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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
FEBRUARY 2, 1996
AMRESCO, INC.
STATE OF DELAWARE 0-8630 59-1781257
(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)
1845 WOODALL RODGERS FREEWAY
SUITE 1700
DALLAS, TEXAS 75201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 953-7700
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Location of Exhibit Index - Page 4
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ITEM 5. OTHER EVENTS.
NOTE OFFERING. On February 2, 1996, AMRESCO, INC. (the "Company")
completed an underwritten public offering of $57,500,000 aggregate principal
amount of the Company's 10% Senior Subordinated Notes due 2003 (the "Notes")
that was registered under the Securities Act of 1933. The offering included the
exercise by the underwriters of their full $7,500,000 aggregate principal amount
over-allotment option. The Notes were issued to the public at 100% of the face
amount with an underwriting discount of 4%. The Notes bear interest at 10% per
annum, payable monthly. The net proceeds from the offering, including the over-
allotment option, aggregated approximately $54.9 million and were used to reduce
borrowings under the Company's Revolving Loan Agreement. The underwriters of
this offering were Piper Jaffray Inc., J.C. Bradford & Co. and Morgan Keegan &
Company, Inc. The Notes are listed on the New York Stock Exchange under the
symbol "AMMBO3."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following documents are attached hereto as exhibits:
(a) Financial statements of business acquired -- not applicable.
(b) Pro Forma Combined Condensed Financial Information -- not applicable.
(c) Exhibits:
1.1 Purchase Agreement, dated January 29, 1996, between the Company
and Piper Jaffray Inc., as representative of the underwriters
listed in Schedule I thereto.
4.1 Indenture, dated as of January 15, 1996, between the Company and
Bank One, Columbus, N.A., as trustee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMRESCO, INC.
Date: February 12, 1996 By: /s/ L. KEITH BLACKWELL
------------------------------
Name: L. Keith Blackwell
Title: General Counsel and Secretary
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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1.1 Purchase Agreement, dated January 29, 1996, between the
Company and Piper Jaffray Inc., as representative of
the underwriters listed in Schedule I thereto.
4.1 Indenture, dated as of January 15, 1996, between the
Company and Bank One, Columbus, N.A., as trustee.
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CONFORMED COPY
$50,000,000 PRINCIPAL AMOUNT OF 10% SENIOR SUBORDINATED NOTES
DUE 2003(1)
AMRESCO, INC.
PURCHASE AGREEMENT
January 29, 1996
PIPER JAFFRAY INC.
J.C. BRADFORD & CO.
MORGAN KEEGAN & COMPANY, INC.
c/o Piper Jaffray Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
AMRESCO, INC., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Underwriters") its 10% Senior Subordinated Notes
due 2003 in an aggregate principal amount of $50,000,000 (the "Firm Notes").
The Company has also granted to the Underwriters an option to purchase up to
an additional $7,500,000 in aggregate principal amount of its 10% Senior
Subordinated Notes due 2003 on the terms and for the purposes set forth in
Section 3(b) hereof. Such additional 10% Senior Subordinated Notes due 2003
are referred to in this Agreement as the "Option Notes," and the Firm Notes
and the Option Notes, if purchased, are hereinafter referred to as the
"Notes" or the "Securities." The Notes shall be issued under an indenture,
dated as of January 15, 1996 (the "Indenture"), between the Company and Bank
One, Columbus, N.A., as trustee (the "Trustee").
The Company hereby confirms its agreement with respect to the sale
of the Securities to the Underwriters.
________________
(1) Plus an option to purchase up to an additional $7,500,000 aggregate
principal amount of Notes to cover over-allotments.
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1. REGISTRATION STATEMENT. A registration statement on Form S-3
(File No. 33-65329) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations ("Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under those acts,
and has been filed with the Commission. One or more amendments to such
registration statement have also been so prepared and have been, or will be,
so filed. Copies of such registration statement and amendments and each
related preliminary prospectus have been delivered to the Underwriters.
