offering and additional compensation in an amount equal to
2.5% of the Company's annual Net Income for each calendar year in
which the Notes are outstanding. The Dealer-Manager may reallow
the selling compensation to Selected Dealers participating in the
Offering. It is expected Notes will be sold primarily through the Selected
Dealers and to a limited extent by the DealerManager. The Dealer-
Manager Agreement and the Selected Dealer Agreements contain
provisions for the indemnification of the Dealer-Manager and
participating Selected Dealers by the Company with respect to
certain liabilities, including liabilities
arising under the Securities Act. The Dealer-Manager may be
deemed to be an "underwriter" for purposes of the Securities Act
in connection with this offering.
Until subscriptions for $1,000,000
of Notes have been accepted by the Company, all funds received by
the DealerManager and Selected Dealers from subscriptions for
Notes will be placed in an escrow account with Continental Stock
Transfer & Trust Company, as escrow
agent. If less than $1,000,000 of Notes are sold within three
months following the date of this prospectus (unless extended by
the Company and DealerManager for an additional three months),
all proceeds raised will be promptly returned to investors,
without paying interest and without
deducting any sales commissions or expenses of the offering.
Investors will not have the use of their funds, will not
earn interest on funds in escrow, and will not be able to obtain
return of funds placed in escrow unless and until the minimum
offering period expires. In the event the minimum amount of
Notes is sold within the minimum offering period, the offering
will continue until [18 months from Effective Date], all Notes are sold, or
terminated by the Company, whichever occurs first.
The offering of the Notes is made subject to
prior sale and to withdrawal, cancellation, or modification of
the offer without notice. The Dealer-Manager and the Company
reserve the right to reject any order for the purchase of Notes.
INVESTOR SUITABILITY AND MINIMUM INVESTMIENT REQUIREMENTS;
SUBSCRIPTION PROCEDURES
General Suitability Considerations
Among the reasons for establishing investor suitability
standards and minimum dollar amounts of investment is that there
is no public market for the Notes and none is expected to
develop. Accordingly, only persons able to make a long-term
investment and who have adequate financial means and no need for
liquidity with regard to their investment should purchase the
Notes. An investment in Notes is not appropriate for you if you
must rely on cash distributions with respect to their Notes as
your primary, or as an essential, source of income to meet your
necessary living expenses.
Requirements Concerning Minimum Investment and Minimum Investor
Net Worth/Income
Minimum Investment. For investors
other than Qualified Plans and IRAs, the minimum investment is
$5,000 in principal amount of the Notes. For Qualified Plans and
IRAs, the minimum investment is $2,000 in principal amount of the
Notes.
Minimum Net Worth/Income. Except with respect to
Qualified Plans and IRAs, Notes will be sold to you only if you
represent in writing:
(i) your net worth is at least $40,000 in excess of the
proposed investment in the Notes and you have an annual gross
income of at least $40,000, or
(ii) irrespective of annual gross income, your net worth is at
least $75,000, or
(iii) that you satisfy the suitability standards imposed by
the state in which you reside, if such standards are more
stringent than those set forth above.
All computations of your net worth must exclude
the value of your home, home furnishings, and personal
automobiles. All other assets should be valued at their fair
market value.
If an investor is a Qualified Plan or an
IRA, such investor must represent (i) that the IRA
owner or the participant in the self-directed Qualified Plan
satisfies the foregoing standards,
or (ii) if other than a self-directed Qualified Plan, that the
Qualified Plan satisfies the foregoing suitability standards.
You must execute a copy of the Subscription Agreement,
the form of which is attached as Appendix B to this prospectus,
to evidence your compliance with the foregoing standards and the
requirements of applicable laws.
How to Subscribe
If you meet the suitability standards set forth above you
subscribe to purchase Notes. You must personally execute the
Subscription Agreement and deliver to the DealerManager or
Selected Dealer soliciting the investment with payment of the
purchase price for the Notes. In the case of IRA and Qualified
Plans, both owners and the plan fiduciary (if any) must sign the
Subscription Agreement. In the case of grantor trusts or other
trusts in which the grantor is the fiduciary, such grantor must
sign the Subscription Agreement. In the case of other fiduciary
accounts in which the donor does not exercise control and is not
a fiduciary, the plan fiduciary alone may sign the Subscription
Agreement.
All subscription payments should be made payable to
"_________________ - Escrow Account." Subscription payments
will be deposited in the escrow account no later than noon of the
next business day following receipt. After the minimum of
$1,000,000 in principal amount of Notes is sold within the
minimum offering period, subscription payments will continue to
be deposited and cleared through the escrow account.
The Company and Dealer-Manager will promptly review, and
accept or reject at their discretion, each subscription. If a
subscription is rejected, the subscription payment will be
promptly refunded, without deduction of any offering expenses and
without payment of interest.
Affiliates of the Company, DealerManager, and
the Selling Dealers will have the right, but not the obligation,
to subscribe for and purchase Notes for their own account for
investment purposes, subject to the terms and conditions
contained herein. Such affiliates may purchase Notes prior to
sale of the minimum $1,000,000 of Notes, which will count toward
the achievement of the minimum requirement. All Notes purchased
by such parties will be purchased solely for investment purposes
and not with a present view towards resale or distribution.
SALES MATERIAL
In addition to and apart from this prospectus, the Company
will utilize certain sales material in connection with the
offering of Notes. This material may include reports describing
the Company and its affiliates and a brochure and audio-visual
materials or taped presentations highlighting various features of
this offering. The Company and its affiliates may also respond
to specific questions from Selected
Dealers and prospective investors. Business reply cards,
introductory letters or similar materials may be sent to Selected
Dealers for customer use, and other information relating to this
offering may be made available to Selected Dealers for their
internal use. However, this offering is made only by means of
this prospectus. Except as described herein or in supplements
hereto, the Company has not authorized the use of other sales
materials in connection with this offering. Although the
information contained in such material does not conflict with any
of the information contained in this prospectus, such material
does not purport to be complete and should not be considered as a
part of this prospectus or the registration statement of which
this prospectus is a part, or as incorporated in this prospectus
or the registration statement by reference or as forming the
basis of this offering of Notes.
LEGAL MATTERS
The legality of the issuance of the Notes offered hereby and
certain other matters will be passed upon for the Company by
Lehman, Jensen & Donahue, L.C., Salt Lake City, Utah.
EXPERTS
The balance sheet of the Company at January 20, 1999,
appearing in this Prospectus and Registration Statement has been
audited by Radin, Glass & Co., LLP, independent auditors, as set
forth in their reports appearing elsewhere herein, and are
included in reliance upon such reports given upon the authority
of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Notes offered hereby. This Prospectus
does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Notes
offered hereby, reference is made to the Registration Statement
and the exhibits and schedules filed therewith. Statements
contained in this Prospectus as to the contents of any contract
or any other document referred to are not necessarily complete,
and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in
all respects by such reference. A copy of the Registration
Statement, and the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities
maintained by the Securities and Exchange Commission in Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade
Center, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of all or any part of the Registration Statement may be obtained
from the Commission upon payment of a prescribed fee. This
information is also available from the Commission's Internet web
site at http://www.sec.gov.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
IBF VI - Guaranteed Income Fund Washington, DC
We have audited the accompanying balance sheet of
IBF VI Guaranteed Income Fund (A Development Stage Enterprise)
as of January 20, 1999. This financial statement is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to
above presents fairly, in all material respects, the financial
position of IBF VI - Guaranteed Income Fund (A Development
Stage Enterprise), as of January 20, 1999, in conformity with
generally accepted accounting principles.
RADIN, GLASS & CO., LLP
Certified Public Accountants
New York, NY
January 20, 1999
<PAGE>
IBF VI - GUARANTEED INCOME FUND
(A Development Stage Enterprise)
BALANCE SHEET
JANUARY 20, 1999
ASSETS
CURRENT ASSETS:
Cash $ 250,000
TOTAL CURRENT ASSETS 250,000
DEBT ISSUANCE COSTS 20,776
$ 270,776
STOCKHOLDER'S EQUITY
Common stock, $1 par value, 1,000
shares authorized, issued ane outstanding $ 1,000
Additionl paid-in capital 269,776
$ 270,776
See notes to financial statements.
<PAGE>
IBF VI - GUARANTEED INCOME FUND
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
JANUARY 20, 1999
1. INITIATION OF BUSINESS
On June 8, 1998, IBF VI Guaranteed Income Fund (the
"Company") was formed to engage in the business of purchasing,
holding and disposing of debt and
equity securities,
instruments, or other ownership interest or assets issued
by/owned by, as the case may be, individuals, corporations and
other entities. The investments will usually take the form of
debt securities or instruments and/or equity securities.
There have been no operations as of January 20, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Development stage - The Company is a
development stage enterprise and will continue as a development
stage enterprise until such time as it has significant revenues
from operations.
b. Debt issuance costs - Debt issuance
costs will be charged against additional paidin capital upon
successful completion of the Company's proposed public offering.
In the event the offering is not completed, such
costs will be charged to expense.
c. Pervasiveness of estimates - The
preparation of financial statements in conformity with generally
accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
3. PROPOSED PUBLIC OFFERING
The Company anticipates offering $50,000,000 of 10% Income
Participating Notes, Class A (the "Notes") of IBF VI,
Guaranteed Income Fund. The Notes may be subordinated to future
Senior Indebtedness of the Company.
Any amount of the Notes is redeemable at the option of
the Company after January 1, 2001. Notes may be redeemed at
the request of the registered holders of the Notes ("Holders")
under limited circumstances. The
redemption value of each Note is equal to 100% of its principal
amount plus accrued Interest and Additional Interest, if any.
The minimum principal amount of Notes that may be purchased is
$5,000 for all investors, except for Individual Retirement
Accounts and Keogh Plans, for which the minimum
purchase is $2,000.
<PAGE>
<TABLE>
Appendix A - The InterBank Funds Loan History
<CAPTION>
Origination Loan Type Loan Amount Collateral Loan to Projected Achieved Disposition Duration Annualized Annualized
Date Value Value Revenue Revenue (months) Projected Actual
Yield Yield
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/02/96 Commercial $450,000 $1,300,000 35% $17,115 $28,181 Paid in full 4 45.63% 43.26%
05/23/96 Real Estate $750,000 $1,548,352 48% $118,750 $101,875 Paid in full 10 26.06% 15.79%
08/06/96 Commercial $850,000 $2,167,000 39% $53,904 $78,000 Paid in full 4 25.37% 27.53%
10/10/96 Commercial $125,000 $970,500 13% $50,069 $50,000 Paid in full 8 60.08% 60.00%
12/10/96 Commercial $112,500 $1,358,000 8% $85,945 $46,150 Paid in full 23 36.67% 21.40%
12/30/96 Real Estate $650,000 $2,901,899 22% $285,795 $261,428 Paid in full 15 35.17% 28.64%
03/10/97 Commercial $88,500 $3,650,000 2% $79,730 $38,548 Outstanding 28 38.61% N/A
03/10/97 Real Estate $600,000 $2,901,899 21% $120,780 $75,775 Outstanding 29 19.99% N/A
03/12/97 Commercial $109,847 $1,103,000 10% $103,805 $49,734 Outstanding 28 40.50% N/A
03/31/97 Real Estate $400,000 $2,901,899 14% $121,917 $90,231 Outstanding 29 20.18% N/A
04/01/97 Commercial $307,500 $970,500 32% $250,390 $128,022 Outstanding 27 36.19% N/A
08/28/97 Real Estate $280,000 $6,900,000 4% $203,023 $147,672 Outstanding 22 39.55% N/A
09/08/97 Real Estate $500,000 $2,000,000 25% $165,472 $154,507 Outstanding 18 25.57% N/A
12/05/97 Commercial $787,500 $2,060,810 38% $473,438 $263,020 Outstanding 19 37.97% N/A
01/26/98 Commercial $425,000 $851,353 50% $79,000 $81,000 Paid in full 8 32.32% 32.57%
02/02/98 Real Estate $175,000 $888,462 20% $89,708 $113,230 Paid in full 9 76.89% 86.27%
02/19/98 Commercial $253,500 $507,000 50% $6,524 $9,568 Paid in full 1 30.88% 30.19%
03/04/98 Commercial $362,000 $958,445 38% $46,560 $39,871 Outstanding 16 35.66% N/A
03/06/98 Commercial $180,000 $180,000 56% $33,782 $25,763 Paid in full 9 27.72% 28.62%
03/09/98 Commercial $180,000 $180,000 56% $8,880 $8,880 Paid in full 2 39.47% 39.47%
03/13/98 Commercial $70,000 $500,802 14% $3,235 $3,235 Paid in full 1 55.46% 55.46%
04/10/98 Commercial $21,000 $269,162 8% $1,315 $1,315 Paid in full 1 75.00% 75.14%
04/29/98 Commercial $130,000 $666,792 19% $5,000 $5,000 Paid in full 1 46.00% 46.15%
04/29/98 Real Estate $800,000 $2,901,899 28% $261,800 $177,749 Outstanding 20 34.61% N/A
05/15/98 Commercial $81,000 $987,953 8% $3,000 $3,000 Paid in full 1 44.00% 44.44%
05/29/98 Real Estate $100,000 $2,700,000 4% $7,000 $7,000 Paid in full 1 84.00% 84.00%
06/01/98 Commercial $65,500 $625,000 10% $5,895 $6,000 Paid in full 2 54.00% 54.96%
06/29/98 Real Estate $675,000 $1,012,500 67% $201,528 $72,501 Outstanding 12 31.83% N/A
06/29/98 Commercial $1,125,800 $2,400,000 47% $270,192 $180,128 Outstanding 12 26.30% N/A
06/29/98 Real Estate $1,125,000 $1,687,500 67% $317,086 $124,294 Outstanding 12 29.36% N/A
06/30/98 Commercial $305,000 $600,000 51% $72,500 $35,705 Paid in full 4 29.00% 35.12%
06/30/98 Real Estate $525,000 $1,400,000 38% $5,250 $5,250 Paid in full 1 52.00% 52.00%
07/27/98 Commercial $325,000 $340,000 96% $78,000 $69,345 Outstanding 6 25.76% N/A
07/31/98 Commercial $760,000 $1,287,500 59% $182,400 $91,200 Outstanding 12 24.00% N/A
07/31/98 Commercial $103,000 $739,732 14% $3,660 $3,399 Paid in full 1 42.64% 39.60%
08/20/98 Commercial $550,000 $750,000 73% $107,800 $78,350 Outstanding 6 39.20% N/A
09/01/98 Real Estate $500,000 $2,038,462 25% $27,708 $25,833 Paid in full 2 33.00% 31.00%
09/09/98 Commercial $460,000 $900,000 51% $110,400 $45,500 Outstanding 12 24.00% N/A
09/15/98 Real Estate $1,240,000 $13,000,000 10% $1,291,100 $90,518 Outstanding 24 40.83% N/A
09/22/98 Commercial $2,000,000 $5,250,000 38% $257,000 $175,088 Outstanding 6 25.70% N/A
10/01/98 Commercial $500,000 $1,000,000 50% $48,000 $18,413 Outstanding 6 19.26% N/A
10/30/98 Commercial $350,000 $595,375 59% $34,181 $23,691 Outstanding 4 36.59% N/A
11/04/98 Commercial $205,231 $3,650,000 6% $50,172 $7,100 Outstanding 8 36.67% N/A
11/10/98 Commercial $420,000 $628,779 67% $104,563 $48,064 Outstanding 12 27.52% N/A
11/10/98 Commercial $420,000 $628,779 67% $104,563 $53,178 Outstanding 12 27.52% N/A
11/30/98 Commercial $97,662 $180,000 54% $9,637 $1,953 Outstanding 3 39.47% N/A
12/14/98 Real Estate $1,037,500 $1,900,000 55% $596,511 $107,828 Outstanding 24 37.08% N/A
12/14/98 Real Estate $1,037,500 $1,900,000 55% $596,511 $107,828 Outstanding 24 37.08% N/A
Total $22,615,540 $86,839,354 $7,150,594 $3,359,920
</TABLE>
<PAGE>
IBF VI - GUARANTEED INCOME FUND
SUBSCRIPTION AGREEMENT
_____________________________________________________
____________ ___________________________
INITIAL SUBSCRIPTION
ADDITIONAL INVESTMENT: Account Number Previously
Assigned:
INVESTMENT
I desire to purchase $_________________ aggregate
principal amount of Notes of IBF VI - Guaranteed Income Fund.
MAKE CHECKS PAYABLE TO:
SUBSCRIBER INFORMATION: Please print name(s) in which Notes are
to be acquired. All checks and correspondence will go to this
address unless another
address is listed in the Investor Mailing or Direct Deposit
Address sections.
Name (1st) Mailing address (if different)
Name (2nd) Name
Address Address
City City
State Zip Code State Zip Code
Custodian Account No. Daytime Telephone Number
Occupation ___________________________
U.S. Citizen Resident Alien Foreign Resident Country
Check if the Subscriber is a U.S. citizen residing outside the U.S.
ALL SUBSCRIBERS: State of Residence of Subscriber (required):
Enter the taxpayer identification number below. For most
individual taxpayers, it is their Social Security
number. Note: If the purchase is in more than one name, the
number should be that of the first person listed.
For IRA's, Keoghs, and qualified plans, enter both the Social
Security number and the taxpayer identification number for the plan.
Taxpayer ID# and/or Social Security #
DIRECT DEPOSIT ADDRESS: Investors requesting direct deposit of distribution
checks to another financial institution or mutual fund, please
complete below. In no event will the Company or Affiliates be
responsible for any adverse consequences of direct deposit.
RA accounts must have a custodian.
Company/Custodian:
Account No.:
Address:
City: State: Zip:
FORM OF OWNERSHIP: (Select only one)
Individual Joint Tenants With Right Of Survivorship
(all parties must sign)
Husband And Wife, As Community A Married Person/Separate Property
Property
(two signatures required) (one signature required)
Tenants In Common Keogh-H.R.10 (trustee signature required)
Tenants By The Entirety Custodian (custodian signature required)
Corporation S Corp Partnership (authorization required)
Non - Profit Organization Pension Plan (trustee signature(s) required)
IRA(custodian signature required) Profit Sharing Plan - trustee signature(s)
required
SEP (custodian signature required) Custodian UGMA State of
(custodian signature required)
Taxable Trust (trustee signature
required) Custodian UTMA - State of
(custodian signature required)
Tax Exempt Trust (trustee Estate (Personal Representative signature
signature required) required)
Irrevocable Trust (trustee Revocable Grantor Trust
signature required) (grantor signature required)
BROKER/DEALER - REGISTERED REPRESENTATIVE INFORMATION (To be
completed by Registered Representative.) PLEASE PRINT
Broker/Dealer Firm Name: ____________________________ Registered
Rep _____________________________ Representative's Office:
_________________________________________ ____________
____________ ___________________________
(street) (city) (state) (zip) (office phone)
Sales Representative Signature: X
INTEREST DISTRIBUTION: If you
are purchasing $15,000 or more of the Notes, please indicate how
you want fixed interest paid
___ monthly ___ quarterly
SUBSCRIBER SIGNATURE: (The undersigned has the authority to enter
into this subscription agreement on behalf of the person(s) or
entity registered above. I (We) certify under penalty of perjury
that this is my (our) correct Social Security Number
(or Tax Identification Number) and that interest income on this
account should be reported on this number. I acknowledge and
agree to the statement on the reverse side hereof.)
X _________________ Date ___________ X ___________________ Date ___________
Authorized Signature of 1st Subscriber Authorized Signature of 2nd Subscriber
COMPANY'S ACCEPTANCE (To be completed only by an authorized representative of
the Company.)
The Foregoing subscription is accepted this _________ day of
_____________, 19___.
___________________________________
Authorized Representative of the Company [Outside back cover]
============================== ===============================
[outside back cover]
Until 90 days following completion of this offering,
all dealers effecting transactions in the registered
securities, whether or not participating in this
distribution, may be required to deliver a prospectus. This
is in addition to the obligation of dealers to deliver a prospectus
when acting as underwriters with respect to their unsold
allotments or subscriptions.
TABLE OF CONTENTS
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained in this
Prospectus and, if given or made, such information
or representations must not be relied upon as having
been authorized by the Company or any Underwriter.
This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the
securities offered hereby to whom it is unlawful to make
such offer in such jurisdiction to any person in any jurisdiction.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that information contained herein is correct
as of any time subsequent to the date hereof or that there
has been no change in the affairs of the Company since such date.
$50,000,000
IBF VI - GUARANTEED INCOME FUND
[logo]
Class A 10% Income Participating
Notes Due 2005
_________________
Prospectus
_________________
___________________, 1999
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in
connection with this Registration Statement. The Company
will pay all expenses of the offering. All of such expenses are
estimates, other than the filing fees payable to the Securities
and Exchange Commission and NASD.
Securities and Exchange Commission Filing Fee $13,900.00
NASD Filing Fee 5,500.00
Printing Fees and Expenses 40,000.00
Legal Fees and Expenses 125,000.00
Accounting Fees and Expenses 50,000.00
Blue Sky Fees and Expenses 25,000.00
Trustee's and Registrar's Fees 35,000.00
Miscellaneous 5,600.00
TOTAL $300,000.00
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Charter provides
that, to the fullest extent that limitations on the liability
of directors and officers are permitted by the Delaware General
Corporation Law (the "DGCL"), no director or officer of the
Company shall have any liability to the Company or its
stockholders for monetary damages. The
DGCL provides that a corporation's charter may include a provision
which restricts or limits the liability of
its directors or officers to the corporation or its
stockholders for money damages except: (1) to the extent
that it is provided that the person actually received an
improper benefit or profit in money, property or services,
for the amount of the benefit or profit in money, property or
services actually received, or (2) to the extent that a judgment
or other final adjudication adverse to the person is entered
in a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. The Company's Charter and Bylaws
provide that the Company shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent
permitted by the DGCL and that the Company shall indemnify
and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Charter and Bylaws provide that the Company will
indemnify its directors and officers and may indemnify
employees or agents of the Company to
the fullest extent permitted by law against liabilities and
expenses incurred in connection with litigation in which
they may be involved because of their offices with the
Company. However, nothing in the Charter or Bylaws of the
Company protects or indemnifies a director, officer,
employee or agent against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. To the extent that a director
has been successful in defense of any proceeding, the
DGCL provides that he shall be indemnified against reasonable expenses
incurred in connection therewith.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this
registration statement, the Company had only one transaction
in which it issued its securities. In connection with the formation
of the Company, it sold 1,000 shares of its common stock to InterBank
Funding Corporation ("IBF") to obtain $250,000 of initial capital.
IBF is the sole stockholder of the Company, and two of the Company's
officers and directors are the sole owners of IBF. The
transactions was intended to be exempt from the registration
requirements of the Securities Act of 1933, as
amended, by virtue of Section 4(2) thereunder. No underwriters
were involved in connection with the sales of these securities.
ITEM 16. EXHIBITS.
Exhibits.
Exhibit SEC Ref. Title of Document Location
No. No.
1 (1) Dealer-Manager Agreement Page E-1
2 (1) Selling Group Agreement Page E-14
3 (3)(i) Certificate of Incorporation,
as amended Page E-17
4 (3)(ii) By-Laws Page E-21
5 (4) Proceeds Escrow Agreement Page E-36
6 (4) Indenture, with exhibits Page E-44
7 (10) Management Agreement Page E-120
8 (10) Amended Loan Agreement,
Consolidated Promissory Note and
Deed to Secure Debt for $1,800,000
loan Page E-125
9 (10) Amended Loan Agreement, Amended
Promissory Note and Amended
Mortgage for $1,520,000 loan Page E-156
10 (10) Loan Agreement, Promissory Note
and Security Agreement for
$840,000 loan Page E-175
11 (5)(23) Opinion and Consent of Lehman,
Jensen & Donahue, L.C. Page E-192
12 (23) Consent of Radin, Glass & Co., LLP Page E-194
13 (25) Form T-1, Statement of Eligibility
under the Trust Indenture Act
of 1939 Page E-195
14 (27) Financial Data Schedule *
* Included in electronic filing only.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
provisions described in this Registration Statement or otherwise,
the Registrant has been advised that in the opinion
of the Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling
persons 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 of whether
such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names
as required by the underwriter to permit prompt delivery to
each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this
registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this
Registration Statement or Amendment to be signed on its behalf
by the undersigned, thereunto duly authorized, in Washington,
DC, on January 21, 1999.
IBF VI - GUARANTEED INCOME FUND
By /s/ Simon A. Hershon, President
By /s/ David C. Chabut,
Chief Financial Officer
POWER OF ATTORNEY
Know all men by these presents, that each person whose
signature appears below constitutes and appoints Simon A. Hershon
and Laura Quinting and (with full power to each of them to act
alone) as his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place
and stead in any and all capacities to sign any or all
amendments or post-effective amendments to this Registration
Statement, including registration statements filed or
amendments made pursuant to Rule 462 under the
Securities Act of 1933, as amended, and to file the same with
all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, to sign
any and all applications, registration statements, notices or
other document necessary or advisable to comply with the applicable
state securities laws, and to file the same, together with all
other documents in connection therewith, with the appropriate state
securities authorities, granting unto said attorneys-in-fact and agents
or any of them, or their or his substitute or substitutes, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person,
thereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof. Pursuant to the
requirements of the Securities Act of 1933, this registration
statement or Amendment has been signed below by the following
persons in the capacities and on the dates indicated.
/s/ Simon A. Hershon, Director January 21, 1999
/s/ Ehud D. Laska, Director January 21, 1999
/s/ Ivan M. Krasner, Director January 21, 1999
E-1
Exhibit No. 1
IBF VI - Guaranteed Income Fund
Form SB-2
IBF VI - GUARANTEED INCOME FUND
(A Delaware corporation)
DEALER-MANAGER AGREEMENT
CLASS A 10% INCOME PARTICIPATING NOTES DUE 2005
$50,000,000
Coleman & Company Securities, Inc. _________________, 1999
__________________________
New York, New York ________
Gentlemen:
IBF VI - Guaranteed Income Fund (the "Company"), a Delaware
corporation, desires to offer for sale to the public $50,000,000
in principal amount of its Class A 10% Income Participating Notes
Due 2005 ("Notes"). The Company desires to offer the Notes for
sale through Coleman & Company Securities, Inc. (the "Dealer-
Manager"). The offering will be undertaken by the Dealer-Manager
as agent for the Company on a "best efforts, $1,000,000 Notes
minimum-$50,000,000 Notes maximum" basis so that in the event
$1,000,000 for the purchase of Notes is not received within the
agreed period, no Notes will be sold, and the Dealer-Manager will
not be entitled to any compensation. On these premises, we set
forth the terms of our proposed agreement as follows:
1. Appointment of Dealer-Manager. The Company hereby
appoints the Dealer-Manager, on all the terms and conditions
hereinafter set forth, as the Company's exclusive agent to use
its best efforts to sell on behalf of the Company the Notes.
2. Representations and Warranties of the Company. As an
inducement to, and to obtain the reliance of, the Dealer-Manager
in connection herewith, the Company represents, warrants, and
agrees with the Dealer-Manager as follows:
(a) The Company has prepared and filed or will prepare
and file with the United States Securities and Exchange
Commission (the "Commission"), a registration statement on
form SB-2, including a prospectus, relating to the Notes in
accordance with section 5 of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and
regulations of the Commission thereunder. As used in this
Agreement, the term "Registration Statement" means such
Registration Statement, including exhibits, financial
statements, and schedules, as amended, when it becomes
effective, and the term "Prospectus" means the Prospectus
filed with the Registration Statement. (The Registration
Statement and Prospectus, as defined herein, are hereinafter
collectively referred to as the "Filing.") The Company will
utilize its best efforts to cause the Filing to become
effective and to maintain its effectiveness during the term
hereof.
(b) The Commission has not issued and, to the
knowledge and belief of the Company, does not have cause to
issue an order preventing or suspending the use of the
Filing; the Filing conforms or shall conform in all material
respects with the requirements of the Securities Act and the
rules and regulations of the Commission promulgated
thereunder (the "Regulations") and does not include any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and on the Effective Date (as hereinafter
defined) and at all times subsequent thereto up to the
Termination Date (as hereinafter defined), the Filing and
any amendment or supplement thereto will fully comply with
the provisions of the Securities Act and the Regulations and
will not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements made, in light of the circumstances under which
they are made, not misleading; provided, that the foregoing
representations and warranties shall not apply to statements
in or omissions from the Filing, or any amendments or
supplements thereto, made in reliance on and in conformity
with information furnished herein or in writing to the
Company by or on behalf of the Dealer-Manager expressly for
use therein.
(c) The Company has no subsidiaries.
(d) Except as reflected in or contemplated by the
Filing, since the respective dates as of which information
is given in the Filing, there has not been and on the
Effective Date there will not have been, any material
adverse change in the condition of the Company, financial or
otherwise, or in the results of its operations.
(e) The authorized capital stock of the Company
consists of 1,000 shares of common stock, par value $1.00,
of which 1,000 shares are issued and outstanding. On the
date of issuance, the Notes will be duly and validly
authorized and, when issued and paid for in accordance with
this Agreement and the Indenture dated _______________, 1999
("Indenture"), will be validly issued, fully paid, and non-
assessable, and will conform to the description thereof
contained in the Filing; and the execution and delivery of,
and compliance with, this Agreement and the Indenture and
the issuance of the Notes will not conflict or constitute a
breach of or default under the certificate of incorporation
or bylaws of the Company, any indenture, agreement, or other
instrument by which the Company is bound, any order, decree,
rule, or regulation of any court, or any law or
administrative regulation applicable to the Company.
(f) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the state of Delaware, with an authorized and
outstanding capitalization as set forth in the Filing and
with full corporate power and authority to carry on the
business in which it is now engaged. The Company is
qualified or licensed and in good standing as a foreign
corporation in each jurisdiction in which the ownership or
leasing of any properties or the character of its operations
requires such qualification or licensing. The Company has
all requisite corporate power and authority and all material
and necessary authorizations, approvals, orders, licenses,
certificates, and permits of and from all governmental
regulatory officials and bodies to own or lease its
properties and conduct its business as described in the
Prospectus, and the Company is doing business in strict
compliance with all such authorizations, approvals, orders,
licenses, certificates, and permits and all federal, state,
and local laws, rules, and regulations concerning the
business in which the Company is engaged. The disclosures
in the Filing concerning the effects of federal, state, and
local regulation on the Company's business as currently
conducted and as contemplated are correct in all material
respects and do not omit to state a material fact. The
Company has all corporate power and authority to enter into
this Agreement and the Indenture and to carry out the
provisions and conditions hereof and thereof, and all
consents, authorizations, approvals, and orders required in
connection therewith have been obtained or will have been
obtained prior to the time of closing as provided in
subparagraph 3(f) hereto. No consent, authorization, or
order of, and no filing with any court, governmental agency,
or other body is required for the issuance of the Notes
pursuant to the Filing, except with respect to applicable
federal and state securities laws.
(g) The Filing contains an audited balance sheet of
the Company as of January 20, 1999, including the notes
thereto, together with the opinion of Radin, Glass & Co.,
LLP, independent certified public accountants, with respect
to the audited balance sheets. Said balance sheet has been
prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods
indicated, except as otherwise indicated in the notes
thereto. The balance sheet presents fairly as of its date
the financial condition of the Company. The Company did not
have, as of the date of such balance sheet, except as and to
the extent reflected or reserved against therein (including
the notes thereto), any liabilities or obligations (absolute
or contingent) of a nature customarily reflected in a
balance sheet or the notes thereto prepared in accordance
with generally accepted accounting principles.
(h) Except as set forth in the Filing, there is no
action, suit, or proceeding before any court or government
agency, authority, or body pending or, to the knowledge of
the Company, threatened which might result in judgments
against the Company which are not adequately covered by
insurance, or which is pending or, to the knowledge of the
Company, threatened by any public body, agency, or
authority, which might result in any material adverse change
in the condition (financial or otherwise), business, or
prospects of the Company or would materially affect its
properties or assets.
(i) The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof will not
conflict with, or constitute a breach of, any of the terms,
provisions, or conditions of any agreement or instrument to
which the Company is a party, nor will any one nor any
combination of the foregoing have such a result.
(j) The Company has the legal right, power, and
authority to enter into this Agreement, and the execution,
delivery, and, except as otherwise indicated in this
Agreement, performance thereof by the Company, do not
require the consent or approval of any governmental body,
agency, or authority which has not been obtained.
(k) The Company is not a party to any material
contract (meaning thereby a contract materially affecting
its business or properties) that is not referred to in the
Filing. No default of any material significance exists in
the due performance and observance by the Company of any
term, covenant, or condition of any such contract; all such
contracts are in full force and effect and are binding on
the parties thereto in accordance with their terms; and, to
the knowledge of the Company, no other party to any such
material contract has threatened or instituted any action or
proceeding wherein the Company is alleged to be in default
thereunder.
(l) No stock options or warrants are or will be
outstanding or issued during the period covered by this
Agreement, except as set forth in the Filing.
(m) The Company is not delinquent in the filing of any
tax return or in the payment of any taxes, knows of no
proposed redetermination or assessment of taxes, and has
paid or provided for adequate reserves for all known tax
liabilities.
3. Employment of the Dealer-Manager. On the foregoing
representations, agreements, and warranties and subject to the
terms and conditions of this Agreement:
(a) The Company hereby employs the Dealer-Manager as
exclusive agent to sell for the Company's account the Notes.
The Dealer-Manager agrees to use its best efforts as agent,
promptly following the receipt of written notice of the
Effective Date of the Registration Statement, to offer for
sale the Notes, subject to the terms, provisions, and
conditions hereinafter set forth.
(b) In the event the Dealer-Manager does not find
subscribers for Notes having a total aggregate purchase
price of $1,000,000 within three months following the
Effective Date (unless extended by agreement of the Company
and Dealer-Manager for an additional period not to exceed
three months), this Agreement shall terminate, and neither
party to this Agreement shall have any obligation to the
other party hereunder. Appropriate arrangements for placing
the funds received for the Notes in escrow until a total of
$1,000,000 in cash has been received shall be made prior to
the commencement of the offering hereunder, with provision
for refund to the purchasers as set forth above or for
delivery to the Company of the net proceeds therefrom if
$1,000,000 or more in cash has been received from the sale
of Notes hereunder within the specified time period.
(c) The Notes shall be offered to the general public
at face value without discount; provided, that the Dealer-
Manager may, at its discretion, waive its commission under
subsection 3(e), below, and offer Notes at face value less
the amount of the commission so waived.
(d) The Dealer-Manager is granted irrevocable
authority as agent for the Company to declare any contract
to purchase Notes offered to the public hereunder in default
if the Notes are not paid for in cash within seven business
days after the contract date. The Dealer-Manager shall
instruct investors to make all checks tendered as payment
for the Notes payable to "__________, Escrow Account" and
shall deposit promptly, but in no event later than noon of
the next business day following receipt, the gross proceeds
from sales of Notes in the account with the escrow agent
until $1,000,000 (or such other amount as may be required by
the securities commission of any state in which the Notes
are offered and sold) in good funds is received from said
sale, and, thereafter, the escrow account shall continue to
be used as a clearing account into which all checks for the
payment for securities shall likewise be promptly deposited.
Subject to and after the sale of Notes with a minimum public
offering price of $1,000,000 and the release by the escrow
agent of such funds under the terms of the escrow agreement,
as funds are collected and subscriptions accepted by the
Company, the net proceeds (gross proceeds minus the Dealer-
Manager's sales commissions and non-accountable expense
allowance as provided herein) shall be promptly paid to the
Company and the Dealer-Manager's sales commission and non-
accountable expense allowance shall be paid to it.
(e) As its compensation, and subject to the sale of
$1,000,000 of Notes, the Dealer-Manager shall be entitled to
receive a commission of 8% of the principal amount of the
Notes sold and for which payment is made to the Company. In
addition, the Dealer-Manager will receive a nonaccountable
expense allowance of 1% of the gross proceeds of the
offering for expenses incurred in connection with the
offering. Finally, the Dealer-Manager shall be entitled to
receive 2.5% of the Company's annual Net Income for each
calendar year through 2005. For purposes of this provision,
Net Income shall be calculated in the same manner as set
forth in the Indenture.
(f) The Company agrees to issue or have issued Notes
in such names and denominations as may be specified by the
Dealer-Manager and to deliver certificates representing the
Notes to the purchasers in accordance with the Indenture
against payment of the purchase price of the Warrants net of
the Dealer-Manager's sales commissions (including the Dealer-
Manager's expense allowance), as provided herein. Such
payment and delivery shall be at such place and at such date
and time within seven days following the sale of the minimum
amount of Notes as provided in subsection 3(b) hereof as
shall be agreed on by the Dealer-Manager and the Company
(the "time of closing"). Thereafter, further payments and
deliveries shall be made at such address and at such
subsequent times and dates similarly agreed on so as to
effect the prompt transmittal of funds and of certificates
for Notes to the purchasers (a "subsequent time of
closing"). All requisitions for Notes by the Dealer-Manager
shall be in writing and shall be given to the Company before
the delivery date.
(g) The Dealer-Manager is hereby authorized to
organize a selling group of participating dealers consisting
exclusively of members of the National Association of
Securities Dealers, Inc., or foreign dealers who are not
eligible for membership in said association. Such
participating dealers are to act as agents and shall be
allowed to purchase on an equal basis from the Dealer-
Manager at a price which provides a concession out of the
Dealer-Manager's commissions in such amount as the Dealer-
Manager may determine.
(h) The Company has appointed Continental Stock
Transfer & Trust Company, 2 Broadway, New York, NY 10004, as
Trustee under the Indenture and registrar of the Notes.
4. Representations and Warranties of the Dealer-Manager. As an
inducement to, and to obtain the reliance of, the Company in
connection herewith, the Dealer-Manager represents, warrants, and
agrees with the Company as follows:
(a) The Dealer-Manager is duly registered as a
securities broker-dealer in accordance with the Securities
Exchange Act of 1934, as amended.
(b) The Dealer-Manager will not publish, issue, or
circulate or authorize the publication, issuance, or
circulation of any circular, notice, or advertisement which
offers the Notes for sale which shall not have previously
been approved by the Company and its counsel, except for so-
called "tombstone" advertisements and which has not been
approved by the Commission prior to its use, if such prior
approval is required.
(c) The Dealer-Manager is in good standing and in full
and current compliance in all material respects with the
rules of the National Association of Securities Dealers,
Inc.
(d) The Dealer-Manager shall confirm sales to
customers only in those states in which it is licensed to do
so as a securities broker or dealer and shall ensure that
all participating dealers similarly confirm sales to
customers only in states in which they are duly licensed to
do so. The Dealer-Manager and participating dealers in the
distribution of the offering will comply with sections 8,
24, 25 and 36 of Article III of the NASD Rules of Fair
Practice and rule 15c2-8 promulgated under the Securities
Exchange Act of 1934, as amended.
5. Covenants by the Company. In further consideration of
the agreements by the Dealer-Manager herein contained, the
Company covenants as follows:
(a) At least 48 hours prior to submission of the
Filing or any amendment thereto to the Commission, the
Dealer-Manager shall be provided with a copy of such Filing
or amendment, and no such Filing will be made to which the
Dealer-Manager shall object within the 48 hour period.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective and will not at
any time, whether before, on, or after the Effective Date,
file any amendments to the Filing or supplement thereto
without first obtaining the Dealer-Manager's approval. Such
approval shall be obtained by compliance with subsection (a)
above. Said Filings or any amendments or supplements
thereto shall be in compliance with the Securities Act and
the Regulations of the Commission to the best of the
Company's knowledge, information, and belief.
(c) As soon as the Company is advised thereof, the
Company will advise the Dealer-Manager and confirm the
advice in writing (i) as to when the Registration Statement
has become effective; (ii) of any request made by the
Commission for amendment of or supplement to the Filing, or
for additional information with respect thereto; and (iii)
of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
or of any amendment thereto or the initiation, or threat of
initiation, of any proceedings for such purpose, and the
Company will use its best efforts to prevent the issuance of
any such order and to obtain as soon as possible the lifting
thereof, if issued.
(d) The Company will deliver to the Dealer-Manager
prior to the Effective Date, copies of the preliminary
prospectus and, on the Effective Date of the Registration
Statement, without charge and from time to time thereafter,
copies of the Prospectus and amendments thereto as required
by law to be delivered in connection with sales, in such
quantities as the Dealer-Manager may reasonably request.
(e) The Company will deliver to the Dealer-Manager,
without charge, one manually executed copy of the
Registration Statement, together with all required exhibits
as filed and all amendments thereto with exhibits which have
not previously been furnished to the Dealer-Manager, and
will deliver to the Dealer-Manager, without charge, such
reasonable number of copies of the Registration Statement
and Prospectus (excluding exhibits) and all amendments
thereto as the Dealer-Manager may reasonably request.
(f) Prior to the Termination Date if, in the opinion
of the Dealer-Manager, any statements are contained in the
Filing which are misleading or inaccurate in light of the
circumstances under which they are made, the Dealer-Manager
may require the Company to amend or supplement the Filing to
correct said statements and may request such reasonable
number of copies of any amended or supplemented Filing as
may be necessary to comply with the Securities Act and
Regulations.
(g) The Company will have used and will use its best
efforts to secure on or before the Effective Date of the
Registration Statement, and to maintain for such period as
may be required for distribution, such exemptions,
registrations and qualifications of the Notes as will permit
the public offering thereof under the "Blue Sky Laws" of
such states as the Dealer-Manager and the Company shall
agree upon; provided, that no such qualification shall be
required if, as a result thereof, the Company would be made
subject to qualify for authority to do business as a foreign
corporation in a jurisdiction where it is not now so subject
or so qualified. The Company's counsel shall furnish copies
of any such filings or other materials submitted in
connection with this subparagraph to the Dealer-Manager and
shall notify the Dealer-Manager, in writing, of those states
in which the Notes may be offered and sold pursuant to the
terms hereof. The Dealer-Manager agrees to cooperate in
securing such exemptions, registrations and qualifications
in accordance with the terms hereof.
(h) The Company will pay all costs and expenses
incident to the performance of its obligations under this
Agreement, including (i) all expenses incident to its
issuance and delivery of the Notes; (ii) the fees and
expenses incident to the preparation, printing, and filing
of the Filing (including all exhibits thereto) with the
Commission, the various "blue sky" agencies and the National
Association of Securities Dealers, Inc.; and (iii) the costs
of furnishing to the Dealer-Manager copies of the Filing and
preliminary and definitive prospectus. The Company shall
not, however, be required to pay for transfer tax stamps on
any sales of the Notes which the Dealer-Manager may make or
to pay for any of the Dealer-Manager's expenses or those of
any other dealers other than as hereinabove set forth.
(i) For a period of five years from the Effective
Date, the Company will furnish the Dealer-Manager (i) all
reports and financial statements, if any, the Company files
with or furnishes to the Commission or any stock exchange on
which the securities of the Company are listed; (ii) such
other periodic and special reports as the Company from time
to time furnishes generally to holders of any class of its
stock; (iii) every press release and every news item and
article with respect to the affairs of the Company which is
released by the Company; and (iv) such additional documents
and information with respect to the affairs of the Company
and any future subsidiaries of the Company as the Dealer-
Manager may from time to time reasonably request.
(j) The Company will mail or otherwise make generally
available to its security holders as soon as practicable,
but in no event more than 15 months after the close of the
fiscal quarter ending after the Effective Date of the
Registration Statement, an earnings statement, which need
not be audited, covering a period of at least 12 months
beginning after the Effective Date of the Registration
Statement.
(k) The Company will, as promptly as practicable after
the end of each fiscal year, release an appropriate report
covering its operations for such year and send to the Dealer-
Manager, to all holders of record of the Company's Notes,
and to recognized statistical services, a report covering
operations for such year, including a balance sheet of the
Company and statements of earnings and of retained earnings,
as examined by the Company's independent accountants.
(l) The Company will apply the net proceeds from the
offering received by it in substantially the manner set
forth in the Prospectus.
(m) The Company will comply with the reporting
requirements to which it is subject pursuant to section
15(d) of the Securities Exchange Act of 1934, as amended.
(n) The Company will, as soon as practicable following
the filing of the Filing with the Commission, make
application for and receive a CUSIP number for its
securities from Standard and Poor's Corporation.
6. Reciprocal Indemnification.
(a) The Company agrees to indemnify and hold harmless
the Dealer-Manager and any person who may be deemed to
control the Dealer-Manager within the meaning of section 15
of the Securities Act; and
(b) The Dealer-Manager agrees to indemnify and hold
harmless the Company, its directors, such of its officers as
sign the Registration Statement, and any person who may be
deemed to control the Company within the meaning of the
Securities Act;
against any and all losses, claims, damages, or liabilities
whatsoever (including, but not limited to, any and all legal or
other expenses whatsoever reasonably incurred in investigating,
preparing, or defending against any actions or threatened actions
or claims) based on or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Filing (as from time to time amended or supplemented) or any
application or other document filed in any state in order to
register, qualify, or obtain an exemption for the Notes under the
laws thereof ("blue sky application"), as the case may be, or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by any of the
indemnifying parties of any provision of the Securities Act or
any Regulation, or of common or statutory law, and against any
and all losses, claims, damages, or liabilities whatsoever to the
extent of the aggregate amount paid in settlement of any action,
commenced or threatened, or of any claim whatsoever based on any
such untrue statement or omission or any such violation
(including, but not limited to, any and all legal or other
expenses whatsoever reasonably incurred in investigating,
preparing, or defending against any such actions or claims) if
such settlement is effected with the written consent of any
indemnifying party. The indemnification by the Dealer-Manager
shall extend only to any such statements or omissions made in
reliance on and in conformity with written information furnished
to the Company by the Dealer-Manager or on behalf of the Dealer-
Manager for use in the remaining statements in or omissions from
the Filing or blue sky applications.
Each of the foregoing indemnifications is expressly
conditioned on the indemnifying party being notified by the
person seeking indemnification, by letter or by telegram
confirmed by letter, of any action commenced against such person,
within a reasonable time after such person shall have been served
with the summons or other first legal process giving information
as to the nature and basis of the claim, and in any event at
least ten days prior to the entry of any judgment in such action,
but the failure to give such notice shall not relieve any
indemnifying party of any liability which such party may have to
such person otherwise than on account of this indemnity
agreement. Any party whose indemnification is being relied on
shall assume the defense of any action or claim, including the
employment of counsel and the payment of all expenses. Any
indemnified party shall have the right to separate counsel in any
such action and to participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment thereof shall have
been specifically authorized by the indemnifying party, or (ii)
the indemnifying party shall have failed to assume the defense
and employ counsel.
The indemnifications contained above in this section 6, and
the representations and warranties of the Company set forth in
this Agreement, will remain operative and in full force and
effect, regardless of any investigations made by or on behalf of
the Dealer-Manager or any controlling person thereof, or by or on
behalf of the Company or its directors or officers and will
survive delivery of and payment for the Notes.
7. Conditions to Obligations of the Company. The
obligation of the Company to deliver the Notes being sold by the
Dealer-Manager hereunder is subject to the conditions that (i)
the Registration Statement shall have become effective not later
than 5:00 p.m., Eastern Time, the twenty-fifth business day
following the date hereof or such later time and date as is
acceptable to the Company, and (ii) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and shall be in effect at the time of closing or at each
subsequent time of closing, if any, and no proceeding for that
purpose shall have been initiated or, to the knowledge of the
Company, threatened by the Commission, it being understood that
the Company shall use its best efforts to prevent the issuance of
any such stop order and, if one has been issued, to obtain the
lifting thereof. In the event that the Notes (or any part
thereof) are not delivered by virtue of the provisions of clause
(i) of this paragraph, the Company shall not be liable to the
Dealer-Manager.
8. Conditions to the Obligations of the Dealer-Manager.
The several obligations of the Dealer-Manager hereunder are
subject to the accuracy, as of the date hereof, at the time of
closing and at each subsequent time of closing, if any, of the
representations and warranties made herein by the Company; to the
accuracy in all material respects of the statements of the
officers of the Company made pursuant to the provisions hereof;
to the performance by the Company of its obligations hereunder
required on its part to be performed or complied with prior to or
at such time of closing; and to the following additional
conditions:
(a) The Filing shall have fully complied with the
provisions of the Securities Act and the Regulations and
shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that statements or omissions
in the Filing in reliance on, and in conformity with,
information furnished in writing by or on behalf of the
Dealer-Manager expressly for use therein shall not be
considered within the scope of this provision.
(b) The Dealer-Manager shall not have advised the
Company that the Filing, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the
opinion of the Dealer-Manager, is material or omits to state
a fact which, in the opinion of the Dealer-Manager, is
material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) The Registration Statement shall have become
effective not later than the date specified in section 7, or
such later time and date as is acceptable to the Dealer-
Manager and, prior to the time of closing, no stop order
shall have been issued by the Commission with respect to the
Filing, no proceedings therefor shall have been initiated by
the Commission, and to the knowledge of the Company or the
Dealer-Manager, no such proceedings shall be contemplated by
the Commission.
(d) Each contract to which the Company is a party and
which is filed as an exhibit to the Registration Statement
shall be in full force and effect at such time of closing,
or shall have been terminated, in accordance with its terms;
no party to any such contract shall have given any notice of
cancellation or, to the knowledge of the Company, shall have
threatened to cancel any such contract; and there shall be
no material misstatement in any description of a contract
contained in the Filing.
(e) From the date hereof until the time of closing and
until each subsequent time of closing, if any, no material
litigation or legal proceedings of any nature shall have
been commenced or threatened against the Company, nor any
litigation or legal proceedings which are directed against
the consummation of the transactions herein contemplated and
no substantial change, financial or otherwise, shall have
occurred in or relating to the condition, business, or
assets of the Company which shall render such condition,
business, or assets substantially less favorable, in the
Dealer-Manager's judgment, than as set forth in the Filing.
(f) The Dealer-Manager shall have been furnished at
the time of closing and at each subsequent time of closing,
if any, with such certificates as the Dealer-Manager may
reasonably request evidencing the continued accuracy in all
material respects of the respective representations and
warranties made herein by the Company and the fulfillment of
the conditions stated above in subsections (a), (c), (d),
and (e) of this section.
(g) The Dealer-Manager shall have received at the time
of closing an opinion of the firm of Lehman, Jensen &
Donahue, L.C., counsel for the Company, dated as of the time
of closing and in a form and substance satisfactory to
counsel for the Dealer-Manager, to the following effect:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of Delaware, with power and
authority to own its properties, hold its franchises,
and conduct its business, as described in the
Prospectus, and, to the best of the knowledge and
information of said counsel, is duly qualified to do
business and is in good standing in every other
jurisdiction where the location of its properties or
the conduct of its business makes such qualification
necessary;
(ii) The Notes have been duly and validly
authorized and are fully paid and non-assessable; and
the description of the Notes made in the Filing
accurately sets forth matters respecting such
securities required to be set forth therein;
(iii) This Agreement has been duly
authorized, executed, and delivered by the Company and
constitutes a valid and binding agreement of the
Company (except that counsel need render no opinion as
to the enforceability of the indemnification
provisions);
(iv) The certificates to be issued for the
Notes are in proper form;
(v) The final Registration Statement has
become effective under Securities Act and, to the best
knowledge of such counsel, no stop orders suspending
the effectiveness of the offering have been issued and
no proceeding for that purpose has been instituted or
pending or contemplated under the Securities Act; and
(vi) The Registration Statement and each
amendment or supplement thereto (except for the
financial data included therein and any information
furnished to the Company by or on behalf of the Dealer-
Manager), complies as to form in all material respects
with the requirements of the Securities Act and the
rules and regulations of the Commission promulgated
thereunder.
The Dealer-Manager shall have received, at each
subsequent time of closing, if any, an opinion of such
counsel dated as of the time of such closing and addressed
to the Dealer-Manager, confirming their opinion delivered at
the time of closing as to the matters set forth in
subparagraphs (i), (ii), (iii), (iv), (v), and (vi) of
subsection 8(g).
Such counsel may rely, as to matters of local law, on
opinions of local counsel satisfactory to it, and, as to
matters of fact, on affidavits or certificates of officers
of the Company.
(h) All proceedings taken and to be taken in
connection with the sale of the Notes pursuant to this
Agreement shall be satisfactory as to legal aspects to the
Dealer-Manager.
(i) If any of the foregoing conditions set forth in
subsections (a), (b), (c), (d), and (e), of this section 8
shall not have been fulfilled as above provided at or prior
to the time of the initial public offering as defined below,
the condition of the securities market or any material
factor, whether of an economic, military, or political
nature or otherwise, bearing on the marketability of the
Notes proposed to be sold shall be such as, in the Dealer-
Manager's reasonable judgment, would seriously affect the
offering, sale, or delivery to the public of the Notes, or
would render such delivery at the initial public offering
price impracticable or inadvisable, the Dealer-Manager shall
have the right to terminate its obligations under this
Agreement forthwith, by written or telegraphic notice to the
Company, without any liability on the part of the Dealer-
Manager. The term "initial public offering" means the first
publication authorized by the Dealer-Manager, following
effectiveness of the Filing, of a newspaper advertisement
relating to the Notes to be offered pursuant to this
Agreement, or the first allotments or confirmations by the
Dealer-Manager of any of the Notes to customers or dealers
or others by letter or telegram, whichever shall occur
first. The Dealer-Manager agrees to notify the Company in
writing immediately after the initial public offering shall
have been made.
(j) If at any time prior to the time of closing (i)
trading in securities on the New York Stock Exchange shall
be suspended, (ii) minimum prices shall be established on
said exchange by action of said exchange or the Commission,
(iii) a bank moratorium shall be declared by federal
authorities, (iv) a significant decline in the United States
or international economies results in a domestic securities
market or other commercial conditions in the opinion of the
Dealer-Manager that are materially adverse or detrimental to
the offering, or (v) there shall be an outbreak of
hostilities between the United States and any foreign power
which has resulted in the declaration of a national
emergency or declaration of war or there shall be an
outbreak of civil disorder within the United States which
has resulted in the declaration of a national emergency, the
Dealer-Manager shall have the right to terminate its
obligations under this Agreement forthwith, by written or
telegraphic notice to the Company, without any liability on
the part of the Dealer-Manager.
If the sale of the Notes as herein contemplated shall not be
carried out because of any of the conditions set forth in
sections 7 or 8 hereof shall not have been fulfilled, then the
Company shall not be liable to the Dealer-Manager for lost
profits or expenses incurred by it in connection herewith.
9. Definitions.
(a) "Effective Date" shall mean the date, following
any required waiting period, when the Commission shall have
declared the Registration Statement effective.
(b) "Termination Date" shall mean the date specified
below which first occurs:
(i) [18 months from Effective Date, unless
extended for 3 months]
(ii) The date on which the escrow period set
forth in subsection 3(b) expires without the minimum
number of Notes having been subscribed to;
(iii) The date on which all offered Notes
are sold.
10. Miscellaneous Provisions.
(a) This Agreement contains the entire agreement of
the parties hereto and cannot be altered, except in a
writing making specific reference hereto.
(b) The representations and warranties contained
herein shall be effective regardless of any investigations
made or participation in the preparation of the Filing, or
any amendment or supplement thereto and shall survive the
Termination Date and the delivery of and payment for the
Notes contemplated herein for a period of three years.
(c) This Agreement has been and is made solely for the
benefit of the Dealer-Manager, the Company, and each's
respective successors, and, to the extent expressly provided
herein, for the benefit of the directors of the Company, the
officers of the Company who signed the Filing or authorized
the same, the persons controlling the Dealer-Manager or the
Company, and each's respective successors and assigns, and
no other person or persons shall acquire or have any right
under or by virtue of this Agreement. The term "successor"
shall not include any purchaser, as such, of any Notes from
the Dealer-Manager.
(d) Each of the parties hereto respectively warrant
and represent that the persons executing this Agreement on
its behalf have full power and authority to execute,
acknowledge, and deliver this Agreement for and on behalf of
such corporation.
(e) Except as otherwise provided herein, all
communications hereunder shall be in writing and, if sent to
the Dealer-Manager, shall be mailed, delivered, or
telegraphed to it at the following address:
Coleman & Company Securities, Inc.
__________________________
New York, New York ________
or, if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed to it at the following address:
IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, NW
Washington, D.C. 20009
with copies to:
Mark E. Lehman, Esq.
Lehman, Jensen & Donahue, L.C.
8 East Broadway, Suite 620
Salt Lake City, Utah 84111
(f) In the event that any party prevails in any action
or suit brought by them to obtain relief for any default
under the terms hereof, the non-prevailing party shall be
liable to the prevailing party for all costs, including
reasonable attorneys' fees, incurred in connection with such
action or suit.
(g) The representations, warranties, and undertakings
herein on the part of the Company and the Dealer-Manager
shall not create any rights in or duties to any person to a
party to this Agreement. It is expressly understood and
agreed that such persons as shall purchase Notes in the
public offering described herein, shall be entitled to rely
solely and only on the statements and representations made
in the Filing.
(h) This Agreement may be executed in one or more
counterparts, which taken together shall constitute one and
the same instrument.
If the foregoing correctly sets forth our understanding,
please so indicate in the space provided below for that purpose,
whereupon this document shall constitute a binding agreement
among us.
Very truly yours,
IBF VI - Guaranteed Income Fund
By____________________________
Simon A. Hershon, President
The foregoing Dealer-Manager Agreement is accepted as of the
date first above written.
Coleman & Company Securities, Inc.
By___________________________
Duly Authorized Officer
E-14
Exhibit No. 2
IBF VI - Guaranteed Income Fund
Form SB-2
SELLING GROUP AGREEMENT
$50,000,000
CLASS A 10% INCOME PARTICIPATING NOTES DUE 2005
IBF VI - Guaranteed Income Fund
_________________, 1999
Gentlemen:
We have agreed to act as the agent of IBF VI - Guaranteed
Income Fund, a Delaware corporation (the "Company"), pursuant to
an Dealer-Manager Agreement between the Company and us (the
"Dealer-Manager"), which may be obtained from us on written
request, for the sale to the public of $50,000,000 in principal
amount of the Company's Class A 10% Income Participating Notes
Due 2005 ("Notes"). The Notes and certain of the terms on which
they are being purchased and offered are more fully described in
the enclosed prospectus, subject to the following further terms:
1. We invite your participation as a member of the selling
group ("Selling Group Member") in offering to the public a part
of the Notes. As a Selling Group Member, you will be allowed,
subject to the sale of $1,000,000 of Notes in the public
offering, a concession on all Notes sold by you in the offering
as set forth on Exhibit A attached hereto. Subject to the sale
of $1,000,000 of Notes, payment of such concession will be made
within five business days after each closing contemplated by the
Dealer-Manager Agreement. The Notes will be offered to the
public on a "best efforts" basis, subject to the approval of
certain legal matters by us and subject to certain other terms
and conditions. We reserve the right to withdraw, cancel, or
modify any offer.
2. You confirm that you are a Selling Group Member who is
actually engaged in the investment banking or securities business
and who is a member in good standing of the National Association
of Securities Dealers, Inc. (the "NASD"). In making sales, you
hereby agree to comply with the provisions of rule 15c2-8
promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the provisions of Article III
of the Rules of Fair Practice of the NASD, particularly the
interpretation of the Board of Governors of the NASD respecting
"free-riding" and "withholding" and sections 8, 24, 25, and 36
thereof.
3. All orders will be strictly subject to confirmation,
and we reserve the right in our uncontrolled discretion to reject
any order, in whole or in part, to accept or reject orders in the
order of their receipt or otherwise, and to allot. Neither you
nor any other person is authorized by the Company or us to give
any information or make any representations other than those
contained in the prospectus in connection with the sale of any of
the Notes. No Selling Group Member is authorized to act as agent
for us when offering the Notes to the public or otherwise.
4. You shall instruct all customers to make all checks
payable to the escrow agent as set forth below. Payment at the
initial offering price for Notes purchased by your customers
shall be made, with respect to payments by checks, by
transmitting your customers' checks payable to
"__________________, Escrow Account,"
_______________________________, New York, NY __________, or,
with respect to cash payments or customer account credit
balances, by wire transfer to such account, all by noon of the
next business day following receipt in accordance with the
provisions of rules 15c2-4 and 15c3-1 promulgated by the
Commission pursuant to the Exchange Act. Certificates for the
Notes to be purchased by your customers shall be delivered
promptly against payment to the Company of the net proceeds of
sale after each closing contemplated by the Dealer-Manager
Agreement, subject to the sale of the minimum amount of Notes.
In addition, there shall be provided to the escrow agent and us,
with the proceeds from your customers, a written account of each
sale, which account shall set forth the name and address of the
purchasers, the amount of Notes purchased by each, the amount
paid therefor, and whether the amount paid was in the form of
cash or evidenced by a check. Furthermore, you will
simultaneously forward to the Company and us the form of purchase
agreement adopted by the Company for use in the offering.
5. This Agreement shall terminate contemporaneously with
the termination of the Dealer-Manager Agreement, unless earlier
terminated at any time by us by written or telegraphic notice to
you.
6. You agree to indemnify us and to hold us harmless, and
each person, if any, who controls us, within the meaning of
section 15 of the Securities Act, against any and all losses,
claims, damages, or liabilities to which we may become subject as
a result of your breach of this Agreement or of your failure to
perform any of the promises contained herein, and will also
reimburse us, or any controlling person thereof, for any legal or
other expenses reasonably incurred in connection with
investigating or defending such action or claim.
7. You are not authorized to give any information or to
make any statements other than those contained in the prospectus
or any amendments thereto.
8. We shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the
offering. We shall be under no liability to you, except for lack
of good faith and for obligations expressly assumed by us in this
Agreement. Nothing contained in this section is intended to
operate as, and the provisions of this section shall not in any
way whatsoever, constitute a waiver by you of compliance with any
provision of the Securities Act or Exchange Act, or of the rules
and regulations of the Commission issued thereunder.
9. On application to us, we shall inform you as to the
jurisdictions in which we believe the Notes have been qualified
for sale under, or are exempt from the requirements of, the
respective securities laws of such jurisdictions, but we assume
no responsibility or obligation as to your right to sell Notes in
any jurisdiction.
10. You confirm that you are familiar with rule 15c2-8
under the Exchange Act relating to the distribution of
preliminary and final prospectuses and confirm that you have
complied therewith and will comply therewith.
11. We hereby confirm that we will make available to you
such number of copies of the prospectus (as amended or
supplemented) as you may reasonably request for the purposes
contemplated by the Securities Act or the Exchange Act or the
rules and regulations of the Commission thereunder.
12. Any notice from us to you shall be deemed to have been
duly given if mailed or telegraphed to you at the address to
which this Agreement is mailed.
Please confirm your agreement hereto by by signing and
returning to us by fax and overnight courier at ________________,
New York, New York _________, the enclosed duplicate of this
Agreement. On receipt thereof, this Agreement and such signed
duplicate copy will evidence the understanding between us.
Very truly yours,
Coleman & Company Securities, Inc.
By____________________________________
Duly Authorized Officer
Selling Group Member's Allocation: __________ Notes.
AGREED AND ACCEPTED as of the date first-above written.
Selling Group Member:
________________________________________
By____________________________________
Duly Authorized Officer
Address of Selling Group Member
_______________________________________
_______________________________________
_______________________________________
Exhibit A
COMPENSATION TERMS
1. Concession. Selling Group Member will receive a concession
equal to _______% of the gross sale price of Notes offered and
sold by the Selling Group Member.
2. Additional Compensation. Selling Group Member is entitled
to the following additional compensation:
E-17
Exhibit No. 3
IBF VI - Guaranteed Income Fund
Form SB-2
CERTIFICATE OF INCORPORATION
OF
IBF PARTICIPATING INCOME FUND II
ARTICLE I
NAME
The name of the Corporation is IBF Participating Income Fund II.
ARTICLE II
REGISTERED OFFICE AND AGENT FOR SERVICE
The address of the Corporation's registered office in the
State of Delaware is in the county of New Castle, at 1013 Centre
Road, Wilmington, Delaware 10805. The name of its registered
agent at such address is Corporation Service Company.
ARTICLE III
CORPORATE PURPOSES
The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
ARTICLE IV
CAPITAL STOCK
The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is one
thousand (1,000) consisting solely of common stock, par value
$1.00 per share.
ARTICLE V
BOARD OF DIRECTORS
The governing board of the Corporation shall be known as
directors, and the number of directors may from time to time be
increased or decreased in such manner as shall be provided by the
Bylaws of the Corporation, provided that the number of directors
may not be less than one nor more than fifteen. Effective upon
filing of this Certificate, the members of the board of directors
shall be as follows:
Simon A. Hershon 1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
Ehud D. Laska 1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
The property and business of the Corporation shall be
controlled and managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized:
(a) To make, alter, amend or repeal the Bylaws of the
Corporation; provided, that no adoption, amendment, or repeal of
the Bylaws shall invalidate any act of the board of directors
that would have been valid prior to such adoption, amendment, or
repeal.;
(b) To determine the rights, powers, duties, rules and
procedures that affect the power of the board of directors to
manage and direct the property, business, and affairs of the
Corporation, including the power to designate and empower
committees of the board of directors, to elect, appoint and
empower the officers and other agents of the Corporation, and to
determine the time and place of, and the notice requirements for
board meetings, as well as the manner of taking board action; and
(c) To exercise all such powers and do all such acts as may
be exercised by the Corporation, subject to the provisions of the
laws of the State of Delaware, this Certificate of Incorporation,
and the Bylaws of the Corporation.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify and may advance expenses to
its officers and directors to the fullest extent permitted by law
in existence either now or hereafter.
ARTICLE VIII
LIMITATION ON PERSONAL LIABILITY FOR DIRECTORS
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of a fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which
the director derived any improper personal benefit. If the
Delaware General Corporation Law is amended hereafter to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at
the time of such repeal or modification.
ARTICLE IX
CERTIFICATE SUBJECT TO AMENDMENT
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute or by the Certificate of Incorporation, and except as
otherwise provided by this Certificate of Incorporation, all
rights conferred upon stockholders herein are granted subject to
this reservation.
ARTICLE X
INCORPORATOR
The sole incorporator of the Corporation is:
Simon A. Hershon 1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
IN WITNESS WHEREOF, the undersigned, acting as the sole
incorporator of the Corporation, signs this Certificate of
Incorporation as his act and deed this 8th day of June, 1998.
/s/ Simon A. Hershon
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
IBF PARTICIPATING INCOME FUND II
IBF PARTICIPATING INCOME FUND II, a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify that:
The amendment to the Corporation's Certificate of
Incorporation set forth below was duly adopted by resolutions
approved by the Corporation's Board of Directors and stockholders
in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware:
Amendment. The Certificate of Incorporation of the
corporation is amended by striking Article I in its entirety and
replacing therefor:
ARTICLE I
NAME
The name of the Corporation is IBF VI -
Guaranteed Income Fund.
IN WITNESS WHEREOF, IBF Participating Income Fund has caused
this Certificate to be signed by its duly authorized officer this
21st day of December, 1998.
IBF PARTICIPATING INCOME FUND II
/s/ Simon A. Hershon, President
Exhibit No. 4
IBF VI - Guaranteed Income Fund
Form SB-2
BYLAWS OF
IBF V - IGUARANTEED INCOME FUND
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of
the Corporation shall be in the county of New Castle, at 1013
Centre Road, Wilmington, Delaware 10805. The name of its
resident agent at such address is Corporation Service Company.
Section 2. Other Offices. Other offices may be
established by the Board of Directors at any place or places,
within or without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders
shall be held either at the principal executive office or any
other place within or without the State of Delaware which may be
designated either by the Board of Directors pursuant to authority
hereinafter granted to said Board, or by the written consent of
all stockholders entitled to vote thereat, given either before or
after the meeting and filed with the Secretary of the
Corporation; provided, however, that if no place is designated or
so fixed, stockholder meetings shall be held at the principal
executive office of the Corporation.
Section 2. Annual Meetings. The annual meetings of the
stockholders shall be held each year on a date and a time
designated by the Board of Directors. At the annual meeting of
stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought
before an annual meeting, business must be specified in the
Notice of Meeting given by or at the direction of the Board of
Directors, otherwise properly brought before the meeting by or at
the direction of the Board of Directors or otherwise properly
brought before the meeting by a stockholder. For business to be
properly brought before the annual meeting by a stockholder,
including the nomination of a director, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive
offices of the Corporation not more than five business days after
the giving of notice of the date and place of the meeting to the
stockholders. A stockholder's notice to the Secretary shall
inform as to each matter the stockholder proposes to bring before
the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business,
(iii) the class and numbers of shares of the Corporation which
are beneficially owned by the stockholder and (iv) any material
interest of the stockholder in such business. Notwithstanding
anything in the Bylaws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the
procedures set forth in this Section. The chairman of the annual
meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section, and if he
should so determine, he shall so declare to the meeting and any
such business not properly before the meeting shall not be
transacted.
Section 3. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes whatsoever, may be
called at any time by the Chairman of the Board, the President or
by a majority of the Board of Directors, or by such other person
as the Board of Directors may designate.
For business to be properly brought before a special meeting
by a stockholder, including the nomination of a director, the
stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the
principal executive offices of the Corporation not more than five
business days after the giving of notice of the date and place of
the meeting to the stockholders. A stockholder's notice to the
Secretary shall inform as to each matter the stockholder proposes
to bring before a special meeting (i) a brief description of the
business desired to be brought before the special meeting and the
reasons for conducting such business at the special meeting, (ii)
the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder and (iv) any
material interest of the stockholder in such business.
Section 4. Notice of Stockholders' Meetings. Written
notice of each annual or special meeting signed by the President
or a Vice President, or the Secretary, or an Assistant Secretary,
or by such other person or persons as the Directors shall
designate, shall be delivered personally to, or shall be mailed
postage prepaid, to each stockholder of record entitled to vote
at such meeting. If mailed, the notice shall be directed to the
stockholder at his address as it appears upon the records of the
Corporation, and service of such notice by mail shall be complete
upon such mailing, and the time of the notice shall begin to run
from the date it is deposited in the mail for transmission to
such stockholder. Personal delivery of any such notice to any
officer of a corporation or association, or to any member of a
partnership, shall constitute delivery of such notice to such
corporation, association or partnership. All such notices shall
be delivered or sent to each stockholder entitled thereto not
less than ten nor more than sixty days before each annual or
special meeting, and shall specify the purpose or purposes for
which the meeting is called, the place, the day and the hour of
such meeting.
Any stockholder may waive notice of any meeting by a writing
signed by him, or his duly authorized attorney, either before or
after the meeting.
Section 5. Voting. At all meetings of stockholders,
every stockholder entitled to vote shall have the right to vote
in person or by written proxy the number of shares standing in
his own name on the stock records of the Corporation. There
shall be no cumulative voting. Such vote may be viva voce or
ballot; provided, however, that all elections for Directors must
be by ballot upon demand made by a stockholder at any election
and before the voting begins.
Section 6. Quorum. The presence in person or by proxy
of the holders of a majority of the shares entitled to vote at
any meeting shall constitute a quorum for the transaction of
business. The stockholders present at a duly called or held
meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 7. Ratification and Approval of Actions at
Meetings. Whenever the stockholders entitled to vote at any
meeting consent, either by: (a) A writing on the records of the
meeting or filed with the Secretary; (b) Presence at such meeting
and oral consent entered on the minutes; or (c) Taking part in
the deliberations at such meeting without objection; the doings
of such meeting shall be as valid as if had at a meeting
regularly called and noticed. At such meeting, any business may
be transacted which is not excepted from the written consent or
to the consideration of which no objection for want of notice is
made at the time. If any meeting be irregular for want of notice
or of such consent, provided a quorum was present at such
meeting, the proceedings of the meeting may be ratified and
approved and rendered likewise valid and the irregularity or
defect therein waived by a writing signed by all parties having
the right to vote at such meeting. Such consent or approval of
stockholders may be by proxy or attorney, but all such proxies
and powers of attorney must be in writing.
Section 8. Proxies. At any meeting of the stockholders,
any stockholder may be represented and vote by a proxy or proxies
appointed by an instrument in writing, which instrument shall be
filed with the Secretary of the Corporation. In the event that
any such instrument in writing shall designate two or more
persons to act as proxies, a majority of such persons present at
the meetings, or, if only one shall be present, then that one
shall have and may exercise all of the powers conferred by such
written instrument upon all of the persons so designated unless
the instrument shall otherwise provide. No such proxy shall be
valid after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person
executing it specifies therein the length of time for which it is
to continue in force, which in no case shall exceed seven years
from the date of its execution. Subject to the above, any proxy
duly executed is not revoked and continues in full force and
effect until an instrument revoking it or a duly executed proxy
bearing a later date is filed with the Secretary of the
Corporation.
Section 9. Action Without a Meeting. Any action which
may be taken by the vote of stockholders at a meeting, may be
taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power;
provided that if any greater proportion of voting power is
required for such action at a meeting, then such greater
proportion of written consents shall be required. This general
provision for action by written consent shall not supersede any
specific provision for action by written consent contained in the
Delaware General Corporation Law. In no instance where action is
authorized by written consent need a meeting of stockholders be
called or noticed.
ARTICLE III
DIRECTORS
Section 1. Powers. Incorporation, these Bylaws, and the
provisions of the Delaware General Corporation Law as to action
to be authorized or approved by the stockholders, and subject to
the duties of Directors as prescribed by these Bylaws, all
corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation must be managed
and controlled by, the Board of Directors. Without prejudice to
such general powers, but subject to the same limitations, it is
hereby expressly declared that the Directors shall have the
following powers:
First. To select and remove all officers, agents and
employees of the Corporation, prescribe such powers and duties
for them as may not be inconsistent with law, the Certificate of
Incorporation or the Bylaws, fix their compensation and require
from them security for faithful service.
Second. To conduct, manage and control the affairs and
business of the Corporation, and to make such rules and
regulations therefor not inconsistent with law, the Certificate
of Incorporation or the Bylaws, as they may deem best.
Third. To change the registered office of the Corporation
in the State of Delaware from one location to another, and the
registered agent in charge thereof, as provided in Article I,
Section 1, hereof; to fix and locate from time to time one or
more subsidiary offices of the Corporation within or without the
State of Delaware, as provided in Article I, Section 2, hereof,
to designate any place within or without the State of Delaware,
for the holding of any stockholders' meeting or meetings; and to
adopt, make and use a corporate seal, and to prescribe the forms
of certificates of stock, and to alter the form of such seal and
of such certificates from time to time, as in their judgment they
may deem best, provided such seal and such certificates shall at
all times comply with the provisions of law.
Fourth. To authorize the issuance of shares of stock of the
Corporation from time to time, upon such terms as may be lawful,
in consideration of cash, services rendered, personal property,
real property or leases thereof, or in the case of shares issued
as a dividend, against amounts transferred from surplus to
capital.
Fifth. To borrow money and incur indebtedness for the
purpose of the Corporation, and to cause to be executed and
delivered therefor, in the corporate name, promissory notes,
bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidence of debt and securities therefor.
Sixth. To make the Bylaws of the Corporation, subject to
the Bylaws, if any, adopted by the stockholders.
Seventh. To, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees,
each committee to consist of one or more of the Directors of the
Corporation, which, to the extent provided in the resolution or
resolutions, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the
Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers on which the Corporation
desires to place a seal. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 2. Number and Qualification of Directors. The
number of Directors constituting the whole Board shall be not
less than one nor more than fifteen. The first Board shall
consist of two directors. Thereafter, within the limits above
specified, the number of Directors shall be determined by
resolution of the Board of Directors or by the stockholders at
the annual meeting. All directors must be at least 18 years of
age. Unless otherwise provided in the Certificate of
Incorporation, directors need not be stockholders.
Section 3. Election and Term of Office. Each Director
shall be elected at each annual meeting of stockholders by a
plurality of votes cast at the election, but if for any reason
the Directors are not elected at the annual meeting of
stockholders, each Director may be elected at any special meeting
of stockholders by a plurality of votes cast at the election.
The term of office of each director shall be one year and until
the next annual meeting of stockholders. Notwithstanding the
foregoing, each Director shall hold office until his successor is
elected and qualified.
Section 4. Vacancies. Vacancies in the Board of
Directors may be filled by a majority of the remaining Directors,
though less than a quorum, or by a sole remaining Director, and
each Director so elected shall hold office until his successor is
elected at an annual or a special meeting of the stockholders.
A vacancy or vacancies in the Board of Directors shall be
deemed to exist in case of the death, resignation or removal of
any Director, or if the authorized number of Directors be
increased.
If the Board of Directors accepts the resignation of a
Director tendered to take effect at a future time, the Board or
the stockholder shall have power to elect a successor to take
office when the resignation is to become effective, and such
successor shall hold office during the remainder of the resigning
Director's term of office.
Section 5. Place of Meeting. Regular meetings of the
Board of Directors shall be held at any place within or without
the State of Delaware as designated from time to time by
resolution of the Board or by written consent of all members of
the Board. In the absence of such designation regular meetings
shall be held at the principal executive office of the
Corporation. Special meetings of the Board may be held either at
a place so designated or at the principal executive office.
Members of the Board, or any committee designated by the
Board, may participate in a meeting of such Board or committee by
means of a conference telephone network or a similar
communications method by which all persons participating in the
meeting can hear each other. Such participation shall constitute
presence in person at such meeting. Each person participating in
such meeting shall sign the minutes thereof, which minutes may be
signed in counterparts.
Section 6. Organization Meeting. Immediately following
each annual meeting of stockholders, the Board of Directors shall
hold a regular meeting for the purpose of organization, election
of officers, and the transaction of other business. Notice of
such meetings is hereby dispensed with.
Section 7. Special Meetings. Special meetings of the
Board of Directors for any purpose or purposes may be called at
any time by the Chairman of the Board, President or by any two or
more Directors.
Written notice of the time and place of special meetings
shall be delivered personally to the Directors or sent to each
Director by mail or other form of written communication (such as
by telegraph, Federal Express package, or other similar forms of
written communication), charges prepaid, addressed to him at his
address as it is shown upon the records of the Corporation, or if
it is not so shown on such records or is not readily
ascertainable, at the place in which the meetings of the
Directors are regularly held. In case such notice is mailed or
otherwise communicated in writing, it shall be deposited in the
United States mail or delivered to the appropriate delivering
agent at least seventy-two hours prior to the time of the holding
of the meeting. In case such notice is Personally delivered, it
shall be so delivered at least twenty-four hours prior to the
time of the holding of the meeting. Such mailing, personal
delivery or other written communication as above provided shall
be due, legal and personal notice to such Director.
Section 8. Notice of Adjournment. Notice of the time
and place of holding an adjourned meeting need not be given to
absent Directors if the time and place be fixed at the meeting
adjourned.
Section 9. Ratification and Approval. Whenever all
Directors entitled to vote at any meeting consent, either by: (a)
A writing on the records of the meeting or filed with the
Secretary; (b) Presence at such meeting and oral consent entered
on the minutes; or (c) Taking part in the deliberations at such
meeting without objection; the doings of such meeting shall be as
valid as if had at a meeting regularly called and noticed. At
such meeting any business may be transacted which is not excepted
from the written consent or to the consideration of which no
objection for want of notice is made at the time.
If any meeting be irregular for want of notice or of such
consent, provided a quorum was present at such meeting, the
proceedings of the meeting may be ratified and approved and
rendered likewise valid and the irregularity or defect therein
waived by a writing signed by all Directors having the right to
vote at such meeting.
Section 10. Action Without a Meeting. Any action
required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all the members
of the Board or of such committee. Such written consent shall be
filed with the minutes of proceedings of the Board or committee.
Section 11. Quorum. A majority of the authorized number
of Directors shall be necessary to constitute a quorum for the
transaction of business, except to adjourn as hereinafter
provided. Every act or decision done or made by a majority of
the Directors present at a meeting duly assembled at which a
quorum is present shall be regarded as the act of the Board of
Directors, unless a greater number be required by law or by the
Certificate of Incorporation.
Section 12. Adjournment. A quorum of the Directors may
adjourn any Directors' meeting to meet again at a stated day and
hour provided, however, that in the absence of a quorum, a
majority of the Directors present at any Directors' meeting,
either regular or special, may adjourn from time to time until a
quorum shall be present.
Section 13. Fees and Compensation. The Board shall have
the authority to fix the compensation of Directors. The
Directors may be paid their expenses, if any, of attendance at
each meeting of the Board and may be paid a fixed sum for
attendance at each meeting of the Board or a stated salary as
Director. No such payment shall preclude any Director from
serving the Corporation in any other capacity as an officer,
agent, employee or otherwise, and receiving the compensation
therefor. Members of committees may be compensated for attending
committee meetings.
Section 14. Removal. Any Director may be removed from
office with or without cause by the vote of stockholders
representing not less than two-thirds of the issued and
outstanding capital stock entitled to voting power.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Corporation
shall be a President and a Secretary. The Corporation may also
have, at the discretion of the Board of Directors, a Treasurer,
one or more Vice Presidents, one or more Assistant Secretaries,
one or more Assistant Treasurers, a Chairman of the Board, and
such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article. Officers other than the
Chairman of the Board need not be Directors. One person may hold
two or more offices.
Section 2. Election. The officers of this Corporation,
except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article, shall be
chosen annually the Board of Directors and each shall hold his
office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and
qualified.
Section 3. Subordinate Officers, Etc. The Board of
Directors may appoint such other officers as the business of the
Corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as are
provided in these Bylaws or as the Board of Directors may from
time to time determine.
Section 4. Removal and Resignation. Any officer may be
removed, either with or without cause, by a majority of the
Directors at the time in office. Any officer may resign at any
time by giving written notice to the Board of Directors, the
President or the Secretary of the Corporation. Any such
resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because
of death, resignation, removal, disqualification or any other
cause shall be filled in the manner prescribed in the Bylaws for
regular appointments to such office.
Section 6. Chairman of the Board. The Chairman of the
Board, if there be such a position, shall preside at all meetings
of the Board of Directors and exercise and perform such other
powers and duties as may be from time to time assigned to him by
the Board of Directors or prescribed by these Bylaws.
Section 7. President. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the
Chairman of the Board, the President shall, subject to the
control of the Board of Directors, have general supervision,
direction and control of the business and officers of the
Corporation. In the absence of the Chairman of the Board, or if
there be none, he shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. He
shall be ex officio a member of all committees, including the
executive committee, if any, and shall have the general powers
and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or by these
Bylaws.
Section 8. Vice-President. In the absence or disability
of the President, the Vice Presidents, in order of their rank as
fixed by the Board of Directors, or if not ranked, the Vice
President designated by the Board of Directors, shall perform all
the duties of the President, and when so acting shall have all
the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed
for them respectively by the Board of Directors or these Bylaws.
Section 9. Secretary. The Secretary shall keep, or
cause to be kept, a book of minutes at the principal executive
office or such other place as the Board of Directors may order,
of all meetings of Directors, committees and stockholders, with
the time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of
those present at Directors' and committee meetings, the number of
shares present or represented at stockholders' meetings and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the
principal executive office (1) a share register, or a duplicate
share register, revised annually, showing the names of the
stockholders, alphabetically arranged, and their places of
residence, the number and classes of shares held by each, the
number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered
for cancellation; (2) a copy of the Certificate of Incorporation
and all amendments thereto certified by the Secretary of State;
and (3) a copy of the Bylaws and all amendments thereto certified
by the Secretary.
The Secretary shall give, or cause to be given, notice of
all the meetings of the stockholders, committees and Board of
Directors required by the Bylaws or by law to be given, and he
shall keep the seal of the Corporation in safe custody, and shall
have such other powers and perform such other duties as may be
prescribed by the Board of Directors or the Bylaws.
Section 10. Treasurer. The Treasurer shall keep and
maintain, or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of
the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus
and surplus arising from a reduction of stated capital, shall be
classified according to source and shown in a separate account.
The books of account shall at all times be open to inspection by
any Director.
The Treasurer shall deposit all monies and other valuables
in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, shall render to the President and
Directors, whenever they request it, an account of all of his
transactions as Treasurer and of the financial condition of the
Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or
the Bylaws.
ARTICLE V
MISCELLANEOUS
Section 1. Record Date and Closing Stock Books. The
Board of Directors may fix a day, not more than sixty (60) days
prior to the holding of any meeting of stockholders, and not
exceeding thirty (30) days preceding the date fixed for the
payment of any dividend or distribution or for the allotment of
rights, or when any change or conversion or exchange of shares
shall go into effect, as a record date for the determination of
the stockholders entitled to notice of and to vote at any such
meeting, or entitled to receive any such dividend or
distribution, or any such allotment of rights, or to exercise the
rights in respect to any such change, conversion or exchange of
shares, and in such case only stockholders of record on the date
so fixed shall be entitled to notice of and to vote at such
meetings, or to receive such dividend, distribution or allotment
of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
Corporation after any record date is fixed as aforesaid. The
Board of Directors may close the books of the Corporation against
transfers of shares during the whole or any part of any such
period.
Section 2. Inspection of Corporate Records.
Stockholders shall have the right to inspect such corporate
records at such times and based upon such limitations of such
rights as may be set forth in the Delaware General Corporation
Law from time to time.
Section 3. Checks, Drafts, Etc. All checks, drafts or
other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the Board of Directors.
Section 4. Contract, Etc., How Executed. The Board of
Directors, except as otherwise provided in these Bylaws may
authorize any officer or officers, agent or agents to enter into
any contract, deed or lease or execute any instrument in the name
of and on behalf of the Corporation, and such authority may be
general or confined to specific instances; and unless so
authorized by the Board of Directors, no officer, agent or
employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit
to render it liable for any purpose or to any amount.
Section 5. Certificates of Stock. A certificate or
certificates for certificated shares of the capital stock of the
Corporation shall be issued to each stockholder when any such
shares are fully paid up. All such certificates shall be signed
by the Chairman of the Board, President or a Vice President, and
by the Treasurer, Secretary or an Assistant Secretary, or be
authenticated by facsimiles of their respective signatures;
provided, however, that every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer
agent or transfer clerk, and by a registrar, which registrar
cannot be the Corporation itself.
Certificates for certificated shares may be issued prior to
full payment under such restrictions and for such purposes as the
Board of Directors or the Bylaws may provide; provided, however,
that any such certificate so issued prior to full payment shall
state the amount remaining unpaid and the terms of payment
thereof.
The Board of Directors is hereby authorized, pursuant to the
provisions of Delaware General Corporation Law Section 158, to
issue uncertificated shares of some or all of the shares of any
or all of its classes or series.
Section 6. Representation of the Shares of Other
Corporation. The President or any Vice President, and the
Secretary or Assistant Secretary, of this Corporation are
authorized to vote, represent and exercise on behalf of this
Corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this
Corporation. The authority herein granted to said officers to
vote or represent on behalf of this Corporation any and all
shares held by this Corporation in any other corporation or
corporations may be exercised either by such officers in person
or by any person authorized so to do by proxy or power of
attorney duly executed by said officers.
ARTICLE VI
AMENDMENTS
Section 1. Power of Stockholders. New Bylaws may be
adopted or these Bylaws may be amended or repealed by the vote of
stockholders entitled to exercise a majority of the voting power
of the Corporation or by the written assent of such stockholders.
Section 2. Power of Directors. Subject to the right of
stockholders as provided in Section 1 of this Article VI to
adopt, amend or repeal Bylaws, Bylaws may be adopted, amended or
repealed by the Board of Directors.
ARTICLE VII
TRANSACTIONS INVOLVING DIRECTORS AND OFFICERS
Section 1. Validity of Contracts and Transactions. No
contract or transaction between the Corporation and one or more
of its Directors or officers, or between the Corporation and any
other corporation, firm, association, or other organization in
which one or more of its Directors or officers are Directors or
officers or are financially interested, shall be void or voidable
solely for this reason, or solely because the Director or officer
is present at or participates in the meeting of the Board of
Directors or committee that authorizes or approves the contract
or transaction, or because their votes are counted for such
purpose, provided that:
(a) the material facts as to his, her, or their
relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the
committee and noted in the minutes, and the Board of Directors or
committee, in good faith, authorizes the contract or transaction
in good faith by the affirmative vote of a majority of
disinterested directors, even though the disinterested directors
are less than a quorum;
(b) the material facts as to his, her, or their
relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved
or ratified in good faith by the majority of shares entitled to
vote, counting the votes of the common or interested directors or
officers; or
(c) the contract or transaction is fair as to the
Corporation as of the time it is authorized or approved.
Section 2. Determining Quorum. Common or interested
directors may be counted in determining the presence of a quorum
at a meeting of the board of directors or of a committee which
authorizes, approves or ratifies the contract or transaction.
ARTICLE VIII
INSURANCE AND OTHER FINANCIAL ARRANGEMENTS
The Corporation may purchase and maintain insurance or make
other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses
incurred by him in his capacity as a Director, officer, employee
or agent, or arising out of his status as such, whether or not
the Corporation has the authority to indemnify him against such
liability and expenses. The insurance or other financial
arrangements may be provided by the Corporation or by any other
person or entity approved by the Board of Directors including a
subsidiary of the corporation.
Such other financial arrangements made by the Corporation
may include the following:
(a) The creation of a trust fund;
(b) The establishment of a program of self-insurance;
(c) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
Corporation; or
(d) The establishment of a letter of credit, guaranty or
surety. No financial arrangement may provide protection for a
person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with
respect to the advancement of expenses or indemnification ordered
by a court as provided in Article IX hereof.
ARTICLE IX
INDEMNIFICATION
Section 1. Action Not By Or On Behalf Of Corporation.
The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or
was a Director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), fees, judgments, fines, and
amounts paid in settlement, actually and reasonably incurred by
him in connection with the action, suit or proceeding if he acted
in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Corporation, and with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent
does not, of itself, create an presumption that the person did
not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 2. Action By Or On Behalf Of Corporation. The
Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
expenses, including amounts paid in settlement and attorneys'
fees actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that
indemnification may not be made for any claim, issue or matter as
to which such a person shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the Corporation or for amounts paid in
settlement to the Corporation, unless and only to the extent that
the court in which the action or suit was brought or other court
of competent jurisdiction determines upon application that, in
view of all of the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
Section 3. Successful Defense. To the extent that a
Director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Section 1 or 2 of this Article
IX, or in defense of any claim, issue or matter therein, he must
be indemnified by the Corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense.
Section 4. Determination Of Right To Indemnification In
Certain Circumstances. Any indemnification under Section I or 2
of this Article IX, unless ordered by a court or advanced
pursuant to this Article IX, must be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is
proper in the circumstances. The determination must be made by
the Stockholders, the Board of Directors by a majority vote of a
quorum consisting of Directors who were not parties to the act,
suit or proceeding, or if a majority vote of a quorum of
Directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written opinion, or if
a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
Section 5. Advance Payment of Expenses. Expenses of
officers and Directors incurred in defending a civil or criminal
action, suit or proceeding must be paid by the Corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or
on behalf of the Director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by the Corporation as
authorized in this Article. The provisions of this subsection
(5) of this Article IX shall not affect any rights to advancement
of expenses to which corporate personnel other than Directors or
officers may be entitled under any contract or otherwise by law.
Section 6. Not Exclusive.
(a) The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to any other section
of this Article IX or any provision of law:
(i) does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation or any statute,
bylaw, agreement, vote of stockholders or disinterested Directors
or otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection
2 of this Article IX or for the advancement of expenses made
pursuant to this Article IX may not be made to or on behalf of
any Director or officer if a final adjudication establishes that
his acts or omissions involved intentional misconduct, fraud or a
knowing violation of the law and was material to the cause of
action; and
(ii) continues for a person who has ceased to be a Director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
(b) Without limiting the foregoing, the Corporation is
authorized to enter into an agreement with any Director, officer,
employee or agent of the Corporation providing indemnification
for such person against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement that result from
any threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative or investigative,
including any action by or in the right of the Corporation, that
arises by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to the full extent
allowed by law, except that no such agreement shall provide for
indemnification for any actions that constitute intentional
misconduct, fraud, or a knowing violation of law and was material
to the cause of action.
Section 7. Certain Definitions. For the purposes of
this Article IX, (a) any Director, officer, employee or agent of
the Corporation who shall serve as a director, officer, employee
or agent of any other corporation, joint venture, trust or other
enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is
or was in any way interested, or (b) any Director, officer,
employee or agent of any subsidiary corporation, joint venture,
trust or other enterprise wholly owned by the Corporation, shall
be deemed to be serving as such Director, officer, employee or
agent at the request of the Corporation, unless the Board of
Directors of the Corporation shall determine otherwise. In all
other instances where any person shall serve as director,
officer, employee or agent of another corporation, joint venture,
trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise
interested, if it is not otherwise established that such person
is or was serving as such director, officer, employee or agent at
the request of the Corporation, the Board of Directors of the
Corporation may determine whether such service is or was at the
request of the Corporation, and it shall not be necessary to show
any actual or prior request for such service. For purposes of
this Article IX references to a corporation include all
constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person
who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or
agent of another corporation, joint venture, trust or other
enterprise shall stand in the same position under the provisions
of this Article IX with respect to the resulting or surviving
corporation as he would if he had served the resulting or
surviving corporation in the same capacity. For purposes of this
Article IX, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the
corporation" shall include any service as a Director, officer,
employee or agent of the Corporation which imposes duties on, or
involves services by, such Director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article IX.