If the Company has elected not to rely upon Rule 430A of the Rules
and Regulations, the Company has prepared and will promptly file an amendment
to the registration statement and an amended prospectus. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare
and file a prospectus pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A. Such
registration statement as amended at the time it is or was declared effective
by the Commission and, in the event of any amendment thereto after the
effective date and prior to the First Closing Date (as hereinafter defined),
but only from and after the effectiveness of such amendment, including all
financial statements, schedules and exhibits thereto, all documents
incorporated by reference therein filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any information deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, is hereinafter called the "Registration Statement."
The prospectus included in the Registration Statement at the time it is or
was declared effective by the Commission is hereinafter called the
"Prospectus," except that if any prospectus filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or any other
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed by
the Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus from and after the time
such prospectus is filed with the Commission or transmitted to the Commission
for filing pursuant to such Rule 424(b) or from and after the time it is
first provided to the Underwriters by the Company for such use. The term
"Preliminary Prospectus" as used herein means any preliminary prospectus
included in the Registration Statement prior to the time it becomes or became
effective under the Act and any prospectus subject to completion as described
in Rule 430A of the Rules and Regulations. Reference made herein to any
Preliminary Prospectus or Prospectus, as amended or supplemented, shall
include all documents incorporated by reference therein.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters as follows:
(a) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission or the
securities authority of any state or other jurisdiction
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in which the Notes are to be offered and sold and each Preliminary
Prospectus, at the time of filing thereof, did not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in
reliance upon, and in conformity with, written information
furnished to the Company by any Underwriter specifically for use in
the preparation thereof.
(b) As of the time the Registration Statement (or any
post-effective amendment thereto) is or was declared effective by
the Commission, upon the filing or first delivery to the
Underwriters of the Prospectus (or any supplement to the
Prospectus) and at the First Closing Date and Option Notes Closing
Date (as hereinafter defined), (i) the Registration Statement and
Prospectus (in each case, as so amended and/or supplemented) will
conform in all material respects to the applicable requirements of
the Act, the Trust Indenture Act and the Rules and Regulations,
(ii) the Registration Statement (as so amended) will not or did not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus (as
so supplemented) will not or did not include an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they are or were made, not
misleading; except that the foregoing clauses (i), (ii) and (iii)
shall not apply to statements in or omissions from any such
document in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. The documents
incorporated by reference in the Registration Statement, the
Prospectus, and any Preliminary Prospectus pursuant to Item 12 of
Form S-3, as of the date they were or are filed with the
Commission, conformed or will conform in all material respects to
the requirements of the Exchange Act and, as of the date of filing,
none of such documents contained or will contain an untrue
statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The consolidated financial statements of the
Company, together with the related notes thereto, set forth or
otherwise included in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act
and fairly present the financial condition and the results of
operations and changes in cash flows of the Company and its
Subsidiaries (as hereinafter defined) or its predecessor or
acquired businesses, as the case may be, at the date and for the
periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein), and the independent
public accountants whose reports are contained therein are
independent public accountants as required by the Act, the Exchange
Act and the Rules and Regulations. The financial statement
schedules, if any, included in the Registration Statement or
incorporated by reference therein, or in any post-effective
amendment thereto, and the other financial and statistical
information included in the
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Prospectus under the captions "Prospectus Summary " and "Summary
Financial and Other Data," in all material respects present fairly
and on a basis consistent with the books and records of the Company
the information stated therein. The terms "Subsidiary" and "Material
Subsidiary" shall have the meanings assigned thereto in the Indenture.
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under
this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company, and constitutes a valid, legal and
binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited
by federal or state securities laws and subject as to enforcement,
to applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles.