E-36
Exhibit No. 5
IBF VI - Guaranteed Income Fund
Form SB-2
PROCEEDS ESCROW AGREEMENT
PROCEEDS ESCROW AGREEMENT ("Agreement") dated as of
________________, 1999, by and between IBF VI - Guaranteed Income
Fund, a Delaware corporation (the "Company"), Coleman & Company
Securities, Inc., a ______________ corporation (the "Dealer-
Manager"), and Continental Stock Transfer & Trust Company
("Escrow Agent").
Recitals
WHEREAS, the Company intends to engage in a public offering
of certain of its securities (the "Offering"), which Offering
contemplates minimum aggregate offering proceeds of $1,00,000 and
maximum aggregate offering proceeds of $50,000,000;
WHEREAS, there will be deposited into an escrow account with
Escrow Agent from time to time funds from prospective investors
who wish to subscribe for securities offered in connection with
the Offering ("Subscribers"), which funds will be held in escrow
and distributed in accordance with the terms hereof; and
WHEREAS, the Escrow Agent is willing to act as an escrow
agent in respect of the Escrow Funds (as hereinafter defined)
upon the terms and conditions set forth herein;
Agreement
NOW, THEREFORE, for good and valuable considerations, the
receipt and adequacy of which are hereby acknowledged by each of
the parties hereto, the parties hereto hereby agree as follows:
1. Appointment of Escrow Agent. The Company hereby
appoints the Escrow Agent as escrow agent in accordance with the
terms and conditions set forth herein, and the Escrow Agent
hereby accepts such appointment.
2. Delivery of Escrow Funds.
(a) The Dealer-Manager and all selected dealers
participating in the Offering shall deliver to the Escrow Agent
checks or wire transfers made payable to the order of
"_______________________" representing subscriptions for the
securities of the Company, together with the Subscriber's mailing
address and social security number or tax identification number
(if the aforesaid information is not provided, the check will be
returned or the amount of the wire transfer refunded). The funds
delivered to the Escrow Agent shall be deposited by the Escrow
Agent into a non-interest bearing account at
__________________________ entitled
_______________________________ (the "Escrow Account") and shall
be held and distributed by the Escrow Agent in accordance with
the terms hereof. The collected funds deposited into the Escrow
Account are referred to herein as the "Escrow Funds." The Escrow
Agent shall acknowledge receipt of all Escrow Funds by notifying
the Company of deposits into the Escrow Account. The Escrow
Agent shall give such notice, in substantially the form attached
hereto as Exhibit A, via facsimile on the next business day
following the business day on which the Escrow Funds are
deposited into the Escrow Account.
(b) The Escrow Agent shall have no duty or responsibility
to enforce the collection or demand payment of any funds
deposited into the Escrow Account. If, for any reason, any check
deposited into the Escrow Account shall be returned unpaid to the
Escrow Agent, the sole duty of the Escrow Agent shall be to
return the check to the Dealer-Manager.
3. Release of Escrow Funds. The Escrow Funds shall be
paid by the Escrow Agent in accordance with the following:
(a) Provided that the Escrow Funds total at least
$1,000,000 at or before 2:00 P.M., New York City time, on
________________, 1999, or on any date prior thereto, the Escrow
Funds (or any portion thereof) shall be paid to the Company or as
otherwise instructed by the Company and the Dealer-Manager ,
within one (1) business day after the Escrow Agent receives a
written release notice in substantially the form of Exhibit B
attached hereto (a "Release Notice") signed by an authorized
person of the Company, and thereafter, the Escrow Account will
remain open for the purpose of depositing therein the
subscription prices for additional securities sold by the Company
in the Offering, which additional Escrow Funds shall be paid to
the Company and Dealer-Manager (or as otherwise instructed by the
Company and Dealer-Manager) upon receipt by the Escrow Agent of a
Release Notice as described above.
(b) If the Escrow Agent has not received a Release Notice
from the Company at or before 2:00 P.M., New York City time, on
_________________, 1999, and the Escrow Funds do not total at
least $1,000,000 at such time and date, then the Escrow Funds
shall be returned to Subscribers, with interest.
In the event that at any time the Escrow Agent shall receive from
the Company written instructions signed by an individual who is
identified on Exhibit C attached hereto as a person authorized to
act on behalf of the Company, requesting the Escrow Agent to
refund to an individual or entity the amount of a collected check
or other funds received by the Escrow Agent from said individual
or entity and deposited into the Escrow Account, the Escrow Agent
shall comply with such instructions provided that said funds are
in the Escrow Account and have not been paid by the Escrow Agent.
4. Acceptance by Escrow Agent. The Escrow Agent hereby
accepts and agrees to perform its obligations hereunder, provided
that:
(a) The Escrow Agent may act in reliance upon any signature
believed by it to be genuine, and may assume that any person who
has been designated by the Company to give any written
instructions, notice or receipt, or make any statements in
connection with the provisions hereof has been duly authorized to
do so. The Escrow Agent shall have no duty to make inquiry as to
the genuineness, accuracy or validity of any statements or
instructions or any signatures on statements or instructions.
The names and true signatures of each individual authorized to
act on behalf of the Company are set forth in Exhibit C attached
hereto.
(b) The Escrow Agent may act relative hereto in reliance
upon advice of counsel in reference to any matter connected
herewith. The Escrow Agent shall not be liable for any mistake
of fact or error of judgment or law, or for any acts or omissions
of any kind, unless caused by its willful misconduct or gross
negligence.
(c) The Company agrees to indemnify and hold the Escrow
Agent harmless from and against any and all claims, losses,
costs, liabilities, damages, suits, demands, judgments or
expenses (including but not limited to reasonable attorneys'
fees) claimed against or incurred by Escrow Agent arising out of
or related, directly or indirectly, to this Agreement.
(d) In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be
entitled to refrain from taking any action other than to keep
safely the Escrow Funds until it shall be directed otherwise by a
court of competent jurisdiction.
(e) The Escrow Agent shall have no duty, responsibility or
obligation to interpret or enforce the terms of any agreement
other than Escrow Agent's obligations hereunder, and the Escrow
Agent shall not be required to make a request that any monies be
delivered to the Escrow Account, it being agreed that the sole
duties and responsibilities of the Escrow Agent shall be (i) to
accept wire transfers, checks or other instruments for the
payment of money delivered to the Escrow Agent for the Escrow
Account and deposit the Escrow Funds into the Escrow Account, and
(ii) to disburse or refrain from disbursing the Escrow Funds as
stated above, provided that the funds received by the Escrow
Agent have been collected and are available for withdrawal.
5. Fees. The Escrow Agent shall be entitled to receive
from the Company a total of $_____ in fees for the services to be
rendered by the Escrow Agent hereunder, and the Escrow Agent
hereby acknowledges receipt of such amount from the Company as
payment in full of such fees.
6. Resignation. The Escrow Agent may resign at any time
by giving 30 days' notice of such resignation to the Company.
Upon providing such notice, the Escrow Agent shall have no
further obligations hereunder except to hold the Escrow Funds
which it has received as of the date on which it provided the
notice of resignation as depositary. In such event, the Escrow
Agent shall not take any action until the Company and Dealer-
Manager have designated a banking corporation, trust company,
attorney or other person as successor. Upon receipt of such
written instructions signed by the Company and Dealer-Manager,
the Escrow Agent shall promptly deliver the Escrow Funds to such
successor and shall thereafter have no further obligations
hereunder. If such instructions are not received within 30 days
following the effective date of such resignation, then the Escrow
Agent may deposit the Escrow Funds and any other amounts held by
it pursuant to this Agreement with a clerk of a court of
competent jurisdiction pending the appointment of a successor.
In either case provided for in this Section 6, the Escrow Agent
shall be relieved from all liability thereafter arising with
respect to the Escrow Funds.
7. Termination. The Company may terminate the appointment
of the Escrow Agent hereunder upon written notice signed by an
individual on behalf of the Company, each of whose name and
signature are included in Exhibit C attached hereto, specifying
the date upon which such termination shall take effect. In the
event of such termination, the Company and Dealer-Manager shall,
within 30 days of such notice, appoint a successor escrow agent
and the Escrow Agent shall, upon receipt of written instructions
signed by the Company and Dealer-Manager, turn over to such
successor escrow agent all of the Escrow Funds. Upon receipt of
the Escrow Funds, the successor escrow agent shall become the
Escrow Agent hereunder and shall be bound by all of the
provisions hereof and the Escrow Agent shall be relieved of all
further obligations and released from all liability thereafter
arising with respect to the Escrow Funds.
8. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder, shall
be in writing and shall be deemed to have been duly given when
delivered personally, on the next business day after delivery to
a recognized overnight courier or mailed first class (postage
prepaid) or when sent by facsimile to the parties (which
facsimile copy shall be followed, in the case of notices or other
communications sent to the Escrow Agent, by delivery of the
original) at the following addresses (or to such other address as
a party may have specified by notice given to the other parties
pursuant to this provision).
if to the Company:
IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, NW
Washington, DC 20009
Attention: Simon A. Hershon, President
Fax: (202) 588-5088
with a copy to:
Lehman, Jensen & Donahue, L.C.
620 Judge Building
8 East Broadway
Salt Lake City, UT 84111
Attention: Mark E. Lehman, Esq.
Fax: (801) 363-1715
if to the Dealer-Manager:
Coleman & Company Securities, Inc.
__________________________
New York, New York ________
Attention: __________________
Fax: (212) ________________
if to the Escrow Agent:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attention: Corporate Trust Department
Fax: (212) 509-4000
9. General.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York
applicable to agreements made and to be entirely performed within
such state.
(b) This Agreement sets forth the entire agreement and
understanding of the parties in respect to the matters contained
herein or covered hereby and supersedes all prior agreements,
arrangements and understandings related thereto.
(c) All of the terms and conditions of this Agreement shall
be binding upon, and inure to the benefit of and be enforceable
by, the parties hereto.
(d) This Agreement may be amended, modified, superseded or
cancelled, and any of the terms or conditions hereof may be
waived, only by a written instruction executed by each party
hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver
of any party of any condition, or of the breach of any term
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term
of this Agreement. No party may assign any rights, duties or
obligations hereunder unless all other parties have given their
prior written consent.
(e) If any provision included in this Agreement proves to
be invalid or unenforceable, it shall not affect the validity of
the remaining provisions.
(f) This Agreement may be executed in several counterparts
or by separate instruments and all of such counterparts and
instruments shall constitute one agreement, binding on all of the
parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first set forth above.
IBF VI - GUARANTEED INCOME FUND
By____________________________________
Duly Authorized Officer
COLEMAN & COMPANY SECURITIES, INC.
By____________________________________
Duly Authorized Officer
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By____________________________________
Duly Authorized Officer
EXHIBIT A
Forms of Receipt of Funds by Escrow Agent
[Date]
IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, NW
Washington, DC 20009
Attention: Simon A. Hershon, President
Dear Sirs:
Pursuant to Section 2(a) of the Escrow Agreement dated as of
___________, 1999, we confirm receipt of the amount of
$_____________________ today for deposit into the Escrow Fund.
Very truly yours,
_______________________________________
EXHIBIT B
Form of Release Notice
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attention: Corporate Trust Department
Dear Sirs:
The undersigned hereby authorize and instruct Continental Stock
Transfer & Trust Company, as escrow agent, to release
$__________________ of Escrow Funds from the Escrow Account and
to deliver such funds as follows:
[Insert Delivery Instructions]
Executed as of this ____ day of _______________, 1999.
IBF VI - GUARANTEED INCOME FUND
By____________________________________
Duly Authorized Officer
COLEMAN & COMPANY SECURITIES, INC.
By____________________________________
Duly Authorized Officer
EXHIBIT C
Authorized Personnel
The Escrow Agent is authorized to accept instructions and
notices signed or believed by the Escrow Agent to be signed by
any one of the following, each of whom is authorized to act on
behalf of the Company:
On Behalf of IBF VI - GUARANTEED INCOME FUND:
Name Title Signature
On Behalf of COLEMAN & COMPANY SECURITIES, INC.
Name Title Signature
E-119
Exhibit No. 6
IBF VI - Guaranteed Income Fund
Form SB-2
IBF VI - GUARANTEED INCOME FUND, as Issuer
And
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee
INDENTURE
Dated as of _________________, 1999
$50,000,000
Class A 10% Income Participating Notes
Due December 31, 2005
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE 6
SECTION 1.01 Definitions
6
SECTION 1.02 Incorporation by Reference of TIA
16
SECTION 1.03 Rules of Construction.
16
ARTICLE II.THE SECURITIES 17
SECTION 2.01 Form and Dating
17
SECTION 2.02 Execution and Authentication
17
SECTION 2.03 Registrar and Paying Agent
18
SECTION 2.04 Paying Agent To Hold Assets in Trust
19
SECTION 2.05 Securityholder Lists
19
SECTION 2.06 Transfer and Exchange
19
SECTION 2.07 Replacement Securities
20
SECTION 2.08 Outstanding Securities
21
SECTION 2.09 Treasury Securities
21
SECTION 2.10 Temporary Securities
21
SECTION 2.11 Cancellation
22
SECTION 2.12 Defaulted Interest
22
SECTION 2.13 Deposit of Monies
22
SECTION 2.14 CUSIP Number 22
SECTION 2.15 Restrictive Legends
23
SECTION 2.16 Book Entry Provisions for Global Security
23
SECTION 2.17 Special Transfer Provisions
24
SECTION 2.18 Interest and Payment Terms
24
ARTICLE III. REDEMPTION
25
SECTION 3.01 Notices to Trustee
25
SECTION 3.02 Notice of Redemption
25
SECTION 3.03 Effect of Notice of Redemption
26
SECTION 3.04 Deposit of Redemption Price
27
SECTION 3.05 Securities Redeemed in Part
27
ARTICLE IV.COVENANTS 27
SECTION 4.01 Payment of Securities
27
SECTION 4.02 Maintenance of Office or Agency
27
SECTION 4.03 Corporate Existence
28
SECTION 4.04 Payment of Taxes and Other Claims
28
SECTION 4.05 Maintenance of Properties and Insurance
28
SECTION 4.06 Compliance Certificates; Notice of Default
29
SECTION 4.07 Compliance with Laws
30
SECTION 4.08 SEC Reports and Other Information
30
SECTION 4.09 Waiver of Stay Extension or Usury Laws
31
SECTION 4.10 Limitation on Indebtedness
31
SECTION 4.11 Limitation on Restricted Payments
33
SECTION 4.12 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
33
SECTION 4.13 Limitation on Liens
34
SECTION 4.14 Limitation on Investments, Loans and Advances
34
SECTION 4.15 Limitation on Transactions with Affiliates
35
SECTION 4.16 Limitation on Liquidations, Dissolutions,
Mergers
and Consolidation
35
SECTION 4.17 ERISA Compliance
35
SECTION 4.18 Limitation on Acquisitions
36
SECTION 4.19 Limitation on Hedging Obligations
36
ARTICLE V. SUCCESSOR CORPORATION 36
SECTION 5.01 Consolidation, Merger, Conveyance, Transfer or
Lease 36
SECTION 5.02 Successor Entity Substituted
37
ARTICLE VI.DEFAULT AND REMEDIES 37
SECTION 6.01 Events of Default
37
SECTION 6.02 Acceleration
39
SECTION 6.03 Other Remedies 40
SECTION 6.04 Waiver of Past Defaults
40
SECTION 6.05 Control by Required Holders
40
SECTION 6.06 Limitation on Suits
41
SECTION 6.07 Rights of Holders to Receive Payment
41
SECTION 6.08 Collection Suit by Trustee
41
SECTION 6.09 Trustee May File Proofs of Claim
42
SECTION 6.10 Priorities
42
SECTION 6.11 Undertaking for Costs
42
SECTION 6.12 Rights and Remedies Cumulative
43
SECTION 6.13 Delay or Omission Not Waiver
43
ARTICLE VII. TRUSTEE 43
SECTION 7.01 Duties of Trustee
43
SECTION 7.02 Rights of Trustee
44
SECTION 7.03 Individual Rights of Trustee
45
SECTION 7.04 Trustee's Disclaimer
45
SECTION 7.05 Notice of Default
45
SECTION 7.06 Reports by Trustee to Holders
46
SECTION 7.07 Compensation and Indemnity
46
SECTION 7.08 Replacement of Trustee
47
SECTION 7.09 Successor Trustee by Merger, Etc
48
SECTION 7.10 Eligibility: Disqualification
48
SECTION 7.11 Preferential Collection of Claims Against
Company 48
ARTICLE VIII. DISCHARGE OF INDENTURE; DEFEASANCE 49
SECTION 8.01 Discharge of Indenture
49
SECTION 8.02 Legal Defeasance and Covenant Defeasance
50
SECTION 8.03 Application of Trust Money
53
SECTION 8.04 Repayment to Company
53
SECTION 8.05 Reinstatement
53
SECTION 8.06 Acknowledgment of Discharge by Trustee
53
ARTICLE IX.AMENDMENTS, SUPPLEMENTS AND WAIVERS 54
SECTION 9.01 Without Consent of Holders
54
SECTION 9.02 With Consent of Holders
54
SECTION 9.03 Compliance with TIA
56
SECTION 9.04 Revocation and Effect of Consents
56
SECTION 9.05 Notation on or Exchange of Securities
56
SECTION 9.06 Trustee to Sign Amendments, Etc.
57
ARTICLE X. SUBORDINATION 57
SECTION 10.01Securities Subordinated to Senior Indebtedness
57
SECTION 10.02Suspension of Payment on Securities in Certain
Events. 57
SECTION 10.03Securities Subordinated to Prior Payment of
All Senior
Indebtedness on Dissolution, Liquidation or
Reorganization
of Company
59
SECTION 10.04Holders to be Subrogated to Rights of Holders
of
Senior Indebtedness
60
SECTION 10.05Obligations of the Company Unconditional.
60
SECTION 10.06Trustee Entitled to Assume Payments Not
Prohibited in
Absence of Notice
61
SECTION 10.07Application by Trustee of Assets Deposited
with It. 61
SECTION 10.08No Waiver of Subordination Provisions.
62
SECTION 10.09Holders Authorize Trustee to Effectuate
Subordination
of Notes 62
SECTION 10.10Right of Trustee to Hold Senior Indebtedness.
63
SECTION 10.11. This Article X Not To Prevent Events of
Default. 63
SECTION 10.12. No Fiduciary Duty of Trustee to Holders
of Senior
Indebtedness
63
ARTICLE XI.MISCELLANEOUS 64
SECTION 11.01TIA Controls
64
SECTION 11.02Notices 64
SECTION 11.03Communications by Holders with Other Holders
65
SECTION 11.04Certificate and Opinion as to Conditions
Precedent 65
SECTION 11.05Statements Required in Certificate or Opinion
65
SECTION 11.06Rules by Trustee, Paying Agent, Registrar
66
SECTION 11.07Legal Holidays 66
SECTION 11.08Governing Law 66
SECTION 11.09No Adverse Interpretation of Other Agreements
67
SECTION 11.10No Recourse Against Others
67
SECTION 11.11Successors
67
SECTION 11.12Counterparts
67
SECTION 11.13Severability
67
SECTION 11.14Table of Contents, Headings. Etc.
67
Reconciliation and tie between the Trust Indenture
Act of 1939 and this Indenture, dated as of ______________, 1999:
Trust Indenture Initially
Act Section Reflected in
Indenture
Section
309 (b)(9) 7.10
310 (a)(1) 7.10
(a)(2) 7.10
(a)(5) 7.10
(b) 7.10
311 (a) 7.11
(b) 7.11
312 (a) 2.05
(b) 11.03
(c) 11.03
313 (a) 7.06
(b) 7.06
(c) 7.06
(d) 4.08
314 (a) 11.02
(c)(3) 5.01
315 (b) 11.02
316 (b) 9.04
INDENTURE, dated as of ______________, 1999, between IBF VI
- - GUARANTEED INCOME FUND, a Delaware corporation (the "Company"),
and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a
________________ corporation, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders
of the Company's Class A 10% Income Participating Notes Due
December 31, 2005:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Acquisition" means the acquisition of (i) a controlling
equity or other ownership interest in another Person (including
the purchase of an option, warrant or convertible, exchangeable
or similar type security to acquire such a controlling interest
at the time it becomes exercisable, convertible or exchangeable
by the holder thereof), whether by purchase of such equity or
other ownership interest or upon exercise of an option or warrant
for, or conversion or exchange of securities into, such equity or
other ownership interest, or (ii) assets of another Person which
constitute all or any material part of the assets of such Person
or of a line or lines of business conducted by such Person.
"Affiliate" means, with respect to any specified Person, any
other Person whom directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such specified Person. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"Affiliate Transaction" means the conduct of business or any
transactions or series of transactions by the Company or any of
its Subsidiaries with or for the benefit of any of their
respective Affiliates.
"Additional Interest" means interest, in addition to Fixed
Interest, payable on the Securities on a pro rata basis only out
of five percent of the Consolidated Net Income of the Company for
each year ending December 31, determined without taking into
account payment of the Additional Interest but reduced by the
amount of any net loss of the Company for a prior year determined
in the same manner as Consolidated Net Income.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the
board of directors or other applicable governing body of such
Person or any committee of the board of directors or of such
other governing body of such Person duly authorized, with respect
to any particular matter, to exercise the power of the board of
directors or other applicable governing body of such Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant
Secretary of such Person, to have been duly adopted by the Board
of Directors of such Person and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Book-Entry Security" means a Security represented by a
Global Security and registered in the name of the nominee of the
Depository.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and
all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting or non-voting)
of such Person's capital stock or any form of membership
interest, as applicable, whether outstanding on the Issue Date or
issued after the Issue Date, and any and all rights, warrants or
options exercisable or exchangeable for or convertible into such
capital stock.
"Cash Equivalents" means at any time (i) any evidence of
Indebtedness with a maturity of 180 days or less issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or
acceptances with a maturity of 180 days or less of any financial
institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less
than $500,000,000; (iii) commercial paper with a maturity of 180
days or less issued by a corporation (except an Affiliate of the
Company) organized under the laws of any state of the United
States or the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation or at least P-1 by Moody's
Investors Service, Inc.; (iv) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing
within one year from the date of acquisition; provided, however,
that the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by
the Comptroller of the Currency; and (v) money market funds
investing principally in the types of securities described in
clauses (i) and (ii) above.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the terms and
conditions of this Indenture and thereafter means such successor.
"Company Order" means a written order or request signed in
the name of the Company by its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred
to are comparable in all material respects to those applied in
the preparation of the audited financial statements of the
Company in prior periods.
"Consolidated Net Income" means, for any period of
computation thereof, the gross revenues from operations of the
Company and its Subsidiaries (including payments received by the
Company and its Subsidiaries of (i) interest income, and (ii)
dividends and distributions made in the ordinary course of their
businesses by Persons in which investment is permitted pursuant
to this Indenture and not related to an extraordinary event),
less all operating and non-operating expenses of the Company and
its Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a
Consistent Basis; but excluding as income: (a) net gains on the
sale, conversion or other disposition of capital assets, (b) net
gains on the acquisition, retirement, sale or other disposition
of Capital Stock and other securities of the Company or its
Subsidiaries, (c) net gains on the collection of proceeds of life
insurance policies, (d) any write-up of any asset, and (e) any
other net gain or credit of an extraordinary nature as determined
in accordance with GAAP applied on a Consistent Basis.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy
Law.
"Default" means any event that is, or after notice or the
passage of time or both would be an Event of Default.
"Default Amount" shall have the meaning set forth in Section
6.02.
"Default Rate" means the rate payable by the Company upon
the occurrence of an Event of Default, which shall be equal to
fifteen percent (15%) per annum.
"Depository" means, with respect to the Securities issuable
or issued in one or more Book-Entry Securities, the Person
specified in Section 2.02 as the Depository with respect to the
Securities until the successor shall have been appointed and
becomes such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Disqualified Stock" means with respect to any Person, any
Capital Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof),
or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or is exchangeable for Indebtedness, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to
the Maturity Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"Financing Documents" means this Indenture, the Guaranty
Agreement and any other document executed by or on behalf of the
Company in connection with the consummation of the sale by the
Company of the Securities.
"Fiscal Quarter" means a three month quarter of a Fiscal
Year and when followed by reference to a year, means the first,
second, third or fourth quarter of such Fiscal Year, as
indicated.
"Fiscal Year" means the twelve-month fiscal period of the
Company and its Subsidiaries commencing on January 1 of each
calendar year and ending on December 31 of such calendar year.
"Fixed Interest" means interest payable on the Securities at
the rate of 10% per annum or, upon the occurrence of an Event of
Default, at the Default Rate, that accrues from the most recent
Interest Payment Date and subject to compounding pursuant to
Section 2.18.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date hereof and
as such principles may be amended from time to time, including,
without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by
a significant segment of the accounting profession of the United
States, which are applicable as of the date of determination.
"Global Security" means a Security evidencing all or a part
of the Securities to be issued as Book-Entry Securities, issued
to the Depository in accordance with Section 2.02 and bearing the
legend prescribed in Exhibit B to this Indenture.
"Guarantor" means InterBank Funding Corp., a Delaware
corporation.
"Guaranty Agreement" means the Guaranty Agreement, dated as
of ____________, 1999, by and among the Guarantor and the
Trustee, for the benefit of the Holders, substantially in the
form of Exhibit C to this Indenture, as amended, modified or
supplemented from time to time in accordance with the terms
thereof, together with any exhibits, schedules or attachments
thereto.
"Hedging Obligations" means any and all obligations of the
Company or any of its Subsidiaries, whether absolute or
contingent and howsoever and whenever created, arising, evidenced
or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least
one of the parties thereto from the fluctuations of interest
rates, exchange rates (including without limitation commodity
exchange rates) or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not
limited to, U.S. dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements,
commodity exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate
"swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.
"Holder" or "Securityholder" means the person in whose name
a Security is registered on the Registrar's books.
"Indebtedness" means, with respect to any person, without
duplication, (i) any liability, contingent or otherwise, of such
Person (a) for borrowed money (whether or not the recourse of the
lender is to the whole of the Property of such Person or only to
a portion thereof), (b) evidenced by bonds, notes, debentures or
similar instruments or representing the balance deferred and
unpaid of any part of the purchase price of Property or other
assets (including Investments) or for the cost of Property or
other assets constructed or of improvements thereto (including
any obligation under or in connection with any letter of credit
related thereto), (c) under or in connection with any letter of
credit issued for the account of such Person, and all drafts
drawn, reimbursement obligations or demands for payment
thereunder, or (d) for the payment of money relating to any
capitalized lease obligations; (ii) any liability of others of
the kind described in the preceding clause (i) which the Person
has guaranteed or which is otherwise its legal liability; (iii)
any liability, contingent or otherwise, secured by any Lien in
respect of Property of such Person, whether or not the
obligations secured thereby shall have been assumed by or shall
otherwise be such Person's legal liability, provided, that,
solely in the case of any Indebtedness of the type described in
this clause (iii), recourse for the payment of which is limited
to such Property, the amount of such Indebtedness shall be deemed
to be the lesser of the fair market value of such Property or the
amount of the obligation so secured; and (iv) any and all
deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any liability of the kind
described in any of the preceding clauses (i), (ii) and (iii).
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations
as described above.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"interest" when used with respect to any Security means any
one or more of Fixed Interest and Additional Interest, as the
context dictates.
"Interest Payment Date" means the stated maturity of an
installment of Fixed Interest or Additional Interest on the
Securities.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time
hereafter.
"Investment" means, with respect to any Person, any direct
or indirect advance, loan or other extension of credit to
(including any guarantee of a loan or other extension of credit)
or investment in, capital contribution to (by means of any
transfer of cash or other Property to others or any payment for
Property for the account or use of others or otherwise including,
without limitation, amounts paid in advance on account of the
purchase price of merchandise or equipment to be delivered within
one year of the date of advance), or purchase of Capital Stock,
bonds, notes, debentures or other securities issued by, any other
Person.
"Issue Date" means the date of first issuance of the
Securities under this Indenture.
"Legal Holiday" means, with respect to a particular place of
payment, a Saturday, a Sunday or a day on which banking
institutions in New York, New York or at such place of payment
are authorized or obligated by law, executive order or
governmental decree to be closed.
"Lien" means any mortgage, lien, pledge, charge, security
interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security
agreement of any kind or nature whatsoever, whether or not filed,
recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement and any
lease deemed to constitute a security interest). For purposes
hereof, a Person shall be deemed to own subject to a Lien any
Property which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement.
"Material Subsidiary" means, with respect to any person, any
Subsidiary of such person, which would be a "significant
subsidiary" pursuant to Article 1-02 of Regulation S-X.
"Maturity Date" means December 31, 2005.
"Multiemployer Plan" means a plan described in Section 3(37)
of ERISA.
"Net Proceeds" means, with respect to any Person (a) in the
case of any sale of Capital Stock by such Person or common equity
contribution to such Person, the aggregate net proceeds received
by such Person after payment of expenses, commissions and the
like, if any, incurred in connection therewith, (b) in the case
of the issuance of any Indebtedness by such Person, the aggregate
net proceeds received by such Person, after payment of expenses,
commissions and the like incurred in connection therewith, or (c)
in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind of the Company for or into
shares of Capital Stock of the Company which is not Disqualified
Stock, the net proceeds received by the Company upon such
exchange, exercise, conversion or surrender (plus, with respect
to the issuance of any such securities after the Issue Date, the
net proceeds received by such Person upon the issuance of such
securities), less any and all payments made to the holders, e.g.,
on account of fractional shares, and less all expenses,
commissions and the like incurred by the Company in connection
therewith.
"Obligations" means all obligations for principal, premium,
Fixed Interest, Additional Interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer, the Controller, the Secretary or the
Assistant Secretary of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers (one of who shall be the Chief
Financial Officer) or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise
complying with the requirements of Sections 11.04 and 11.05.
"Opinion of Counsel" means a written opinion from legal
counsel complying with the requirements of Sections 11.04 and
11.05. Unless otherwise required by the TIA, the legal counsel
may be an employee of or counsel to the Company.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Acquisition" means each Acquisition effected with
the consent and approval of the Board of Directors of the Person
being acquired, and with the duly obtained approval of such
shareholders or other holders of equity or other ownership
interest as such Person may be required to obtain, so long as (i)
immediately prior to and immediately after the consummation of
such Acquisition, no Default or Event of Default has occurred and
is continuing, (ii) substantially all of the sales and operating
profits generated by such Person (or assets) so acquired or
invested are derived from a line or lines of business that are
part of, or complimentary to, the business of the Company
described in the Prospectus, (iii) the Acquisition is incidental
to the business of the Company described in the Prospectus (iv)
an audited consolidated balance sheet and audited statements of
income, cash flow and stockholders' equity of the Person being
acquired, in each case as of its most recent fiscal year end are
delivered to the Trustee not less than five (5) Business Days
prior to the consummation of such Acquisition, (v) in the event
the Person so acquired is not a Wholly-Owned Subsidiary, the
Company is permitted to make such Acquisition pursuant to Section
4.14, and (iv) any Indebtedness included in the cost of the
Acquisition otherwise qualifying as a Permitted Acquisition
hereunder shall be permitted to be incurred pursuant to Section
4.10 hereof.
"Permitted Investments" means (i) obligations of the United
States government due within one year; (ii) certificates of
deposit or Eurodollar deposits due within one year with a
financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits
of at least $500,000,000 or more; (iii) commercial paper rated at
least A-1 by Standard & Poor's Corporation or at least P-1 by
Moody's Investors Service, Inc.; (iv) debt of any state or
political subdivision that is rated among the two highest rating
categories obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc. and is due within one year;
(v) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one
year from the date of acquisition; provided, however, that the
terms of such agreements comply with the guidelines set forth in
the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of
the Currency; and (vi) Investments represented by Hedging
Obligations permitted to be made pursuant to Section 4.19.
"Permitted Liens" means, with respect to any Person, any
Lien arising by reason of (a) any judgment, decree or order of
any court, so long as such Lien is being contested in good faith
and is adequately bonded, and any appropriate legal proceedings
which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated
or the period within which such proceedings may be initiated
shall not have expired; (b) Liens arising by operation of law for
taxes, assessments, governmental charges or claims not yet
delinquent or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted and if a reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been
made therefore and enforcement is stayed and which Liens are not
yet enforceable against other creditors; (c) security for payment
of workers' compensation or other insurance or social security
legislation; (d) security for the performance of tenders,
contracts (other than contracts for the payment of money) or
leases incurred in the ordinary course of business; (e) deposits
to secure public or statutory obligations, or in lieu of surety,
performance or appeal bonds, entered into in the ordinary course
of business; (f) Liens arising by operation of law in favor of
carriers, warehousemen, landlords, mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course
of business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate
proceedings which suspend the collection thereof and if a reserve
or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and which
Liens are not yet enforceable against other creditors; (g)
easements, rights-of-way, zoning and similar covenants and
restrictions and other similar encumbrances or title defects
which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the
Property subject thereto or materially interfere with the
ordinary conduct of the business of the Company or any of its
Subsidiaries; (h) Liens arising in the ordinary course of
business in favor of custom and revenue authorities to secure
payment of custom duties; (i) Liens existing as of the Issue
Date; and (j) Liens securing the Indebtedness of the Company and
its Subsidiaries incurred as permitted by Section 4.10 hereof.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or any other entity or organization
including a government or political subdivision or any agency or
instrumentality thereof.
"Physical Securities" has the meaning set forth in Section
2.02.
"Plan" means an employment benefit plan within the meaning
of Section 3(3) of ERISA.
"Principal" of any Indebtedness (including the Securities)
means the principal of such Indebtedness plus the premium, if
any, on such Indebtedness.
"Property" or "property" means any assets or property of any
kind or nature whatsoever, real, personal or mixed (including
fixtures), whether tangible or intangible.
"Prospectus" has the meaning set forth in Section 4.14.
"Record Date" means the Record Dates specified in the
Securities; provided that if any such date is a Legal Holiday,
the Record Date shall be the first day immediately preceding such
specified day that is not a Legal Holiday.
"Redemption Date" when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to
this Indenture and the Securities.
"Redemption Price" when used with respect to any Security to
be redeemed, means: (1) with respect to a redemption effected at
the option of the Company, an amount equal to that portion of the
principal amount to be redeemed, plus accrued Fixed Interest and
Additional Interest, if any, to the Redemption Date (subject to
the right of Holders of record on relevant Record Dates to
receive interest due on an Interest Payment Date); (2) with
respect to a redemption effected at the request of a Holder in
June during a calendar year an amount equal to the principal
amount of the Security plus accrued Fixed Interest to the
Redemption Date (subject to the right of Holders of record on
relevant Record Dates to receive interest due on an Interest
Payment Date); and (3), with respect to a redemption effected at
the request of a Holder in December during a calendar year an
amount equal to the principal amount of the Security plus accrued
Fixed Interest and Additional Interest, if any, to the Redemption
Date (subject to the right of Holders of record on relevant
Record Dates to receive interest due on an Interest Payment
Date).
"Registrar" has the meaning provided in Section 2.03.
"Representative" means the trustee, agent or representative
in respect of any Senior Indebtedness; provided, however, that
if, and for so long as, any Senior Indebtedness lacks such a
representative, then the Representative for such Senior
Indebtedness shall at all times constitute the holders of a
majority in outstanding principal amount of such Senior
Indebtedness in respect of any Senior Indebtedness.
"Required Holders" means the Holders of at least a majority
of the aggregate principal amount of the outstanding Securities.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution
on Capital Stock of the Company or any of its Subsidiaries or any
payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of the Company or any of its
Subsidiaries (other than (x) dividends or distributions payable
solely in Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to purchase Capital Stock
(other than Disqualified Stock), and (y) in the case of
Subsidiaries of the Company, dividends or distributions payable
to the Company or to a Wholly-Owned Subsidiary of the Company),
(ii) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company or any of its
Subsidiaries, and (iii) the making of any principal payment on,
or the purchase, defeasance, repurchase, redemption or other
acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness of the Company which is subordinated in right
of payment to the Securities (other than Indebtedness of the
Company acquired in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition).
"SEC" means the Securities and Exchange Commission.
"Securities" means, the Company's Class A 10% Income
Participating Notes due December 31, 2005, as amended or
supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to the terms and conditions of
this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Senior Debt Other Default: has the meaning provided in
Section 10.02 hereof.
"Senior Debt Payment Default" has the meaning provided in
Section 10.02 hereof.
"Senior Indebtedness" means all Indebtedness and other
amounts permitted by Section 4.10(c) or 4.10(d) or any
refinancing, refunding, replacement or extension thereof, and all
amounts owing the Trustee under Section 7.07.
"Subsidiary" means with respect to any Person (i) a
corporation a majority of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person or (ii) any other Person (other than
a corporation) in which such Person, one or more Subsidiaries of
such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, individually or with another
Person, at the date of determination thereof, has (a) at least a
majority ownership interest or (b) the power to elect or direct
the election of a majority of the directors or other governing
body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS
77aaa-77bbbb), as amended, as in effect on the date of the
execution of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions
of this Indenture and thereafter means such successor.
"Trust Officer" means any officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct non-callable
obligations of, or non-callable obligations guaranteed by, the
United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of
America is pledged.
"U.S. Legal Tender" means such coin or currency of the
United States of America, as at the time of payment shall be
legal tender for the payment of public and private debts.
"voting power" means with respect to any Person, the power
under ordinary circumstances, pursuant to the ownership of shares
of any class or classes of Capital Stock, to elect at least a
majority of the board of directors, managers or trustees of such
Person (irrespective of whether or not, at the time, stock of any
other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means with respect to any Person
any Subsidiary of such person, 100% of the Capital Stock of which
(other than shares of Capital Stock representing any director's
qualifying shares or investments by foreign nationals mandated by
applicable law) is owned by such Person, by a Wholly-Owned
Subsidiary of such Person or by such Person and one or more
Wholly-Owned Subsidiaries of such Person.
SECTION 1.02 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in, and made a part
of, this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Security
holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by SEC rule and not otherwise defined herein have the
meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and
words in the plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) the words "include" and "including" shall be
deemed to mean "include, without limitation," and
"including, without limitation";
(vii) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(viii) references to Sections or Articles means
references to such Section or Article in this Indenture,
unless stated otherwise; and
(ix) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the
SEC from time to time.
ARTICLE II.
THE SECURITIES
SECTION 2.01 Form and Dating.
The Securities and the Trustee's certificate of
authentication with respect thereto shall be substantially in the
form of Exhibit A hereto, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock
exchange rules, usage or agreement to which the Company is
subject, including without limitation the legend set forth in
Exhibit B hereto. The Company and the Trustee shall approve the
form of the Securities and any notation, legend or endorsement on
them. Each Security shall be dated the date of its
authentication, shall bear interest from the Issue Date and shall
be payable on the Interest Payment Dates and the Maturity Date.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.02 Execution and Authentication.
One Officer shall sign (who shall have been duly authorized
by all requisite corporate actions) the Securities for the
Company by manual or facsimile signature. If an Officer whose
signature is on a Security was an Officer at the time of such
execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall nevertheless be
valid. A Security shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate Securities for original issue
up to an aggregate principal amount of Fifty Million dollars
($50,000,000) upon a written order of the Company in the form of
an Officers' Certificate to a Trust Officer directing the Trustee
to authenticate the Securities and certifying that all conditions
precedent to the issuance of the Securities contained herein have
been complied with. Upon the written order of the Company in the
form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities issued on the Issue Date
to reflect any name change of the Company. The aggregate
principal amount of Securities outstanding at any time may not
exceed Fifty Million dollars ($50,000,000) except as provided in
Section 2.07 hereof.
The Principal and interest on Book-Entry Securities shall be
payable to the Depository or its nominee, as the case may be, as
the sole registered owner and the sole holder of the Book-Entry
Securities represented thereby. The Principal of and interest on
Securities in certificated form ("Physical Securities") shall be
payable at the office of the Paying Agent.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless
otherwise provided in the appointment, an authenticating agent
may authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company and
Affiliates of the Company.
The Securities shall be issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple in excess thereof.
If the Securities are to be issued in the form of one or
more Global Securities, then the Company shall execute and the
Trustee shall authenticate and deliver one or more Global
Securities that (i) shall represent and shall be in minimum
denominations of $1,000, (ii) shall be registered in the name of
the Depository for such Global Security or Securities or the
nominee of such Depository, (iii) shall be delivered to the
Trustee as custodian for such Depository or pursuant to such
Depository's instructions, and (iv) shall bear the legend set
forth in Exhibit B.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where (a) Securities
may be presented or surrendered for registration of transfer or
for exchange (the "Registrar"), (b) Securities may be presented
or surrendered for payment (the "Paying Agent"), and (c) notices
and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company may also from time
to time designate one or more other offices or agencies where the
Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations
provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New
York, for such purposes. Neither the Company nor any Affiliate
of the Company shall act as Paying Agent. The Registrar shall
keep a register of the Securities and of their transfer and
exchange. The Company, upon notice to the Trustee, may appoint
one or more co-Registrars and one or more additional paying
agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional paying agent. The Company
initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices or demands in connection with the
Securities and this Indenture until such time as the Trustee has
resigned or a successor has been appointed. Securities, notices
and demands may be delivered to the Trustee at 2 Broadway, New
York, New York 10004, Attn: Corporate Trust Department.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which agreement
shall incorporate the provisions of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such
Agent. The Company shall promptly notify the Trustee of the name
and address of any such Agent. If the Company fails to maintain
a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation in accordance with
Section 7.07 hereof.
SECTION 2.04 Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in
trust for the benefit of the Holders or the Trustee all assets
held by the Paying Agent for the payment of Principal of, or
interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee of any Default by the
Company (or any other obligor on the Securities) in making any
such payment. The Trustee may at any time during the continuance
of any Default by the Company in making any such payment, upon
written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account
for any assets distributed. The Company at any time may require
a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed. Upon distribution to the
Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no
further liability for such assets.
SECTION 2.05 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of the Holders and shall otherwise comply
with TIA 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee five (5) days before each
Record Date and at such other times as the Trustee may request in
writing a list as of such date and in such form as the Trustee
may reasonably require of the names and addresses of the Holders,
which list may be conclusively relied upon by the Trustee, and
the Company shall otherwise comply with TIA 312(a).
SECTION 2.06 Transfer and Exchange.
When Securities in certificated form are presented to the
Registrar or a co-Registrar with a request from the Holder
thereof to register the transfer of such Securities or to
exchange such Securities for an equal principal amount of
Securities of other authorized denominations, the Registrar or co-
Registrar, as the case may be, shall register the transfer or
make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Securities
surrendered for registration of transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Registrar, or co-
Registrar, as the case may be, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company
shall execute by manual or facsimile signature and issue, and the
Trustee shall authenticate new Securities evidencing such
transfer or exchange at the Registrar's or co-Registrar's
request, as the case may be. The Company may require payment of
customary transfer fees of the Registrar or co-Registrar and a
sum sufficient to cover any transfer tax or similar governmental
charge payable in connection with transfer (other than any such
transfer taxes or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.02, 2.07, 2.10,
3.06, 4.16, 4.17 or 9.05). The Registrar or co-Registrar shall
not be required to register the transfer of or exchange of any
Security (i) during a period beginning at the opening of business
fifteen (15) days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such
mailing and (ii) selected for redemption in whole or in part
pursuant to Article III, except the unredeemed portion of any
Security being redeemed in part.
Notwithstanding any other provision of this Section 2.06, a
Global Security representing Book-Entry Securities may not be
transferred in whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any
such nominee to a successor depository or a nominee of such
successor depository.
Notwithstanding the foregoing, no Global Security shall be
registered for transfer or exchange, or authenticated and
delivered, whether pursuant to this Section 2.06, Section 2.07,
2.10 or 3.06 or otherwise, in the name of a person other than the
Depository for such Global Security or its nominee until (i) the
Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Global Security or if at any time
the Depository ceases to be a clearing agency registered under
the Exchange Act, and a successor depository is not appointed by
the Company within thirty (30) days, (ii) the Company executes
and delivers to the Trustee a Company Order that all such Global
Securities shall be exchangeable or (iii) there shall have
occurred and be continuing an Event of Default.
Except as provided above, any Security authenticated and
delivered upon registration of transfer or, or in exchange for,
or in lieu of, any Global Security, whether pursuant to this
Section 2.06, Section 2.07, 2.10 or 3.06 or otherwise, shall also
be a Global Security and bear the legend specified in Exhibit B.
SECTION 2.07 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or the
Registrar or if the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, the Company shall issue and the Trustee, upon receipt
of a Company Order, shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee
or the Company, such Holder must provide an indemnity bond or
other indemnity, sufficient in the judgment of both the Company
and the Trustee, to protect the Company, the Trustee or any Agent
from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge such Holder for
their respective reasonable, out-of-pocket expenses in replacing
a Security, including reasonable fees and expenses of counsel.
Every replacement Security shall constitute an additional
obligation of the Company and shall be entitled to all benefits
of this Indenture equally and proportionately with all other
Securities duly issued hereunder.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all the Securities
that have been authenticated by the Trustee except those canceled
by it, those delivered to it for cancellation and those described
in this Section as not outstanding. Except as set forth in
Section 2.09, a Security does not cease to be outstanding because
the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other
than a mutilated Security surrendered for replacement), it ceases
to be outstanding unless the Trustee receives proof satisfactory
to it that the replaced Security is held by a bona fide
purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to
Section 2.07.
If the principal amount of any Security is considered paid
under Section 4.01 hereof, it ceases to be outstanding and
interest on it ceases to accrue.
If on a Redemption Date or the Maturity Date the Paying
Agent holds U.S. Legal Tender sufficient to pay all of the
Principal and interest due on the Securities payable on that date
and is not prohibited from paying such Principal and interest due
on such date, then on and after such date such Securities cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any declaration of
acceleration or notice of default or direction, waiver or consent
or any amendment, modification or other change to this Indenture,
the Securities owned by the Company or an Affiliate of the
Company shall be disregarded as though they were not outstanding,
except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or
consent, only Securities that the Trustee knows are so owned
shall be disregarded.
SECTION 2.10 Temporary Securities.
Until definitive Securities are prepared and ready for
delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities upon receipt of a written order
of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the
temporary Securities are to be authenticated. Temporary
Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall
authenticate, upon receipt of a written order of the Company
pursuant to Section 2.02, definitive Securities in exchange for
temporary Securities. Until such exchange, Holders of temporary
Securities shall be entitled to the same rights, benefits and
privileges as definitive Securities.
SECTION 2.11 Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Company or a Subsidiary), and no one else,
shall cancel and, pursuant to a Company Order, shall dispose of
all Securities surrendered for registration of transfer,
exchange, payment, replacement or cancellation and certification
of their destruction (subject to the record retention
requirements of the Exchange Act) shall be delivered to the
Company unless, by a Company order, the Company shall direct that
canceled Securities be returned to it. Subject to Section 2.07,
the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation.