(e) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture and the Notes. The Indenture has been duly and validly
authorized by the Company and, when the Indenture has been executed
and delivered, will be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws
relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles. The Notes sold
hereunder have been duly and validly authorized by the Company and,
when the Notes have been executed and authenticated in the manner
set forth in the Indenture and issued, sold, and delivered in the
manner set forth in the Prospectus, will be the valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Indenture,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
The Indenture will have been duly qualified under the Trust
Indenture Act upon effectiveness of the Registration Statement.
The Indenture will be substantially in the form filed as an exhibit
to the Registration Statement and will comply with the Trust
Indenture Act and the regulations thereunder. The Indenture and
the Notes conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(f) The authorized capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectus.
All of the outstanding shares of capital stock have been duly
authorized, validly issued and are fully paid and non-assessable.
All offers and sales of the Company's capital stock or 8%
Convertible Subordinated Debentures due 2005 prior to the date
hereof were at all relevant times duly registered under the Act or
exempt from the registration requirements of the Act and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or
Blue Sky laws. None of the issued shares of capital stock of the
Company or its predecessors or any of its Subsidiaries has been
issued or is owned or held in violation of any pre-emptive rights
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of shareholders, and no preemptive rights or similar rights of any
security holders of the Company exist with respect to the Notes.
The Company has no agreement with any security holder as to which
the Company has not obtained waiver which gives such security
holder the right to require the Company to register under the Act
any securities of any nature owned or held by such person in
connection with the transactions contemplated by this Agreement.
(g) The execution, delivery and performance of this
Agreement, the Indenture and the Securities, the issuance and
delivery of the Securities, and the consummation of the
transactions herein and therein contemplated will not conflict
with, or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any statute,
(ii) any material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which either the Company
or any Subsidiary is bound or to which any of their property is
subject, (iii) the Company's or any Subsidiary's charter or
by-laws, or (iv) any order, rule, regulation or decree of any court
or governmental agency or body having jurisdiction over the
Company, any Subsidiary or any of their respective properties,
which breach, violation or default reasonably could or might be
expected, individually or in the aggregate with other such
breaches, violations or defaults, to result in a material adverse
effect on the financial condition, results of operations or
business of the Company and its Subsidiaries, taken as a whole.
Other than those already obtained or waivers from which have been
obtained, no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required
by the Company or any Subsidiary for the execution, delivery and
performance of this Agreement, the Indenture or the Securities or
for the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the
Securities by the Company, except such as may be required under the
Act, the Trust Indenture Act or state securities or blue sky laws.
(h) Neither the Company nor any Subsidiary is (i) in
violation of its respective certificate of incorporation or charter
or its respective by-laws or other organizational documents,
(ii) in default (nor has an event occurred which with notice or passage
of time or both would constitute such a default) under any bond,
indenture, mortgage, deed of trust, note, loan or credit agreement
or other material agreement or instrument to which any of them is a
party or by which any of them or any of their properties or assets
may be bound or affected, (iii) in violation of any order of any
court, arbitrator or governmental body or (iv) except as disclosed
in the Registration Statement and the Prospectus, in violation of
or has violated any franchise, grant, authorization, license,
permit, judgment, decree, order, statute, rule or regulation,
which, in the case of clauses (i)-(iv) of this sentence, would
(individually or in the aggregate) (x) adversely affect the
legality, validity or enforceability of this Agreement, the
Indenture or the Securities, or any document related hereto or
thereto or (y) have a material adverse effect on the financial
condition, results of operations or business of the Company and the
Subsidiaries, taken as a whole, or (z) materially impair the
Company's ability to perform fully on a timely basis any
obligations which it has under this Agreement, the Indenture or the
Securities. The Company or the Subsidiaries hold all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any
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governmental or self-regulatory body required for the conduct of their
respective businesses, except where any such failure to hold will not
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. The descriptions in the Registration Statement and
the Prospectus of statutes, legal and governmental proceedings or
contracts and other documents are accurate in all material respects and
fairly present the information required to be shown; and there are no
statutes or legal or governmental proceedings required to be described
in the Registration Statement or the Prospectus that are not described
as required.