If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation pursuant
to this Section 2.11.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall, unless the Trustee fixes another Record
Date pursuant to Section 6.10, pay the defaulted interest, plus
(to the extent lawful) any interest payable on the defaulted
interest to the persons who are Holders on a subsequent special
Record Date, which date shall be a Business Day at least five (5)
Business Days prior to the payment date, in each case at the rate
provided in the Securities and this Indenture. The Company shall
fix or cause to be fixed such special Record Date and payment
date in a manner reasonably satisfactory to the Trustee. At
least fifteen (15) days before the subsequent special Record
Date, the Company shall mail or cause to be mailed to each
Holder, with a copy to the Trustee, a notice that states the
subsequent special Record Date, the payment date and the amount
of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid. The Company may also pay defaulted
interest in any other lawful manner.
SECTION 2.13 Deposit of Monies.
On or before 10:00 a.m. on each Interest Payment Date and
the Maturity Date, as the case may be, the Company shall deposit
or cause to be deposited with the Paying Agent, in immediately
available funds, U.S. Legal Tender sufficient to make cash
payments, if any, due on such Interest Payment Date or the
Maturity Date, as the case may be, in a timely manner that
permits the Trustee to remit payment to the Holders on such
Interest Payment Date or the Maturity Date, as the case may be.
SECTION 2.14 CUSIP Number.
The Company in issuing the Securities may use one or
more CUSIP numbers, and if so, the Trustee shall use the CUSIP
numbers in notices of redemption or exchange as a convenience to
Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the
CUSIP number printed in the notice or on the Securities, and that
reliance may be placed only on the other identification numbers
printed on the Securities.
SECTION 2.15 Restrictive Legends.
Each Global Security shall also bear the legend as set forth
in Exhibit B.
SECTION 2.16 Book Entry Provisions for Global Security.
(a) Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depository, or
the Trustee as its custodian, or under the Global Securities, and
the Depository may be treated by the Company, the Trustee and any
Agent of the Company or the Trustee as the absolute 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 the Depository or impair, as between the Depository and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Transfers of a Global Security shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial
owners in a Global Security may be transferred or exchanged for
Physical Securities in accordance with the rules and procedures
of the Depository and the provisions of Section 2.17. In
addition, Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a
Global Security if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for the
Global Securities and a successor depositary is not appointed by
the Company within ninety (90) days of such notice or (ii) an
Event of Default has occurred and is continuing and the Registrar
has received a written request from the Depository to issue
Physical Securities.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in a Global Security to
beneficial owners pursuant to paragraph (b) of this Section 2.16,
the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease
in the principal amount of such Global Securities in an amount
equal to the principal amount of the beneficial interest in the
Global Security to be transferred, and the Company shall execute
and the Trustee shall authenticate and deliver, one or more
Physical Securities of like tenor and amount.
(d) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to paragraph (b) of this
Section 2.16, such Global Security shall be deemed to be
surrendered to the Trustee for cancellation, and the Company
shall execute and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Global Security, an equal
aggregate principal amount of Physical Security of authorized
denominations.
(e) The Holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and
Persons that may hold interest through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or
the Securities.
SECTION 2.17 Special Transfer Provisions.
Notwithstanding any other provisions of this Indenture, a
Global Security may not be transferred as a whole except by the
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
SECTION 2.18 Interest and Payment Terms.
(a) The Company promises to pay Fixed Interest on the
unpaid principal amount of the Securities; provided, however,
that upon the occurrence and during the continuance of an Event
of Default the Company will pay interest on the unpaid principal
amount of the Securities (but only those Securities as to which
an Event of Default has occurred) at the applicable Fixed
Interest rate accruing from the most recent Interest Payment
Date. The Company will pay interest monthly in arrears on the
30th day of each calendar month on Securities originally issued
in denominations of $15,000 or more (unless the original Holder
elects quarterly payment) and quarterly in arrears on March 30,
June 30, September 30 and December 30 of each year, or if any
such day is not a Business Day, on the next succeeding Business
Day (the "Interest Payment Date"), commencing on the first such
date to occur following the Issue Date for each Security. Fixed
Interest on the Securities will accrue from the most recent
Interest Payment Date to which Fixed Interest has been paid or,
if no interest has been paid, from the date of issuance.
Interest shall accrue with respect to principal on this Security
to, but not including the date of repayment of such principal;
provided, however, that if payment to the Paying Agent occurs
after 10:00 a.m., New York City time, interest shall be deemed to
accrue until the following Business Day. On each Interest
Payment Date, interest on the Securities will be paid for the
immediately preceding accrual period. To the extent lawful, the
Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on (i) overdue
Principal, if any, at the Default Rate, compounded semiannually;
and (ii) overdue installments of interest, if any (without regard
to any applicable grace period) at the same rate, compounded
semiannually. Interest will be computed on the basis of a 360-
day year of twelve 30-day months. The Record Date for
determining the Holders entitled to payment of interest is the
10th day prior to each Interest Payment Date, unless a special
Record Date has been set by the Trustee in accordance with
Section 6.10.
(b) The Company promises to pay Additional Interest on the
Securities. Additional Interest will be paid to Holders of
record on December 31, of each year on the basis of a fraction,
the numerator of which is the principal amount of the Securities
held by each such Holder and the denominator of which is the
principal amount of the Securities outstanding on such date. The
Company will pay the Additional Interest, if any, on the 120th
day following the end of each calendar year, or if any such day
is not a Business Day, on the next succeeding Business Day. The
Record Date for determining the Holders entitled to payment of
interest is December 31 of each calendar year, unless a special
Record Date has been set by the Trustee in accordance with
Section 6.10.
(c) The Company shall pay interest on the Securities
(except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date even if the Securities are
canceled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to the
Paying Agent to collect principal payments. The Securities will
be payable as to Principal and interest at the office or agency
of the Company maintained for such purpose within the City and
State of New York, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders of the
Securities at their addresses set forth in the register of
Holders. If this Security is a Global Security, all payments in
respect of this Security will be made to the Depository or its
nominee in immediately available funds in accordance with
customary procedures established from time to time by the
Depository.
(d) Initially, the Trustee under the Indenture will act as
Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
The Company or any of its Subsidiaries may act as Registrar.
ARTICLE III.
REDEMPTION
SECTION 3.01 Notices to Trustee.
If a Holder seeks redemption of its Securities pursuant to
the Securities and such redemption is agreed to by the Company,
it shall notify the Trustee and the Paying Agent in writing of
the Redemption Date, the Redemption Price and the principal
amount of the Securities to be redeemed, together with an
Officers' Certificate stating that such redemption will comply
with the conditions contained herein and in the Securities.
Notwithstanding anything set forth in this Article III, the
Company shall at all times comply with Article X hereof.
SECTION 3.02 Notice of Redemption.
At least thirty (30) days, but not more than sixty (60)
days, before a Redemption Date, the Company shall mail a notice
of redemption by first class mail to each Holder whose Securities
are to be redeemed at the address of such Holder appearing in the
Security register maintained by the Registrar. At the Company's
request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense; provided, that the
Company shall give the Trustee at least forty-five (45) days
advance notice of the Redemption Date. In the event of a partial
redemption, the Trustee will select the Securities to be redeemed
by lot or by such other manner as the Trustee deems fair and
appropriate to the Holders of the Securities. Each notice of
redemption shall identify the Securities to be redeemed and shall
state:
(i) the Redemption Date;
(ii) the Redemption Price to be paid;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(v) that, unless the Company defaults in making the
redemption payment or such redemption payment is prevented
for any reason, interest on Securities to be redeemed ceases
to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Securities is to
receive payment of the Redemption Price upon surrender to
the Paying Agent of the Securities redeemed;
(vi) if fewer than all the Securities are to be
redeemed, the identification of the particular Securities
(or portion thereof) to be redeemed, as well as the
aggregate principal amount of Securities to be redeemed and
the aggregate principal amount of Securities to be reissued
to the Holders after such partial redemption;
(vii) if any Security is being redeemed in part,
the portion of the principal amount of such Security to be
redeemed and that, after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in
the aggregate principal amount equal to the unredeemed
portion thereof will be issued without charge to the
Security holder;
(viii) the CUSIP number, if any, relating to such
Securities pursuant to Section 2.14 hereof; and
(ix) that the notice is being sent pursuant to this
Section 3.02 and pursuant to the optional redemption
provisions of the Securities.
SECTION 3.03 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.02, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Trustee or Paying Agent, such Securities called
for redemption shall be paid at the applicable Redemption Price;
provided, that any Additional Interest under the Securities shall
be paid 120 days following the end of the calendar year in which
the redemption is effected. Interest installments whose maturity
is on or prior to such Redemption Date will be payable on the
relevant Interest Payment Dates to the Holders of record.
Notice of redemption shall be deemed to be given when mailed
to each Holder in the manner herein provided whether or not the
Holder receives such Notice. In any event, failure to give such
notice, or any defect therein, shall not affect the validity of
the proceedings for the redemption of any other Security.
SECTION 3.04 Deposit of Redemption Price.
On or prior to each Redemption Date, the Company shall
deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price of all Securities to be redeemed on that
date; provided, that any Additional Interest under the Securities
shall be deposited with the Paying Agent 120 days following the
end of the calendar year in which the redemption is effected.
Upon the written request of the Company, the Paying Agent shall
promptly return to the Company any U.S. Legal Tender so deposited
which is not required for that purpose except with respect to
monies owed as obligations to the Trustee pursuant to Article
VII.
If the Company complies with the preceding paragraph,
interest on the Securities to be redeemed will cease to accrue on
the applicable Redemption Date, whether or not such Securities
are presented for payment. If any Security called for redemption
shall not be so paid upon surrender for redemption, interest will
be paid, from the Redemption Date until such Redemption Price is
paid, on the unpaid Principal of and on any interest not paid on
such unpaid Principal, in each case, at the rate provided in the
Securities.
SECTION 3.05 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall issue and the Trustee shall authenticate for
the Holder, at the expense of the Company, a new Security or
Securities equal in principal amount to the unredeemed portion of
the Security surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.01 Payment of Securities.
The Company shall pay the Principal of and interest on the
Securities on the dates and in the manner provided in the
Securities and this Indenture. An installment of Principal of or
interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent holds on that date U.S.
Legal Tender designated for and sufficient to pay the installment
and/or interest then due and is not prohibited from paying such
installment on such date.
The Company shall pay interest on (i) overdue Principal at
the rate set forth in the second paragraph of paragraph 1 of the
Securities, and (ii) overdue installments of interest at the same
rate, to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, the office or agency required under Section
2.03. The Company shall give prior notice to the Trustee of the
location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders,
notices and demands described in such Section 2.03 may be made or
served at the address of the Trustee set forth in Section 2.03.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough
of Manhattan, The City of New York, for such purposes. The
Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location
of any such other office or agency. The Company hereby initially
designates the corporate trust office of the Trustee set forth in
Section 2.03 as such office.
SECTION 4.03 Corporate Existence.
Except as otherwise permitted by Article V, the Company
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and the existence of
each of its Subsidiaries, in accordance with the respective
organizational documents of each of them and the rights (charter
and statutory) and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be
required to preserve, with respect to itself, any right or
franchise, and with respect to any of its Subsidiaries, any such
existence, right or franchise, if (a) the Board of Directors of
the Company shall determine reasonably and in good faith that the
preservation thereof is no longer desirable in the conduct of the
business of the Company and (b) the loss thereof is not adverse
in any material respect to the Holders.
SECTION 4.04 Payment of Taxes and Other Claims.
The Company shall and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed
upon it or any of its Subsidiaries or properties of it or any of
its Subsidiaries, and (ii) all lawful claims for labor, materials
and supplies that, if unpaid, might by law become a Lien upon the
property of it or any of its Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge
or claim if either (a) the amount, applicability or validity
thereof is being contested in good faith by appropriate
proceedings and an adequate reserve has been established therefor
to the extent required by GAAP, or (b) the failure to make such
payment or effect such discharge (together with all other such
failures) would not have a material adverse effect on the
financial condition or results of operations of the Company and
its Subsidiaries, taken as a whole.
SECTION 4.05 Maintenance of Properties and Insurance.
(a) The Company shall cause all Properties used or useful
in the conduct of its business or the business of any of its
Subsidiaries to be maintained and kept in satisfactory condition,
repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all
as in its judgment may be necessary, so that the business carried
on in connection therewith may be properly and advantageously
conducted at all times unless the failure to so maintain such
properties (together with all other such failures) would not have
a material adverse effect on the financial condition or results
of operations of the Company and its Subsidiaries taken as a
whole; provided, however, that nothing in this Section 4.05 shall
prevent the Company or any of its Subsidiaries from discontinuing
the operation or maintenance of any of such properties or
disposing of any of them if such discontinuance or disposal is
either (i) in the ordinary course of business, (ii) in the good
faith judgment of the Board of Directors of the Company or the
Subsidiary concerned, or of the senior officers of the Company or
such Subsidiary, as the case may be, desirable in the conduct of
the business of the Company or such Subsidiary, as the case may
be, or (iii) is otherwise permitted by this Indenture.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds
that, in the reasonable, good faith opinion of the Company are
adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner, with reputable
insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be customary, in
the reasonable, good faith opinion of the Company, for companies
similarly situated in the industry, unless the failure to provide
such insurance (together with all other such failures) would not
have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries, taken
as a whole.
(c) The Company shall and shall cause each of its
Subsidiaries to keep proper books of record and account, in which
full and correct entries shall be made of all financial
transactions and the assets and business of the Company and each
Subsidiary in accordance with GAAP consistently applied to the
Company and its Subsidiaries taken as a whole.
SECTION 4.06 Compliance Certificates; Notice of Default.
(a) The Company shall deliver to the Trustee, within sixty
(60) days after the end of each of the Company's first three
fiscal quarters and within ninety (90) days after the end of the
Company's fiscal year, an Officers' Certificate stating that a
review of the Company's activities and the activities of its
Subsidiaries during the preceding fiscal period has been made
under the supervision of the signing Officers with a view to
determining whether it has kept, observed, performed and
fulfilled its obligations under this Indenture and further
stating, as to each such Officer signing such certificate, that
to the best of his knowledge, the Company during such preceding
fiscal period has kept, observed, performed and fulfilled each
and every such covenant and no Default or Event of Default
occurred during such period and at the date of such certificate
there is no Default or Event of Default that has occurred and is
continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event
of Default and its status with particularity and what action the
Company has taken or proposes to take with respect thereto. The
Officers' Certificate shall also include all calculations
necessary to show covenant compliance. The Officers' Certificate
shall also notify the Trustee should the Company elect to change
the manner in which it fixes its fiscal year end.
(b) So long as (and to the extent) not contrary to the then
current recommendations of the American Institute of Certified
Public Accountants, the Company shall deliver to the Trustee
within ninety (90) days after the end of each fiscal year a
written statement by an independent public accounting firm
stating (A) that their audit examination has included a review of
the terms of this Indenture and the Securities as they relate to
accounting matters, and (B) whether, in connection with their
audit examination, any Default or Event of Default has come to
their attention and if such a Default or Event of Default has
come to their attention, specifying the nature and period of
existence thereof.
(c) The Company will deliver to the Trustee promptly, and
in any event within ten (10) days after the Company becomes aware
or should reasonably have become aware of the occurrence of any
Default or Event of Default, an Officers' Certificate describing
such Default or Event of Default and its status with
particularity and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.07 Compliance with Laws.
The Company shall comply, and shall cause each of its
Subsidiaries to comply, with the respective organizational
documents of each of them and all applicable statutes, rules,
regulations, orders and restrictions of the United States of
America, all states, provinces and municipalities thereof, and of
any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing,
in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such the
noncompliance with which would not in the aggregate have a
material adverse effect on the financial condition or results of
operations of the Company and its Subsidiaries taken as a whole.
SECTION 4.08 SEC Reports and Other Information.
To the extent permitted by applicable law or regulation,
whether or not the Company is subject to Section 13(a) or 15(d)
of the Exchange Act, the Company shall file with the SEC the
annual reports, quarterly reports and other documents which the
Company would have been required to file with the SEC pursuant to
such Sections 13(a) and 15(d) if the Company were so subject,
such documents to be filed with the SEC on or prior to the
respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the
Company were so subject. The Company shall comply with its
reporting and filing obligations under the applicable federal
securities laws. Annual reports will contain consolidated
financial statements and notes thereto, together with an opinion
thereon expressed by an independent public accounting firm and
management's discussion and analysis of financial condition and
results of operations, and quarterly reports will contain
unaudited condensed consolidated financial statements for the
first three quarters of each fiscal year. Upon qualification of
this Indenture under the TIA, the Company shall also comply with
the provisions of TIA 314(a).
SECTION 4.09 Waiver of Stay Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury law or other law that would
prohibit or forgive the Company from paying all or any portion of
the Principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) the
Company hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 4.10 Limitation on Indebtedness.
The Company shall not, and shall not cause or permit any of
its Subsidiaries to, directly or indirectly, create, incur,
assume, issue, guarantee or in any manner become liable for or
with respect to the payment of, any Indebtedness, except that the
Company and its Subsidiaries may incur (each of which shall be
given independent effect):
(a) Indebtedness of the Company evidenced by the Securities
or otherwise arising under this Indenture, and additional
Indebtedness which may be incurred from time to time through the
issuance of notes, bonds, or other Obligations of the Company
(whether under this Indenture or under some other instrument)
which is pari passu or subordinated in right of payment with the
Securities;
(b) Indebtedness of the Company and its Subsidiaries
outstanding on the Issue Date; provided, none of the instruments
and agreements evidencing or governing such Indebtedness shall be
amended, modified or supplemented after the Issue Date to change
any terms of subordination, payment of Principal, interest, fees
or other amounts due, or rights of conversion, put, exchange or
other similar rights or any other covenants, terms or conditions
thereof to be less favorable to the Holders than such terms,
rights and conditions as is effect on the Issue Date.
(c) purchase money Indebtedness of the Company described in
Section 4.13(d) not to exceed an aggregate outstanding amount at
any time of $5,000,000;
(d) Indebtedness of the Company secured by Property of the
Company in an aggregate principal amount not to exceed the
highest aggregate principal amount of the Securities issued under
this Indenture if, immediately after giving pro forma effect to
the incurrence thereof, no Default or Event of Default shall have
occurred;
(e) Indebtedness of a Subsidiary of the Company issued to
and held by the Company or a Wholly-Owned Subsidiary of the
Company; provided, however, that any transfer of such
Indebtedness (other than to the Company or a Wholly-Owned
Subsidiary of the Company) shall be deemed, in such case, to
constitute a new incurrence of such Indebtedness by the issuer
thereof;
(f) Indebtedness of the Company owed to or held by a Wholly-
Owned Subsidiary of the Company that is unsecured and
subordinated in right of payment to the Securities; provided,
however, that any subsequent issuance or transfer of any Capital
Stock which results in any such other Wholly-Owned Subsidiary
ceasing to be a Wholly-Owned Subsidiary of the Company, or any
transfer of such Indebtedness (other than to a Wholly-Owned
Subsidiary of the Company), shall be deemed in each case to
constitute a new incurrence of such Indebtedness by the Company;
(g) Indebtedness represented by Hedging Obligations of the
Company or its Subsidiaries with respect to Indebtedness of the
Company or its Subsidiaries (which Indebtedness is otherwise
permitted to be incurred under this Section 4.10 and which
Hedging Obligations are otherwise permitted to be incurred under
Section 4.19) to the extent the notional principal amount of such
Hedging Obligations does not exceed the principal amount of the
Indebtedness to which such Hedging Obligations relate;
(h) any replacements, renewals, refinancings and extensions
of Indebtedness incurred under clauses (a), (b), (c), (d), (e),
and (f) above provided that (i) any such replacement, renewal,
refinancing and extension (x) shall not provide for any mandatory
redemption, amortization or sinking fund requirement in an amount
greater than or at a time prior to the amounts and times
specified in the Indebtedness being replaced, renewed, refinanced
or extended and (y) shall be contractually subordinated to the
Securities at least to the extent, if at all, that the
Indebtedness being replaced, renewed, refinanced or extended is
subordinate to the Securities, (ii) any such Indebtedness of any
person must be replaced, refinanced or extended with Indebtedness
incurred by such person or by the Company, (iii) the principal
amount of Indebtedness incurred pursuant to this clause (h) (or,
if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof, the original issue price
of such Indebtedness) shall not exceed the sum of the principal
amount (or with respect to Indebtedness which provides for an
amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity
thereof, the accreted value thereof) of Indebtedness so replaced,
renewed, refinanced or extended, plus accrued interest, the
amount of any premium required to be paid in connection with such
replacement, renewal, refinancing or extension pursuant to the
terms of such Indebtedness or the amount of any premium
reasonably determined by the Company as necessary to accomplish
such replacement, renewal, refinancing or extension by means of a
tender offer or privately negotiated purchase and the amount of
fees and expenses incurred in connection therewith, (iv) the
covenants, terms and conditions of any such extension, renewal,
refunding or refinancing Indebtedness (and of any agreement or
instrument entered into in connection therewith) are no less
favorable to the Holders than the terms of the Indebtedness as in
effect prior to such action, and (v) immediately prior to and
immediately after giving effect to any such extension, renewal,
refunding or refinancing, no Default or Event of Default shall
have occurred and be continuing; and
(i) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business.
SECTION 4.11 Limitation on Restricted Payments.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted
Payment, unless at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and
be continuing or occur as a consequence thereof; and
(b) the aggregate of all Restricted Payments declared or
made after the Issue Date through and including the date of such
Restricted Payment does not exceed 50% of the Company's
Consolidated Net Income from and including January 1, 1999, to
and including the last day of the fiscal quarter immediately
preceding the date of such Restricted Payment.
The provisions of this Section 4.11 shall not prohibit (i)
the payment of any dividend within sixty (60) days after the date
of declaration thereof, if such payment would comply with the
provisions of this Indenture at the date of the declaration of
such payment, (ii) the retirement of any shares of Capital Stock
of the Company or Indebtedness of the Company which is
subordinated in right of payment to the Securities by conversion
into, or by an exchange for, shares of Capital Stock of the
Company that are not Disqualified Stock or out of the Net
Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of other shares of Capital Stock
(other than Disqualified Stock) of the Company, and (iii) the
redemption or retirement of Indebtedness of the Company which is
subordinated in right of payment to the Securities in exchange
for, by conversion into, or out of the Net Proceeds of, a
substantially concurrent sale of subordinated Indebtedness of the
Company (other than to a Subsidiary of the Company) that is
contractually subordinated in right of payment to the Securities
at least to the same extent that the Indebtedness being redeemed
or retired is subordinated to the Securities.
Not later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting
forth the basis upon which the calculations required by this
Section 4.11 were computed, which calculations may be based upon
the Company's latest available financial statements.
SECTION 4.12 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective or enter into any
agreement with any person that would cause any consensual
encumbrance or restriction of any kind on the ability of any
Subsidiary of the Company to (a) pay dividends, in cash or
otherwise, or make any other distributions on its Capital Stock
or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Company or
any of its Subsidiaries, (b) make loans or advances to the
Company or any of its Subsidiaries or (c) transfer any of its
Properties to the Company or any of its Subsidiaries, except, in
each case, for such encumbrances or restrictions existing under
or contemplated by or by reason of customary non-assignment or
sublease provisions of any agreement of the Company or its
Subsidiaries.
SECTION 4.13 Limitation on Liens.
Other than Permitted Liens, the Company shall not, and the
Company shall not permit, cause or suffer any of its Subsidiaries
to, create, incur, assume or suffer to exist any Lien, charge or
other encumbrance of any kind with respect to any property or
assets now owned or hereafter acquired by it, which (a) secures
Indebtedness of the Company subordinated in right of payment to
the Securities, unless the Securities are secured by a Lien on
such property that is senior to such Lien, (b) secures
Indebtedness of the Company which is pari passu in right of
payment with the Securities, unless the Securities are secured by
a Lien on such Property that is equal and ratable with such Lien,
(c) secures Indebtedness incurred to refinance Indebtedness which
has been secured by a Lien permitted under this Indenture and is
permitted to be refinanced under this Indenture, to the extent
such Liens extend to or cover Property of the Company or any of
its Subsidiaries not securing the Indebtedness so refinanced or
increase the extent of such Liens, or (d) purchase money Liens to
secure Indebtedness permitted under this Indenture (or as
extended or renewed as permitted under this Indenture) and
incurred to purchase fixed assets, unless such Indebtedness
represents not less than seventy-five percent (75%) and not more
than one hundred percent (100%) of the purchase price of such
assets as of the date of purchase thereof and no Property other
than the assets so purchased secures such Indebtedness.
SECTION 4.14 Limitation on Investments, Loans and Advances.
The Company shall not make, and shall not permit any of its
Subsidiaries to make, any Investment, except: (i) Investments by
the Company or any of its Subsidiaries in any Wholly-Owned
Subsidiary of the Company (including any such Investment pursuant
to which a Person becomes a Wholly-Owned Subsidiary of the
Company) or in the Company by any of its Subsidiaries; (ii)
Investments of the type contemplated by the prospectus included
in the Company's registration Statement on Form SB-2 (file no.
_________) as filed with, and declared effective by, the SEC (the
"Prospectus"); (iii) Investments permitted to be made pursuant to
Section 4.11; (iv) Investments represented by advances to
employees, officers and directors of the Company or its
Subsidiaries made in the ordinary course of business and
consistent with reasonable and customary business practices; (v)
Permitted Investments; (vi) Investments permitted to be made with
the Net Cash Proceeds of Asset Sales pursuant to Section 4.17;
(vii) Investments in Hedging Obligations permitted under Section
4.24; (viii) Investments represented by loans or advances to
Affiliates; and (x) Investments permitted to be made pursuant to
Section 4.10(e) and Section 4.10(f).
SECTION 4.15 Limitation on Transactions with Affiliates.
The Company will not, and will not permit, cause or suffer,
any of its Subsidiaries to, participate in an Affiliate
Transaction, except in good faith and on terms that are no less
favorable to the Company or such Subsidiary, as the case may be,
than those that could have been obtained in a comparable
transaction on an arm's length basis from a person not an
Affiliate of the Company or such Subsidiary. With respect to any
Affiliate Transaction (and each series of related Affiliate
Transactions which are similar or part of a common plan)
involving aggregate payments or other market value in excess of
$5,000,000, the Company shall deliver an Officers' Certificate to
the Trustee certifying that such Affiliate Transaction (or series
of related Affiliate Transactions) complies with the foregoing
provisions and that such Affiliate Transaction (or series of
related Affiliate Transactions) was approved by the Board of
Directors of the Company. Notwithstanding the foregoing, the
restrictions set forth in this Section 4.15 shall not apply to
(i) any employment agreement, consulting agreement and
indemnification obligations entered into by the Company or any of
its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such
Subsidiary, (ii) the payment of reasonable and customary fees to
directors of the Company who are not employees of the Company,
and (iv) transactions permitted under Sections 4.10, 4.11 and
4.14 hereof.
SECTION 4.16 Limitation on Liquidations, Dissolutions, Mergers
and Consolidation.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make
any material change in its present method of conducting business,
except, (i) any Subsidiary of the Company may be merged or
consolidated with or into the Company (provided that the Company
shall be the continuing or surviving corporation) or with or into
any one or more Wholly-Owned Subsidiaries of the Company
(provided that a Wholly-Owned Subsidiary of the Company shall be
the continuing or surviving corporation) and after giving effect
to any of such transactions, no Default or Event of Default shall
exist; (ii) any Wholly-Owned Subsidiary of the Company may sell,
lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Company or any
of its Wholly-Owned Subsidiaries; (iii) any Affiliate of the
Company may be merged or consolidated with or into the Company
(provided that the Company shall be the continuing or surviving
corporation) or with or into any one or more Wholly-Owned
Subsidiaries of the Company (provided that a Wholly-Owned
Subsidiary of the Company shall be the continuing or surviving
corporation) and after giving effect to any of such transactions,
no Default or Event of Default shall exist; (iv) any conveyance,
sale, assignment, transfer, or disposition of property and assets
contemplated by the Registration Statement to create liquidity
for repayment of the Securities; or (v) any the Company may be
merged or consolidated with or into another entity, provided that
there is no material change in the business of the surviving
entity from the business of the Company, the surviving entity
assumes all obligations hereunder and under the Securities, and
after giving effect to any such transaction, no Default or Event
of Default shall exist.
SECTION 4.17 ERISA Compliance.
The Company will not and will not permit any of its
Subsidiaries to, directly or indirectly, (i) engage in a
"prohibited transaction," as such term is defined in Section 406
of ERISA or Section 4975 of the Internal Revenue Code, with
respect to any Plan or Multiemployer Plan or knowingly consent to
any other "party in interest" or any "disqualified person," as
such terms are defined in Section 3(14) of ERISA or Section
4975(e)(2) of the Internal Revenue Code, respectively, engaging
in any "prohibited transaction," with respect to any Plan or
Multiemployer Plan maintained by the Company or any of its
Subsidiaries; (ii) permit any Plan maintained by the Company or
any of its Subsidiaries to incur any "accumulated funding
deficiency," as defined in Section 302 of ERISA or Section 412 of
the Internal Revenue Code, unless such incurrence shall have been
waived in advance by the Internal Revenue Services; (iii)
terminate any Plan in a manner which could result in the
imposition of a Lien on any property of the Company or any of its
Subsidiaries pursuant to Section 4068 of ERISA; (iv) breach, or
knowingly permit any employee of officer or any trustee or
administrator of any Plan maintained by the Company or any of its
Subsidiaries to breach, any fiduciary responsibility imposed
under Title I of ERISA with respect to any Plan; (v) engage in
any transaction which would result in the incurrence of a
liability under section 4069 of ERISA; or (vi) fail to make
contributions to a Plan or Multiemployer Plan which results in
the imposition of a Lien on any property of the Company or any of
its Subsidiaries pursuant to Section 302(f) of ERISA or Section
412(n) of the Internal Revenue Code.
SECTION 4.18 Limitation on Acquisitions.
The Company will not and will not permit any of its
Subsidiaries to enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or
take any action to solicit the tender of securities or proxies in
respect thereof in order to effect any Acquisition, other than
Permitted Acquisitions.
SECTION 4.19 Limitation on Hedging Obligations.
The Company will not and will not permit any of its
Subsidiaries to incur any Hedging Obligations or enter into any
agreements, arrangements, devices or instruments relating to
Hedging Obligations, except for Hedging Obligations the aggregate
notional amount of which does not exceed $75,000,000.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.01 Consolidation, Merger, Conveyance, Transfer or
Lease.
The Company shall not consolidate with or merge with or into
or sell, assign, convey, lease, transfer or otherwise dispose of
all or substantially all of its properties and assets (determined
on a consolidated basis for the Company and its Subsidiaries,
taken as a whole) to another Person or Persons, in a single
transaction or through a series of related transactions, or cause
or permit any of its Subsidiaries to do any of the foregoing,
unless:
(a) the Company is the continuing Person, or the Person
formed by or surviving such consolidation or merger or the Person
to which such sale, assignment, conveyance, lease, transfer or
other disposition is made (the "surviving entity") is a
corporation organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia;
(b) the surviving entity shall expressly assume, by a
supplemental indenture executed and delivered to the Trustee, in
form and substance reasonably satisfactory to the Trustee, all of
the obligations of the Company under the Securities and this
Indenture;
(c) immediately before and immediately after giving effect
to such transaction, or series of transactions (including,
without limitation, any Indebtedness incurred or anticipated to
be incurred in connection with or in respect of such transaction
or series of transactions), no Default or Event of Default shall
have occurred and be continuing; and
(d) the Company or the surviving entity shall have
delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that (i) if a supplemental indenture is
required in connection with such transaction or series of
transactions, such supplemental indenture complies with this
Section 5.01, and (ii) all conditions precedent in this Indenture
relating to the transaction or series of transactions have been
satisfied.
SECTION 5.02 Successor Entity Substituted.
Upon any consolidation, merger or any transfer of all or
substantially all of the assets of the Company in accordance with
Section 5.01, the surviving entity formed by such consolidation
or into or with which the Company is merged or to which such
transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such surviving entity had
been named as the Company herein and the Company shall be
discharged from all obligations and covenants under the Indenture
and the Securities.
ARTICLE VI.
DEFAULT AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest on
any Security when the same becomes due and payable and
continuance of any such default for a period of thirty (30) days;
or
(ii) the Company defaults in the payment of the
Principal of or premium on any Security as and when due and
payable (including a default in payment upon an offer to purchase
required to be made by this Indenture); or
(iii) the Company defaults in the performance, or
breach, of any material covenant, obligation or agreement in the
Securities or this Indenture (other than defaults specified in
clause (i) or (ii) above), and such default or breach continues
for a period of thirty (30) days after written notice to the
Company by the Trustee or to the Company and the Trustee by the
Holders of at least 30% in aggregate principal amount of the
outstanding Securities; or
(iv) any representation or warranty contained in the
Financing Documents or any writing furnished by the Company or
any of its Subsidiaries to any Holder, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading; or
(v) failure by the Company or any of its Subsidiaries
(a) to make any payment when due with respect to any other
Indebtedness under one or more classes or issues of Indebtedness
which one or more classes or issues of Indebtedness are in an
aggregate principal amount of $5,000,000 or more and such failure
results in acceleration of the maturity thereof; or (b) to
perform any term, covenant, condition, or provision of one or
more classes or issues of Indebtedness which one or more classes
or issues of Indebtedness are in an aggregate principal amount of
$5,000,000 or more, which failure, in the case of this clause
(b), results in an acceleration of the maturity thereof; or
(vi) one or more judgments, orders or decrees for the
payment of money in excess of $5,000,000, either individually or
in an aggregate amount, shall be entered against the Company or
any of its Subsidiaries or any of their respective properties and
shall not be discharged and there shall have been a period of
thirty (30) days during which a stay of enforcement of such
judgment or order, by reason of pending appeal or otherwise,
shall not be in effect; or
(vii) any of the Financing Documents ceases to be
in full force and effect (other than as a result of termination
pursuant to its terms) or any such Financing Document or any of
its material provisions is declared or asserted to be null and
void or otherwise becomes unenforceable in accordance with its
terms; or
(viii) the Company or any Material Subsidiary of the
Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding with
respect to itself,
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of
it or for all or any material part of its property,
(D) makes a general assignment for the benefit of
its creditors,
(E) consents to or acquiesces in the institution
of bankruptcy or insolvency proceedings against it,
(F) shall generally not pay its debts when such
debts become due or shall admit in writing its
inability to pay its debts generally, or
(G) takes any corporate action in furtherance of
or to facilitate, conditionally or otherwise, any of
the foregoing; or
(ix) a court of competent jurisdiction enters a decree,
judgment or order under any Bankruptcy Law that:
(A) is for relief against the Company or any
Material Subsidiary of the Company in an involuntary
case or proceeding,
(B) appoints a Custodian of the Company or any
Material Subsidiary of the Company for all or
substantially all of its properties, or
(C) orders the winding-up or liquidation of the
Company or any Material Subsidiary of the Company, and
in each case the order or decree remains unstayed and
in effect for sixty (60) days; or
(x) this Indenture ceases to be in full force and
effect or ceases to give the Trustee, an any material
respect, the liens, rights, powers and privileges purported
to be created thereby, in each case, as determined by a
court of competent jurisdiction.
The Company shall, within sixty (60) days following the end
of each of its first three Fiscal Quarters, and within ninety
(90) days following the end of each of its Fiscal Years, file
with the Trustee an Officers' Certificate certifying that the
Company has performed all of its obligations under this Indenture
in all material respects and that no Event of Default has
occurred during the preceding Fiscal Quarter or Fiscal Year, as
the case may be, or in the event any such Event of Default has
occurred, the facts and circumstances resulting in such Event of
Default. The Company shall promptly upon the occurrence thereof
provide notice to the Trustee of an Event of Default.
SECTION 6.02 Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (viii) or (ix) above with respect to the
Company or any Material Subsidiary of the Company) occurs and is
continuing, then the Trustee or the Holders of at least thirty
percent (30%) in aggregate principal amount of the outstanding
Securities may, by written notice to the Company and the Trustee,
and the Trustee upon the request of the Holders of not less than
thirty percent (30%) in aggregate principal amount of the
outstanding Securities shall, subject in each case to Section
10.02(e), declare the Principal of and accrued and unpaid
interest, if any, on all the Securities on the date of such
declaration to be due and payable immediately (the "Default
Amount"). Upon any such declaration, the Default Amount shall
become due and payable immediately. If an Event of Default
specified in clause (viii) or (ix) above with respect to the
Company occurs and is continuing, then the Default Amount on all
of the Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Trustee or any Holder.
After a declaration of acceleration, the Required Holders
may, by notice to the Trustee, rescind such declaration of
acceleration if all existing Events of Default have been cured or
waived, other than nonpayment of the Default Amount on the
Securities that have become due solely as a result of such
acceleration and if the rescission of acceleration would not
conflict with any judgment, order or decree by a court of
competent jurisdiction. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may, subject to Section 10.02(e), pursue any available remedy by
proceeding at law or in equity to collect the payment of
Principal of, or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture
as may be required or permitted thereunder.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Past Defaults.
Subject to Sections 6.02, 6.07 and 9.02, the Required
Holders by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a Default in the
payment of Principal of or interest on any Security as specified
in clauses (i) and (ii) of Section 6.01 or in respect of any
provision hereof which cannot be modified or amended without the
consent of the Holder so affected pursuant to Section 9.02. When
a Default or Event of Default is so waived, it shall be deemed
cured and ceases to exist, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.
SECTION 6.05 Control by Required Holders.
The Required Holders may direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it
including, without limitation, any remedies provided for in
Section 6.03. Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that conflicts with any law or
this Indenture that the Trustee determines may be unduly
prejudicial to the rights of another Securityholder, or that may
involve the Trustee in personal liability unless the Trustee has
asked for and received indemnification reasonably satisfactory to
it against any loss, liability or expense caused by its following
such direction; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(a) the Holder gives to the Trustee notice of a continuing
Event of Default;
(b) Holders of at least thirty percent (30%) in principal
amount of the outstanding Securities make a written request to
the Trustee to pursue the remedy;
(c) such Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(d) the Trustee does not comply with the request within
thirty (30) days after receipt of the request and the offer of
indemnity; and
(e) during such thirty (30) day period the Required Holders
do not give the Trustee a direction which, in the opinion of the
Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or
priority over such other Securityholder.
SECTION 6.07 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture,
except as set forth in Article X, the right of any Holder to
receive payment of Principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to
bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without
the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default in payment of Principal or interest
specified in clause (i) or (ii) of Section 6.01 occurs and is
continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of Principal and
accrued interest remaining unpaid, together with interest on
overdue Principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest,
in each case at the rate per annum borne by the Securities and
such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, taxes, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed
in any judicial proceedings relating to the Company or any other
obligor upon the Securities, any of their respective creditors or
any of their respective property and shall be entitled and
empowered to collect and receive any monies or other securities
or property payable or deliverable upon the conversion or
exchange of the Securities or upon any such claims and to
distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder to make
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Securityholders, to first pay to the Trustee any amount due to it
for the reasonable compensation, expenses, taxes, disbursements
and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Securityholder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article
VI, it shall pay out the money and other property in the
following order:
First: to the Trustee for amounts due under Section
7.07;
Second: to Holders for Principal and interest owing
under the Securities, ratably, according to the amounts due
and payable on the Securities for Principal, in the
following order of priority: first to any premiums, and
then to interest; and
Third: to the Company or any other obligor on the
Securities, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a
Record Date and payment date for any payment to Securityholders
pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to
a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, or a suit by a Holder or Holders of more than ten percent
(10%) in principal amount of the outstanding Securities.
SECTION 6.12 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.13 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event
of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right
and remedy given by this Article VI or by law to the Trustee or
to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
ARTICLE VII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein
expressed.
SECTION 7.01 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in its exercise thereof as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of a Default or an Event
of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and
no covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture but need not
verify the accuracy of the contents thereof.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05.
(d) The Trustee may refuse to perform any duty or exercise
any right or power unless it receives indemnity reasonably
satisfactory to it against any loss, liability or expense.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(f) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (e) of
this Section 7.01.
(g) The Trustee shall not be liable for interest on any
money or assets received by it except as the Trustee may agree
with the Company. Assets held in trust by the Trustee need not
be segregated from other assets except to the extent required by
law.
SECTION 7.02 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or
an Opinion of Counsel, which shall conform to Sections 11.04 and
11.05 hereof. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) 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 reliance
thereon.
(d) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of
any agent (other than the negligence or misconduct of an agent
who is an employee of the Trustee) appointed with due care.
(e) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers, provided that the
Trustee's conduct does not constitute negligence or bad faith.
(f) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request,
direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled, upon
reasonable notice to the Company, to examine the books, records,
and premises of the Company, personally or by agent or attorney.
(g) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred by it
in compliance with such request, order or direction.
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with the Company, any Subsidiary of the Company or their
respective Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11
hereof.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities. Further, the
Trustee shall not be accountable for the Company's use of the
proceeds from the Securities, nor be responsible for any
statement in the Prospectus or Securities other than the
Trustee's certificate of authentication.
SECTION 7.05 Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Securityholder, as their names and addresses appear on the
Securityholder list described in Section 2.05 hereof, notice of
the Default or Event of Default within thirty (30) days after
such Default or Event of Default has occurred, unless such
Default or Event of Default shall have been cured or waived.
Except in the case of a Default or an Event of Default in payment
of Principal of or interest on, any Security, and a Default or
Event of Default that resulted from the failure to comply with
Section 5.01 hereof, the Trustee may withhold the notice if and
so long as its Board of Directors, the executive committee of its
Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is
in the interest of the Securityholders.
SECTION 7.06 Reports by Trustee to Holders.
If required by law, within sixty (60) days after each May 15
beginning with the May 15 following the date of this Indenture,
the Trustee shall mail to the Holders, at the Company's expense,
a brief report dated as of such reporting date that complies with
TIA 313(a) (but if no event described in TIA 313(a) has
occurred within the twelve months preceding the reporting date,
no report need be transmitted). The Trustee also shall comply
with TIA 313(b)(2) to the extent applicable. The Trustee shall
also transmit by mail all reports as required by TIA 313(c).
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange or market on
which the Securities are listed or quoted. The Company shall
notify the Trustee when the Securities are listed on any stock
exchange or quoted on any market.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for all services rendered by it
hereunder. Any law on compensation of a trustee of an express
trust shall not limit the Trustee's compensation. The Company
shall reimburse the Trustee upon request for all tax obligations
imposed on the Trustee related to this Indenture and all
reasonable out-of-pocket expenses incurred or made by it. Such
expenses shall include the reasonable fees and expenses of the
Trustee's agents, compensation and counsel.
The Company shall indemnify the Trustee and its agents for,
and hold them harmless against, any loss, liability or expense
(including reasonable attorneys' fees and expenses) incurred by
them without negligence, bad faith or willful misconduct on their
part, arising out of or in connection with the administration of
this trust including the reasonable costs and expenses of
enforcing this Indenture against the Company (including Section
7.07 hereof) and of defending themselves against any claim
(whether asserted by any Securityholder or the Company) or
liability in connection with the exercise or performance of any
of their rights, powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company need not
pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through
its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.07, the Company and the Holders agree that the Trustee shall
have a lien prior to the Securities on all assets or money held
or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(viii) or (ix)
occurs, such expenses and the compensation for such services are
intended to constitute expenses of administration under any
Bankruptcy Law. This Section 7.07 shall survive the termination
of this Indenture.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign by so notifying the Company in
writing at least thirty (30) days prior to the date of the
proposed resignation; provided, however, that no such resignation
shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 7.08. The Required Holders
may remove the Trustee by so notifying the Company and the
Trustee and may appoint a successor Trustee with the Company's
consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.01 or 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;
(c) a receiver Custodian or other public officer takes
charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall notify
each Holder of such event and shall promptly appoint a successor
Trustee. Within one (1) year after the successor Trustee takes
office, the Required Holders may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, subject
to the lien provided in Section 7.07, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
If a successor Trustee does not take office within sixty
(60) days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least ten
percent (10%) in principal amount of the outstanding Securities
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Security holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10 Eligibility: Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA 310(a)(1) and 310(a)(5). The Trustee (or in
the case of a corporation included in a bank holding company
system, the related bank holding company) shall always have a
combined capital and surplus of at least $150,000 as set forth in
its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank
holding company, shall meet the capital requirements of TIA
310(a)(2). The Trustee shall comply with TIA 310(b) including
the optional provision permitted by the second sentence of TIA
310(b)(9); provided, however, that there shall be excluded from
the operation of TIA 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or
participation in other securities, of the Company are
outstanding, if the requirements for such exclusion set forth in
TIA 310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has
resigned or been removed shall be subject to TIA 311(a) to the
extent indicated therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Discharge of Indenture.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Sections 7.07, 8.04 and 8.05
shall survive) as to all outstanding Securities when all such
Securities theretofore authenticated and delivered (except lost,
stolen or destroyed Securities which have been replaced or paid
and Securities for the payment of which money has theretofore
been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from
such trust) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable hereunder. In
addition, the Company may terminate all of its obligations under
this Indenture (except the Company's obligations under Sections
7.07, 8.04 and 8.05) if:
(a) all Securities have otherwise become due and payable in
accordance with the terms of this Indenture (including the
provisions of Article X);
(b) the Company shall have irrevocably deposited or caused
to be deposited with the Trustee or a trustee satisfactory to the
Trustee, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds in
trust solely for the benefit of the Holders for that purpose,
U.S. Legal Tender sufficient to pay Principal of and interest, if
any, on the outstanding Securities; provided that the Trustee
shall have been irrevocably instructed to apply such U.S. Legal
Tender to the payment of said Principal and interest with respect
to the Securities;
(c) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent providing for the termination of
the Company's obligation under the Securities and this Indenture
have been complied with; and
(d) the Company shall have paid all sums payable by it
hereunder.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.02,
7.07, 7.08, 8.03, 8.04 and 8.05 hereof shall survive until the
Securities are no longer outstanding. After the Securities are
no longer outstanding, the Company's obligations in Sections
7.07, 8.04 and 8.05 hereof shall survive.
After such delivery or irrevocable deposit the Trustee upon
request shall acknowledge in writing the discharge of the
Company's obligations under the Securities and this Indenture
except for those surviving obligations specified above.
SECTION 8.02 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
paragraph (b) or paragraph (c) below be applied to the
outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company shall be
deemed to have been released and discharged from its obligations
with respect to the outstanding Securities on the date the
conditions set forth in paragraph (d) below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal
defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be
"outstanding" only for the purposes of paragraph (e) below and
the other Sections of and matters under this Indenture referred
to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the
trust fund described in paragraph (d) below and as more fully set
forth in such paragraph, payments in respect of the Principal of
and interest on such Securities when such payments are due, (ii)
the Company's obligations with respect to such Securities under
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.02, 7.07, 7.08, 8.03,
8.04 and 8.05, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, and (iv) this Section 8.02.
Subject to compliance with this Section 8.02, the Company may
exercise its option under this paragraph (b) notwithstanding the
prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company shall be
released and discharged from its obligations under any covenant
contained in Article V and in Sections 4.10 through 4.16 with
respect to the outstanding Securities on and after the date the
conditions set forth in paragraph (d) below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall
thereafter be deemed to be not "outstanding" for the purpose of
any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all
other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the outstanding
Securities, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default
under Section 6.01, but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected
thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding
Securities:
(i) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 7.10 who shall agree
to comply with the provisions of this Section 8.02
applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) U.S. Legal Tender in an
amount, or (B) U.S. Government Obligations which through the
scheduled payment of Principal of and interest in respect
thereof in accordance with their terms will provide (without
giving effect to the reinvestment of any interest thereon),
not later than one (1) day before the due date of any
payment, U.S. Legal Tender in an amount, or (C) a
combination thereof, sufficient, in the opinion of a firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge Principal of
and interest, on the outstanding Securities on the Maturity
Date of such principal or installment of principal or
interest in accordance with the terms of this Indenture and
of such Securities; provided, however, that the Trustee (or
other qualifying trustee) shall have received an irrevocable
Company Order instructing the Trustee (or other qualifying
trustee) to apply such U.S. Legal Tender or the proceeds of
such U.S. Government Obligations to said payments with
respect to the Securities;
(ii) no Default or Event of Default or event which with
notice or lapse of time or both would become a Default or an
Event of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit or,
in so far as Sections 6.01(viii) and (ix) are concerned, at
any time during the period ending on the 91st day after the
date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration
of such period);
(iii) such legal defeasance or covenant defeasance
shall not result in a breach or violation of, or constitute
a Default or Event of Default under, this Indenture or any
other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which any of them is
bound;
(iv) in the case of an election under paragraph (b)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has received
from, or there has been published by, the Internal Revenue
Service a ruling, or (y) since the date of this Indenture,
there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such
legal defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance
had not occurred;
(v) in the case of an election under paragraph (c)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant
defeasance had not occurred;
(vi) in the case of an election under either paragraph
(b) or (c) above, an Opinion of Counsel to the effect that,
(x) the trust funds will not be subject to any rights of any
other holders of any other Indebtedness of the Company after
the 91st day following the deposit, and (y) after the 91st
day following the deposit, the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(vii) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that (A) all conditions precedent provided for
relating to either the legal defeasance under paragraph (b)
above or the covenant defeasance under paragraph (c) above,
as the case may be, have been complied with; and (B) if any
other Indebtedness of the Company (including, without
limitation, the Senior Indebtedness) shall then be
outstanding, such legal defeasance will not violate the
provisions of the agreements or instruments evidencing such
Indebtedness; and
(viii) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit
was not made by the Company with the intent of preferring
the Holders of the Securities over other creditors of the
Company or with the intent of defeating, hindering, delaying
or defrauding creditors of the Company or others.
(e) All money and U.S. Government Obligations (including
the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this paragraph
(e), the "Trustee") pursuant to paragraph (d) above in respect of
the outstanding Securities shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through
any Paying Agent as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of Principal, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to paragraph (d) above
or the Principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Securities.
Anything in this Section 8.02 to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon the request, in writing, by the Company
any money or U.S. Government Obligations held by it as provided
in paragraph (d) above which, in the opinion of a firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of
the amount thereof which would then be required to be deposited
to effect an equivalent legal defeasance or covenant defeasance.
SECTION 8.03 Application of Trust Money.
The Trustee shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to Sections
8.01 and 8.02, and shall apply the deposited U.S. Legal Tender
and the U.S. Legal Tender from U.S. Government Obligations in
accordance with this Indenture to the payment of Principal of and
interest on the Securities.
SECTION 8.04 Repayment to Company.
Subject to Sections 7.07, 8.01 and 8.02, the Trustee shall,
subject to Article X, promptly pay to the Company, upon receipt
by the Trustee of an Officers' Certificate, any excess money,
determined in accordance with Sections 8.02(d)(i) and (e), held
by it at any time. The Trustee and the Paying Agent shall pay to
the Company upon receipt by the Trustee or the Paying Agent, as
the case may be, of an Officers' Certificate, any money held by
it for the payment of Principal or interest that remains
unclaimed for two (2) years, provided, however, that the Trustee
and the Paying Agent before being required to make any payment
may, but need not, at the expense of the Company, cause to be
published once in a newspaper of general circulation in The City
of New York or mail to each Holder entitled to such money notice
that such money remains unclaimed and that after a date specified
therein, which shall be at least thirty (30) days from the date
of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company. After
payment to the Company, Securityholders entitled to money must
look solely to the Company for payment as general creditors
unless an applicable abandoned property law designates another
person.
SECTION 8.05 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with
this Indenture by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
then and only then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had been made pursuant to this Indenture until such time
as the Trustee is permitted to apply all such U.S. Legal Tender
or U.S. Government Obligations in accordance with this Indenture;
provided, however, that if the Company has made any payment of
Principal of or interest on of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
SECTION 8.06 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.02 have been
satisfied, (ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company, and (iii) the
Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent
referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee
upon written request shall acknowledge in writing the discharge
of the Company's obligations under this Indenture except for
those surviving obligations specified in Section 8.01.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
The Company, when authorized by its Board Resolution, and
the Trustee, together, may without notice to or the consent of
any Securityholder amend, waive or supplement this Indenture or
the Securities:
(i) to cure any ambiguity, defect or inconsistency or to
make any other provisions with respect to matters or questions
arising under this Indenture; provided that such action does not
adversely affect the rights of any Holder;
(ii) to add to the covenants of the Company for the benefit
of the Holders, or to surrender any right or power herein
conferred upon the Company, or to provide any additional rights
or benefits to the Holders;
(iii) to evidence the succession of another person to
the Company, and the assumption by any such successor of the
obligations of the Company herein and in the Securities in
accordance with Article V;
(iv) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(v) to make any other change that does not adversely affect
the rights of any Securityholders hereunder;
(vi) to comply with the TIA; or
(vii) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the
TIA;
provided that the Company has delivered to the Trustee an Opinion
of Counsel and an Officers' Certificate, each stating that such
amendment or supplement complies with the provisions of this
Section 9.01.
SECTION 9.02 With Consent of Holders.
Subject to Section 6.07, the Company when authorized by its
Board Resolution, and the Trustee, together, with the written
consent of the Required Holders, may amend or supplement this
Indenture or the Securities, without notice to any other
Securityholders. However, without the consent of each
Securityholder affected, no amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may:
(i) reduce the principal amount of any Security or premium,
if any, with respect thereto;
(ii) change the Maturity Date of, or alter the redemption or
repurchase or other provisions of the Securities, in a manner
that adversely affects the rights of any Holder;
(iii) reduce the percentage in principal amount
outstanding of Securities which must consent to an amendment,
supplement or waiver or consent to take any action under this
Indenture or the Securities;
(iv) impair the right to institute suit for the enforcement
of any payment on or with respect to the Securities;
(v) make any changes in the provisions concerning waivers
of Defaults or Events of Default by Holders of the Securities or
the rights of Holders to recover the principal of, interest on,
any Security;
(vi) make any change in or affecting the ranking of the
Securities with respect to any other obligation of the Company or
any Subsidiary in a way that adversely affects the rights of any
Holder;
(vii) reduce the interest rate or extend the time for
payment of interest, if any, on the Securities;
(viii) make the principal of, premium, if any, or the
interest on, any Security payable with anything, at any place of
payment or in any manner other then as provided for in this
Indenture and the Security as in effect on the date hereof; or
(ix) make any changes in this Section 9.02 in a manner that
adversely affects the rights of any Holder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders
affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment, supplement
or waiver.
SECTION 9.03 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or
the Securities shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective,
a consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any
Security. However, prior to becoming effective, any such Holder
or subsequent Holder may revoke the consent as to his Security or
portion of his Security by notice to the Trustee or the Company
if such notice is received by the Trustee or the Company before
the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver. Notwithstanding
the above, nothing in this paragraph shall impair the right of
any Securityholder under 316(b) of the TIA.
The Company may, but shall not be obligated to, fix a Record
Date for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver. If a Record Date
is fixed, then notwithstanding the last sentence of the
immediately preceding paragraph, those persons who were Holders
at such Record Date (or their duly designated proxies), and only
those persons, shall be entitled to revoke any consent previously
given, whether or not such persons continue to be Holders after
such Record Date. No such consent shall be valid or effective
for more than ninety (90) days after such Record Date unless
consents from Holders of the principal amount of Securities
required hereunder for such amendment, supplement or waiver to be
effective shall have been given and not revoked within such
ninety (90) day period.
After an amendment, supplement or waiver becomes effective,
it shall bind every Securityholder, unless it makes a change
described in any of clauses (i) through (x) of Section 9.02, in
which case, the amendment, supplement or waiver shall bind only
each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security;
provided, however, that any such waiver shall not impair or
affect the right of any Holder to receive payment of Principal of
and interest on a Security, on or after the respective dates set
for such amounts to become due and payable expressed in such
Security, or to bring suit for the enforcement of any such
payment on or after such respective dates.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to
deliver the Security to the Trustee. The Trustee may place an
appropriate notation on the Security about the changed terms and
return the Security to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect the
validity and effect of such amendment, supplement or waiver.
SECTION 9.06 Trustee To Sign Amendments, Etc.
Subject to the next sentence, the Trustee shall execute any
amendment, supplement or waiver authorized pursuant to this
Article IX, provided, however, that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture. The Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an
Opinion of Counsel and an Officers' Certificate each stating that
the execution of any amendment, supplement or waiver is
authorized or permitted by this Indenture.
ARTICLE X.
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder (and each
Person holding any Security, whether upon original issue, or upon
transfer, assignment or exchange thereof) of the Securities, by
its acceptance thereof, likewise covenants and agrees that: (i)
all Securities shall be issued subject to the provisions of this
Article X; (ii) the payment of the Principal of, and interest on,
the Securities by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of
payment to the prior payment in full, in cash or Cash
Equivalents, of the Senior Indebtedness; and (iii) the
subordination is for the benefit of, and shall be relied upon and
be enforceable directly by, the holders of Senior Indebtedness.
The Company and each Holder hereby agree not to amend, modify or
change in any manner any provision of this Article X (and any
defined term used in this Article X) so that the terms and
conditions hereof, as so amended, modified or changed, are less
favorable to the holders of the Senior Indebtedness and their
Representative than the terms hereof on the Issue Date, without
the prior written consent of the necessary holders of Senior
Indebtedness.
SECTION 10.2 Suspension of Payment on Securities in Certain
Events.
(a) If (i) any default occurs and is continuing after the
expiration of any applicable cure period (each a "Senior Debt
Payment Default"), in the payment when due, whether at maturity,
upon any redemption, by declaration or otherwise, of any
Principal of, or interest on the Senior Indebtedness, or fees or
other amounts due under the terms of the Senior Indebtedness, and
(ii) the Representative of the holders of the Senior Indebtedness
gives written notice (a "Default Notice") of such Senior Debt
Payment Default to the Trustee, then no payment of any kind or
character shall be made by or on behalf of the Company or any
other Person on its behalf with respect to any Principal of, or
interest on or fees or other amounts due with respect to, the
Securities or to redeem, repurchase or otherwise acquire any of
the Securities for cash or property or otherwise, until such
payment is made in full or Senior Payment Default has been cured,
waived or has ceased to exist.
(b) If (i) any event of default other than a Senior Debt
Payment Default (a "Senior Debt Other Default") occurs and is
continuing with respect to the Senior Indebtedness, as such
Senior Debt Other Default is defined in the instrument creating
or evidencing such Senior Indebtedness, permitting the holders of
such Senior Indebtedness to accelerate the maturity thereof, and
(ii) the Representative of the holders of the Senior Indebtedness
gives a Default Notice to the Trustee, then until the earlier of
(A) the Trustee receiving notice from the Representative of the
holders of the Senior Indebtedness terminating the Blockage
Period (as defined below), (B) the date on which the Senior Debt
Other Default giving rise to the Blockage Period is cured or
waived, or (C) 180 days after the delivery of such Default Notice
(the "Blockage Period"), neither the Company nor any other Person
on its behalf shall make any payment of any kind or character
with respect to any Principal of, or interest on, or fees or
other amounts due with respect to the Securities, or redeem,
repurchase or otherwise acquire any of the Securities for cash or
property or otherwise; provided, however, that if such Senior
Indebtedness has not been accelerated or become the subject of
judicial proceedings within the Blockage Period, then the Company
shall resume making any and all required payments in respect of
the Securities. At the expiration or termination, as applicable,
of such Blockage Period the Company shall promptly pay to the
Trustee all sums not paid during such Blockage Period as a result
of this subsection (b). Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 180
days from the date of the Senior Debt Other Default and only one
such Blockage Period may be commenced within any period of 360
consecutive days. No Senior Debt Other Default or event which,
with the giving of notice and/or lapse of time or otherwise,
would become a Senior Debt Other Default which existed on the
date of the commencement of such Blockage Period, may be used as
the basis for declaring any subsequent Blockage Period unless
such Senior Debt Other Default or event, as the case may be,
shall in the interim have been cured or waived for a period of
not less than ninety (90) consecutive days.
(c) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such
payment is prohibited by Sections 10.02(a) and (b), then unless
and until such payment is no longer prohibited by this Section
10.02, such payment shall be held in trust for the benefit of,
and shall as soon practicable be paid over or delivered to, the
Representative of the holders of the Senior Indebtedness. No
amount paid by the Company, or any other Person on its behalf, to
the Trustee or any Holder of the Securities, and paid over by
such Person to the Representative of the holders of the Senior
Indebtedness pursuant to this Article X shall, as between the
Company and the Holders of the Securities, be deemed a payment by
the Company to or on account of any payments due in respect of
the Securities.
(d) The Company shall give prompt written notice to the
Trustee of any Senior Debt Payment Default or any Senior Debt
Other Default, under the Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been
issued. Failure to give such notice shall not affect the
subordination of the Securities to the Senior Indebtedness
provided in this Article X.
(e) Nothing contained in this Article X shall limit the
right of the Trustee or the Holders of Securities to take any
action to accelerate the maturity of the Securities pursuant to
Section 6.02 or to pursue any rights or remedies available under
this Indenture or otherwise; provided that the Trustee or the
Holders shall, prior to commencing any such action, provide the
Representative of the holders of the Senior Indebtedness with
five (5) days prior written notice of its intention to take such
action; provided further that all Senior Indebtedness thereafter
due or declared to be due shall first be paid in full, in cash or
Cash Equivalents, before the Holders are entitled to receive any
payment of any kind or character with respect to Principal of, or
interest on or fees or other amounts due with respect to, the
Securities.
SECTION 10.03 Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or Reorganization
of Company.
(a) Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of
creditors or marshaling of assets of the Company or in a
bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to the Company or its property,
whether voluntary or involuntary, all Senior Indebtedness shall
first be paid in full in, cash or Cash Equivalents (or such
payment shall be duly provided for), before any payment or
distribution of any kind or character is made on account of any
Principal of, or interest on, or fees or other amounts due with
respect to, the Securities, or for the acquisition of any of the
Securities for cash or property or otherwise. Upon any such
dissolution, winding-up, liquidation, reorganization,
receivership or similar proceeding, any payment or distribution
of assets of the Company of any kind or character, whether in
cash, property or securities, to which the Holders of the
Securities or the Trustee under this Indenture would be entitled,
except for the provisions hereof, shall be paid by the Company or
by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by
the Holders or by the Trustee under this Indenture if received by
them, to the Representative of the holders of the Senior
Indebtedness, for application to the payment of Senior
Indebtedness remaining unpaid until all such Senior Indebtedness
has been paid in full, in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision
therefor to or for the holders of Senior Indebtedness.
Notwithstanding anything herein to the contrary, the Company's
obligations to the Trustee under Section 7.07 shall at all times
be deemed Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness
(whether by or on behalf of the Company, as proceeds of security
or enforcement of any right of setoff or otherwise) is declared
to be fraudulent or preferential, set aside or required to be
paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such
payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment has not occurred.
(c) The consolidation of the Company with, or the merger of
the Company with or into, another corporation or the liquidation
or dissolution of the Company following the conveyance or
transfer of all or substantially all of its assets, to another
corporation upon the terms and conditions provided in Article V
hereof and as long as permitted under the terms of the Senior
Indebtedness shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if
such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, assume in writing, to the
reasonable satisfaction of the Representative, the Company's
obligations hereunder in accordance with Article V hereof.
(d) The Company shall give prompt written notice to the
Trustee of any dissolution, winding-up, liquidation or
reorganization of the Company, but failure to give such notice
shall not affect the subordination of the Securities to the
Senior Indebtedness provided in this Article X.
SECTION 10.04 Holders to be Subrogated to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full, in cash or Cash Equivalents,
of the Senior Indebtedness, the Holders shall be subrogated to
the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the
Securities shall be paid or converted in full. For the purposes
of such subrogation, no such payments or distributions of cash,
property or securities of the Company to the holders of the
Senior Indebtedness by or on behalf of the Company or by or on
behalf of the Holders by virtue of this Article X which otherwise
would have been made to the Holders shall, as between the Company
and the Holders, be deemed to be a payment by the Company to or
on account of the Senior Indebtedness, it being understood that
the provisions of this Article X are and are intended solely for
the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
SECTION 10.05 Obligations of the Company Unconditional.
Nothing contained in this Article X or elsewhere in this
Indenture or in the Securities, is intended to or shall impair,
as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the
Holders the principal of, and interest on, the Securities as and
when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the
holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article
X of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise
of any such remedy. Upon any payment or distribution of cash,
property or securities of the Company referred to in this Article
X, the Trustee, subject to the provisions of Sections 7.01 and
7.02, and the Holders shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any
liquidation, dissolution, winding-up or reorganization
proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee or agent or other
Person making any payment or distribution to the Trustee or to
the Holders for the purpose of ascertaining (i) the Persons
entitled to participate in such payment or distribution, (ii) the
holders of Senior Indebtedness and other Indebtedness of the
Company, (iii) the amount thereof or payable thereon, (iv) the
amount or amounts paid or distributed thereon, and (iv) all other
facts pertinent thereto or to this Article X. Nothing in this
Article X shall apply to the claims of, or payments to, the
Trustee under or pursuant to Section 7.07. The Trustee, subject
to Section 1.01, shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself or itself to
be the Representative of the holders of the Senior Indebtedness.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a
Representative of the holders of the Senior Indebtedness, the
Trustee may request such Person to furnish evidence thereof to
the reasonable satisfaction of the Trustee, and if such evidence
is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to right of such Person
to receive such payment on behalf of the holders of the Secured
Indebtedness.
SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice.
The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making
of any payment to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article X. Regardless of
anything to the contrary contained in this Article X or elsewhere
in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any Senior Debt Payment Default or
Senior Debt Other Default or of any other facts which would
prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received notice in writing from
the Company, or from a holder of Senior Indebtedness or a
Representative thereof, together with proof satisfactory to the
Trustee of such holding of Senior Indebtedness or of the
authority of such Representative, and, prior to the receipt of
any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary), subject to
the provisions of Section 7.01 and 7.02 that no such facts exist.
SECTION 10.07 Application by Trustee of Assets Deposited with
It.
U.S. Legal Tender or U.S. Government Obligations deposited
in trust with the Trustee pursuant to and in accordance with
Sections 8.01 and 8.02 shall be for the sole benefit of the
Holders of the Securities and, to the extent allocated for the
payment of Securities, shall not be subject to the subordination
provisions of this Article X. Otherwise, any deposit of assets,
property or securities by or on behalf of the Company with the
Trustee or any Paying Agent (whether or not in trust) for the
payment of Principal of, or interest on, any Securities shall be
subject to the provisions of this Article X; provided, however,
that if prior to the second Business Day preceding the date on
which by the terms of this Indenture any such assets may become
distributable for any purpose (including, without limitation, the
payment of either Principal of, or interest on, any Security) the
Trustee or such Paying Agent shall not have received with respect
to such assets the notice provided for in Section 10.06, then the
Trustee or such Paying Agent shall have full power and authority
to receive such assets and to apply the same to the purpose for
which they were received, and shall not be affected by any notice
to the contrary received by it on or after such date. Nothing
contained in this Section 10.07 shall limit the right of the
holders of Senior Indebtedness to recover payments as
contemplated by this Article X.
SECTION 10.08 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any non-
compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of
this Section 10.08, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustees or the Holders, without incurring responsibility
to the Holders and without impairing or releasing the
subordination provided in this Article X or the obligations
hereunder of the Holders to the holders of Senior Indebtedness,
do any one or more of the following: (1) change the manner,
place, terms or time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3)
release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.09 Holders Authorize Trustee to Effectuate
Subordination of Notes.
Each Holder of the Securities by such Holders' acceptance
thereof authorizes and expressly directs the Trustee on his
behalf to take such action as may be necessary or appropriate to
effectuate, as between the Holders and the holders of Senior
Indebtedness, the subordination provisions contained in this
Article X, and appoints the Trustee such Holders' attorney-in-
fact for such purpose, including, in the event of any
liquidation, dissolution, winding-up, reorganization, assignment
for the benefit of creditors or marshaling of assets of the
Company (whether in bankruptcy, insolvency or receivership
proceedings or upon assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets
of the Company, the immediate filing of a claim for the unpaid
balance of such Holder's Securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee
does not file a proper claim or proof of debt in the form
required in such proceeding prior to thirty (30) days before the
expiration of the time to file such claim or proof, then any of
the holders of the Senior Indebtedness or their Representative is
hereby authorized, but is not obligated, to file an appropriate
claim for and on behalf of the Holders of said Securities.
Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof, or to authorized the Trustee or the holders of Senior
Indebtedness or their Representative to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 10.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee and any agent of the Company shall be entitled
to all the rights set forth in this Article X with respect to any
Senior Indebtedness which may at any time be held by it in its
individual or any other capacity to the same extent as any other
holder of Senior Indebtedness and nothing in this Indenture shall
deprive the Trustee or any such agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article X, and no implied covenants or obligations with respect
to the holders of Senior Indebtedness shall be read into this
Indenture against the Trustee.
Whenever a distribution is to be made or a notice given to
holders or owners of Senior Indebtedness, the distribution will
be made and the notice will be given to their Representative.
SECTION 10.11 This Article X Not To Prevent Events of Default.
The failure to make a payment on account of Principal of, or
interest on, the Securities by reason of any provision of this
Article X will not be construed as preventing the occurrence of
an Event of Default.
Nothing contained in this Article X shall limit the right of
the Trustee or the Holders of the Securities to take any action
to accelerate the maturity of the Securities pursuant to Article
VI or to pursue any rights or remedies hereunder or under
applicable law, subject to the rights, if any, under this Article
X of the holders, from time to time, of Senior Indebtedness.
SECTION 10.12 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness, and it undertakes to perform
or observe such of its covenants and obligations as are
specifically set forth in this Article X, and no implied
covenants or obligations with respect to the Senior Indebtedness
shall be read into this Indenture against the Trustee. The
Trustee shall not be liable to any such holders (other than for
its willful misconduct or gross negligence) if it shall pay over
or deliver to the Holders or the Company or any other Person
money or assets in compliance with the terms of this Indenture.
Nothing in this Section 10.12 shall affect the obligation of any
Person other than the Trustee to hold such payment for the
benefit of, and to pay such payment over to, the holders of
Senior Indebtedness or their Representative.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included
in this Indenture by the TIA, the required provision shall
control.
SECTION 11.02 Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, or
overnight courier addressed as follows:
if to the Company:
IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, NW
Washington, DC 20009
Attention: Simon A. Hershon, President
Fax: (202) 588-5088
with a copy to:
Lehman, Jensen & Donahue, L.C.
620 Judge Building
8 East Broadway
Salt Lake City, UT 84111
Attention: Mark E. Lehman, Esq.
Fax: (801) 363-1715
if to the Trustee:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attention: Corporate Trust Department
Fax: (212) 509-4000
Each of the Company and the Trustee by written notice to
each other may designate additional or different addresses for
notices. Any notice or communication to the Company or the
Trustee shall be deemed to have been given or made as of the date
so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if faxed; five (5)
calendar days after mailing, if sent by registered or certified
mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by
the addressee); and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing
next day delivery.
Any notice or communication mailed to a Securityholder,
including any notice delivered in connection with TIA 310(b),
TIA 313(c), TIA 314(a) and TIA 315(b) shall be mailed to him
by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall
be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 11.03 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 312(b) with
other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA
312(c).
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee at the request of the Trustee:
(a) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
(b) an Opinion of Counsel (in form and reasonably
satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion.
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 or her 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
each such person, such condition or covenant has been complied
with; provided, however, that, with respect to certain matters of
fact not involving any legal conclusion, an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.06 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make
reasonable rules and set reasonable requirements for its
functions.
SECTION 11.07 Legal Holidays.
If a payment date is a Legal Holiday at such place, payment
may be made at such place on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 11.08 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE
PARTIES HERETO AGREE TO IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE
AND THE SECURITIES, AND IRREVOCABLY ACCEPT FOR THEMSELVES AND IN
RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OR THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
SECTION 11.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any of its
Subsidiaries, except to the extent necessary to interpret the
meanings of provisions or defined terms specifically incorporated
by reference. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture, except to the extent
necessary to interpret the meanings of provisions or defined
terms specifically incorporated by reference.
SECTION 11.10 No Recourse Against Others.
A director, officer, employee, stockholder or Affiliate, as
such, of the Company and each of its Subsidiaries shall not have
any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each
Holder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration
for the issuance of the Securities.
SECTION 11.11 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successors and assigns. All agreements
of the Trustee in this Indenture shall bind its successors and
assigns.
SECTION 11.12 Counterparts.
This Indenture may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be and original and all of
which taken together shall constitute one and the same agreement.
SECTION 11.13 Severability.
In case any provision in this Indenture or in the Securities
shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby; it being intended that all of the provisions hereof
shall be enforceable to the full extent of the law.
SECTION 11.14 Table of Contents, Headings. Etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted
for convenience of reference only, and are not to be considered a
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
IBF VI -GUARANTEED INCOME
FUND, as Issuer
By:_________________________________
Name:
Title:
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as Trustee
By:_________________________________
Name:
Title:
EXHIBIT A
IBF VI - GUARANTEED INCOME FUND
Class A 10% Income Participating Notes due December 31, 2005
No. $
IBF VI - GUARANTEED INCOME FUND, a Delaware corporation (the
"Company", which term includes any successor entity), for value
received promises to pay to or registered assigns, the Principal
sum of
_________________________________________________________________
__________dollars ($_________) on December 31, 2005, together
with interest at the rate of 10% per annum and Additional
Interest, including any applicable Default Rate, all on the terms
set forth in Indenture, dated as of ___________, 1999 (the
"Indenture"), between the Company and the Trustee. This Security
is one of a duly authorized issue of Securities of the Company
designated as its Class A 10% Income Participating Notes due
December 31, 2005. Each Holder, by accepting the Securities,
agrees to be bound by all the terms and provisions of the
Indenture, as the same may be amended from time to time in
accordance with its terms. The terms of the Securities include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code 77aaa-77bbbb) (the "TIA"), as in effect on the date
of the Indenture. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders
are referred to the Indenture and the TIA for a statement of such
terms. The Securities are unsecured obligations of the Company
limited (except as otherwise provided in the Indenture) in
aggregate principal amount to $50,000,000 plus amounts, if any,
sufficient to pay interest and premium, if any, on outstanding
Securities. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Indenture.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may
be made to: IBF VI - Participating Income Fund, 1733 Connecticut
Avenue N.W., Washington, D.C. 20009, Attn.: President.
Subject to certain exceptions, the Indenture or the
Securities may be amended or supplemented with the written
consent of the Required Holders (as defined in the Indenture),
and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Required
Holders. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Securities
to, cure among other things, any ambiguity, defect or
inconsistency, provide for uncertificated Securities in addition
to or in place of certificated Securities, comply with Article V
of the Indenture or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA,
or make any other change that does not adversely affect the
rights of any Holder of a Security.
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to
be signed manually or by facsimile by its duly authorized
officers.
Dated: ______________,1999
IBF VI - GUARANTEED INCOME
FUND
Attest: By:
Name: Title: Name: Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities in the within-mentioned Indenture.
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as Trustee
By:
Authorized Signer
IBF VI - GUARANTEED INCOME FUND
Class A 10% Income Participating Notes due December 31, 2005
1. The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A
Holder shall register the transfer of or exchange Securities in
accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay certain taxes or similar
governmental charges required by law and as permitted by the
Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for
redemption. The Company need not exchange or register the
transfer of any Security or portion of a Security selected for
redemption, except for the unredeemed portion of any Security
being redeemed in part. Also, it need not exchange or register
the transfer of any Securities for a period of fifteen (15) days
before a selection of Securities to be redeemed or during the
period between a record date and the corresponding Interest
Payment Date.
2. Initially, the Trustee under the Indenture will act as
Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
The Company or any of its Subsidiaries may act as Registrar.
3. On and after January 1, 2001, the Securities may be
redeemed, at the option of the Company, in whole or in part at
the Redemption Price stated in the Indenture. The Company may at
any time or from time to time purchase Securities from Holders in
market transactions and such purchases shall not be considered
redemptions. If the Redemption Date is subsequent to a Record
Date with respect to any Interest Payment Date and on or prior to
such Interest Payment Date, then such accrued interest, if any,
will be paid to the person in whose name such Securities are
registered at the close of business on such Record Date and no
other interest will be payable thereon. In the event of a partial
redemption, the Trustee will select the Securities to be redeemed
by lot or by such manner as the Trustee deems fair to the Holders
of the Securities. In the event of any conflict between the
Security and the Indenture, the Indenture shall govern. Notice
of redemption will be mailed by first class mail at least thirty
(30) days but not more than sixty (60) days before the Redemption
Date to each Holder of Securities to be redeemed at such Holder's
registered address. Except as set forth in the Indenture, from
and after any Redemption Date, if on such Redemption Date the
Paying Agent holds U.S. Legal Tender sufficient for the
redemption of the Securities called for redemption on such
Redemption Date, then, unless the Company defaults in the payment
of the Redemption Price or the Paying Agent is otherwise
prohibited from paying the Redemption Price, the Securities
called for redemption will cease to bear interest and the only
right of the Holders of such Securities will be to receive
payment of the Redemption Price.
4. The Holder may tender this Security in whole, not in part,
for redemption at the Redemption Price stated in the Indenture
under hardship circumstances. To effect redemption, the Holder
may deliver to the Company notice of redemption with the Security
only during the periods June 1 through June 30 and December 1
through December 31 each calendar year. The Holder's notice of
redemption is irrevocable, and is subject only to the Company's
acceptance. The notice must provide information on the financial
difficulty or change of circumstances of the Holder and the
Holder must provide any additional information requested by the
Company on the hardship situation. The Company has complete
discretion on the basis of the information provided or factors
unrelated to the Holder's personal circumstances to accept or
reject the request for hardship redemption. Notes will be
redeemed effective the last day of the month in which the notice
of redemption is tendered to the Company, and payment of the
Redemption Price will be made 30 calendar days thereafter. The
aggregate Holder redemption of Securities in the Series in each
calendar year shall not exceed 10% of the aggregate principal
amount of the Notes in the Series outstanding on the first day of
each calendar year. The Company will select the Securities to be
redeemed on a "first come - first served" basis or by such manner
as the Company deems fair to the Holders of the Securities.
5. The Company's obligations pursuant to the Indenture will be
discharged, except for obligations pursuant to certain sections
thereof, subject to the terms of the Indenture, upon the payment
of all the Securities or upon the irrevocable deposit with the
Trustee of U.S. Legal Tender sufficient to pay when due Principal
of and interest, if any, on the Securities to maturity or
redemption, as the case may be. The Indenture contains
provisions (which provisions apply to this Security) for
defeasance at any time of (a) the entire Indebtedness of the
Company on this Security or (b) certain restrictive covenants and
the Defaults and Events of Default related thereto, in each case
upon compliance by the Company with certain conditions set forth
therein.
6. The Indenture contains certain covenants that, among other
things, limit the ability of the Company to incur additional
Indebtedness, transfer or sell assets, pay dividends, make
certain other Restricted Payments and Investments, create Liens
or enter into transactions with Affiliates and mergers. The
Company must report quarterly to the Trustee on compliance with
such limitations.
7. If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least thirty percent (30%) in the aggregate
principal amount of Securities then outstanding may declare all
the Securities to be due and payable in the manner, at the time
and with the effect provided in the Indenture. Holders may not
enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture
or the Securities unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, the Required Holders to direct the
Trustee in its exercise of any trust or power.
8. Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company, its Subsidiaries or their
respective Affiliates, as if it were not the Trustee.
9. A stockholder, director, officer, employee or incorporator,
as such, of the Company or any of its Subsidiaries shall not have
any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of, such obligations or their creation, including
with respect to any certificates delivered hereunder or
thereunder from any such person. Each Holder of a Security by
accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance
of the Securities.
10. This Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of
authentication on this Security.
11. The Indenture and this security shall be governed by and
construed in accordance with the laws of the State of New York,
as applied to contracts made and performed within the State of
New York without regard to principles of conflicts of laws.
12. Customary abbreviations may be used in the name of a Holder
of a Security or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
13 Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company may cause
CUSIP numbers to be printed on the Securities immediately prior
to the qualification of the Indenture under the TIA as a
convenience to the Holders of the Securities. No representation
is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other
identification numbers printed hereon.
14. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture and the
transaction complies with the terms of Article V of the
Indenture, the predecessor will be released from those
obligations.
15. If money for the payment of Principal or interest remains
unclaimed for two (2) years, the Trustee or Paying Agent shall
return the money to the Company upon its request. After that,
all liability of the Trustee and Paying Agent with respect to
such money shall cease and Holders entitled to money must look to
the Company for payment.
EXHIBIT B
[FORM OF LEGEND FOR BOOK-ENTRY SECURITIES]
Any Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR
A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF
THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
EXHIBIT C
CONTINUING GUARANTY
1. Guaranty of Indebtedness. This guaranty is given in
connection with the Indenture dated ______________, 1999, between
IBF VI - Guaranteed Income Fund ("GIF") and Continental Stock
Transfer & Trust Company ("Indenture"). All capitalized terms
used herein not otherwise defined, shall have the meaning
assigned to such terms under the Indenture. At the solicitation
of GIF, the subsidiary of InterBank Funding Corporation, a
Delaware Corporation, InterBank Funding Corporation
("Guarantor"), and in consideration of the benefits to be derived
from the Guarantor from the issuance of the Securities under the
Indenture, the Guarantor unconditionally and irrevocably
guarantees and promises to pay in lawful money of the United
States, as and when the same shall become due (by demand,
acceleration or otherwise), all present and future Indebtedness,
as hereinafter defined, of GIF under the Securities. The word
"Indebtedness" as used herein is limited to Fixed Interest,
whether GIF may be liable individually or jointly with others,
and whether recovery upon the Fixed Interest may be or hereafter
becomes barred by any statute of limitations, or whether the
Fixed Interest may be or hereafter becomes otherwise
unenforceable.
2. Independent Obligations; Subrogation. The obligations
of the Guarantor hereunder are independent of and separate from
the obligations of GIF and any other guarantor, maker or endorser
of the Indebtedness and shall not be reduced by, but shall
survive as if the same had not been made, any and all payments by
GIF and/or any other guarantor, maker or endorser of the
Indebtedness and/or the application of any proceeds from any
collateral security for the Indebtedness until all the
Indebtedness is fully paid and finally discharged. To the
maximum extent permitted by law, the Guarantor hereby
subordinates to the prior payment in full of the Indebtedness any
claim, right or remedy which the Guarantor may now have or
hereafter acquire against GIF that arises hereunder and/or from
the performance by any guarantor hereunder including, without
limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of Holder against GIF
or any security which Holder now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise. In
addition, the Guarantor hereby agrees that, until payment in full
of the Indebtedness, it will not pursue any right to proceed
against GIF, now or hereafter, for contribution, indemnity,
reimbursement, and any other suretyship rights and claims,
whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law,
which the Guarantor may now have or hereafter have as against GIF
with respect to the Indebtedness. The Guarantor also hereby
waives any rights to recourse to or with respect to any asset of
GIF.
3. Authority to Modify Obligations and Security. The
Guarantor authorizes GIF, the Trustee, and the Holders, without
notice or demand and without affecting the liability hereunder,
from time to time, whether before or after any notice of
termination hereof or before or after any default in respect of
the Indebtedness, to: (a) renew, extend, accelerate, or
otherwise change the time for payment or, or otherwise change any
other term or condition of any document or agreement evidencing
or relating to any Indebtedness, including, without limitation,
to increase or decrease the rate of interest thereon; (b) accept,
substitute, waive, decrease, increase, release, exchange or
otherwise alter any collateral security, in whole or in part,
securing the Indebtedness or any other guaranty of the
Indebtedness; (c) apply any and all such collateral security and
direct the order or manner of sale thereof as Holder, in its sole
discretion, may determine; (d) add, release or substitute any one
or more other guarantors, makers or endorsers of the
Indebtedness, and otherwise deal with GIF or any other guarantor,
maker or endorser as the Trustee and the Holders may elect; (e)
settle, compound, compromise, collect or otherwise liquidate any
Indebtedness and/or any collateral security therefor in any
manner, and bid and purchase any collateral security at any sale
thereof; (f) apply any and all payments or recoveries from GIF,
from any other guarantor, maker, endorser or from the Guarantor
in accordance with the Indenture; (g) apply any and all payments
or recoveries from any other guarantor, maker or endorser of the
Indebtedness or sums realized from collateral security furnished
by any of them upon any of their indebtedness or obligations in
accordance with the Indenture; and (h) refund any payment
received by the Trustee or Holders in respect of any
Indebtedness, and payment to the Trustee and Holders of the
amount refunded shall be fully guaranteed hereby even though
prior thereto this Continuing Guaranty may have been canceled or
terminated; all without in any way diminishing, releasing or
discharging the liability of the Guarantor hereunder.
4. Waiver of Defenses. Upon default of GIF in respect of
any Indebtedness, Holder may, at its option and without notice to
the Guarantor, proceed directly against the Guarantor to collect
and recover the full amount of the liability hereunder, or any
portion thereof, and the Guarantor waives any right to require
the Trustee or Holders to: (a) proceed against GIF, or any other
guarantor, endorser, or other person whomsoever; (b) proceed
against or exhaust any collateral security given to or held by
the Trustee or Holders in connection with the Indebtedness; (c)
give notice of the terms, time and place of any public or private
sale of any real or personal property securing the Indebtedness
or any other guaranty of the Indebtedness; or (d) pursue any
other remedy in the Trustee's or Holder's power whatsoever. A
separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against GIF and/or
any other guarantor, maker or endorser of the Indebtedness and
whether GIF and/or any other guarantor, maker or endorser be
joined in any such action or actions; and the Guarantor waives
the benefit of any statute of limitations affecting the liability
hereunder or the enforcement hereof, and agrees that any payment
of any Indebtedness or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll
such statute of limitations applicable to the liability
hereunder.
5. Additional Waivers. The Guarantor waives any defense
arising by reason of any disability or other defense of GIF or by
any reason of the cessation from any cause whatsoever of the
liability of GIF or by reason of any act or omission of the
Trustee, Holders, or others which directly or indirectly results
in or aids the discharge or release of GIF of any Indebtedness or
any security in respect thereof by operation of law or otherwise.
The obligations hereunder shall be enforceable without regard to
the validity, regularity, or enforceability of any of the
Indebtedness or any of the documents related thereto, any other
guaranty of the Indebtedness, or any collateral security
documents securing any of the Indebtedness or securing any other
guaranty of the Indebtedness. No exercise by the Trustee or
Holders of, and no omission of Trustee or Holders to exercise,
any power or authority recognized herein and no impairment or
suspension of any right or remedy of Trustee or Holders against
GIF, any other guarantor, maker or endorser or any collateral
security shall in any way suspend, discharge, release, exonerate
or otherwise affect any of the Guarantor's obligations hereunder
or any collateral security furnished by the Guarantor or give to
the Guarantor any right of recourse against Holder. The
Guarantor specifically agrees that the failure of Holder: (a) to
perfect any lien on or security interest in any property
heretofore or hereafter given by GIF or any guarantor, maker or
endorser to secure payment of the Indebtedness or of any guaranty
of the Indebtedness, or to record or file any document relating
thereto or (b) to file or enforce a claim against the estate
(either in administration, bankruptcy or other proceeding) of
GIF, any guarantor, maker or endorser, shall not in any manner
whatsoever terminate, diminish, exonerate or otherwise affect the
liability of the Guarantor hereunder.
6. Notices, Demands, Etc. The Trustee and Holders shall
be under no obligation whatsoever to make or give to the
Guarantor, and the Guarantor hereby waives, notice of acceptance
of this Continuing Guaranty, diligence, all rights of setoff and
counterclaim against Trustee and Holders, all demands,
presentments, protests, notices of protests, notices of
nonperformance, notices of dishonor, and all other notices of
every kind or nature, including notice of the existence, creation
or incurring of any new or additional Indebtedness.
7. Subordination. Except as otherwise provided in this
paragraph, any indebtedness of GIF now or hereafter owing to the
Guarantor is hereby subordinated to all Indebtedness of GIF to
Holder heretofore, now or hereafter created, whether before or
after notice of termination hereof. The Guarantor agrees to file
all claims against GIF in any bankruptcy or other proceeding in
which the filing of claims is required by law in respect of any
indebtedness of GIF to the Guarantor, and the Trustee and Holders
shall be entitled to all of the Guarantor's rights thereunder.
If for any reason the Guarantor fails to file such claim at least
30 days prior to the last date on which such claim should be
filed, the Trustee or Holders, as the Guarantor's attorney-in-
fact, are hereby authorized to do so in accordance with the
Indenture in the Guarantor's name, or to assign such claim to and
cause proof of claim to be filed in the name of the Trustee or
Holder's for their ratable benefit under the Indenture. In all
such cases, whether in administration, bankruptcy or otherwise,
the person or persons authorized to pay such claim shall pay to
the Trustee or Holders the full amount payable on the claim in
the proceeding, and to the full extent necessary for that purpose
the Guarantor hereby assigns to the Trustee and Holders all the
Guarantor's rights to any payments or distributions to which the
Guarantor otherwise would be entitled. If the amount so paid is
greater than the Guarantor's liability hereunder, the Trustee and
Holders will pay the excess amount to the party entitled thereto.
8. Revival of Guaranty. If any payments of money or
transfer of property made to the Trustee or Holders by GIF, any
other guarantor, any maker or any endorser should for any reason
subsequently be declared to be fraudulent (within the meaning of
any state or federal law relating to fraudulent conveyances),
preferential or otherwise voidable or recoverable in whole or in
part for any reason (herein after collectively called "voidable
transfers") under the Bankruptcy Code or any other federal or
state law and the Trustee or Holders are required to repay or
restore any such voidable transfer, or the amount of any portion
thereof, then as to any such voidable transfer or the amount
repaid or restored, the Guarantor's liability hereunder shall
automatically be revived, reinstated and restored and shall exist
as though such voidable transfer had never been made. In the
event the Trustee shall have returned this Continuing Guaranty to
the Guarantor and the Trustee or Holders are subsequently
required or advised by counsel to restore or repay any such
voidable transfer, the amount thereof, or any portion thereof,
the Guarantor shall remain liable as provided herein to the same
extent as if this Continuing Guaranty had not been returned to
the Guarantor.
9. Delays: Cumulative Remedies. No failure or delay by
the Trustee or Holders in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise of any other
right, power or privilege. All rights and remedies of the
Trustee or Holders in respect of the Indebtedness, the collateral
security for the Indebtedness or for this or any other guaranty,
or under any document in respect of any of the foregoing, shall
be cumulative and may be exercised singly or concurrently, and
are not exclusive of any other right or remedy permitted by law
or in equity.
10. Transactions Affecting GIF. The Guarantor hereby
agrees that it shall not become subject to any agreement or
undertaking that restricts the ability of the Guarantor to (a)
pay dividends or make other distributions to GIF, repay
indebtedness owed to GIF, make loans or advances to GIF, or
transfer property to GIF, (b) guaranty the Indebtedness of GIF,
or (c) grant a lien or a security interest in its property to
secure the Indebtedness of GIF.
11. Complete Agreement; Modification; Notice. This
Continuing Guaranty contains all the terms and conditions of the
agreement between the Trustee, Holders, and Guarantor and is an
integrated agreement. No evidence of any term or agreement not
set forth herein shall be admissible in any dispute involving
this Continuing Guaranty. None of the terms or provisions of
this Continuing Guaranty may be waived, altered, modified or
amended, except by an instrument in writing duly executed by the
party to be charged thereby. Notices hereunder shall be deemed
received on the earlier of receipt, whether by mail, personal
delivery, facsimile or otherwise, or five days after deposit in
the United States mail, postage prepaid. Any notice to the
Guarantor shall be delivered to the address set forth below its
signature.
12. Understanding of Waivers. The Guarantor warrants and
agrees that the waivers set forth in this Continuing Guaranty are
made with full knowledge of their significance and consequences,
and that under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any of said waivers are
determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent
permitted by law. Should any one or more provisions of this
Continuing Guaranty be determined to be illegal or unenforceable,
all other provisions hereof shall nevertheless remain effective.
13. Binding Effect. This Continuing Guaranty shall remain
in full force and effect and be binding in accordance with its
terms upon the Guarantor, and the representatives, successors and
assigns of the Guarantor, and inure to the benefit of the Trustee
and Holders, and their successors, endorsees, transferees and
assigns, until the obligations and liabilities of the Guarantor
hereunder shall have been finally satisfied by payment in full.
14. Attorneys' Fees. The Guarantor agrees without demand
to pay to and reimburse the Trustee and Holders for all costs,
attorneys' fees and other expenses incurred in the enforcement of
any right relating to any Indebtedness, including collection
thereof, or in the enforcement of this Continuing Guaranty. In
addition, Guarantor agrees to guaranty all of GIF's obligations
to the Trustee under the Indenture, including the obligations
arising under Section 7.07 thereof in accordance with the
priority under Section 6.10.
15. GOVERNING LAW: JURISDICTION: VENUE. THIS CONTINUING
GUARANTY AND THE RIGHTS, OBLIGATIONS AND LIABILITIES HEREUNDER
SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE
OF NEW YORK GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE. THE GUARANTOR WAIVES THE RIGHT TO A JURY TRIAL. BY
THE EXECUTION AND DELIVERY OF THIS CONTINUING GUARANTY, THE
GUARANTOR IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK
16. MUTUAL WAIVER OF RIGHT TO JURY TRIAL. HOLDER AND THE
GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO THIS CONTINUING GUARANTY; OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN HOLDER AND THE GUARANTOR; IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
17. Captions. The captions or titles of the paragraphs of
this Continuing Guaranty are without substantive meaning and are
not part of this Continuing Guaranty.