(i) Each of the Company and the Material Subsidiaries has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation with
full corporate power and authority to own or lease its properties and
conduct its business as currently being carried on and as described in
the Registration Statement and Prospectus; and is duly qualified to do
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases real property of a nature, or
transacts business of a type, that would make such qualification
necessary and in which the failure to so qualify would have a material
adverse effect on the financial condition, results of operations or
business of the Company and the Subsidiaries, taken as a whole. Each of
the Company and the Subsidiaries is in compliance with the rules,
regulations or other lawful directives established by each regulatory
authority having jurisdiction over the Company's or the Subsidiary's
respective business, conduct and affairs, including without limitation
the timely and accurate filing of all reports, statements, documents,
registrations, filings or submissions required to be filed by it with
any such regulatory authority, where the failure to comply with such
rules, regulations or other lawful directives reasonably could or might
be expected to result in a material adverse effect on the financial
condition, results of operations or business of the Company and its
Subsidiaries, taken as a whole.
(j) Except as disclosed in the Registration Statement and
the Prospectus, there is no action, suit, investigation or proceeding,
governmental or otherwise, pending or overtly threatened, to which the
Company or any Subsidiary is or may be a party or of which the business
or property of the Company or any Subsidiary is or may be the subject
which, in each case, is material to the Company and the Subsidiaries,
taken as a whole, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance of the Securities
or any of the other transactions contemplated hereby or by the
Indenture, or which questions the legality or validity of any such
transactions or which seeks to recover damages or obtain other relief
in connection with any of such transactions; and there is no contract
or document of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required.
(k) All of the outstanding capital stock of each
Subsidiary has been duly authorized, validly issued and is fully paid
and non-assessable, and except as otherwise noted
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in the Prospectus, is owned directly or indirectly by the Company
free and clear of any security interest, claim, lien or other
encumbrance.
(l) The Company and its Subsidiaries have good and
marketable title in fee simple to all real property, if any, and
good title to all personal property owned by them, in each case
free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed
in the Prospectus or such as do not materially and adversely affect
the value of those properties which individually or in the
aggregate are material to the Company and its Subsidiaries taken as
a whole and do not interfere with the use made or proposed to be
made of such property by the Company or any one of its
Subsidiaries, as the case may be; and any real property and
buildings held under lease by the Company or any of its
Subsidiaries are held under valid, subsisting and enforceable
leases, with such exceptions as are disclosed in the Prospectus or
are not material and do not interfere with the use made or proposed
to be made of such property and buildings by the Company or such
Subsidiary.
(m) The Company and each of its Subsidiaries have
filed all necessary foreign, federal and state and local income and
franchise tax returns and, other than taxes the Company or its
Subsidiaries are consisting in good faith and for which the Company
has established adequate reserves, have paid all taxes shown as due
thereon. Except as is otherwise expressly stated in the
Registration Statement or Prospectus, the Company has no knowledge
of any tax deficiency which might be asserted against it which
would materially and adversely affect the financial condition,
results of operations or business of the Company and its
Subsidiaries, taken as a whole.
(n) Since the date of the most recent audited financial
statements included in the prospectus, neither the Company nor any
of the Subsidiaries has sustained any loss or interference with its
business, which loss or interference was material to the Company
and its Subsidiaries, taken as a whole, from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
other than as disclosed in or contemplated by the Prospectus.
(o) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) neither
the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into
any transactions, not in the ordinary course of business, that are
material to the Company and the Subsidiaries taken as a whole, (ii)
the Company has not purchased any of its outstanding capital stock
or declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock, (iii) there has not been any change
in the capital stock (except as a result of shares issued upon
exercise of stock options pursuant to existing stock option plans
of the Company and the Subsidiaries, upon conversion of the
Company's 8% Convertible Subordinated Debentures and upon issuances
of 65,790 shares of restricted stock pursuant to the Company's
Stock Option and Award Plan), long-term debt or, otherwise than in
the ordinary
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course of business consistent with past practice, short-term debt
of the Company or any of the Subsidiaries and (iv) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the financial
condition, results of operations or business of the Company and the
Subsidiaries taken as a whole, in each case other than as disclosed
in or contemplated by the Prospectus.
(p) Neither the Company nor any of its officers, directors
or affiliates has taken, directly or indirectly, any action
designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale of the Notes.
(q) Neither the Company nor any of the Subsidiaries, nor
any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any such Subsidiary has,
directly or indirectly (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds,
(iii) violated any provisions of the Foreign Corrupt Practices Act
of 1977, as amended, or (iv) made any bride, rebate, payoff,
influence payment, kick back or other unlawful payment.
(r) To the Company's knowledge, the operations of the
Company and its Subsidiaries with respect to any real property
currently leased or owned or by any means controlled by the Company
or any Subsidiary (the "Real Property") are in compliance with all
federal, state and local laws, ordinances, rules and regulations
relating to occupational health and safety and the environment
(collectively "Laws"), except where the failure to so comply would
not have a material adverse effect on the Company's business or
results of operations, and the Company and its Subsidiaries have
all licenses, permits and authorizations necessary to operate under
all Laws and are in compliance with all terms and conditions of
such licenses, permits and authorizations, except where such
failure would not have a material adverse effect on the Company's
and its Subsidiaries' business or results of operations taken as a
whole; neither the Company nor any Subsidiary has authorized,
conducted or has knowledge of the generation, transportation,
storage, use, treatment, disposal or release of any hazardous
substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminate, petroleum
product, natural gas, liquefied gas or synthetic gas defined in or
regulated under any environmental law on, in or under any Real
Property in violation of any Laws, except where such violation
would not have a material adverse effect on the Company's business
or results of operations; and there is no material pending or
threatened claim, litigation or any administrative agency
proceeding, nor has the Company or any Subsidiary received any
written or oral notice from any governmental entity or third party
that (i) alleges a violation of any Laws by the Company or any
Subsidiary; (ii) alleges the Company or any Subsidiary is a liable
party under the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 ET SEQ. or any state
superfund law; (iii) alleges possible contamination of the
environment by the Company or any Subsidiary
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or (iv) alleges possible contamination of the Real Property, except
as to each of the above, for any violations, liability or
contamination that would not have a material adverse effect on the
Company's and its Subsidiaries' business or results of operations
taken as a whole.
(s) The Company and its Subsidiaries own or have the right
to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
trade secrets, proprietary or other confidential information and
intangible properties and assets (collectively "Intangibles")
necessary to their respective businesses as presently conducted or
as the Prospectus indicates the Company or such Subsidiary proposes
to conduct; to the Company's knowledge, neither the Company nor any
Subsidiary has infringed or is infringing, and neither the Company
nor any Subsidiary has received notice of infringement with respect
to, asserted Intangibles of others; and, to the Company's
knowledge, there is no infringement by others of Intangibles of the
Company or any of its Subsidiaries which would have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(t) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
business in which they are engaged by similarly situated companies;
and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a comparable cost, except as disclosed in the
Prospectus.
(u) Each of the Company and its Subsidiaries makes and
keeps accurate books, records and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of its assets and maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's
general and specific authorization, (ii) transactions are recorded
as necessary to permit preparation of the Company's consolidated
financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets
of the Company, (iii) access to the assets of the Company and each
of its Subsidiaries is permitted only in accordance with
management's general and specific authorization and (iv) the
recorded accountability for assets of the Company and each of its
Subsidiaries is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(v) No Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making
any other distributions on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary or
from transferring any of such Subsidiary's property or assets to
the Company or any other Subsidiary, except as disclosed in the
Prospectus.
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(w) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct
its business in any manner that would cause it to become an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940.