18. Severability. If any provision of this Continuing
Guaranty shall be prohibited or invalid under applicable law, it
shall be ineffective only to such extent, without invalidating
the remainder of this Continuing Guaranty.
This Continuing Guaranty is made this ___ day of _______,
1999.
INTERBANK FUNDING CORPORATION
By:________________________________________
Name: Simon A.
Hershon
Title: President
Address: 1733 Connecticut
Avenue, N.W.
Washington, DC 20009
E-120
Exhibit No. 7
IBF VI - Guaranteed Income Fund
Form SB-2
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of the ____ day of
____________, 1999 (the "Effective Date"), by and between IBF VI
- - GUARANTEED INCOME FUND, a Delaware corporation with an address
of 1733 Connecticut Avenue, NW, Washington, D.C. 20009
("Company"), and IBF MANAGEMENT CORP., a Delaware corporation,
with an address of 1733 Connecticut Avenue, NW, Washington, D.C.
20009 ("Manager").
Recitals
WHEREAS, Company was formed to engage in the business of
acquiring, holding, and disposing of loan assets and equity
securities (the "Finance Business"); and
WHEREAS, Manager has particular expertise, knowledge and
experience in connection with the operation of the Finance
Business.
Agreement
NOW, THEREFORE, for the consideration herein stipulated, the
mutual covenants set forth herein, and other good and valid
consideration, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Duties of Manager
(a) Manager shall have responsibility for the management of
the day-to-day operation of the Finance Business and the Manager
shall perform all management services necessary for the efficient
operation of the Finance Business.
(b) During the term of this Agreement, Manager shall, among
other things:
(i) Review the financial viability of each proposed
investment by the Company in loan and equity transactions
(the "Portfolio Assets"). Manager will utilize nationally
recognized credit reporting services and other resources to
determine the credit rating of each borrower or issuer (the
"Portfolio Companies"). In addition to the standard
underwriting practice, UCC searches will be conducted on
each Portfolio Company. Where appropriate, the Manager will
arrange for obtaining appraisals of collateral to be pledged
on loan transactions, but the costs of such appraisals will
be borne by the Company. All information regarding the
Portfolio Company and the proposed investment in its
Portfolio Company, including the Manager's evaluation of
risk and return on investment, will be submitted to the
Company for it to determine whether to make the investment.
(ii) Provide financial and operational advice in
connection with the operation of the Finance Business;
(iii) Review and approve such accounting and
administrative records, procedures and reports as shall be
necessary to operate the Finance Business and develop
procedures for and carry out the collection of all revenue
generated by the Finance Business and the payment of all
operating expenses of the Finance Business;
(iv) Obtain insurance for liability or otherwise as may
be necessary or prudent, if any;
(v) Review, approve, and carry out operating,
personnel, and other management policies and procedures as
shall be necessary in the operation of the Finance Business;
(vi) Maintain sufficient personnel and independent
contractors to operate the Finance Business;
(vii) Perform all duties set forth in Company's
Registration Statement on Form SB-2, SEC File No. _________
("Registration Statement");
(viii) Advise and consult with Company in connection
with any and all aspects of the Finance Business and the
operation thereof;
(ix) Keep or cause to be kept at the principal office
of Manager and/or the Finance Business all necessary books
and records of all Finance Business affairs (the books of
account shall be kept in accordance with generally accepted
accounting principles and procedures consistently applied),
in which shall be entered the transactions of the Finance
Business and provide Company or its representatives with
access to inspect and examine same at any reasonable time;
(x) Perform all loan servicing functions required for
the Portfolio Assets; and
(xi) Enforce the rights of the Company with respect to
the Finance Business, including, but not limited to,
collecting on the Portfolio Assets.
(c) Manager will pay all overhead, expenses, and salaries
required to perform the services described in Section 1 of this
Agreement, except for legal fees, accounting fees, filing fees,
appraisal fees, fees paid to the Company's Indenture Trustee,
Portfolio Asset transaction costs, taxes, officer and director
liability insurance, and similar expenses.
2. Compensation of Manager
(a) Manager will receive an organizational fee of 5% of the
gross proceeds of the offering of the Company's Notes described
in the Registration Statement to establish the administrative
facilities and systems required for the Company's Finance
Business.
(b) Manager will receive in each calendar year a management
fee (the "Management Fee"), equal to 2% of the gross assets of
the Company as of December 31 of the immediately preceding
calendar year. The Management Fee for each year is payable in
four equal installments on the last day of each calendar quarter
during the year.
3. Bank Accounts
(a) Manager shall create and maintain, in the name of and
on behalf of Company, one or more bank accounts in a bank or
banks satisfactory to Company for use in operating and
maintaining the Finance Business. Manager shall cause any and
all receipts to be promptly deposited in said account or
accounts. All funds in said account or accounts from time to
time shall be the property of Company. Manager shall cause to be
paid from said account or accounts all payments of costs,
expenses, fees and charges payable by the Company with respect to
the Finance Business, including debt service, subject to the
terms hereof. All such payments shall be made promptly when due
upon receipt of an invoice in reasonable detail as to the source
of the costs in question. In the event that at any time there
shall be insufficient funds in said account or accounts with
which to make any payment provided for hereunder, then Manager
shall immediately notify Company of such fact.
(b) All checks or drafts upon or withdrawals made from the
account or accounts established hereunder shall require the
authorization of a designee of Manager, which authorization may
be in the form of a blanket authorization granted in advance of
any particular check or draft. Manager shall designate the
person or persons having authority to draw checks upon or make
withdrawals from the accounts; provided, however, that in no
event shall a check for any unbudgeted expense be drawn upon, or
a withdrawal made from, the accounts that exceeds $10,000 without
the prior approval of Company. No other accounts of Company
shall be created or maintained by Manager without approval of
Company.
4. Term and Termination
(a) This Agreement shall become effective as of the
Effective Date and shall continue in full force and effect until
terminated by mutual agreement of the parties or as otherwise
provided in Section 4(b) of this Agreement.
(b) Subject to the provisions of clause (c) of this Section
4, this Agreement may be terminated as follows:
(i) By Company on written notice to Manager in the
event of any default by Manager which continues for 45 days
after written notice thereof from Company to Manager,
provided, however, if such default cannot be cured within
such 45-day period, then such additional period as shall be
reasonable, provided Manager commences to cure such default
within such 45-day period and proceeds diligently to
prosecute such cure to completion;
(ii) By Company or Manager immediately upon the
dissolution of Manager or Company. As used herein,
"dissolution" shall include voluntary or involuntary
dissolution or liquidation and shall occur at such time as
Company or Manager ceases operations, or intends to cease
operations, or files any statement indicating its intent to
dissolve or terminate a significant portion of its
operations, provided, however, that Company and Manager
shall not effect a voluntary dissolution or liquidation and
shall not voluntarily cease operations or a significant
portion of its operations for three years from the Effective
Date without the prior written consent of the other;
(iii) Upon a sale or other disposition of all or
substantially all of the assets of the Company;
(iv) By Company or Manager on written notice to the
other if a petition in bankruptcy or insolvency is filed by
Company or Manager, respectively, or if either shall make an
assignment for the benefit of creditors, or if either shall
file a petition for a reorganization, or for the appointment
of a receiver or trustee of all or a substantial portion of
its property, or if a petition in bankruptcy or other above-
described petition is filed against either which is not
discharged with sixty (60) days thereafter; and
(v) By Company "for cause." As used herein, the term
"for cause" shall mean (A) the gross negligence or
deliberate or willful misconduct of Manager hereunder, or
(B) misappropriation of funds held by Manager in trust for
Company.
(c) After receipt of notice of termination and before the
effective date of termination provided by the notice or this
Agreement, Manager shall continue management of the Finance
Business in accordance with the terms of this Agreement unless
instructed by Company to the contrary, in which case such
instructions shall prevail over any provisions of this Agreement.
Further, Manager shall take all actions necessary to deliver to
Company possession or control of all property of Company or its
designee in an orderly manner and without interruption of
Company's obligations to its obligees, including, but not limited
to, its subscribers, customers, advertisers, servants, employees,
agents, contractors, lenders, and all governmental authorities,
and Manager shall use its best efforts to preserve goodwill and
retain the services of employees and independent contractors of
the Finance Business.
(d) Subject to any special instruction by Company, upon
termination of this Agreement, Manager shall immediately
relinquish to Company, or its designee, possession and control of
all property of Company, including, but not limited, to all
documents, records, and data pertaining to the Finance Business.
(e) In the event of termination of this Agreement pursuant
to the terms hereof, Manager shall remain liable to Company for
any required payment to Company or other obligations hereunder
accrued prior to the date of termination; and Manager shall be
entitled to receive the amount payable for any accrued but unpaid
services or work performed under the provisions hereof, subject
to the terms hereof as to sources of payment and adjustments of
payments.
5. Power of Attorney
Company hereby makes, constitutes and appoints Manager as
its true and lawful attorney for Company, and in the name, place
and stead of Company from time to time to make, execute, sign,
acknowledge and file any and all documents, certificates or
instruments as Manager may deem necessary or appropriate to
consummate the transactions contemplated by this Agreement. The
foregoing grant of authority is a special power of attorney
coupled with an interest, is revocable and may be exercised by
said attorney-in-fact with full power of substitution.
6. Miscellaneous
(a) All communications permitted or required between the
parties hereto shall be effective when hand delivered or mailed
by United States mail, with postage prepaid, addressed to the
addresses first set forth in this Agreement or at such other
addresses as may be designated from time to time by written
notice to the other party.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors
and assigns; however, Manager may not assign its obligations
under this Agreement without the prior written approval of
Company.
(c) This Agreement shall be governed by and construed
according to the laws of the District of Columbia,
notwithstanding any conflict of law provision to the contrary.
This Agreement may not be modified, altered or amended in any
manner except by agreement in writing duly executed by the
parties hereto. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original; and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this
Management Agreement as of the day and year first above written.
IBF VI - Guaranteed Income
Fund
By:___________________________
______
Title:________________________
_______
IBF Management Corp.
By:___________________________
______
Title:________________________
_______
E-125
Exhibit No. 8
IBF VI - Guaranteed Income Fund
Form SB-2
AMENDED LOAN AGREEMENT
AGREEMENT made as of this 23rd day of June, 1998 between
[name], a Georgia limited liability Company ("Borrower") and IBF
Participating Income Fund ("Lender").
WITNESSETH:
Lender's assignor together with Borrower's assignor are
parties to a Loan Agreement
dated May ____, 1998 ( the "First Loan Agreement') pertaining to
the acquisition of the Winecoff Hotel in Atlanta Georgia (the
"Property"). Borrower has succeeded to the interest of the
purchaser to acquire the said Property and desires to borrow from
Lender a total of $1,800,000 (which includes the balance of
principal and interest due Lender as the First Advance under the
First Loan Agreement)
NOW, THEREFORE, the parties hereto agree as follows:
Article I. The Loan.
Section 1.01 Loan. The Loan shall be in the amount of
$1,800,000. Simultaneously herewith the Borrower shall execute
and deliver to Lender a Consolidated Note which shall consolidate
and combine the outstanding principal and interest due under the
First Loan Agreement and this Amended Loan Agreement. (The
"Note").
Article II. Representations and Covenants.
Section 2.01. Representations. The Borrower represents and
warrants to the Lender which representations shall be true as of
the date hereof, that:
(a) The Borrower has the power and authority to
execute, deliver and perform this Agreement, and each of the
other documents executed in connection therewith (collectively,
the "Loan Documents") to own its properties and to carry on its
business as now conducted;
(b) The execution, delivery performance of the Loan
Documents (i) have been duly authorized by all requisite action
of Borrower; (ii) to Borrower's knowledge does not violate any
provision of law, the Borrower's Operating Agreement any order
of any court or other agency, or any agreement to which the
Borrower is a party or by which the Borrower is bound; and (iii)
will not be in conflict with, result in a breach or constitute
(with due notice or lapse of time or both) a default under any
such agreement;
lien against the Property, free and clear of any other liens or
encumbrances other than Permitted Encumbrances as therein
described.
Article IV Extension of Maturity Date
Section 4.1 Loan Extension. Borrower shall have the right to
extend the stated Maturity Date as set forth in the Note for one
additional period of six months provided:
(a) Borrower is not at the time of the request to extend in
default hereunder or under the Note or the Deed to
Secure Debt;
(b) Borrower requests the extension in writing at least
thirty (30) days in advance of the Maturity Date and
has furnished proof that the Second Mortgage has been
satisfied of record or extended for not less than the
extended Maturity Date hereunder.
(c) All sums then due Lender have been paid;
(d) Borrower has paid Lender together with the written
request to extend, an extension fee of I% of the amount
of the then outstanding principal balance of the Loan
and has delivered to Lender a sum equal to interest
payment due hereunder.
Article V Origination Fee.
Borrower agrees to compensate Lender in connection with its
to due diligence, and originating the Loan by the payment of an
origination fee equal to 5% of the aggregate of the Note, payable
simultaneously with and out of the proceeds of the loan.
Section 5.1 Legal Fees. Borrower authorizes Lender to
disburse from the Loan to be advanced simultaneously herewith the
sum of S4000, be paid to the order of Holm & Drath, Esqs. to
defray Lenders costs in connection with this Agreement. Borrower
shall also be responsible to pay any additional r1egal fee Lender
may incur in connection with the Loan.
Article V1. Default.
Section 6.01 Events of Default. Each of the following shall
constitute and "Event of Default" under this Agreement;
(a) If any representation or warranty made in connection
with this Agreement shall be untrue or incorrect in any
material respect;
(b) The failure to make any payment of principal or
interest under the Note within ton (10) days after the
due date thereof;
(c) A default in respect of any liabilities or obligations
(present or future, absolute or contingent, secured or
unsecured, matured or unmatured, joint or several) of
the Borrower, or any of its affiliates, to the Lender
included any under this Agreement, after the expiration
of any applicable grace, notice or cure period-,
(d) The admission (whether in writing or otherwise) by
Borrower of its inability to pay its debts generally as
they become due;
(e) The commencement by the Borrower or any Guarantor of a
voluntary case or other proceeding) under the Federal
Bankruptcy Code, as now constituted or hereafter
amended, or under any other applicable foreign or state
bankruptcy, insolvency or other similar law; or the
continued existence for more than (60) days in respect
of the Borrower of any Guarantor of an involuntary case
(or other proceeding) under the Federal Bankruptcy
Code, as now constituted or hereafter amended, or under
any other applicable bankruptcy applicable bankruptcy,
insolvency or other similar law, or the appointment of
a receiver, liquidator, assignee, custodian, manager,
trustee, sequestrator or similar official of the
Borrower or any Guarantor or for any substantial part
of its business; or the making by the Borrower or any
Guarantor of any assignment for the benefit of
creditors; of the failure of the Borrower generally to
pay its debts as they become due; of the taking by the
Borrower of action to do or authorize any of the
foregoing or in the furtherance of any of the
foregoing.
Section 6.02 Effect of Default (a) Upon the occurrence of an
Event of Default, the Lender, in its sole and absolute
discretion, may (i) declare all of the outstanding principal
balance to be immediately due and payable and/or exercise such of
the other remedies provided for in the Loan Documents as the
Lender may elect; and/or (ii) pursue any other rights or remedies
available to the Lender under this Agreement or the other Loan
Documents. Upon the occurrence of an Event of Default interest
shall accrue at the raw of 24% per annum.
(b) Without limiting any remedy otherwise available to the
Lender, the Borrower shall pay a late charge, to the extent
permitted by law, of five ($.05) cents per each dollar ($1. 00)
of each payment more than ten (10) days in arrears and accepted
by the Lender, to cover the extra expense involved in handling
delinquent payments.
(c) If the Borrower fails to observe or perform any of the
covenants or agreements on the part of the Borrower to be
performed hereunder, then the Lender may, but shall not be
obligated to, perform the same and all necessary and reasonable
costs incurred by the Lender in performing the Borrower's
covenants and agreements, including reasonable counsel fees,
shall be repaid by the Borrower upon demand, together with
interest thereon at the default rate under the Note.
Section 6.03 No Waiver (a) Any failure of the Lender
to exercise its option to declare the Credit Loans immediately
due and payable, or any forbearance by the Lender before or after
any exercise of such option, or any forbearance to exercise any
other remedy of the Lender, or any withdrawals or abandonment of
the Lender of any of its rights in any one circumstance, shall
not be construed as a waiver of any option, power, remedy or
right of the Lender hereunder except to the extent, if any, the
action of the Lender constitutes an express waiver with respect
to such one circumstance. The rights and remedies of the Lender
expressed and contained in this Agreement and in the other Loan
Documents are commutative and none of them shall be deemed to be
exclusive of any other or of any right or remedy the Lender may
now or hereafter have in law or in equity. The election of any
one or more remedies shall not be deemed to be an election of
remedies under any statute, rule, regulation or other law.
(b) The obligations of the Borrower( and the rights and
remedies of the Lender against the Borrower) hereunder shall in
no way modified, abrogated, terminated or adversely affected by
(i) any forbearance by the Lender in collecting any sums due, or
(ii) the granting of any extension of time to perform any
obligation hereunder or (iii) any impairment of the collateral,
if any, which may now or hereafter be assigned or delivered to
Lender to secure payment of the Credit Loans, by reason of any
act, failure to act or negligence of the Lender.
Article VII Interest Reserve: Simultaneously and from the
Loan proceeds, Borrower has delivered to Lender $137,445
representing six months of interest payments due under the Note.
Accordingly, Borrower shall be deemed to have made and paid each
of the first six monthly payments due under the Note.
Article VIII Miscellaneous
Section 7.01 Notice. All notices to be given hereunder
shall be delivered by hand, or sent to the party to be notified
via certified mail, return receipt requested or sent by
recognized overnight courier which provided evidence of receipt
and shall be deemed given when delivered by hand or one (1)
business day after delivery to such recognized overnight courier
for the next business day or three (3) business days after being
posted with the United States Postal Service addressed to the
parties as follows
If to the Lender at: IBF Participating Income Fund
1733 Connecticut Avenue
Washington, D.C. 20009
If to the Borrower: [name]
Atlanta, Georgia, 30013
Section 7.02 Successors-and Assigns The terms Borrower
and Lender, shall include the named Borrower and the named Lender
and their respective legal representative successors and assigns.
Section 7.03 Severability. If any or more of the
provisions contained in this Agreement or in any of the other
Loan Documents 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 Agreement of any other of the other Loan
Document.
Section 7.04 Expenses of Lender. The Borrower shall pay
all reasonable out-of-pocket expenses, including but not limited
to counsel fees incurred by the Lender in connection with the
preparation, execution and delivery of this Agreement and the
enforcement or amendment of any of its rights or provisions
hereunder.
Section 7.05 Indemnity The Borrower shall indemnify and
hold harmless the Lender from and against any and all
liabilities, obligations, losses, damages, penalties, claims,
reasonable actions, suits proceedings, judgments, costs,
expenses, and disbursements, including but not limited t0counsel
fees, in any way relating to or arising out of the failure of the
Borrower to perform in full its obligations under this Agreement
or under any of the other Loan Documents.
Section 7.06 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Georgia without regard to conflict of laws principles.
Section 7.07 Jurisdiction. ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS AGREEMENT MAY BE BROUGHT IN A COURT OF
RECORD OF THE STATE OF GEORGIA OR THE FEDERAL DISTRICT COUKIAN
THE STATE OF NEW YORK OR THE DISTRICT OF COLUMBIA.
Section 7.08 Waiver of Certain Defenses. IN ANY ACTION
OR PROCEEDING IN CONNECT10N WITH THIS AGREEMENT, OR ANY OTHER
LOAN DOCUMENT, THE BORROWER WAIVES ANY CLAIM THAT ANY FORUM
LISTED HEREIN IS INCONVENIENT AND FURTHER WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS OR
ANY CLAIM OF LACBES AND ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE
OR DESCRIPTION EXCEPT FOR ANY COUNTERCLAIMS DEEMED COMPULSORY
UNDER APPLICABLE COURT RULES OR STATES. THIS PARAGRAPH SHALL NOT
BE DEEMED TO BE A WAIVER OF ANY OTHER DEFENSE THAT MAY BE
RIGHTFULLY IWASSERTED BY BORROWER.
Section7.09 Waiver of Jury Trial and Waiver of Certain
Damages. IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE LENDER AND BORROWER
MUTUALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY AND BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
Section 7. 10 Joint and Several Liability. If this
Agreement is executed by more than one person or entity, all
representations, warranties, obligations and covenants made by
the Borrower hereunder shall be deemed to have been made by each
of such persons and entities and the obligations and duties of
such parties hereunder shall be deemed to be joint and several in
all respects.
Section7.11 Counterparts. This Agreement maybe executed
in any number of counterparts, each of which shall be deemed to
be an original, but all of which, when taken together, shall
constitute one and the same instrument and shall become effective
when copies hereof, when taken together, bear the signatures of
each of the parties hereto and it shall not be necessary in
making proof of this instrument to produce or account for more
than one of such fully executed counterparts.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Borrower and Lender as of the day and year first above
written.
BORROWER:[name][
By:
___________________________________
Name:
Title:
LENDER: IBF PARTICPATING INCOME FUND.
By:
____________________________________
Name:
Title:
CONSOLIDATED PROMISSORY NOTE
$1,800,000 JUNE 23,1998
FOR VALUE RECEIVED, [name] ( the "Borrower"), a Georgia
corporation promises to pay IBF Participating Income Fund, ( the
"Lender") or order, at Lender's office at 1733 Connecticut Avenue
NW, Washington DC 20009 or at such other address that any holder
of this note designates, the principal sum of One Million Seven
Hundred & Sixty Thousand ($1,700,000) Dollars with interest from
the date of advancement hereof on the unpaid principal at the
rate and in the manner hereinafter provided in lawful money in
the United States of America.
This Note shall be payable in full on December 23, 1998, (
the "Maturity Date") at which time all principal outstanding,
together with all accrued and unpaid interest, shall be due and
payable.
Interest on the outstanding balance shall accrue at the rate
of 15% per annum, until the Maturity Date. The Borrower shall
have the right to extend the Maturity Date for one additional
period of six months ( to expire no later than June 22, 1999)
provided:
(a) Borrower is not in default hereunder or under the terms
of a Deed to Secure Debt of even date given by Borrower
to Lender (the "Mortgage") or under an Amended Loan
Agreement of even date (the ""Loan Agreement") at the
time of the request to extend;
(b) The Deed to Secure Debt given by Borrower to JAMION
AMERICAN CORP. the ("Second Mortgage") has been
satisfied and removed of record or the term extend to
mature no sooner than the extended Maturity Date
hereunder;
(c) Borrower requests the extension in writing at least
thirty (30) days in advance of the Maturity Date;
(d) Borrower has paid Lender together with the written
request to extend, an extension fee of 1% of the amount
of the then outstanding principal balance of the Note
and has also delivered to Lender a sum equal to
interest payments for the succeeding six months under
this Note.
The principal balance of the Note includes the principal
balance and accrued interest under a Commercial Promissory Note
dated May , 1998 in the original principal amount of $107,000
made by Borrower in favor of IBF Special Purpose Corporation III,
(which note has been assigned to Lender) and as such is
consolidated hereinunder.
If a payment of principal or interest due hereunder is not
made within fifteen (15) days of its due date interest shall
therefore accrue at the lower of 24% per annum or the maximum
permitted rate, until paid.
If at any time while this Note is outstanding, any one or
more of the following events of default shall occur:
(a) a default in the performance or observance of the terms
of the Loan Agreement;
(b) a default in the prompt payment of any sum at any time
due under this Note;
(c) the filing of a voluntary bankruptcy petition by the
Borrower or the filing of an involuntary bankruptcy
petition against the Borrower which is not discharges
within sixty (60) days after its filing;
(d) a default in the performance or observance of any of
the terms of any Deed to Secure Debt or mortgage
including the Second Mortgage;
then and in any such event, the Lender may, at its option,
without notice or demand, declare the principal and a1l interest
then accrued under this Note to be immediately due and payable
without presentment, demand, protest or other notice of dishonor
of any kind, all of which are hereby expressly waived. No course
of dealing or delay in accelerating the maturity of this Note or
in taking any other action with respect to any event of default
shall affect rights later to take such action with respect
thereto and no waiver as to any one default shall affect rights
as to any other default.
The Borrower shall have the privilege of paying all of the
principal balance at any time, In the event of a prepayment,
Borrower shall be entitled to the amount of unearned interest
then held by Lender pursuant to the Loan Agreement against the
then outstanding principal balance of the Note. Upon the payment
in full whether at the Maturity Date or otherwise, the Borrower
shall pay to Lender an amount equal to 3% of the original
principal balance of this Note and unless the same is paid this
Note shall not be deemed fully satisfied.
The Borrower agrees by making this Note or by making an
agreement to pay any of the indebtedness evidenced by this Note,
to waive presentment for payment, protest and demand, notice of
protest, demand and dishonor and nonpayment of notice or further
assent (a) to the substitution, exchange or release by the Lender
or holder (s) hereof at any time of any additional collateral or
security of this Note, (b) to the modification or amendment, at
any time and from time to time this Note, Mortgage or any other
instrument securing this Note, at the request of any person
liable hereon, (c) to the granting by the Lender or holder hereof
of any extension of the time for payment of this Note or for the
performance of the agreements, covenants and conditions contained
in this Note, or any other instrument securing this Note at the
request of any person liable hereon, and (d) to any and all
forbearance and indulgences whatsoever. Such consent shall not
alter or diminish the liability of any person.
The Borrower agrees to pay all reasonable expenses and
costs, including without limitation attorney's fees, appraisal
fees, and costs of collection, which may be incurred by the
holder hereof in connection with the enforcement of any
obligations hereunder or under any instrument or document
executed in connection herewith or in connection with
representation with respect to bankruptcy or insolvency
proceedings.
This Note shall be the joint and several obligation of the
Borrower and all sureties and endorsers, and shall be binding
upon them and their respective successors and assigns and each an
and any of them.
IN WITNESS WHEREOF, the Borrower has executed this
Consolidated Promissory Note as an instrument under seal as of
the day and date first written above.
Witness: [name]
___________________________ By:
________________________________
AFTER RECORDING, PLEASE RETURN TO:
Holm & Drath LLP
400 Park Avenue
New York, New York 10022
Attention: Lawrence I. Drath,
Esq.
STATE OF GEORGIA
COUNTY OF COBB
DEED TO SECURE DEBT
THIS INDENTURE, made as of the 26th day of June, 1998, by
and between [name], a Georgia limited liability company
(hereinafter referred to as the "Borrower "), and IBF
PARTICIPATING INCOME FUND, a Delaware corporation (hereinafter
referred to as the "Lender");
WITNESSETH:
WHEREAS, Borrower has executed and delivered to Lender that
certain Promissory Note dated on or about the date hereof (the
"Note") evidencing certain indebtedness of Borrower to Lender in
the original principal amount of S 1,800,000.00 arising from the
loan in such amount made by Lender to Borrower; and
WHEREAS, Borrower and Lender desire to enter into this Deed
to Secure Debt in order to secure the aforesaid indebtedness.
NOW, THEREFORE, the Borrower and the Lender hereby agree as
follows:
That for and in consideration of the sum of Ten and No/100
($10.00) Dollars in hand paid and the other considerations
hereinafter mentioned, receipt whereof is hereby acknowledged,
the Borrower does hereby bargain, sell, grant and convey to the
Lender, its successors and assigns all of the land described in
Exhibit "A" attached hereto and incorporated herein, together
with all buildings, improvements (including improvements to be
made hereafter) and fixtures attached or affixed thereto
(hereinafter collectively called the "Property ").
TOGETHER WITH all and singular the rights, members and
appurtenances whatsoever, in any way belonging, relating or
appertaining to any of the Property hereinabove mentioned or
which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Borrower.
TO HAVE AND TO HOLD the premises and all parts, rights,
members and appurtenances thereof to the use, benefit and behalf
of the Lender, its successors and assigns in fee simple forever;
and the Borrower covenants that the Borrower is lawfully seized
and possessed of the Property in fee simple and has good right to
convey the same, and that the Borrower will warrant and defend
the title thereto against the claims of all persons claiming by,
through or under Borrower, subject only to those matters
enumerated on Exhibit "B", attached hereto and made a part hereof
This conveyance is intended (i) to constitute a security
agreement as required under the Uniform Commercial Code of
Georgia and (ii) to operate as and to be construed as a deed
passing the title to the Property to the Lender and is made under
those provisions of the existing laws of the State of Georgia
relating to Deeds to Secure Debt, and not as a mortgage, and is
given to secure (a) a debt evidenced by the Note, payable to the
order of the Lender in the principal sum of $1,800,000.00 with
interest payable at the rate therein specified, to be paid as
specified in the Note (said amount hereinafter sometimes referred
to as the "Indebtedness"); (b) any and all renewals and
extensions of the Note; and (c) all costs of collection including
reasonable attorneys fees if collected by or through an attorney
at law. The entire unpaid principal balance and all accrued and
unpaid interest thereon, if not sooner paid, shall be due and
payable on December 23, 1998, as such due date may be extended
for one period of six (6) months to June 22, 1999, as provided in
the Note.
The Borrower covenants with the Lender as follows:
ARTICLE I
1.01 Payment of Indebtedness. The Borrower will pay the Note
according to the tenor thereof and all other sums secured hereby
promptly as the same shall become due.
1.02 Taxes, Liens and Other Charges.
(a) The Borrower will pay, before the same become
delinquent, all taxes, liens, assessments and charges
of every character already levied or assessed or that
may hereafter be levied or assessed upon or against the
Property and all utility charges, whether public or
private.
(b) The Borrower will not suffer or create any mechanic's,
materialmen's, laborer's statutory or other lien which
might or could be prior to, equal, or junior to this
Deed to Secure Debt to be created or to remain
outstanding upon any part of the Property, except as a
Permitted Encumbrance.
1.03 Insurance. The Borrower shall keep the buildings and
improvements now existing upon the Property insured for the
lesser of their replacement value or fair market value against
loss or damage by fire and other casualty including (i) fire, and
(ii) the perils covered by extended coverage insurance. Such
insurance shall be maintained with such companies as are
authorized to do business in the State of Georgia. Such policies
shall insure the Lender's interest in the Property, name the
Lender as an insured party thereunder, provide that the losses
thereunder shall be payable to the Lender and provide that no
cancellation or reduction in coverage shall be effective unless
the insurer first gives the Lender thirty (30) days' prior
written notice.
1.04 Care of Premises.
(a) If the Property or any part thereof is damaged by fire
or any other cause, the Borrower will give immediate
written notice of such damage to the Lender.
(b) The Lender or its representative is hereby authorized
to enter upon and inspect the Property at any time
during normal business hours upon reasonable advance
notice to the Borrower.
(c) The Borrower will promptly comply with all present and
future laws, ordinances, rules and regulations of any
governmental authority affecting the Property or any
part thereof, subject to the right to contest the same
in good faith.
(d) The Borrower shall not permit any waste to the
Property.
1.05 Expenses. The Borrower will pay or reimburse the Lender
for all reasonable attorneys' fees, costs and expenses incurred
by the Lender in any action, legal proceeding or dispute of any
kind in which the Lender is made a party, or appears as party
plaintiff or defendant affecting the Indebtedness, this Deed to
Secure Debt or the interest created herein, or the Property,
including but not limited to the exercise of the power of sale of
this Deed to Secure Debt, any condemnation action involving the
Property or any action to protect the security hereof, and any
such amounts paid by the Lender shall be added to and be a part
of the Indebtedness.
1.06 Performance by the Lender of Defaults by the Borrower.
If the Borrower shall default in the payment of any tax, lien,
assessment or charge levied or assessed against the Property, in
the payment of any insurance premium, in the procurement of
insurance, coverage or in the performance or observance of any
covenant, condition or term of this Deed to Secure Debt, and such
default is not cured within the applicable notice and cure
periods set forth herein, then the Lender, at its option, may,
but shall not be required to, perform or observe the same, and
all payments made or costs incurred by the Lender in connection
therewith shall be secured hereby and shall be, without demand,
immediately repaid by the Borrower to the Lender.
1.07 Condemnation. If all or any part of the Property shall
be damaged or taken through condemnation (which term when used in
this Deed to Secure Debt shall include any damage or taking by
any governmental authority or any transfer by private sale in
lieu thereof), either temporarily or permanently, the Lender
shall be entitled to all compensation, awards and other payment
or relief thereof up to and including an amount per acre equal to
the release price per acre set forth in Article V, below, and is
hereby authorized, at its option, to commence, appear in and
prosecute any action or proceeding relating to any condemnation
and to settle or compromise any claim in connection therewith.
All such compensation, awards, damages, claims, rights of action
and proceeds and the night thereto are hereby assigned by the
Borrower to the Lender, who, after deducting therefrom all its
reasonable expenses, including reasonable attorneys' fees, shall,
without affecting this Deed, apply the same in reduction of the
principal sum secured hereby or in the Note or notes evidencing
the Indebtedness, provided that any balance or such monies then
remaining shall be paid to the Borrower. The Borrower agrees to
execute such further assignment of any compensation, awards,
damages, claims, rights of action and proceeds as the Lender may
reasonably require.
ARTICLE II
2.01 Default . A Default shall have occurred hereunder, time
being of the essence, if:
(a) The Borrower shall fail to pay in full any installment
of principal or interest required by the Note, this Deed to
Secure Debt or otherwise and fails to remedy such nonpayment
within ten (10) days; or
(b) The Borrower shall fall to duly observe any other
covenant, condition or agreement of this Deed to Secure Debt or
any other instrument evidencing, securing or executed in
connection with the Indebtedness and fails to remedy such breach
within thirty (30) days after written notice thereof from the
Lender; or
(c) Any lien for labor or material or otherwise shall be
filed against the Property and not be removed within sixty (60)
calendar days of the date of such filing; or
(d) A levy shall be made under process on, or a receiver be
appointed for, the Property; or
(e) The Borrower files a voluntary petition in bankruptcy
or the Borrower is adjudicated as a bankrupt or insolvent or the
Borrower files any petition or answer seeking or acquiescing in
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for
debtors or the Borrower seeks or consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of the
Borrower or of all or any substantial part of the Property or of
any or all the rents, revenues, issues, earnings, profits or
income thereof or the making of any general assignment for the
benefit of creditors;
(f) An order, judgment or decree shall be entered without
the application, approval or consent of the Borrower by any court
of competent jurisdiction approving a petition seeking
reorganization of the Borrower or of all or a substantial part of
its properties or assets or .appointing a receiver, trustee or
liquidator of it and such order, judgment or decree shall
continue unstayed and in effect for any period of ninety (90)
days; or
(g) Title to the Property or any interest therein or in
Borrower is transferred or assigned without Lender's prior
written consent.
2.02 Acceleration of Maturity. If a default shall have
occurred hereunder and not be remedied within the time periods
permitted hereby, then the entire unpaid principal sum of the
indebtedness secured hereby, together with all interest accrued
and unpaid thereon, shall, at the option of the Lender, become
due and payable without notice or demand, time being of the
essence of this Deed to Secure Debt and of the Note; and no
omission on the part of the Lender to exercise such option when
entitled so to do shall be considered as a waiver of such right.
2.03 Power of Sale. When the indebtedness secured hereby
shall become due, whether by acceleration or otherwise, if the
same is not paid to Lender and the failure to make such payment
constitutes a default by Borrower hereunder, the Lender may sell
and dispose of the Property at public auction, at the usual place
for conducting sales at the courthouse in the county where the
Property or any part thereof may be located, to the highest
bidder for cash, first advertising the time, terms and place of
such sale by publishing a notice thereof once a week for four
consecutive weeks in a newspaper in which sheriff s
advertisements are published in said county, all other notice
being hereby waived by the Borrower; and the Lender may thereupon
execute and deliver to the purchaser at said sale a sufficient
conveyance of the Property in fee simple, which conveyance may
contain recitals as to the happening of the default upon which
the execution of the power of sale herein granted depends, and
said recitals shall be presumptive evidence, insofar as the
purchaser is concerned, that all preliminary acts prerequisite to
said sale and deed were in all things duly complied with; and the
Lender, its agents, representatives, successors or assigns may
bid and purchase at such sale; and the Borrower hereby
constitutes and appoints the Lender or its assigns Borrower's
agent and attorney-in-fact to make such recitals, sale and
conveyance, and all of the acts of such attorney-in-fact are
hereby ratified, and the Borrower agrees that such recitals shall
be binding and conclusive upon the Borrower, insofar as the
purchaser is concerned, and that the conveyance to be made by the
Lender, or its assigns, (and in the event of a deed in lieu of
foreclosure, then as to such conveyance) shall be effectual to
bar all right, title and interest, equity of redemption,
including all statutory redemption, homestead, dower, curtesy and
all other exemptions of the Borrower, or its successors in
interest, in and to said Property; and the Lender, or its
assigns, shall collect the proceeds of such sale, reserving
therefrom all unpaid secured indebtedness with interest then due
thereon, and all amounts advanced by the Lender for taxes,
assessments, fire insurance premiums and other charges, together
with all costs and charges for advertising, and commissions for
selling the Property and reasonable attorney's fees and pay over
any surplus to the Borrower; and the Borrower agrees that
possession of the Property during the existence of the secured
indebtedness by the Borrower, or any person claiming under the
Borrower, shall be that of tenant under the Lender, or its
assigns, and, in case of a sale, as herein provided, the Borrower
or any person in possession under the Borrower shall then become
and be tenants holding over and shall forthwith deliver
possession to the purchaser at such sale or be summarily
dispossessed in accordance with the provisions of law applicable
to tenants holding over; the power and agency hereby granted .are
coupled with an interest and are irrevocable by death or
otherwise and are in addition to any and all other remedies which
the Lender may have at law or in equity.
2.04 Discontinuance of Proceedings and Restoration of the
Parties. In case the Lender shall have proceeded to enforce any
right or remedy under this Deed to Secure Debt by receiver, entry
or otherwise and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely
to the Lender, then, and in every such case, the Borrower and the
Lender shall be restored to their former positions and nights
hereunder, and all rights, powers and remedies of the Lender
shall continue as if no such proceeding had been taken.
2.05 WAIVER. THE BORROWER HEREBY WAIVES ANY RIGHT THE
BORROWER MAY HAVE UNDER THE CONSTITUTION OR THE LAWS OF THE STATE
OF GEORGIA OR THE CONSTITUTION OR THE LAWS OF THE UNITED STATES
OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THIS DEED TO SECURE
DEBT TO THE LENDER AND THE BORROWER WAIVES THE BORROWER'S RIGHTS,
IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED IN
ACCORDANCE WITH THE PROVISIONS OF THIS DEED TO SECURE DEBT ON THE
GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED
WITHOUT A PRIOR JUDICIAL HEARING. ALL WAIVERS BY THE BORROWER IN
THIS PARAGRAPH HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY AFTER THE BORROWER HAS BY THE BORROWER'S ATTORNEY BEEN
FIRST APPRISED OF AND COUNSELED WITH RESPECT TO THE BORROWER'S
POSSIBLE ALTERNATIVE RIGHTS.
ARTICLE III
3.01 Intentionally omitted.
ARTICLE IV
4.01 Successors and Assigns Included in Parties. Whenever in
this Deed to Secure Debt one of the parties hereto is named or
referred to, the legal representatives, successors and assigns of
such parties shall be included and all covenants and agreements
contained in this indenture by or on behalf of the Borrower and
by or on behalf of the Lender shall bind and inure to the benefit
of their respective legal representatives, successors and
assigns, whether so expressed or not.
4.02 Headings. The headings of the sections, paragraphs and
subdivisions of this Deed to Secure Debt are for the convenience
of reference only, are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
4.03 Invalid Provisions to Affect No Others. If fulfillment
of any provision hereof or any transaction related hereto or to
the Note, at the time performance of such provisions shall be
due, shall involve transcending the limit of validity prescribed
by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and, if any clause or
provision herein contained operates or would prospectively
operate to invalidate this Deed to Secure Debt in whole or in
part, then such clause or provision only shall be held for
naught, as though not herein contained, and the remainder of this
Deed to Secure Debt shall remain operative and in full force and
effect.
4.04 Number and Gender. Whenever the singular or plural
number, masculine or feminine or neuter gender is used herein, it
shall equally include the other.
4.05 Applicable Law. This Deed to Secure Debt shall be
governed by and shall be construed and interpreted in accordance
with the laws of the State of Georgia.
4.06 Time. TIME IS OF THE ESSENCE HEREOF.
4.07 Notices. Any and all notices required or permitted to
be given hereunder shall be in writing and shall be considered as
given when deposited in the mail, certified, postage prepaid,
return receipt requested, to the following parties:
If to the Lender: IBF Participating Income Fund
1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
Attention: Mr. Robert Porco
With a copy to: Holm & Drath LLP
400 Park Avenue
New York, New York 10022
Attention: Lawrence I. Drath, Esq.
If to the Borrower: [name]
Atlanta, Georgia 30303
With copy to:
ARTICLE V
5.01 Deed to Secure Debt Releases. The Lender agrees to
cooperate with any applications necessary for the dedication of
any plat or plats, and any documents necessary to effectuate such
plans, such as the granting of or subordination to easements,
dedication of roads, acquisition of utilities and requests for
zoning changes; provided, however, that the Borrower shall
indemnify and hold the Lender harmless from any cost or expenses
incurred as a result of executing such documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Borrower and the Lender have caused
their duly authorized officers to execute under seal and deliver
this Deed to Secure Debt the day and year first above written.
Signed, sealed and delivered before me this BORROWER:
_____ day of _____________, 1998.
__________________________________
Unofficial Witness
__________________________________
Notary Public By:
________________________________
Name:
Title:
My Commission Expires:
________________________
(Signatures continued on next page)
(Signatures continued from preceding page)
Signed, sealed and delivered before me this
_____ day of _______________, 1998 LENDER:
__________________________________
Unofficial Witness IBF PARTICIPATING INCOME FUND
__________________________________
Notary Public By:
______________________________________
Name:
Title:
My Commission Expires:
______________ [CORPORATE OR BANK SEAL]
(NOTARIAL SEAL)
EXHIBIT "A"
ALL THAT TRACT OR PARCEL of land lying and being in the City of
Atlanta, in Land Lot 78 of the 14th District of Fulton County,
Georgia, and being more particularly described as follows:
BEGINNING at the intersection of the western right-of-way line of
Peachtree Street (right-of-way width varies) with the southern
right-of-way line of Ellis Street (right-of-way width varies),
said point being the northeastern comer of the building on said
lot; running thence south 00 degrees 00 minutes 00 seconds east
along the western right-of-way line of Peachtree Street, a
distance of 63.28 feet to a comer of said building and the
property of Metropolitan Atlanta Rapid Transit Authority
(Peachtree Center Station); thence leaving said right-of-way line
of Peachtree Street, and running south 89 degrees 53 minutes 46
seconds west along said MARTA property, a distance of 70.60 feet
to a comer of said building and the eastern side of a 10-foot
alley; running thence north 00 degrees 05 minutes 02 seconds west
along the eastern side of said alley, a distance of 63.45 feet to
a comer of said building and the southern right-of-way fine of
Ellis Street; running thence north 89 degrees 57 minutes 57
seconds east along said right-of-way fine of Ellis Street, a
distance of 70.70 feet to the POINT OF BEGINNING; according to
ALTA/ACSM Land Title Survey for "The Demm Group, Inc. & Chicago
Title Insurance Company," dated January 16, 1998, prepared by
Watts & Browning Engineers, Inc., under the seal and
certification of V.T. Hammond, Georgia Registered Land Surveyor
No. 2554; said tract of land containing 0. 10277 acre (4,477
square feet) and being improved property having a 15story brick
building located thereon, known as 174-178 Peachtree Street,
N.W., according to the present system of numbering in the City of
Atlanta, said survey being incorporated herein and made a part
hereof by reference.
TOGETHER WITH all right, title, and interest, if any, in and to
the aforesaid alley.
EXHIBIT "B"
1 All taxes for the year 1998 and subsequent years, and any
additional taxes resulting from reassessment of the subject
property.
2. Title to the alley adjoining the subject property on the
west and rights of the adjoining property owners in and to
the use of said alley as established by an Agreement by and
between A.G. Rhodes and J.B. Frost, W.H. Kiser, J.F. Kiser,
Sanders Loan and Investment Company, and Asa Candler, dated
February 17, 1913, recorded in Deed Book 355, Page 304,
Fulton County, Georgia Records.
3. Rights of the owner of the property adjoining to the south
of the subject property to require the removal of three
cornices, or projections, on the southern side of the
building located on the subject property, which extend over
the property line, as provided in an Agreement by and
between H.H. and J.F. Kiser and Walton Investment Company,
dated July 31, 1913, recorded in Deed Book 427, Page 492,
aforesaid records.
4. Rights of the City of Atlanta to a part of the basement of
said building which protrudes under the sidewalk on the
Peachtree Street side of the subject property, conveyed as a
ten foot (10') strip on the Peachtree Street side of the
property for sidewalk purposes only, by quitclaim deed dated
February 24, 1913, recorded in Deed Book 409, Page 217,
aforesaid records.
5. Permanent Subsurface Easement acquired by the City of
Atlanta in Civil Action File Number C-39679, Superior Court
of Fulton County, dated May 4,1978, a copy of which order is
recorded in Deed Book 6995, Page 167, aforesaid records, and
subsequently conveyed by Deed from City of Atlanta to
Metropolitan Atlanta Rapid Transit Authority, dated May 6,
1978, recorded in Deed Book 6981, Page 383, aforesaid
records; said easement being below the elevation of 1060
feet above U.P.S.C. and G.S. 1929 adjusted mean sea level
within the bound of the subject property for all purposes
necessary or incidental to the Metropolitan Atlanta Rapid
Transit Authority's construction, use and maintenance of a
rapid rail transit system, and appurtenances, including, but
not limited to, the right to construct, use, and maintain
within said easement an escalator tunnel for public access
to and from Metropolitan Atlanta Rapid Transit Authority's
Peachtree Center station located south of the subject
property.
6. Those matters as disclosed by that certain survey entitled
"ALTA/ACSM Land Title Survey for The Demm. Group, Inc. &
Chicago Title Insurance Company," prepared by Watts &
Browning, Engineers, bearing the seal and certification of
V.T. Hammond, Georgia Registered Land Surveyor No. 2554,
dated January 16, 1998, as follows:
(i) subterranean MARTA easement; and
(ii) ten (10) foot alley along the west line of
the subject property.
AFTER RECORDING, PLEASE RETURN TO:
Holm & Drath LLP
400 Park Avenue
New York, New York 10022
Attention: Lawrence I. Drath,
Esq.