(x) The Company's common stock, par value $0.05 per share
(the "Common Stock") is registered pursuant to Section 12(g) of the
Exchange Act and is qualified as a Nasdaq National Market security
of The Nasdaq Stock Market, Inc. The Company has taken no action
designed to terminate, or likely to have the effect of terminating,
the registration of the Common Stock under the Exchange Act or
qualification of the Common Stock on the Nasdaq National Market,
nor has the Company received any notification that the Commission
or The Nasdaq Stock Market, Inc. is contemplating terminating such
registration or qualification.
(y) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the
Act to be distributed by the Company; provided, however, that
materials used in the "road show" with the express approval of the
Underwriters but not otherwise delivered to prospective purchasers
of the Notes shall not be deemed, for the purposes of this
paragraph 2(y), to be distributed by the Company.
(z) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92-198, laws of Florida).
The Company does not do any business, directly or indirectly, with
the government of Cuba or, to the Company's knowledge, with any
person or entity located in Cuba.
(aa) The conditions for use of a Registration Statement on
Form S-3 set forth in the General Instructions to Form S-3 have
been satisfied with respect to the Company and the transactions
contemplated by this Agreement and the Registration Statement.
(bb) Any certificate signed by any officer of the
Company and delivered to the Underwriters or to counsel for the
Underwriters shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(cc) Other than as contemplated herein, the Company has
not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
the Firm Notes to the Underwriters, and the Underwriters agree to
purchase the
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respective principal amounts of Firm Notes set forth opposite each
Underwriter's name in Schedule I hereto. The purchase price for
each Firm Note shall be 96.0% of the principal amount thereof,
which shall reflect an Underwriting Discount of 4.0% of the
principal amount of the Firm Notes payable to the Underwriters.
The obligation of each Underwriter to the Company shall be to
purchase from the Company that principal amount of Firm Notes set
forth opposite the name of such Underwriter in Schedule I hereof.
In making this Agreement, each Underwriter is contracting severally
and not jointly. Except as provided in paragraph (c) of this
Section 3 and in Section 8 hereof, the agreement of each
Underwriter is to purchase only its respective principal amount of
Firm Notes as specified in Schedule I.
The Firm Notes will be delivered by the Company to Piper
Jaffray Inc. for each Underwriter's account against payment of the
purchase price therefor by wire transfer of same day funds to the
account designated by the Company, at the offices of Piper Jaffray
Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota, or such other location as may be mutually acceptable, at
9:00 a.m., Minneapolis time, on the third (or, if the Notes are
priced, as contemplated by Rule 15c6-1(c) promulgated pursuant to
the Exchange Act, after 4:30 p.m. Washington, D.C. time, the
fourth) full business day following the date hereof, or at such
other time as the Underwriters and the Company determine, such time
and date of delivery being herein referred to as the "First Closing
Date." Certificates for the Firm Notes, each in definitive form
and in such denominations and registered in such names as the
Underwriters may request upon at least two business days' prior
notice to the Company, will be made available for checking and
packaging at the offices of Piper Jaffray Inc., Piper Jaffray
Tower, 222 South Ninth Street, Minneapolis, Minnesota, or such
other location as may be mutually acceptable, at least one business
day prior to the First Closing Date.
(b) On the basis of the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the
Underwriters an option to purchase up to $7,500,000 principal
amount of Option Notes, at the same purchase price as the Firm
Notes, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Securities. The
option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the effective date of this
Agreement upon notice (confirmed in writing) by the Underwriters to
the Company setting forth the aggregate principal amount of Option
Notes as to which the Underwriters are exercising the option, the
names and denominations in which the Option Notes are to be
registered and the date and time, as determined by the
Underwriters, when the Option Notes are to be delivered, such time
and date of purchase of the Option Notes being herein referred to
as the "Option Notes Closing" and "Option Notes Closing Date,"
respectively; provided, however, that the Option Notes Closing Date
shall not be earlier than the First Closing Date nor earlier than
the third business day after the date on which the option shall
have been exercised. The First Closing Date and the Option Notes
Closing Date are sometimes herein individually called the "Closing
Date" and collectively called the "Closing Dates." The principal
amount of Option Notes to be sold by the Company to the
Underwriters and purchased by the Underwriters from the Company
shall be determined by
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<PAGE>
the Underwriters. The option granted hereby may be canceled by the
Underwriters as to the Option Notes for which the options are
unexercised, at any time prior to the expiration of the 30-day
period, upon notice to the Company. No Option Notes shall be sold
and delivered unless the Firm Notes previously have been, or
simultaneously are, sold and delivered.
The Option Notes will be delivered by the Company to Piper
Jaffray Inc. for each Underwriter's account against payment of the
purchase price therefor by wire transfer of same day funds to the
account designated by the Company, at the offices of Piper Jaffray
Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota, or such other location as may be mutually acceptable at
9:00 a.m., Minneapolis time, on the Option Notes Closing Date. The
Option Notes in definitive form and in such denominations and
registered in such names as the Underwriters have set forth in the
notice of option exercise, will be made available for checking and
packaging at the office of Piper Jaffray Inc., Piper Jaffray Tower,
222 South Ninth Street, Minneapolis, Minnesota, or such other
location as may be mutually acceptable, at least one business day
prior to the Option Notes Closing Date.
(c) It is understood that each Underwriter may (but
shall not be obligated to) make payment to the Company on behalf of
another Underwriter for the Securities to be purchased by such
Underwriter. Nothing herein contained shall constitute any of the
Underwriters an unincorporated association or partner with the
Company or with each other.
(d) The Underwriters propose to make a public offering
of the Notes directly to the public (which may include selected
dealers and special purchasers) as soon as the Underwriters deem
practicable after the Registration Statement becomes effective, at
the initial public offering price as set forth on the cover page of
the Prospectus, subject to the terms and conditions of this
Agreement and in accordance with the Prospectus. Such concessions
from the public offering price may be allowed to selected dealers
and other members of the National Association of Securities
Dealers, Inc. as the Underwriters may determine, and the
Underwriters will furnish the Company with such information about
the distribution arrangements as may be necessary for inclusion in
the Registration Statement. It is understood that the public
offering price and concessions may vary after the initial public
offering.
4. COVENANTS. The Company covenants and agrees with the
Underwriters as follows:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best
efforts to cause the Registration Statement or any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify the Underwriters promptly of the time when the
Registration Statement or any post-effective amendment to the
Registration Statement has become effective or any supplement to
the Prospectus has been filed and of any request by the Commission
for any amendment or supplement to the Registration Statement or
Prospectus or additional information; if the Company has elected to
rely on Rule 430A of the Rules and Regulations,
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<PAGE>
the Company will file a Prospectus containing the information
omitted therefrom pursuant to such Rule 430A with the Commission
within the time period required by, and otherwise in accordance
with the provisions of, Rules 424(b) and 430A of the Rules and
Regulations; the Company will prepare and file with the Commission,
promptly upon the request of the Underwriters, any amendments or
supplements to the Registration Statement or Prospectus that, in
the Underwriters' reasonable opinion, may be necessary or advisable
in connection with the distribution of the Securities by the
Underwriters; and the Company will not file any amendment or
supplement to the Registration Statement or Prospectus to which the
Underwriters shall reasonably object by notice to the Company after
having been furnished a copy a reasonable time prior to the filing.
(b) The Company will advise the Underwriters, promptly
after it shall receive notice or obtain knowledge thereof, of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding
for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Within the time during which a prospectus relating to
the Securities is required to be delivered under the Act, the
Company will comply as far as it is able with all requirements
imposed upon it by the Act, as now and hereafter amended, and by
the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof and the
Prospectus. If during such period any event occurs as a result of
which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify the
Underwriters and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify
the Securities for sale under the securities laws of such
jurisdictions as the Underwriters may reasonably designate and to
continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not
be required in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process
in any state. In each jurisdiction in which the Notes shall have
been qualified as above provided, the Company will make and file
such statements and reports as may be identified as requiring
post-sale filings in any blue sky memoranda delivered in connection
with the offer and sale of the Notes contemplated hereby or as
otherwise reasonably requested by the Underwriters or officials of
such jurisdictions.