STATE OF GEORGIA
COUNTY OF COBB
DEED TO SECURE DEBT
THIS INDENTURE, made as of the 26th day of June, 1998, by
and between [name], a Georgia limited liability company
(hereinafter referred to as the "Borrower "), and IBF
PARTICIPATING INCOME FUND, a Delaware corporation (hereinafter
referred to as the "Lender");
WITNESSETH:
WHEREAS, Borrower has executed and delivered to Lender that
certain Promissory Note dated on or about the date hereof (the
"Note") evidencing certain indebtedness of Borrower to Lender in
the original principal amount of S 1,800,000.00 arising from the
loan in such amount made by Lender to Borrower; and
WHEREAS, Borrower and Lender desire to enter into this Deed
to Secure Debt in order to secure the aforesaid indebtedness.
NOW, THEREFORE, the Borrower and the Lender hereby agree as
follows:
That for and in consideration of the sum of Ten and No/100
($10.00) Dollars in hand paid and the other considerations
hereinafter mentioned, receipt whereof is hereby acknowledged,
the Borrower does hereby bargain, sell, grant and convey to the
Lender, its successors and assigns all of the land described in
Exhibit "A" attached hereto and incorporated herein, together
with all buildings, improvements (including improvements to be
made hereafter) and fixtures attached or affixed thereto
(hereinafter collectively called the "Property ").
TOGETHER WITH all and singular the rights, members and
appurtenances whatsoever, in any way belonging, relating or
appertaining to any of the Property hereinabove mentioned or
which hereafter shall in any way belong, relate or be appurtenant
thereto, whether now owned or hereafter acquired by the Borrower.
TO HAVE AND TO HOLD the premises and all parts, rights,
members and appurtenances thereof to the use, benefit and behalf
of the Lender, its successors and assigns in fee simple forever;
and the Borrower covenants that the Borrower is lawfully seized
and possessed of the Property in fee simple and has good right to
convey the same, and that the Borrower will warrant and defend
the title thereto against the claims of all persons claiming by,
through or under Borrower, subject only to those matters
enumerated on Exhibit "B", attached hereto and made a part hereof
This conveyance is intended (i) to constitute a security
agreement as required under the Uniform Commercial Code of
Georgia and (ii) to operate as and to be construed as a deed
passing the title to the Property to the Lender and is made under
those provisions of the existing laws of the State of Georgia
relating to Deeds to Secure Debt, and not as a mortgage, and is
given to secure (a) a debt evidenced by the Note, payable to the
order of the Lender in the principal sum of $1,800,000.00 with
interest payable at the rate therein specified, to be paid as
specified in the Note (said amount hereinafter sometimes referred
to as the "Indebtedness"); (b) any and all renewals and
extensions of the Note; and (c) all costs of collection including
reasonable attorneys fees if collected by or through an attorney
at law. The entire unpaid principal balance and all accrued and
unpaid interest thereon, if not sooner paid, shall be due and
payable on December 23, 1998, as such due date may be extended
for one period of six (6) months to June 22, 1999, as provided in
the Note.
The Borrower covenants with the Lender as follows:
ARTICLE I
1.01 Payment of Indebtedness. The Borrower will pay the Note
according to the tenor thereof and all other sums secured hereby
promptly as the same shall become due.
1.02 Taxes, Liens and Other Charges.
(a) The Borrower will pay, before the same become
delinquent, all taxes, liens, assessments and charges
of every character already levied or assessed or that
may hereafter be levied or assessed upon or against the
Property and all utility charges, whether public or
private.
(b) The Borrower will not suffer or create any mechanic's,
materialmen's, laborer's statutory or other lien which
might or could be prior to, equal, or junior to this
Deed to Secure Debt to be created or to remain
outstanding upon any part of the Property, except as a
Permitted Encumbrance.
1.03 Insurance. The Borrower shall keep the buildings and
improvements now existing upon the Property insured for the
lesser of their replacement value or fair market value against
loss or damage by fire and other casualty including (i) fire, and
(ii) the perils covered by extended coverage insurance. Such
insurance shall be maintained with such companies as are
authorized to do business in the State of Georgia. Such policies
shall insure the Lender's interest in the Property, name the
Lender as an insured party thereunder, provide that the losses
thereunder shall be payable to the Lender and provide that no
cancellation or reduction in coverage shall be effective unless
the insurer first gives the Lender thirty (30) days' prior
written notice.
1.04 Care of Premises.
(a) If the Property or any part thereof is damaged by fire
or any other cause, the Borrower will give immediate
written notice of such damage to the Lender.
(b) The Lender or its representative is hereby authorized
to enter upon and inspect the Property at any time
during normal business hours upon reasonable advance
notice to the Borrower.
(c) The Borrower will promptly comply with all present and
future laws, ordinances, rules and regulations of any
governmental authority affecting the Property or any
part thereof, subject to the right to contest the same
in good faith.
(d) The Borrower shall not permit any waste to the
Property.
1.05 Expenses. The Borrower will pay or reimburse the Lender
for all reasonable attorneys' fees, costs and expenses incurred
by the Lender in any action, legal proceeding or dispute of any
kind in which the Lender is made a party, or appears as party
plaintiff or defendant affecting the Indebtedness, this Deed to
Secure Debt or the interest created herein, or the Property,
including but not limited to the exercise of the power of sale of
this Deed to Secure Debt, any condemnation action involving the
Property or any action to protect the security hereof, and any
such amounts paid by the Lender shall be added to and be a part
of the Indebtedness.
1.06 Performance by the Lender of Defaults by the Borrower.
If the Borrower shall default in the payment of any tax, lien,
assessment or charge levied or assessed against the Property, in
the payment of any insurance premium, in the procurement of
insurance, coverage or in the performance or observance of any
covenant, condition or term of this Deed to Secure Debt, and such
default is not cured within the applicable notice and cure
periods set forth herein, then the Lender, at its option, may,
but shall not be required to, perform or observe the same, and
all payments made or costs incurred by the Lender in connection
therewith shall be secured hereby and shall be, without demand,
immediately repaid by the Borrower to the Lender.
1.07 Condemnation. If all or any part of the Property shall
be damaged or taken through condemnation (which term when used in
this Deed to Secure Debt shall include any damage or taking by
any governmental authority or any transfer by private sale in
lieu thereof), either temporarily or permanently, the Lender
shall be entitled to all compensation, awards and other payment
or relief thereof up to and including an amount per acre equal to
the release price per acre set forth in Article V, below, and is
hereby authorized, at its option, to commence, appear in and
prosecute any action or proceeding relating to any condemnation
and to settle or compromise any claim in connection therewith.
All such compensation, awards, damages, claims, rights of action
and proceeds and the night thereto are hereby assigned by the
Borrower to the Lender, who, after deducting therefrom all its
reasonable expenses, including reasonable attorneys' fees, shall,
without affecting this Deed, apply the same in reduction of the
principal sum secured hereby or in the Note or notes evidencing
the Indebtedness, provided that any balance or such monies then
remaining shall be paid to the Borrower. The Borrower agrees to
execute such further assignment of any compensation, awards,
damages, claims, rights of action and proceeds as the Lender may
reasonably require.
ARTICLE II
2.01 Default . A Default shall have occurred hereunder, time
being of the essence, if:
(a) The Borrower shall fail to pay in full any installment
of principal or interest required by the Note, this Deed to
Secure Debt or otherwise and fails to remedy such nonpayment
within ten (10) days; or
(b) The Borrower shall fall to duly observe any other
covenant, condition or agreement of this Deed to Secure Debt or
any other instrument evidencing, securing or executed in
connection with the Indebtedness and fails to remedy such breach
within thirty (30) days after written notice thereof from the
Lender; or
(c) Any lien for labor or material or otherwise shall be
filed against the Property and not be removed within sixty (60)
calendar days of the date of such filing; or
(d) A levy shall be made under process on, or a receiver be
appointed for, the Property; or
(e) The Borrower files a voluntary petition in bankruptcy
or the Borrower is adjudicated as a bankrupt or insolvent or the
Borrower files any petition or answer seeking or acquiescing in
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for
debtors or the Borrower seeks or consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of the
Borrower or of all or any substantial part of the Property or of
any or all the rents, revenues, issues, earnings, profits or
income thereof or the making of any general assignment for the
benefit of creditors;
(f) An order, judgment or decree shall be entered without
the application, approval or consent of the Borrower by any court
of competent jurisdiction approving a petition seeking
reorganization of the Borrower or of all or a substantial part of
its properties or assets or .appointing a receiver, trustee or
liquidator of it and such order, judgment or decree shall
continue unstayed and in effect for any period of ninety (90)
days; or
(g) Title to the Property or any interest therein or in
Borrower is transferred or assigned without Lender's prior
written consent.
2.02 Acceleration of Maturity. If a default shall have
occurred hereunder and not be remedied within the time periods
permitted hereby, then the entire unpaid principal sum of the
indebtedness secured hereby, together with all interest accrued
and unpaid thereon, shall, at the option of the Lender, become
due and payable without notice or demand, time being of the
essence of this Deed to Secure Debt and of the Note; and no
omission on the part of the Lender to exercise such option when
entitled so to do shall be considered as a waiver of such right.
2.03 Power of Sale. When the indebtedness secured hereby
shall become due, whether by acceleration or otherwise, if the
same is not paid to Lender and the failure to make such payment
constitutes a default by Borrower hereunder, the Lender may sell
and dispose of the Property at public auction, at the usual place
for conducting sales at the courthouse in the county where the
Property or any part thereof may be located, to the highest
bidder for cash, first advertising the time, terms and place of
such sale by publishing a notice thereof once a week for four
consecutive weeks in a newspaper in which sheriff s
advertisements are published in said county, all other notice
being hereby waived by the Borrower; and the Lender may thereupon
execute and deliver to the purchaser at said sale a sufficient
conveyance of the Property in fee simple, which conveyance may
contain recitals as to the happening of the default upon which
the execution of the power of sale herein granted depends, and
said recitals shall be presumptive evidence, insofar as the
purchaser is concerned, that all preliminary acts prerequisite to
said sale and deed were in all things duly complied with; and the
Lender, its agents, representatives, successors or assigns may
bid and purchase at such sale; and the Borrower hereby
constitutes and appoints the Lender or its assigns Borrower's
agent and attorney-in-fact to make such recitals, sale and
conveyance, and all of the acts of such attorney-in-fact are
hereby ratified, and the Borrower agrees that such recitals shall
be binding and conclusive upon the Borrower, insofar as the
purchaser is concerned, and that the conveyance to be made by the
Lender, or its assigns, (and in the event of a deed in lieu of
foreclosure, then as to such conveyance) shall be effectual to
bar all right, title and interest, equity of redemption,
including all statutory redemption, homestead, dower, curtesy and
all other exemptions of the Borrower, or its successors in
interest, in and to said Property; and the Lender, or its
assigns, shall collect the proceeds of such sale, reserving
therefrom all unpaid secured indebtedness with interest then due
thereon, and all amounts advanced by the Lender for taxes,
assessments, fire insurance premiums and other charges, together
with all costs and charges for advertising, and commissions for
selling the Property and reasonable attorney's fees and pay over
any surplus to the Borrower; and the Borrower agrees that
possession of the Property during the existence of the secured
indebtedness by the Borrower, or any person claiming under the
Borrower, shall be that of tenant under the Lender, or its
assigns, and, in case of a sale, as herein provided, the Borrower
or any person in possession under the Borrower shall then become
and be tenants holding over and shall forthwith deliver
possession to the purchaser at such sale or be summarily
dispossessed in accordance with the provisions of law applicable
to tenants holding over; the power and agency hereby granted .are
coupled with an interest and are irrevocable by death or
otherwise and are in addition to any and all other remedies which
the Lender may have at law or in equity.
2.04 Discontinuance of Proceedings and Restoration of the
Parties. In case the Lender shall have proceeded to enforce any
right or remedy under this Deed to Secure Debt by receiver, entry
or otherwise and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely
to the Lender, then, and in every such case, the Borrower and the
Lender shall be restored to their former positions and nights
hereunder, and all rights, powers and remedies of the Lender
shall continue as if no such proceeding had been taken.
2.05 WAIVER. THE BORROWER HEREBY WAIVES ANY RIGHT THE
BORROWER MAY HAVE UNDER THE CONSTITUTION OR THE LAWS OF THE STATE
OF GEORGIA OR THE CONSTITUTION OR THE LAWS OF THE UNITED STATES
OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THIS DEED TO SECURE
DEBT TO THE LENDER AND THE BORROWER WAIVES THE BORROWER'S RIGHTS,
IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED IN
ACCORDANCE WITH THE PROVISIONS OF THIS DEED TO SECURE DEBT ON THE
GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED
WITHOUT A PRIOR JUDICIAL HEARING. ALL WAIVERS BY THE BORROWER IN
THIS PARAGRAPH HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY AFTER THE BORROWER HAS BY THE BORROWER'S ATTORNEY BEEN
FIRST APPRISED OF AND COUNSELED WITH RESPECT TO THE BORROWER'S
POSSIBLE ALTERNATIVE RIGHTS.
ARTICLE III
3.01 Intentionally omitted.
ARTICLE IV
4.01 Successors and Assigns Included in Parties. Whenever in
this Deed to Secure Debt one of the parties hereto is named or
referred to, the legal representatives, successors and assigns of
such parties shall be included and all covenants and agreements
contained in this indenture by or on behalf of the Borrower and
by or on behalf of the Lender shall bind and inure to the benefit
of their respective legal representatives, successors and
assigns, whether so expressed or not.
4.02 Headings. The headings of the sections, paragraphs and
subdivisions of this Deed to Secure Debt are for the convenience
of reference only, are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
4.03 Invalid Provisions to Affect No Others. If fulfillment
of any provision hereof or any transaction related hereto or to
the Note, at the time performance of such provisions shall be
due, shall involve transcending the limit of validity prescribed
by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and, if any clause or
provision herein contained operates or would prospectively
operate to invalidate this Deed to Secure Debt in whole or in
part, then such clause or provision only shall be held for
naught, as though not herein contained, and the remainder of this
Deed to Secure Debt shall remain operative and in full force and
effect.
4.04 Number and Gender. Whenever the singular or plural
number, masculine or feminine or neuter gender is used herein, it
shall equally include the other.
4.05 Applicable Law. This Deed to Secure Debt shall be
governed by and shall be construed and interpreted in accordance
with the laws of the State of Georgia.
4.06 Time. TIME IS OF THE ESSENCE HEREOF.
4.07 Notices. Any and all notices required or permitted to
be given hereunder shall be in writing and shall be considered as
given when deposited in the mail, certified, postage prepaid,
return receipt requested, to the following parties:
If to the Lender: IBF Participating Income Fund
1733 Connecticut Avenue, N.W.
Washington, D.C. 20009
Attention: Mr. Robert Porco
With a copy to: Holm & Drath LLP
400 Park Avenue
New York, New York 10022
Attention: Lawrence I. Drath, Esq.
If to the Borrower: [name]
Atlanta, Georgia 30303
With copy to: Kilpatrick Stockton LLP
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530
Attention: Mark A. Palmer, Esq. and W. Randy
Eaddy, Esq.
ARTICLE V
5.01 Deed to Secure Debt Releases. The Lender agrees to
cooperate with any applications necessary for the dedication of
any plat or plats, and any documents necessary to effectuate such
plans, such as the granting of or subordination to easements,
dedication of roads, acquisition of utilities and requests for
zoning changes; provided, however, that the Borrower shall
indemnify and hold the Lender harmless from any cost or expenses
incurred as a result of executing such documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Borrower and the Lender have caused
their duly authorized officers to execute under seal and deliver
this Deed to Secure Debt the day and year first above written.
Signed, sealed and delivered before me this BORROWER:
_____ day of _____________, 1998.
__________________________________ [name]
Unofficial Witness
__________________________________
Notary Public By:
________________________________
Name:
Title:
My Commission Expires:
________________________
(Signatures continued on next page)
(Signatures continued from preceding page)
Signed, sealed and delivered before me this
_____ day of _______________, 1998 LENDER:
__________________________________
Unofficial Witness IBF PARTICIPATING INCOME FUND
__________________________________
Notary Public By:
______________________________________
Name:
Title:
My Commission Expires:
______________ [CORPORATE OR BANK SEAL]
(NOTARIAL SEAL)
EXHIBIT "A"
ALL THAT TRACT OR PARCEL of land lying and being in the City of
Atlanta, in Land Lot 78 of the 14th District of Fulton County,
Georgia, and being more particularly described as follows:
BEGINNING at the intersection of the western right-of-way line of
Peachtree Street (right-of-way width varies) with the southern
right-of-way line of Ellis Street (right-of-way width varies),
said point being the northeastern comer of the building on said
lot; running thence south 00 degrees 00 minutes 00 seconds east
along the western right-of-way line of Peachtree Street, a
distance of 63.28 feet to a comer of said building and the
property of Metropolitan Atlanta Rapid Transit Authority
(Peachtree Center Station); thence leaving said right-of-way line
of Peachtree Street, and running south 89 degrees 53 minutes 46
seconds west along said MARTA property, a distance of 70.60 feet
to a comer of said building and the eastern side of a 10-foot
alley; running thence north 00 degrees 05 minutes 02 seconds west
along the eastern side of said alley, a distance of 63.45 feet to
a comer of said building and the southern right-of-way fine of
Ellis Street; running thence north 89 degrees 57 minutes 57
seconds east along said right-of-way fine of Ellis Street, a
distance of 70.70 feet to the POINT OF BEGINNING; according to
ALTA/ACSM Land Title Survey for "The Demm Group, Inc. & Chicago
Title Insurance Company," dated January 16, 1998, prepared by
Watts & Browning Engineers, Inc., under the seal and
certification of V.T. Hammond, Georgia Registered Land Surveyor
No. 2554; said tract of land containing 0. 10277 acre (4,477
square feet) and being improved property having a 15story brick
building located thereon, known as 174-178 Peachtree Street,
N.W., according to the present system of numbering in the City of
Atlanta, said survey being incorporated herein and made a part
hereof by reference.
TOGETHER WITH all right, title, and interest, if any, in and to
the aforesaid alley.
EXHIBIT "B"
1 All taxes for the year 1998 and subsequent years, and any
additional taxes resulting from reassessment of the subject
property.
2. Title to the alley adjoining the subject property on the
west and rights of the adjoining property owners in and to
the use of said alley as established by an Agreement by and
between A.G. Rhodes and J.B. Frost, W.H. Kiser, J.F. Kiser,
Sanders Loan and Investment Company, and Asa Candler, dated
February 17, 1913, recorded in Deed Book 355, Page 304,
Fulton County, Georgia Records.
3. Rights of the owner of the property adjoining to the south
of the subject property to require the removal of three
cornices, or projections, on the southern side of the
building located on the subject property, which extend over
the property line, as provided in an Agreement by and
between H.H. and J.F. Kiser and Walton Investment Company,
dated July 31, 1913, recorded in Deed Book 427, Page 492,
aforesaid records.
4. Rights of the City of Atlanta to a part of the basement of
said building which protrudes under the sidewalk on the
Peachtree Street side of the subject property, conveyed as a
ten foot (10') strip on the Peachtree Street side of the
property for sidewalk purposes only, by quitclaim deed dated
February 24, 1913, recorded in Deed Book 409, Page 217,
aforesaid records.
5. Permanent Subsurface Easement acquired by the City of
Atlanta in Civil Action File Number C-39679, Superior Court
of Fulton County, dated May 4,1978, a copy of which order is
recorded in Deed Book 6995, Page 167, aforesaid records, and
subsequently conveyed by Deed from City of Atlanta to
Metropolitan Atlanta Rapid Transit Authority, dated May 6,
1978, recorded in Deed Book 6981, Page 383, aforesaid
records; said easement being below the elevation of 1060
feet above U.P.S.C. and G.S. 1929 adjusted mean sea level
within the bound of the subject property for all purposes
necessary or incidental to the Metropolitan Atlanta Rapid
Transit Authority's construction, use and maintenance of a
rapid rail transit system, and appurtenances, including, but
not limited to, the right to construct, use, and maintain
within said easement an escalator tunnel for public access
to and from Metropolitan Atlanta Rapid Transit Authority's
Peachtree Center station located south of the subject
property.
6. Those matters as disclosed by that certain survey entitled
"ALTA/ACSM Land Title Survey for The Demm. Group, Inc. &
Chicago Title Insurance Company," prepared by Watts &
Browning, Engineers, bearing the seal and certification of
V.T. Hammond, Georgia Registered Land Surveyor No. 2554,
dated January 16, 1998, as follows:
(i) subterranean MARTA easement; and
(ii) ten (10) foot alley along the west line of
the subject property.
E-156
Exhibit No. 9
IBF VI - Guaranteed Income Fund
Form SB-2
AMENDED
LOAN AGREEMENT
AGREEMENT made as of this 12th day of September 1998 by and
between [name] and [name] jointly and severally ("Borrower"),
and IBF Special Purpose Corp. III (Lender).
WITNESSETH:
Borrower desires to borrow and Lender desires to lend to Borrower
and make available to it, for Borrower's use in connection with
the acquisition of certain real property for development of a
hotel project on real property described on Exhibit A hereto and
to be known as Pond Bay Club in St. John. U.S. Virgin Islands
(the "Project" or the "Property") in the principal sum of
$1,520,000.00 pursuant to the terms hereof.
WHEREAS, Borrower and Lender herein entered into a certain Loan
Agreement dated September 12, 1998 regarding a loan in the
principal sum of $1,240,000.00; and
WHEREAS, the parties hereto desire to amend the said Loan
Agreement by increasing the principal amount to $1,520,000.00 and
by adding [name] a U.S. Virgin Islands corporation as a mortgagor
jointly and severally with [name], and for all other terms to
remain as stated.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
A. The Loan.
Section 1.01 Loan. The amended total amount of the loan to be
advanced hereunder shall be $1,520,000.00 (the "Loan"). Lender
shall make advances to or on behalf of Borrower up to the loan
amount. Borrower has executed and delivered to Lender a Grid Note
of even date (the "Note") in the principal amount of the Loan.
Lender is hereby authorized as attorney-in- fact, with an
interest, to make entries on the Note evidencing each advance as
well as each repayment of principal.
B. Term of Credit Facility. The term of the credit facility
shall be twenty-four months (24 months), provided, however,
that the outstanding amount of the credit facility including
any accrued but unpaid interest shall be automatically due
upon and simultaneously with the placement of any
construction loan mortgage or the sale of the Property.
C. Interest Rates. Borrower shall pay to Lender interest on the
aggregate daily loan balance at twelve percent (12%) per
annum. Interest is calculated on the basis of a three
hundred sixty (360) day year and charged for the actual days
elapsed. If any installment is not paid within 10 days from
when it was due, a charge of 6% will be added. Default
interest shall accrue from and after an Event of Default has
occurred. as defined in the Loan Agreement at the highest
rate allowed under applicable law.
ARTICLE II
Representations and Covenants.
Section 2.0 1. Representations. Borrower represents and warrants
to Lender which representations shall be true as of the date
hereof as well as of the date of each subsequent advance that:
(a) Borrower has the power and authority to execute,
deliver, and perform this Agreement. and each of the
other documents executed in connection therewith
(collectively, the "Loan Documents") . to own its
properties and to carry on its business as now
conducted;
(b) The execution, delivery, and performance of the Loan
Documents (i) have been duly authorized by all
requisite action of Borrower; (ii) does not violate any
provision of law, Borrower's Certificate of
Incorporation or its Bylaws, any order of any court or
other agency, or any agreement to which Borrower is a
party or by which Borrower is bound; and (iii) will not
be in conflict with, result in a breach or constitute
(with due notice or lapse of time or both) a default
under any such agreement:
(c) There are no actions, suits, or proceedings before or
by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or
instrumentality pending against Borrower which if
determined adversely to Borrower, would have a material
effect on Bower or the Property;
(d) No event of Default has occurred under this Agreement
and no default has occurred under any of the other Loan
Documents;
(e) Borrower makes no claim that the terms of the Note,
including without limitation the interest rate thereon,
nor anything contained herein is usurious nor that
there exists any offset, deduction, or defense with
respect to Borrower's obligations under the Loan
Documents;
(f) Borrower's title to the assets constituting the Project
are free and clear of any liens, charges, or
encumbrances;
(g) There are no outstanding judgments against Borrower
which have not been paid;
(h) There has been no material adverse change in the
financial position or condition of Borrower since the
date of the first Advance;
(i) There are no impediments to the full and complete
performance by Borrower hereunder or under any of the
Loan Documents.
Section 2.02 Certain Covenants. Borrower covenants and agrees
that so long as this Agreement shall remain in effect or any
principal of or interest on the Loan shall be unpaid, to:
(a) Pay all sums due and owing under the Note pursuant to
its terms;
(b) Do or cause to be done all things necessary to preserve
and keep in full force and effect its existence under
the laws of its State of incorporation;
(c) Give prompt notice to Lender (i) any proceedings of
which Borrower has notice instituted by or against
Borrower, and (ii) any other action, event, or
condition of any nature which the management of
Borrower reasonably believes could have, lead to, or
result in a material adverse affect upon the business,
assets, or financial condition of Borrower;
(d) Refrain from mortgaging, pledging, granting, or
permitting any security interest, lien, or encumbrances
of any nature in any amount to exist with respect to
any of Borrower's property including without limitation
the Property, except where such security interest,
lien, or encumbrance is for the benefit of Lender, or
except as approved by Lender in any mortgage or deed of
trust given to secure the Loan;
(e) Not incur any additional indebtedness except, in the
ordinary course of business, with customary time
payment arrangements with vendors and suppliers;
(f) Pay all sums that may be necessary to be paid in order
to enforce the Note and to enforce and/or to record any
agreement or any other documentation executed and
delivered in connection with the Note, including, but
not limited to, this Agreement, whether such sums be in
the nature of recording fees, mortgage tax, or any
other expense in connection with such recording;
(g) Provide Lender with monthly financial and progress
reports.
Section 2.03 Negative Pledge Covenants. Borrower pledges,
covenants, and agrees that so long as this Agreement shall remain
in effort or the principal of or interest on the Loan shall
remain unpaid it shall not, without the prior written consent of
Lender, do any of the following:
(a) Sell, transfer, or otherwise convey, either voluntarily
or involuntarily, all or any portion of the Property or
any interest or estate therein;
(b) Grant or suffer to exist any unsecured financing or
grant or suffer to exist any mortgage, pledge, lien.
secured interest, hypothecation, or other encumbrances
upon any portion of the Property including any personal
property owned by Borrower now or hereafter placed in
or attached to and necessarily used in connection with
the Property except as may be approved by Lender,
(c) Enter into any leasing arrangement of any kind in
respect of all or substantially all of the Property;
(d) Suffer or permit any mechanics' or other statutory lien
which is filed against the Property to remain
undischarged or not bonded for a period exceeding sixty
(60) days beyond the filing date thereof. Borrower has
executed and delivered a document containing the
covenants set forth above for recordation.
ARTICLE III
Guaranty and Collateral
Section 3.1 Guarantors. The limited guaranty of certain acts of
Borrower (the "Carve-outs") by Robert Emmett III shall be
delivered to Lender simultaneously herewith.
Section 3.2 Simultaneously with the execution of this Agreement.
Borrower has delivered to Lender a first mortgage encumbering the
Property (the "Mortgage").
ARTICLE IV
Origination Fee
Borrower agrees to compensate Lender in connection with its due
diligence, and originating the Loan by the payment of an
origination fee of $62.000, payable simultaneously with and out
of the proceeds of the First Advance and $16,700 payable
simultaneously with an out of the proceeds of the December, 1998
advance.
ARTICLE V
Interest Reserve
At the First Advance, Lender is authorized by Borrower to
withhold $240,000 from loan proceeds, which funds shall be
applied by Lender monthly, in satisfaction of the interest
requirements of this credit facility.
Section 5.1 Fees. Borrower authorizes Lender to disburse from the
First Advance, the sum of $12,500 to reimburse Lender for out-of-
pocket expenses and legal counsel fees in connection with this
Agreement. Any additional costs and expenses incurred by Lender
shall be reimbursed from future advances.
ARTICLE VI
Condition to Release of Collateral
In addition to the full satisfaction of all outstanding sums due
Lender, and as a condition to the release of the collateral,
Borrower shall deliver to Lender an assignment and direction of
payment in form and content reasonably satisfactory to Lender's
counsel, of 5% of the net proceeds realized by Borrower from the
sale of the Property as a whole or from each condominium or time-
share unit sale made by Borrower, but only after Borrower and its
partners, if any, have been repaid their equity contribution.
"Net Proceeds" shall mean the gross selling price less repayment
of third-party debt obligation needed to be released in
connection with the sale as well as actual third-party expenses
which are necessary to the transaction, such as reasonable
closing costs.
ARTICLE VII
Default
Section 7.01 Events of Default. Each of the following shall
constitute an "Event of Default" under this Agreement:
(a) If any representation or warranty made in connection
with this Agreement shall prove to be incorrect in any
material respect;
(b) The failure to make any payment of principal or
interest under the Note within ten (10) days after the
due date thereof other than regular interest to the
extent of the funds described in Article V.
(c) A default in respect of the Mortgage or any liabilities
or obligations (present or future, absolute or
contingent. secured or unsecured, matured or unmatured,
joint or several, original or acquired) of Borrower, or
any of its affiliates, to Lender, after the expiration
of any applicable grace, notice, or cure period;
(d) The admission (whether in writing or otherwise) by
Borrower of its inability to pay its debts generally as
they become due;
(e) The commencement by Borrower or any Guarantor of a
voluntary case (or other proceeding) under the Federal
Bankruptcy Code, as now constituted or hereafter
amended, or under any other applicable foreign or state
bankruptcy, insolvency, or other similar law; or the
continued existence for more than sixty (60) days in
respect of Borrower of any guarantor of an involuntary
case (or other proceeding) under the Federal Bankruptcy
Code, as now constituted or hereafter amended, or under
any other applicable bankruptcy, insolvency, or other
similar law; or the appointment of a receiver,
liquidator, assignee, custodian, manager, trustee,
sequestrator, or similar official of Borrower or any
Guarantor or for any substantial part of its business,
or the making by Borrower or any Guarantor of any
assignment for the benefit of creditors; of the failure
of Borrower generally to pay its debts as they become
due; of the taking by Borrower of action to do or
authorize any of the foregoing or in the furtherance of
any of the foregoing;
(f) The commission by borrower of (a) fraud or
misrepresentation, (b) gross negligence resulting in
loss of the Property, (c) misapplication of the
proceeds of the funds advanced hereto.
Section 7.02 Effect of Default.
(a) Upon the occurrence of an Event of Default, Lender, in
its sole and absolute discretion, may (i) declare all
of the Loan to be immediately due and payable and/or
exercise such of the other remedies provided for in the
Loan Documents as Lender may elect; and/or (ii) pursue
any other rights or remedies available to Lender under
this Agreement or the other Loan Documents. Upon the
occurrence of an Event of Default interest shall accrue
at the highest rate allowed under applicable law;
(b) Without limiting any remedy otherwise available to
Lender, Borrower shall pay a late charge, to the extent
permitted by law, of six cents ($0.06) per each dollar
($1.00) of each payment more than ten (10) days in
arrears and accepted by Lender, to cover the extra
expense involved in handling delinquent payments;
(c) If Borrower fails to observe or perform any of the
covenants or agreements on the part of Borrower to be
performed hereunder, then Lender may, but shall not be
obligated to, perform the same and all necessary and
reasonable costs incurred by Lender in performing
Borrower's covenants and agreements, including
reasonable counsel fees, shall be repair by borrower
upon demand, together with interest thereon at the
default rate under the Note.
Section 7.03 No Waiver.
(a) Any failure of Lender to exercise its option to declare
the Credit Loans immediately due and payable, or any
forbearance to exercise any other remedy of Lender, or
any withdrawals or abandonment of Lender of any of its
rights in any one circumstance. shall not be construed
as a waiver of any option, power, remedy, or right of
Lender hereunder except to the extent, if any, the
action of Lender constitutes an express waiver with
respect to such on circumstance. The rights and
remedies of Lender expressed and contained in this
Agreement and in the other Loan Documents are
cumulative and none of them shall be deemed to be
exclusive of any other or of any right or remedy Lender
may now or hereafter have in law or in equity. The
election of any one or more remedies shall not be
deemed to be an election of remedies under any statute,
rule, regulation, or other law;
(b) The obligations of Borrower (and the rights and
remedies of Lender against Borrower) hereunder shall in
no way be modified, abrogated, terminated, or adversely
affected by (i) any forbearance by Lender in collecting
any sums due, or (ii) the granting of any extension of
time to perform any obligation hereunder, or (iii) any
impairment of the collateral, if any, which may now or
hereafter be assigned or delivered to Lender to secure
payment of the Credit Loans, by reason of any act,
failure to act or negligence of Lender.
ARTICLE VIII
Miscellaneous
Section 8.01 Notices. All notices to be given hereunder shall be
delivered by hand, or sent to the party to be notified via
certified mail, return receipt requested or sent by recognized
overnight courier which provided evidence of receipt and shall be
deemed given when delivered by hand or one (1) day after delivery
to such recognized overnight courier or three (3) days after
being posted with the United States Postal Service addressed to
the parties as follows:
If to Lender at: IBF Special Purpose Corporation III
1733 Connecticut Avenue
Washington, D. C. 20009
If to Borrower at: [name]
It is understood and agreed that notice to either Borrower entity
herein shall be notice to both
Borrowers.
Section 8.02 Successors and Assigns. The terms Borrower and
Lender shall include the named Borrower and the named Lender and
their respective legal representative successors and assigns.
Section 8.03 Severability. If any or more of the provisions
contained in this Agreement or in any of the other Loan Documents
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
Agreement or any other of the other Loan Documents.
Section 8.04. Expenses of Lender. Borrower shall pay all out-of-
pocket expenses, including but not limited to Counsel fees
incurred by Lender in connection with the preparation, execution,
and delivery of this Agreement and the enforcement or amendment
of any of its rights or provisions hereunder.
Section 8.05 Indemnity. Borrower shall indemnify and hold
harmless Lender from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits
proceedings. judgments, costs, expenses, and disbursements,
including but not limited to counsel fees, in any way relating to
or arising out of the failure of Borrower to perform in full its
obligations under this Agreement or under any of the Other Loan
Documents.
Section 8.06 Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Virginia without regard to conflict of laws principles.
Section 8.07. Jurisdiction. ANY ACTION OR PROCEEDING IN
CONNECTION WITH THIS AGREEMENT MAY BE BROUGHT IN A COURT OF
RECORD OF THE STATE OF VIRGINIA OR THE FEDERAL DISTRICT COURT IN
THE STATE OF VIRGINIA.
Section 8.08 Waiver of Certain Defenses. IN ANY ACTION OR
PROCEEDING IN CONNECTION WITH THIS AGREEMENT, OR ANY OTHER LOAN
DOCUMENT, BORROWER WAIVES ANY CLAIM THAT ANY FORUM LISTED HEREIN
IS INCONVENIENT AND FURTHER WAIVES THE RIGHT TO INTERPOSE ANY
DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF
LACHES AND ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE OR
DESCRIPTION EXCEPT FOR ANY COUNTERCLAIMS DEEMED COMPULSORY UNDER
APPLICABLE COURT RULES OR STATES.
Section 8.09 Waiver of Jury Trial and Waiver of Certain Damages.
IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, LENDER AND BORROWER MUTUALLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY AND BORROWER
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM
FOR CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES.
Section 8. 10 Joint and Several Liability. If this Agreement is
executed by more than one person or entity, all representations,
warranties, obligations, and covenants made by Borrower hereunder
shall be deemed to have been made by each of such persons and
entities and the obligations and duties of such parties hereunder
shall be deemed to be joint and several in all respects.
Section 8.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which, when taken together, shall constitute
one and the same instrument and shall become effective when
copies hereof, when taken together, bear the signatures of each
of the parties hereto and it shall not be necessary in making
proof of this instrument to produce or account for more than one
of such fully executed counterparts.
Section 8.12 Merger of Acreage. It is understood and agreed that
the purpose for amending the original Loan Agreement described
herein is to allow the purchase of an adjoining 3+/- acres. The
new acreage will be titled temporarily under the name of PBP,
Inc. At soon as reasonable after completion of revival of
development permits on the original acreage, the said 3+/- acre
parcel will be transferred at cost to First American Development
Group/Carib Limited Partnership subject, as stated herein. to all
other terms of this Loan Agreement and the accompanying Amended
Note, Mortgage, and Limited Guaranty. Upon said transfer to First
American Development Group/Carib Limited Partnership, PBP, Inc.
will be dissolved.
IN WITNESS WHEREOF, this Agreement has been duly executed by
Borrower and Lender as of the day and year first above written.
BORROWER:
[name]
By:
__________________________________
____
[name]
By:
__________________________________
____
LENDER:
IBF SPECIAL PURPOSE CORP. III
By:
__________________________________
____
AMENDED
PROMISSORY NOTE
$1,520,000.00 Washington, D.C.
September 12, 1998
WHEREAS, First [name] acting by and through its [name]. as
Mortgagor and IBF Special Purpose Corp. III as Lender entered
into a certain Promissory Note dated September 12, 1998 in the
original principal amount of $1,240,000.00; and
WHEREAS, the said parties desire to amend said Promissory
Note by increasing the principal amount to $1,520,000 and by
adding [name] a United States Virgin Islands corporation as a
Mortgagor jointly and severally with [name], and for all other
terms to remain as stated herein.
WITNESSETH, FOR VALUE RECEIVED, the undersigned, jointly
and severally, promise to pay to IBF Special Purpose Corp. III
(the "Lender") or ORDER, the principal sum of ONE MILLION FIVE
HUNDRED TWENTY DOLLARS ($1,520,000.00), or so much thereof as may
be advanced by the Lender to the undersigned pursuant to the Loan
Agreement of even date herewith between the Lender and the
undersigned (the "Loan Agreement"), lawful money of the United
States of America, with interest from this date, on the principal
sum advanced and outstanding from time to time, at a rate per
annum equal to twelve percent (12%). The said principal and all
accrued interest shall be payable in full at the office of the
Lender, or at such other place as the holder may, from time to
time, designate in writing TWO (2) YEARS after the date hereof,
(which if not then paid accrues interest at the accrual rate of
the highest annual rate allowed under the law governing the note)
provided that interest only, on the principal sums advanced and
outstanding, shall be due and payable on the first (1st) day of
each month hereafter commencing on October 1, 1998.
AND IT IS HEREBY EXPRESSLY AGREED that the entire principal
sum from time to time outstanding hereunder and all accrued and
unpaid interest thereon shall become due and payable, at the
option of the Lender, (i) after default for ten (10) days in the
payment of any sum due hereunder, or (ii) after default in the
performance of any covenant or agreement contained in the Loan
Agreement, or in the security instruments therein referred to,
which shall not have been remedied within twenty (20) days after
written notice thereof shall have been given by the Lender, or
(iii) upon the undersigned's receipt of construction financing
for its project at Chocolate Hole Bay, St. John, Virgin Islands
(the "Project").
This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement
of any change, waiver, modification, or discharge is sought.
In case recourse to the courts by the holder of this Note
becomes necessary in order to collect the whole or any unpaid
part thereof together with all accrued interest thereon, the
undersigned agrees to pay any and all court expenses,
disbursements, and reasonable attorney's fees which may be
incurred. The undersigned expressly authorizes and empowers the
Lender, at its option, at any time to appropriate and to apply to
the payment of this Note any and all monies now or hereafter in
the hands of the Bank on deposit or otherwise to the credit of or
belonging to the undersigned, except, however, funds held by the
Lender in trust in connection with the purchase and sale of
condominium units to be built at the Project. Further, Mortgagee
is authorized as Mortgagor's attorney-in-fact to confess judgment
in favor of Mortgagee in any action brought to enforce the terms
hereof.
Presentment, protest, demand, and notice of non-payment are
hereby waived.
This Note is being issued pursuant to the Loan Agreement, and is
secured by the security instruments therein referred to, and
is subject to all of the terms and conditions of the said
Loan Agreement and security instruments as if the same were
herein set forth at length, and any default by the
undersigned under any of the said instruments shall
constitute a default under this Note, except as set forth to
the contrary herein or the said Loan Agreement.
[name]
By: _____________________________ By:
________________________________
President President
Attest: ___________________________ Attest:
______________________________
Secretary Secretary
AMENDED
MORTGAGE
THIS INDENTURE made this 12th day of September, 1998 between
[name], a Virginia limited partnership whose address is 220 North
Boundary Street, Williamsburg, Virginia 23185 and [name], a
United States Virgin Island corporation whose address is No. 41-
42 Kongens Gade, St. Thomas, USVI, hereinafter jointly and
severally called the "Mortgagor", and IBF Special Purpose Corp.
111, a Delaware Corporation incorporated under the laws of the
United States of America having an office at 1733 Connecticut
Avenue, N.W., Washington, District of Columbia, hereinafter
called the "Mortgagee".
WHEREAS, [name]acting by and through its general partner,
[name] as Mortgagor and IBF Special Purpose Corp. III as Lender
enter into a certain promissory note and mortgage dated September
12, 1998 in the original principal amount of $1,240,000.00 which
was recorded in the office of the Recorder of Deeds St.
Thomas/St. John on September 17, 1998-, and
WHEREAS, the said parties desire to amend the said Mortgage
by increasing the principal amount by $280,000.00 to
$1,520,000.00 and by adding [name] a United States Virgin Islands
corporation as a Mortgagor jointly and severally with [name]. and
by making "Premises 11" described below subject to this Amended
Mortgage and for all other terms to remain as stated herein.
THEREFORE
WITNESSETH, that to secure the payment of an indebtedness
in the principal sum of ONE MILLION FIVE HUNDRED TWENTY THOUSAND
DOLLARS ($ 1,520,000.00), or so
much thereof as may be advanced under and pursuant to a Loan
Agreement of even date between the Mortgagor and the Mortgagee
(the "Loan Agreement"), together with interest thereon at a rate
set forth in a certain note (the "Note") bearing even date
herewith made by the Mortgagor to the Mortgagee, lawful money of
the United States to be paid in accordance with the Note, the
Mortgagor. for the better securing of the payment of said sum
with the interest thereon, and also in consideration of ONE
DOLLAR ($1.00) paid by the Mortgagee, receipt whereof is hereby
acknowledged, does grant, release, assign, transfer, set-over,
and mortgage the real properties (hereinafter called the
"Premises") more particularly described as:
PREMISES I
Plot Nos. 126 and 272 (the latter consisting of Plot Nos.
118A, 119, 119A, 120, 120A, 12 1, and 12 IA) Estate
Chocolate Hole, No. I I Cruz Bay Quarter, St. John, U.S.
Virgin Islands, as shown on P.W.D. No. A9-72-T67 dated
October 26. 1967. Said Premises I is titled in the name of
FIRST AMERICAN DEVELOPMENT GROUP/CARIB LIMITED PARTNERSHIP,
a Virginia limited partnership.
AND
PREMISES II
Parcel Nos. 488D, 488E, and 488F Estate Chocolate Hole
No. 11 Cruz Bay Quarter,
St. John, U.S. Virgin Islands
as shown on O.L.G. Drawing No. D9-5072-T91
and consisting of approximately 1.81, 0.518, and 0.5776
acres respectively
TOGETHER with the appurtenances and all the estate and rights of
the Mortgagor in and to the Premises.
TOGETHER also with all of the Mortgagor's right, title, and
interest in and to all buildings and improvements now erected on
the Premises and in and to all buildings and improvements
hereafter constructed or placed thereon, or any part thereof, and
in and to all fixtures, equipment, and articles of personal
property of every kind and nature whatsoever now or hereafter
installed in or upon the Premises, or any part thereof, and used
or procured for use in connection with the operation thereof.
including, but without limiting the generality of the foregoing,
all engines, furnaces, boilers, stokers, pumps, tanks, heaters,
dynamos, generators, switchboards, electric equipment, heating,
plumbing, lifting, and ventilating and incinerating apparatus,
sprinkler and other fire extinguishing and fire prevention
apparatus or systems, air cooling and air conditioning apparatus,
gas and electric fixtures, radiators, and machinery.
TOGETHER with any and all awards heretofore and hereafter made to
the present and all subsequent owners of the Premises, or any
part thereof, by any governmental or other lawful authorities,
for taking by eminent domain the whole or any part of the
Premises, or any improvements thereon, or any easement therein,
including any awards for any changes of grades of streets, which
said awards are hereby assigned to the Mortgagee who is hereby
authorized to collect and receive the proceeds of any such awards
from such authorities, and to give proper receipts and
acquittances therefor and to apply the same toward the payment of
the amount secured by this Mortgage and evidenced by the Note,
notwithstanding the fact that the amount owing thereon may not
then be due and payable-, and the Mortgagor hereby covenants and
agrees, upon request, to make, execute, and deliver any and all
assignments and other instruments sufficient for the purpose of
assigning the aforesaid awards to the Mortgagee, free. clear, and
discharged of any and all encumbrances of any kind or nature
whatsoever.
TOGETHER with all right, title, and interest of the
Mortgagor in and to the land lying in the streets and roads in
front of and adjoining the Premises (all of the foregoing
Premises. appurtenance, buildings, and improvements, personal
property and awards being hereinafter collectively called the
"Mortgaged Property").
TO HAVE AND TO HOLD the Mortgaged Property unto the
Mortgagee, its successors and assigns, forever.
PROVIDED always that if the Mortgagor shall pay or cause to
be paid unto the Mortgagee the said sum of money and the interest
thereon on demand, then these presents and the estate hereby
granted shall cease, determine, and be void.
AND the Mortgagor covenants with the Mortgagee as follows:
1. That the Mortgagor shall pay to the Mortgagee the said
sum of money mentioned in the Note, and the interest
thereon, according to the Note.
2. That the Mortgagor shall at the Mortgagor's sole cost
and expense keep the improvements on the Premises
insured against (i) loss by fire, (ii) loss by
earthquake, lightning, windstorm. hail, explosion,
riot, riot attending a strike, civil commotion,
aircraft, vehicles, smoke and other risks normally
within extended coverage, and (iii) after notice and
demand, such other insurable hazard or hazards and war
risk, if obtainable from any governmental or quasi -
governmental agency or authority, that may be required
by the Mortgagee, in such amounts as may be reasonably
specified by the Mortgagee from time to time, and in
default thereof the Mortgagee may, but shall not be
obligated to, obtain such insurance and pay the
premiums therefor; and the Mortgagor agrees to
reimburse the Mortgagee upon demand for all premiums
thus paid, together with interest. The policies of
insurance provided for hereunder shall contain a loss
payee clause, reasonably satisfactory in form and
substance to the Mortgagee, in favor of the Mortgagee.
Such policies shall, by their terms, be non-cancellable
for any reason until not less than ten (10) days'
written notice is given to the Mortgagee of intention
to cancel.
If the Mortgagee shall receive proceeds of any insurance as
a result of loss or damage by fire or other casualty, such
proceeds may be retained and applied by the Mortgagee towards
payment of the indebtedness secured hereby, notwithstanding the
fact that the amount owing thereon may not then be due and
payable, the balance, if any, to be paid over by the Mortgagee to
the Mortgagor, or the same may be paid over in whole or in part
to the Mortgagor for the repair of said buildings or for the
erection of any buildings in their place, or for any other
purpose or object satisfactory to the Mortgagee and. if the
Mortgagee shall retain and apply said proceeds as aforesaid, the
lien to this Mortgage shall be reduced by the amount of such
proceeds retained and applied as aforesaid.
3. That the Mortgagee shall not voluntarily or
involuntarily assign the rents or any part of the rents
of the Premises, nor shall any building or improvement
now or hereafter situate on the Premises be removed,
demolished, or materially altered without the consent
of the Mortgagee.
4. That the holder of this Mortgage, in any action to
foreclose it, shall be entitled to the appointment of a
receiver, notwithstanding the adequacy of the security
then available to the Mortgagee.
5. That the Mortgagor will pay all taxes, assessments,
water rates, and sewer rents which may become a lien
upon the Mortgaged Property, and in default thereof,
the Mortgagee may pay the same.
6. That the Mortgagor within ten (10) days upon request in
person, or within twenty (20) days upon request by
mail, will furnish a written statement duly
acknowledged of the amount due on the Note and whether
any offsets or defenses exist against the indebtedness
evidenced by the Note.
7. That notice and demand or request may be in writing and
may be served in person or by mail, and said notice and
demand or request shall be deemed fulfilled by
personally serving one or more of the persons who shall
at the time hold the record title to the Premises, or
their successors, or mailed, certified mail, return
receipt requested, by depositing it in any post office
station or letter box. enclosed in a postpaid envelope
addressed to such person or persons, or their
successors, at their address to the Mortgagee last
known.
8. That the Mortgagor warrants that the Mortgagor has good
title to the Premises and has the right to mortgage the
same and shall and will make, execute, acknowledge and
deliver in due form of law, all such further or other
deeds or assurances as may at any time hereafter be
reasonably desired or required for more fully and
effectually conveying the Premises unto the Mortgagee
for the purpose aforesaid and unto all and every person
or persons, corporation or corporations, deriving any
estate, right, title, or interest therein under this
Mortgage, and the Mortgagor will forever warrant and
defend any such estate. right, title, or interest
therein from any claims of the Mortgagor, and all
persons claiming by, through, or under the Mortgagor.
9. That if any action or proceeding be commenced (except
an action to foreclose this Mortgage or to collect the
debt thereby), to which action or proceeding the holder
of this Mortgage is made a party, or in which it
becomes necessary to defend or uphold the lien of this
Mortgage, all sums paid by the Mortgagee for the
expense of any litigation to prosecute or defend the
rights and lien created by this Mortgage (including
reasonable counsel fees) shall be paid by the Mortgagor
together with interest thereon at the Virgin Islands
legal rate, and any such sum and the interest thereon
shall be a lien on the Mortgaged Property, prior to any
right or title, interest in or claim upon the Mortgaged
Property attaching or accruing subsequent to the lien
of this Mortgage, and shall be deemed to be secured by
this Mortgage. In any action or proceeding to foreclose
this Mortgage. or to recover or collect the debt
secured thereby, the provisions of law respecting the
recovery of costs, disbursements, and allowances shall
prevail unaffected by this covenant.
10. That if the Mortgagor shall fail to perform any of its
covenants in this Mortgage contained, the Mortgagee or
any received of the Mortgaged Property may, at any
time, and from time to time, in its or his discretion,
make advances to effect performance of such covenant on
behalf of the Mortgagor; and all monies so advanced by
the Mortgagee or such receiver, together with interest
thereon at the Virgin Islands legal rate shall be
repaid by the Mortgagor upon demand, and any such sum
and the interest thereon shall be a lien on the
Mortgaged Property prior to any right or title to,
interest in, or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of this
Mortgage. and shall be deemed to be secured by this
Mortgage.
11. That the right of the Mortgagee arising out of the
clauses and covenants contained in this Mortgage shall
be separate and distinct and cumulative, and none of
them shall be in exclusion of the others; that no act
of the Mortgagee shall be construed as an election to
proceed under any one provision herein to the exclusion
of any other provision, anything herein to the contrary
notwithstanding.
12. That the Mortgagee and any authorized representative of
the Mortgagee shall have the right to enter and inspect
the Mortgaged Property and the buildings and
improvements on the premises at all reasonable times.
13. That the Mortgagor shall not, without the prior written
consent of the Mortgagee, sell, convey, or alienate the
Premises, or any part thereof, or any interest therein,
nor suffer the divestment of the Mortgagor's title, or
any interest therein, in any manner, whether
voluntarily or involuntarily, except that the Mortgagor
may, in the normal and ordinary course of business,
enter into purchase and sale agreements with purchasers
of condominium units to be built upon the Premises.
14. That the whole of said principal sum of the Note, and
all interest thereon accrued, shall become due at the
option of the Mortgagee in case any one or more of the
following "Events of Default" shall not have been
remedied, by the commencement, within any applicable
notice or other period provided for hereinafter, and
the diligent prosecution thereafter, of appropriate
action to cure such Event of Default:
(a) after default in the payment of any installment of
principal or of interest or of principal and
interest when due on the Note: or
(b) after default in the payment of tax, water rate,
sewer rent, or assessment for twenty days after
the same becomes due and payable, provided that an
assessment which has been made payable in
installments at the application of the Mortgagor
shall, for the purpose of this subdivision, be
deemed due and payable on the dates respective
installments become due or payable or a lien; or
(c) after default after twenty (20) days' notice and
demand in reimbursing the Mortgagee for taxes,
assessments, water rates, and sewer rents paid by
the Mortgagee; or
(d) after default after twenty (20) days' notice and
demand either in assigning and delivering the
policies of insurance hereinbefore specified or in
reimbursing the Mortgagee for premiums paid on
such insurance; or
(e) after default after twenty (20) days' notice and
demand in furnishing a statement of the amount due
on the Mortgage and whether any offsets or
defenses exist against the mortgage debt; or
(f) after failure to exhibit to the Mortgagee, within
twenty (20) days after demand, receipts showing
payment of all taxes, water rates, sewer rents,
and assessments; or
(g) if the Mortgagor shall voluntarily or
involuntarily assign the rents or any part of the
rents of the Premises; or
(h) after the actual or threatened demolition or
removal of any building or improvement on the
Premises without the written consent of the
Mortgagee; or
(i) if the buildings and improvements on the Premises
are not maintained in reasonably good repair, and
the Mortgagor fails to commence and diligently
prosecute work to remedy such deficiency within
twenty (20) days after notice thereof; or
(j) after failure to comply with any requirements or
order or notice of violation of law or ordinances
issued by any governmental department claiming
jurisdiction over the Mortgaged Property within
three (3) months from the issuance thereof, or if
the same cannot be complied with within three (3)
months, within such reasonable period of time as
may be necessary for compliance; or
(k) if on application of the Mortgagee two or more
fire insurance companies lawfully doing business
in the Virgin Islands refuse to issue policies as
hereinbefore specified; or
(1) in the event of the removal, demolition or
destruction in whole or in part of any of the
fixtures, chattels, or articles of personal
property covered hereby, unless the same are
promptly replaced by similar fixtures, chattels
and articles of personal property at least equal
in quality and condition to those replaced, free
from chattel mortgages or other encumbrances
thereon and free from any reservation of title
thereto; or
(m) if the Mortgagor, without the prior written
consent of the Mortgagee, shall sell, convey, or
alienate the Premises, or any part thereof, or any
interest therein, or shall be divested of its,
his, her, or their title or any interest therein,
in any manner, whether voluntarily or
involuntarily, except that the Mortgagor may, in
the normal and ordinary course of business, enter
into purchase and sale agreements with the
purchasers of condominium units to be built upon
the Premises; or
(n) if the Mortgagor fails to keep, observe, and
perform any of the other covenants, conditions, or
agreements contained in this Mortgage or in the
Note; or
(o) if the Mortgagor fails to keep, observe, and
perform any of the covenants, conditions or
agreements contained in the Loan Agreement or in
that certain Security Agreement made by the
Mortgagor and the Mortgagee bearing even date
herewith.
15. That wherever used in this Mortgage, unless the context
requires a contrary construction or unless otherwise
specifically provided herein, the term "Mortgagor" shall be
construed as meaning the "Mortgagor and/or any subsequent
owner or owners of the Mortgaged Property" and the word
"Mortgagee" shall be construed as meaning "Mortgagee and/or
any subsequent holder or holders of this Mortgage".
16. That this Mortgage may not be changed or terminated orally.
17. That the covenants contained in this Mortgage shall run with
the land and bind the Mortgagor, the heirs, personal
representatives, successors, and assigns of the Mortgagor
and all subsequent owners, encumbrances, tenants, and
subtenants of the Premises, and shall ensure to the benefit
of the Mortgagee, the successors, and assigns of the
Mortgagee, and all subsequent holders of this Mortgage.
18. Mortgagor acknowledges that it shall not be entitled to made
a release of this Mortgage notwithstanding the payment of
the entire outstanding balance of the Note which it secures,
unless it tenders to Mortgagee documents that effectually
assign to Mortgagee or its designee, five percent (5%) of
the net profit realized by Mortgagor from the sale of each
Property as a whole or from each condominium or time-share
unit sale made by Mortgagor. "Net Proceeds" shall mean the
gross selling price less repayment of third-party debt
obligation needed to be released in connection with the sale
of the unit as well as actual third-party expenses which are
necessary to the transaction, such as reasonable closing
costs, and all equity contributions of Mortgagor.
IN WITNESS WHEREOF, the Mortgagor has duly executed this
instrument the day and
year first above written.
WITNESS: [Name]
By:
______________________________________
WITNESS: [Name]
By:
___________________________________
___ President
State of Virginia
County of James City, to wit:
The foregoing instrument was acknowledged before me this
29th day of December. 1998. by [Name]
__________________________________________
Notary Public
My Commission expires:
E-175
Exhibit No. 10
IBF VI - Guaranteed Income Fund
Form SB-2
LOAN AGREEMENT
LOAN AGREEMENT (hereinafter referred to as "the Agreement"),
made as of this 10th day of November, 1998 between [name]
(hereinafter referred to as "Borrower"), having an offices at
279 South Bald Hill Road, New Canaan, CT, 06840 and InterBank
Funding Corporation, (hereinafter referred to as "Lender"), a
Delaware corporation having an office at 1733 Connecticut Avenue,
N. W., Washington, D. C. 20009-1137.
WITNESSETH:
The Borrower desires to borrow and the Lender desires to
lend to Borrower, the principal amount of up to Eight Hundred
Forty Thousand, and 00/100 Dollars ($840,000), pursuant to the
terms of this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
Article I
The Loan
Section 1.01 Loans. Lender agrees, upon the terms, and
subject to the conditions hereof, to make advances to the
Borrower up to the sum of Eight Hundred Forty Thousand, and
no/100 Dollars ($840,000), (the amount so advanced, including
interest and all other costs and obligations pertaining thereto,
hereinafter referred to as the "Loan"). The Loan shall be
evidenced by a Promissory Note of even date herewith in the face
amount of Eight Hundred Forty Thousand, and no/100 Dollars
($840,000), (hereinafter referred to as the "Note").
Section 1.02 N/A
Section 1.03 N/A
Section 1.04 Commitment Fee. A commitment fee equal to
Eighty Five Thousand and no dollars will be due at the time of
the closing of the loan; additional commitment fees will be due
upon the granting of further extensions, which is at the sole
discretion of the Lender.
Article II
Representations and Covenants
Section 2.01 Representations. The Borrower represents
and warrants to the Lender that :
(a) The Borrower has the power and authority to execute,
deliver and perform this Agreement, and each of the other
documents executed in connection therewith (collectively, the
"Loan Documents") to own its properties and to carry on its
business as now conducted;
(b) The execution, delivery and performance of the Loan
Documents (i) have been duly authorized by all requisite action
of the Borrower, and (ii) does not violate any provision of law,
any order of any court or other agency, or any agreement to which
the Borrower is a party or by which the Borrower is bound;
(c) As of the date hereof, there are no actions, suits, or
proceedings before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality pending against the Borrower which if determined
adversely to the Borrower, would have a material effect on the
Borrower;
(d) No Event of Default has occurred under this Agreement
and no default has occurred under any of the other Loan
Documents;
(e) The Borrower makes no claim that the terms of the Note,
including without limitation the interest rate thereon, nor
anything contained herein is usurious nor that there exists any
offset, deduction or defense with respect to the Borrower's
obligations under the Loan Documents;
(f) There are no outstanding judgments against the Borrower
which have not been paid;
(g) There are no impediments to the full and complete
performance by the Borrower hereunder or under any of the Loan
Documents.
Section 2.02 Certain Covenants. The Borrower covenants
and agrees that so long as this Agreement shall remain in effect
or any principal of or interest on said Loan shall be unpaid, to:
(a) Pay all sums due and owing under the Note pursuant to
its terms;
(b) Give prompt notice to the Lender of (i) any proceedings
of which the Borrower has notice instituted by or against the
Borrower, and (ii) any other action, event or condition of any
nature which the management of the Borrower reasonably believes
could have, lead to, or result in a material adverse effect upon
the business, assets of financial condition of the Borrower;
(c) Refrain from selling, assigning, mortgaging, pledging,
granting or permitting any security interest, lien or
encumbrances of any nature in any amount to exist with respect to
any of the Borrower's accounts receivable or inventory, except
where such sale, assignment, security interest, lien or
encumbrance is for the benefit of the Lender.
(d) Provide the Lender on or before the 10th day of each
month Borrower's financial statements, and providing such other
information, including interim financial statements, concerning
the Borrower's business affairs and financial condition as the
Lender may from time to time request;
(e) Not incur any additional indebtedness except, in the
ordinary course of business, with customary time payment
arrangements with vendors and suppliers; and
(f) Pay all sums that may be necessary to be paid in order
to enforce the Note and to enforce and/or to record any agreement
or any other documentation executed and delivered in connection
with the Note, including but not limited to, this Agreement,
whether such sums be in the nature of recording fees, mortgage
tax or any other expense in connection with such recording.
Section 2.03 Negative Pledge Covenants. The Borrower
pledges, covenants and agrees that so long as this Agreement
shall remain in effect or the principal of or interest on the
Loan shall remain unpaid it shall not, without the prior written
consent of the Lender, do any of the following :
(a) Sell, transfer or otherwise convey, either voluntarily
or involuntarily, all or any substantial portion of its business
or assets or any interest or estate therein;
(b) Suffer or permit any mechanics' or other statutory lien
which is filed against any of its assets to remain undischarged
or not bonded for a period exceeding sixty (60) days beyond the
filing date thereof.
Article III
Voluntary Prepayments
Section 3.1 Voluntary Prepayments. Borrower shall have
the right, without payment of any premium or penalty, to make
total or partial prepayments on the Note on the last day of any
month, provided Borrower has given Lender not less than ten (10)
business days prior written notice of its intention to do so.
Article IV
Collateral
Section 4.1 Collateral.
a.) Borrower shall execute and deliver a Security Agreement
(the "Security Agreement") granting Lender a security interest in
all of Borrower's ownership interest in Preferred Pension
Administrators.
Article V
Renewal Option
Section 5.1 Renewal Option. Borrower, upon five (5)
business days advance notice, may apply to Lender for an
extension. The extension shall be for a term of no more than one
hundred eighty (180) days, and shall otherwise be on the same
terms and conditions, and with the same security, as the Loan.
The extension will be made only at the sole discretion of the
Lender and provided that all of the following conditions are met:
(a) Borrower is not at the time of the request to extend in
default hereunder
or under the Note:
(b) Borrower has furnished timely the reports as set forth
in Section 2.02,
Paragraph (d);
(c) All sums then due Lender have been paid.
Article VI
Default
Section 6.01 Event of Default. Each of the following
shall constitute an "Event of Default" under this Agreement :
(a) If any representation or warranty made in connection
with this Agreement shall prove to be incorrect in any material
respect;
(b) The failure to make any payment of principal or
interest under the Note on or before the due date thereof;
(c) A default in respect of any liabilities or obligations
(present or future, absolute or contingent, secured or unsecured,
matured or unmatured, joint or several, original or acquired) of
the Borrower, or any of its affiliates, to the Lender or any of
its affiliates, after the expiration of any applicable grace,
notice or cure period;
(d) The admission (whether in writing or otherwise) by
Borrower of its inability to pay its debts generally as they
become due;
(e) The commencement by the Borrower of a voluntary case
(or other proceeding) under the Federal Bankruptcy Code, as now
constituted or hereafter amended, or under any other applicable
foreign or state bankruptcy, insolvency or other similar law; or
the continued existence for more than thirty (30) days in respect
of the Borrower of any involuntary case (or other proceeding)
under the Federal Bankruptcy Code, as now constituted or
hereafter amended, or under any other applicable bankruptcy,
insolvency or other similar law; or the appointment of a
receiver, liquidator, assignee, custodian, manager, trustee,
sequestrator or similar official of the Borrower or for any
substantial part of its business; or the making by the Borrower
of any assignment for the benefit of creditors; or the failure of
the Borrower generally to pay its debts as they become due; or
the taking by the Borrower of action to do or authorize any of
the foregoing or in the furtherance of any of the foregoing.
Section 6.02 Effect of Default.
(a) Upon the occurrence of an Event of Default, the Lender,
in its sole and absolute discretion, may (i) declare all of the
Loan to be immediately due and payable and/or exercise such of
the other remedies provided for in the Loan Documents as the
Lender may elect; and/or (ii) pursue any other rights or remedies
available to the Lender under this Agreement or the other Loan
Documents.
(b) Without limiting any remedy otherwise available to the
Lender, and at Lender's option, the Borrower shall pay as a late
charge, to the extent permitted by law, five cents ($.05) per
each dollar ($1.00) of each payment more than ten (10) days in
arrears and accepted by the Lender, to cover the extra expense
involved in handling delinquent payments.
(c) If the Borrower fails to observe or perform any of the
covenants or agreements on the part of the Borrower to be
performed hereunder, then the Lender may, but shall not be
obligated to, perform the same, and all necessary and reasonable
costs incurred by the Lender in performing the Borrower's
covenants and agreements, including reasonable counsel fees,
shall be repaid by the Borrower upon demand, together with
interest thereon at the default rate under the Note.
Section 6.03 No Waiver.
(a) Any failure of the Lender to exercise its option to
declare the Loan immediately due and payable, or any forbearance
by the Lender before or after any exercise of such option, or any
forbearance to exercise any other remedy of the Lender, or any
withdrawals or abandonment of the Lender of any of its right in
any one circumstance, shall not be construed as a waiver of any
option, power, remedy or right of the Lender hereunder except to
the extent, if any, the action of the Lender constitutes an
express waiver with respect to such one circumstance. The rights
and remedies of the Lender expressed and contained in this
Agreement and in the other Loan Documents are cumulative, and
none of them shall be deemed to be exclusive of any other or of
any right or remedy the Lender may now or hereafter have in law
or in equity. The election of any one or more remedies shall not
be deemed to be an election of remedies under any statute, rule,
regulation or other law.
(b) The obligations of the Borrower (and the rights and
remedies of the Lender against the Borrower) hereunder shall in
no way be modified, abrogated, terminated or adversely affected
by (i) any forbearance by the Lender in collecting any sums due,
or (ii) the granting of any extension of time to perform any
obligation hereunder, or (iii) any impairment of the collateral,
if any, which may now or hereafter be assigned or delivered to
Lender to secure payment of the Loan, by reason of any act,
failure to act or negligence of the Lender.
Article VII
Miscellaneous
Section 7.01 Notices. All notices to be given hereunder
shall be delivered by hand, or sent to the party to be notified
via Certified Mail, Return Receipt Requested, or sent by a
recognized overnight courier which provides evidence of receipt,
and shall be deemed given when delivered by hand or one (1) day
after delivery to such recognized overnight courier, or three (3)
days after being posted with the United States Postal Service
addressed to the parties as follows:
If to the Lender at: InterBank Funding
Corporation
1733 Connecticut Avenue, N. W.
Washington, D. C. 20009-1137
If to the Borrower at: [name]
Section 7.02 Successors and Assigns. The terms Borrower
and Lender shall include the named Borrower and the named Lender
and their respective legal representatives, successors and
assigns.
Section 7.03 Severability. If any one or more of the
provisions contained in this Agreement or in any of the other
Loan Documents 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 Agreement or any other of the other Loan
Documents, and in lieu of such invalid, illegal or unenforceable
provision, there shall be added automatically as a part of this
Agreement a provision as similar to such invalid, illegal or
unenforceable provision as may be possible and be valid, legal
and enforceable.
Section 7.04 Expenses of Lender. The Borrower shall pay
all out-of-pocket expenses, including but not limited to,
reasonable counsel fees incurred by Lender in connection with the
preparation, execution and delivery of this Agreement and the
enforcement or amendment of any of its rights or provisions
hereunder. Expenses for the preparation and review of the
documents shall be collected at the closing. Any other expenses
incurred will be collected at the time of the final
reconciliation.
Section 7.05 Indemnity. The Borrower shall indemnify
and hold harmless the Lender from and against any and all
liabilities, obligations, losses, damages, penalties, claims,
actions, suits, proceedings, judgments, costs, expenses, and
disbursements, including but not limited to, counsel fees, in any
way relating to or arising out of the failure of the Borrower to
perform in full its obligations under this Agreement or under any
of the other Loan Documents.
Section 7.06 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
District of Columbia without regard to conflict of laws or
principles.
Section 7.07 Jurisdiction. ANY ACTION OR PROCEEDING IN
CONNECTION WITH THIS AGREEMENT MAY BE BROUGHT IN A COURT OF
RECORD OF THE DISTRICT OF COLUMBIA. THE PARTIES HEREBY CONSENTING
TO THE JURISDICTION THEREOF.
Section 7.08 Waiver of Certain Defenses. IN ANY ACTION
OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT, OR ANY OTHER
LOAN DOCUMENTS, THE BORROWER WAIVES ANY CLAIM THAT THE DISTRICT
OF COLUMBIA IS AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT
TO INTERPOSE ANY DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS OR
ANY CLAIM OF LACHES AND ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE
OR DESCRIPTION EXCEPT FOR ANY COUNTERCLAIMS DEEMED COMPULSORY
UNDER APPLICABLE COURT RULES OR STATUTES.
Section 7.09 Waiver of Jury Trial and Waiver of Certain
Damages. IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS, THE LENDER AND BORROWER
MUTUALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY AND BORROWER HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
Section 7.10 Joint and Several Liability. If this
Agreement is executed by more than one person or entity, all
representations, warranties, obligations and covenants made by
the Borrower hereunder shall be deemed to have been made by each
of such persons and entities and the obligations and duties of
such parties hereunder shall be deemed to be joint and several in
all respects.
Section 7.11 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to
be an original, but all of which, when taken together, shall
constitute one and the same instrument and shall become effective
when copies hereof, when taken together, bear the signatures of
each of the parties hereto and it shall not be necessary in
making proof of this instruments to produce or account for more
than one of such fully executed counterparts.
IN WITNESS WHEREOF, this Agreement has been fully executed by the
Borrower and Lender as of the day and year first above written.
BORROWER :
[name]
By: _____________________________
Name: _____________________________
(Please Print)
Title: _____________________________
(Please Print)
LENDER :
INTERBANK FUNDING CORPORATION
By: _____________________________
Name: _____________________________
(Please Print)
Title: _____________________________
(Please Print)
PROMISSORY NOTE
$840,000 Washington, DC November 10,
1998
FOR VALUE RECEIVED, we promise to pay to the order of
InterBank Funding Corporation, a Delaware Corporation with
offices at 1733 Connecticut Avenue, N. W., Washington, D. C.
20009-1137, or such other place as the holder hereof may from
time to time designate in writing, the sum of EIGHT HUNDRED FORTY
THOUSAND, AND NO/100 DOLLARS ($840,000.00), or so much thereof
as may be advanced, in lawful money of the United States, with
interest on the amount from time to time outstanding at the rate
of fifteen percent (15.00%) per annum, payable as hereinafter
stipulated.
THE ENTIRE PRINCIPAL BALANCE and all unpaid and accrued
interest on this Note shall be due and payable on the 10th day of
November, 1999.
Upon not less than ten (10) days prior written notice of its
intent to do so, Maker shall have the privilege of prepaying all
or any part of this Note on the last day of any month, without
penalty.
The principal of this Note after maturity and all past due
interest shall bear interest until paid at that rate that shall
be ten per cent (10%) per annum in excess of the rate above
stated, or the maximum permissible by law, whichever is the
lesser.
Default in the payment of any part of the principal or
interest, when due, or failure to comply with any of the
obligations, agreements and conditions contemplated by the Loan
Agreement of even date herewith pursuant to which this Note is
issued or in the instrument given to secure this Note shall, at
the option of the Holder hereof, mature the whole of this Note,
upon notice to Maker.
In the event this Note is placed into the hands of an
attorney for collection, or if collected through Probate or
Bankruptcy proceedings, then an additional ten per cent (10% on
the amount of principal and interest then owing hereon, shall be
added to the same as attorney's fees.
To the extent permitted by law, the makers and all
endorsers, sureties and guarantors of this Note hereby severally
waive notice of intention to accelerate, notice of acceleration,
presentment for payment, notice of nonpayment, protest and
diligence in bringing suite, against any party hereto, and
consent to any renewal, extension, or rearrangement, or other
indulgence with respect to this Note any time without notice to
any of them.
It is the intent of Maker and Payee in the making of the
loan represented by this Note, including all obligations arising
hereunder (the "Loan"), to contract in strict compliance with
applicable usury law. In furtherance thereof, Maker and Payee
stipulate and agree that none of the terms and provisions
contained herein, or in any instrument executed in connection
herewith, shall ever be construed to create a contract to pay for
the use, forbearance or detention of money or to pay interest at
a rate in excess of the maximum interest rate permitted to be
charged by applicable law. Neither the Maker nor any guarantors,
endorsers or other parties now or hereafter becoming liable for
payment of the Loan shall ever be required to pay interest
thereon at a rate in excess of the maximum interest that may be
lawfully charged under applicable law, and the provisions of this
Note or any other instruments now or hereafter executed in
connection herewith which may be in apparent conflict herewith
shall be deemed inoperative. If the maturity of the Loan shall
be accelerated for any reason or if the principal of the Loan is
paid prior to the end of the term thereof, and as a result
thereof the interest received for the actual period of existence
of the Loan exceeds the applicable maximum lawful rate, the
Holder of the Loan shall refund to Maker the amount of such
excess or shall credit the amount of such excess against the
principal balance of the Loan then outstanding. In the event
that Payee or any other holder of the Loan shall collect monies
which are deemed to constitute interest in an amount sufficient
to increase the effective interest rate on the Loan to a rate in
excess of that permitted to be charged by applicable law, all
such sums deemed to constitute interest in excess of the lawful
rate shall, upon such determination, at the option of the Payee,
be immediately returned to the Maker or credited against the
principal balance of the Loan then outstanding. The term
"applicable Law" as used herein shall mean the laws of the
District of Columbia or the laws of the United States, whichever
laws allow the greater rate of interest, as such laws now exist
or may be changed or amended or come into effect in the future.
This Note has been issued pursuant to a Loan Agreement of
even date herewith between Maker and Payee, to which reference is
made for all purposes. Advances against this note and required
reductions in the outstanding principal balance of this Note
shall be governed by the Loan Agreement. Payee is entitled to
the benefits of the security provided for in the Loan Agreement,
including a security interest in the designated accounts
receivable of Maker created by a Security Agreement of even
date herewith.
[name]
By: ________________________________
Name:
________________________________
(Please Print)
Title:
________________________________
(Please Print)
SECURITY AGREEMENT
This Security Agreement (the "Agreement") dated as of the
10th day of November 1998, is made by and between [name] (the
"Debtor"), and InterBank Funding Corporation, a Delaware
corporation (the "Secured Party").
RECITALS:
A. The Debtor and the Secured Party have entered into that
certain Loan Agreement (the "Loan Agreement") of even date
herewith under the terms of which the Secured Party has committed
to provide to the Debtor a loan in the original aggregate
principal amount of up to Eight Hundred Forty Thousand, and
no/100 Dollars ($840,000), and Debtor has agreed to repay such
loan, pursuant to a Promissory Note of even date herewith (the
"Note"). The obligations of Debtor arising under the Note, the
Loan Agreement and all other documents executed in connection
therewith are hereinafter sometimes collectively referred to as
the "Secured Obligations."
B. This Agreement is issued pursuant to, and is subject to
all terms, provisions, conditions and limitations set forth in
the Loan Agreement, and if any provision contained in this
Agreement is in conflict with or inconsistent with any provision
contained in the Loan Agreement, the Loan Agreement shall govern
and control. Capitalized terms used but not otherwise defined
herein shall have the meanings as ascribed to them in the Loan
Agreement.
C. Pursuant to the Loan Agreement, the Secured Party has
this day provided all or a portion of such funds to the Debtor.
D. As a condition to providing such funds to the Debtor,
the Secured Party requires that the Debtor grant a security
interest in certain property owned by the Debtor to secure
payment and performance of certain obligations of the Debtor,
including its obligations under the Note.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the
parties hereto agree as follows:
1. Security Interest. The Debtor hereby grants to the
Secured Party security interests in and to any and all present or
future rights of the Debtor in and to all of the following
rights, interests, and property (all of the following being
herein sometimes called the "Collateral"):
(a) Debtor's ownership interest in Preferred Pension
Administrators
2. The Obligations. The security interests herein
granted (the "Security Interests") shall secure full payment and
performance of all of the Secured Obligations.
3. Representations and Warranties of the Debtor. The
Debtor represents and warrants to the Secured Party that (a) the
Debtor is the owner of the Collateral; (b) the Security Interests
are first and prior security interests in and to all of the
Collateral; and (c) to the Debtor's knowledge, except as
disclosed in the Loan Agreement, no dispute, right of setoff,
counterclaim, or defenses exist with respect to all or any part
of the Collateral. The delivery at any time by the Debtor to the
Secured Party of Collateral shall constitute a representation and
warranty by the Debtor under this Agreement that, with respect to
such Collateral, and each item thereof, the matters heretofore
warranted in clauses (a) through (c) of this Section 3 are true
and correct in all material respects.
4. Defaults. As used herein, the term "Event of Default"
has the meaning given to such term in the Loan Agreement, all of
the terms, covenants, conditions and provision of which are
incorporated herein by reference the same as if set forth herein
verbatim.
5. Remedies. Subject to Section 19 hereof, without
limiting or affecting any rights, remedies or privileges
unrelated to any Event of Default that Secured Party may have
under the Loan Agreement, the Note or any Other Agreements, upon
the occurrence of an Event of Default and during the continuance
thereof, the Secured Party may exercise any and
all rights, remedies, and privileges it may have under the
District of Columbia Business and Commerce Code and any of the
Loan Agreement, the Note and the Other Agreements that are
triggered by an Event of Default. Without limiting the
generality of the foregoing, before or after default Secured
Party may contact account debtors directly to verify information
furnished by Debtor; notify obligors on the Collateral to pay
Secured Party directly; take control of all proceeds of and
payments on any Collateral and apply them against the Secured
Obligations; and, as Debtor's agent endorse any documents or
chattel paper that is Collateral or that represents Collateral.
Secured Party has no obligation to collect any account and will
not be liable for failure to collect any account or for any act
or omission on the part of Secured Party or Secured Party's
officers, agents or employees, except willful misconduct.
6. Costs, Risks. Subject to Section 19 hereof, should any
part of the Collateral come into the possession of Secured Party,
whether before or after an Event of Default, Secured Party may
use or operate such Collateral for the purpose of preserving it
or its value, or pursuant to the order of a court of appropriate
jurisdiction or in accordance with any other rights held by
Secured Party in respect of the Collateral. Debtor covenants to
promptly reimburse and pay to the Secured Party, at the Secured
Party's request, the amount of all reasonable expenses (including
the cost of any insurance and payment of taxes or other charges )
incurred by the Secured Party in connection with its custody,
preservation, use, or operation of the Collateral, and, all such
expenses, costs, taxes, and other charges shall be a part of the
Secured Obligations and shall bear interest as provided under the
Loan Agreement from the date incurred until the date repaid to
the Secured Party. It is agreed, however, that the risk of loss
or damage to such Collateral is on the Debtor, and the Secured
Party shall have no liability whatsoever for failure to obtain or
maintain insurance, nor to determine whether any insurance ever
in force is adequate as to amount or as to the risks insured.
7. Notice. Reasonable notification of the time and
place of any public sale of the Collateral, or reasonable
notification of the time after which any private sale or other
intended disposition of the Collateral is to be made (including
retention thereof in satisfaction of the Liabilities), shall be
sent to the Debtor and to any other person entitled under the
Code to notice. It is agreed that notice sent or given at least
ten (10) Business Days prior to the taking of the action to which
the notice relates is reasonable notification and notice for the
purposes of this paragraph.
8. Rights Cumulative. All rights and remedies of the
Secured Party hereunder are cumulative of each other and of every
other right or remedy which the Secured Party may otherwise have
at law or in equity or under any other contract or other writing
for the enforcement of the Security Interests herein or in the
payment of the Note or the Secured Obligations, and the exercise
of one or more rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of other rights or
remedies.
9. Assignment. The rights, powers and interests held by
the Secured Party hereunder, together with the Security Interests
in the Collateral, may be transferred and assigned by the
Security Party in accordance with the terms of the Loan
Agreement.
10. No Waiver. No failure on the part of the Secured
Party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by the Secured Party of any right,
power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
11. Binding Effect. This Agreement shall be binding on
the Debtor and the Secured Party and their respective successors
and permitted assigns and shall inure to the benefit of the
Secured Party, and the Secured Party's successors and permitted
assigns.
12. Termination. This Agreement and the Security
Interests in the Collateral will terminate when the Secured
Obligations have been paid in fully by extinguishment thereof but
not by renewal, modification or extension thereof. Upon such
termination, the Secured Party agrees to execute and to deliver
to Debtor upon request appropriate termination statements and
releases of lien evidencing such termination.
13. Governing Law. THIS AGREEMENT CONSTITUTES A SECURED
COMMERCIAL LENDING TRANSACTION GOVERNED BY THE UNIFORM COMMERCIAL
CODE (TO THE EXTENT APPLICABLE). THIS AGREEMENT SHALL BE DEEMED
TO HAVE BEEN MADE AT THE DISTRICT OF COLUMBIA AND SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES
APPLICABLE THERETO AND THE INTERNAL LAWS OF THE DISTRICT OF
COLUMBIA APPLICABLE TO AGREEMENTS EXECUTED, DELIVERED AND
PERFORMED WITHIN SUCH STATE, AND THE DEBTOR HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED
TO SUCH PARTY AT ITS ADDRESS SET FORTH IN THE LOAN AGREEMENT.
DEBTOR WAIVES TRIAL BY JURY, ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS
PARAGRAPH 13 SHALL AFFECT THE RIGHT OF THE SECURED PARTY TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
DEBTOR AND/OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION WHERE SUCH PARTY MAINTAINS OFFICES OR HAS PROPERTY.
14. Mailings. Unless otherwise required herein, any notice,
request, instruction or other document required or permitted to
be delivered hereunder by either party hereto to the other shall
be given as set forth in the Loan Agreement, and shall be deemed
to have been delivered as set forth therein.
15. Agreement as Financing Statement. The Secured Party
shall have the right at any time to execute and file a copy of
this Agreement as a financing statement, but the failure of the
Secured Party to do so shall not impair the validity or
enforceability of this Agreement.
16. Severability. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, the
legality, validity, and enforceability of the remaining
provisions of this Agreement shall not be affected thereby, and
in lieu of each such illegal, invalid, or unenforceable provision
there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid,
and enforceable.
17. Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which, for all
purposes, is to be deemed an original, and all of which
collectively constitute one agreement, but in making proof of
this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
18. Number and Gender of Words. Whenever herein the
singular number is used, the same shall include the plural where
appropriate, and words of any gender shall include each other
gender where appropriate.
19. Further Assurances. Debtor agrees to execute, deliver
and file any and all other agreements, assignments, conveyances,
mortgages, financing statements and/or other instruments and
documents as may be requested by Secured Party in order to
evidence or perfect Secured Party's security interests in the
Collateral
20. Matters pertaining to Collateral. Debtor has delivered or
will deliver to Secured Party certificate(s) representing the
Collateral, either endorsed or with a fully executed Collateral
power attached to be held by Secured party in accordance with the
terms of this Agreement.
(a) The Debtor grants the Secured Party and its assigns full
power to sell, assign, and deliver the whole or any part of the
Collateral, or any additions thereto, at any brokers exchange or
elsewhere, at public or private sale, at the Secured party's
option, in order to satisfy any part of the obligations of Debtor
now existing or hereafter arising, which are in default. On any
such sale Secured Party or its assigns may purchase all or any
part of the Collateral. Out of the proceeds of any sale, Secured
Party shall retain an amount equal to the principal and interest
then due under the Loan plus attorney's fees and costs of sale,
and shall pay any remaining balance to the Debtor. The rights and
remedies provided for herein shall be in addition to the rights
of Secured Party under applicable law, the Loan Agreement, the
Note or any other Agreements.
(b) The Debtor authorizes Secured Party to deliver at any time
all or any portion of the Collateral, to deal with the Collateral
in the same manner as if it stood in the name of Secured Party,
and to apply the proceeds of sale in payment or reduction of any
Secured Obligations of Debtor. Debtor waives any notice of any
kind relative to the sale or other disposition of the Collateral.
(c) During the term of this Agreement, all cash dividends or
other distributions made or paid on the Collateral shall become
part of the security pledged hereunder, and on the occurrence of
an Event of Default, any dividends paid on the Collateral shall
be paid to Secured Party in partial satisfaction of the Secured
Obligations of Debtor.
(d) During the term of this Agreement, and so long as no Event
of Default has occurred and is continuing, the Debtor shall have
the right to vote the Collateral on all corporate questions. If
an Event of Default occurs, and so long as it continues, then, at
Secured Party's election in its sole discretion indicated by
written notice to Debtor, all of Debtor's rights to exercise any
voting or other consensual rights pertaining to the Collateral or
any part thereof shall cease, and all such rights shall thereupon
become vested in Secured Party, which shall thereupon have the
sole right to exercise such voting and other consensual rights.
In furtherance of the immediately preceding sentence, Debtor
irrevocably constitutes and appoints Secured Party, effective
upon Secured Party's giving of the foregoing notice after the
occurrence and during the continuance of any Event of Default, as
Debtor's proxy with full power, in the same manner, to the same
extent and with the same effect as if Debtor were to do the same,
and whether or not the Collateral has been transferred into the
name of Secured Party or its nominee: (a) to attend all meetings
of stockholders of Preferred Pension Administrators and to vote
the Collateral at such meetings in such manner as Secured Party
shall, in its sole discretion, deem appropriate, including,
without limitation, in favor of the liquidation of Preferred
Pension Administrators; (b) to consent, in the sole discretion of
Secured Party, to any and all action by or with respect to
Preferred Pension Administrators for which the consent of the
stockholders of Preferred Pension Administrators is or may be
necessary or appropriate; and (c) without limitation, to do all
things which Debtor can or could do as a stockholder of Preferred
Pension Administrators, giving to Secured Party full power of
substitution and revocation. The foregoing proxy shall terminate
when this Agreement is no longer in full force and effect as
hereinafter provided. Debtor hereby revokes any proxy or proxies
heretofore given by Debtor to any person or persons whatsoever
and agrees not to give any other proxies in derogation hereof
until this Agreement is no longer in full force and effect as
hereinafter provided.
e) In the event that, during the term of this
Agreement, any stock dividend, reclassification,
readjustment, or other change is declared or made
in the capital structure of the issuer of the
Collateral, all new, substituted and additional
shares, or other securities, issued by reason of
any such change shall be held by Secured Party
under the terms of this Agreement in the same
manner as the Collateral originally pledged
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day, month and year first above written.
SECURED PARTY:
INTERBANK FUNDING CORPORATION
By: ________________________________
Name:
________________________________
(Please Print)
Title:
________________________________
(Please Print)
DEBTOR:
[name]
By: ________________________________
Name:
________________________________
(Please Print
Title:
_________________________________
(Please Print)
E-192
Exhibit No. 11
IBF VI - Guaranteed Income Fund
Form SB-2
Lehman, Jensen & Donahue, L.C.
620 Judge Building
8 East Broadway
Salt Lake City, Utah 84111
January 21, 1999IBF VI - Guaranteed Income Fund
1733 Connecticut Avenue, NW
Washington, D.C. 20009
Re: Class A 10% Income Participating Notes Due 2005
("Notes")
Ladies and Gentlemen:
You have requested our opinion as to the legality of the
above-referenced Notes of IBF VI - Guaranteed Income Fund, a
Delaware corporation (the "Corporation") to be issued and
distributed pursuant to a Registration Statement on Form SB-2,
and amendments thereto (the "Registration Statement") under the
Securities Act of 1933, as amended.
In furnishing our opinion, we have examined original,
photostatic, or certified copies of certain records of the
Corporation, including the Registration Statement, the
Certificate of Incorporation, as amended, the By-laws and such
other documents that we have deemed relevant and necessary for
the opinion hereinafter set forth. In such examination, we have
assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to
authentic originals of all documents submitted to us as certified
or photostatic copies. As to various questions of fact material
to such examination, we have relied upon representations made to
us by officers and directors of the Corporation, and we have not
conducted or received independent verification of those facts.
Based upon and subject to the foregoing and such other
matters of fact and questions of law as we have deemed relevant
in the circumstances, and in reliance thereon, it is our opinion
that:
1. The Corporation is duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware; and
2. The Notes being offered under the Registration
Statement are duly authorized and, when issued in accordance with
the terms and conditions of the Prospectus and the form of
Indenture governing the Notes included as a exhibit to the
Registration Statement, will be validly issued and non-assessable
and shall represent the binding obligations of the Corporation.
We consent to being named in the Registration Statement and
related Prospectus as counsel who are passing upon the legality
of the above securities for the Corporation by reference to our
name under the caption "Legal Matters" in such Prospectus. We
also consent to your filing copies of this opinion as an exhibit
to the Registration Statement or any amendment thereto.
This opinion is limited to the matters set forth herein and
may not be relied upon by any other person or used for any other
purpose without our prior written consent.
Sincerely,
Lehman, Jensen & Donahue, L.C.
Exhibit No. 12
IBF VI - Guaranteed Income Fund
Form SB-2
INDEPENDENT ACCCOUNTANT'S CONSENT
We hereby consent to the use of our report dated January 20, 1999
and the reference to us under Experts to be included in the
Registration Statement on Form SB-2 of IBF VI-Guaranteed Income
Fund on or about January 21, 1999.
Radin, Glass & Co., LLP
Certified Public Accountants
January 21, 1999
E-195
Exhibit No. 13
IBF VI - Guaranteed Income Fund
Form SB-2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
_______________
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-2780552
(State of Incorporation if not a national (I.R.S. employer
bank) identification
number)
2 Broadway, New York, New York 10004
(Address of principal executive offices) (Zip Code)
Jesse R. Meer
120 West 45th Street
New York, New York 10036
(212) 704-0100
(Name, address and telephone number of agent for service)
_______________
IBF VI - GUARANTEED INCOME FUND
(Exact name of obligor as specified in its charter)
Delaware 52-2139510
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
1733 Connecticut Avenue, N.W.
Washington, DC 20009
(Address of Principal Executive Offices) (Zip Code)
Class A 10% INCOME PARTICIPATING NOTES DUE 2005
(Title of Indenture Securities)
Item 1. General Information. Furnish the following information
as to the trustee:
(a) Name and address of each examining or supervision
authority to which it is subject.
Banking Department of the State of New York, 2
Rector Street, New York, New York 10006
(b) Whether it is authorized to exercise corporate
trust powers.
The trustee is so authorized.
Item 2. Affiliations with the Obligor. If the obligor is an
affiliate of the trustee, describe each such
affiliation.
No such affiliation exists with the trustee.
Note: Items 3 through and including 15 are omitted, in
accordance with General Instruction B., based upon the
obligor's representation that it is not in default under
other Indentures under which Continental Stock Transfer &
Trust Company is the Trustee.
Item 16. List of Exhibits. The following exhibits to this
Statement of Eligibility and Qualification, other than
Exhibits 7 which is being filed herewith, were filed as
exhibits to the Statements of Eligibility and
Qualification on Form T-1 that accompanied the
registration statements of the named obligors in the
S.E.C. files specified. Such exhibits are hereby
incorporated by reference to such filings.
1(a). Amended organization certificate of the
trustee. Trans-Lux Corporation, S.E.C. File No.
33-1695.
1(b). Certificate of amendment, dated May 14, 1986,
of the trustee's organization certificate.
Howtek, Inc., S.E.C. File No. 33-8971.
2. Certificate of authority of the Banking Department
of New York. Trans-Lux Corporation, S.E.C. File
No. 33-1695.
3. Certificate of amendment, dated December 19, 1984,
of the trustee's organization certificate. Trans-
Lux Corporation, S.E.C. File No. 33-1695.
4. By-laws of the trustee. Trans-Lux Corporation,
S.E.C. File No. 33-1695.
5. Not applicable.
6. Consent of the trustee as required by Section
321(b) of the Act. Trans-Lux Corporation, S.E.C.
File No. 33-1695.
7. Balance sheet of the trustee, as of December 31,
1996. (The trustee is not required by the Banking
Department to publish a report of its condition.)
8. Not applicable.
9. Not applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, Continental Stock Transfer & Trust
Company, a limited purpose trust company organized and existing
under the laws of the State of New York, has duly caused this
Statement of Eligibility and Qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of New York, and State of New York, on the ____ day of
January, 1999.
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/
EXHIBIT 7
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority.
CONTINENTIAL STOCK TRANSFER & TRUST COMPANY
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
Cash $110,792
Accounts receivable (net of allowance for doubtful 1,796,271
accounts of $10,000)
Interest receivable 169,530
U.S. Government securities (Note 2) 699,951
Prepaid expenses 91,664
Total current assets 2,868,208
PROPERTY AND EQUIPMENT - Net (Notes 2 and 3) 409,430
U.S. GOVERNMENT SECURITIES (Note 2) 498,754
OTHER ASSETS 10,183
3,786,575
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accrued expenses and other liabilities $
190,576
Exchanges 53,582
State and local income taxes payable (Note 2) 74,203
Total current liabilities 318,361
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDER'S EQUITY:
Capital stock, $100 par value- authorized and
outstanding, 5,000 shares (no change during year) 500,000
Additional paid-in capital 1,000,000
Undistributed S Corporation earnings (payable to 413,910
stockholders)
Retained earnings 1,554,304
Total stockholder's equity 3,468,214
3,786,575
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<PERIOD-END> JAN-20-1999
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