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<PAGE>
(e) The Company will furnish to you copies of the
Registration Statement (two of which will be manually signed and
will include all exhibits), the Indenture, each Preliminary
Prospectus, the Prospectus, and all amendments and supplements to
such documents, in each case as soon as available and in such
quantities as each Underwriter may from time to time reasonably
request.
(f) During a period of five years commencing with the
date hereof, the Company will furnish to each Underwriter who may
so request in writing, copies, without charge, of (i) all periodic
and special reports furnished to the securities holders of the
Company and (ii) all information, documents and reports filed with
the Commission or any national securities exchange under the
Exchange Act.
(g) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal
quarter, an earnings statement (which need not be audited) covering
a 12-month period beginning after the effective date of the
Registration Statement that shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations.
(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is
prevented from becoming effective under the provisions of Section 9(a)
hereof or is terminated, will pay or cause to be paid (i) all
expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (ii) all expenses and fees
(including, without limitation, fees and expenses of the Company's
accountants and counsel but, except as otherwise provided below,
not including fees and expenses of the Underwriters' counsel) in
connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules and exhibits
thereto), the Securities, the Indenture, each Preliminary
Prospectus, the Prospectus, and any amendment thereof or supplement
thereto, and underwriting documents, including Blue Sky Memoranda,
(iii) all filing fees and reasonable fees and disbursements of the
Underwriters' counsel incurred in connection with the qualification
of the Securities for offering and sale by the Underwriters or by
dealers under the securities or blue sky laws of the states and
other jurisdictions which the Underwriters shall designate in
accordance with Section 4(d) hereof, (iv) the fees and expenses of
the Trustee and counsel for the Trustee, (v) the filing fees
incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the
Securities, (vi) listing fees, if any, (vii) fees or expenses, if
any, of Underwriters' counsel incurred in connection with
investigating the legality of an investment in the Securities by
certain purchasers in certain jurisdictions and the preparation of
memoranda relating thereto, and (viii) all other reasonable costs
and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein.
If the sale of the Securities provided for herein is not
consummated by reason of action by the Company pursuant to Section 9(a)
hereof which prevents this Agreement from becoming effective,
or by reason of any failure, refusal or inability on the part of
the Company
14
<PAGE>
to perform any material agreement on its part to be performed, or
because any other material condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all
reasonable out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in
connection with their investigation, preparing to market and
marketing the Securities or in contemplation of performing their
obligations hereunder. The Company shall not in any event be
liable to either Underwriter for loss of anticipated profits from
the transactions covered by this Agreement.
(i) The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes
set forth in the Prospectus.
(j) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(k) For so long as the delivery of a prospectus is
required in connection with the offering, sale and distribution of
the Notes, the Company will file on a timely basis such
registration statements and other filings and take such other
action as is required pursuant to the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.
(l) So long as any of the Notes are outstanding, the
Company will furnish to each of you, upon request, the reports
required to be filed with the Trustee pursuant to the Indenture,
concurrently with such filing.
(m) The Company will use its best efforts to cause the
Notes to be listed on the New York Stock Exchange, Inc. upon
issuance of the Notes and will use its best efforts to cause the
Notes to be so listed as long as the Notes remain outstanding.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters hereunder are subject to the accuracy, as of the date hereof
and at each of the First Closing Date and the Option Notes Closing Date (as
if made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company contained herein, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., Minneapolis time, on the date
of this Agreement, or at such later time and date as the
Underwriters shall approve and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been timely made;
no stop order suspending the effectiveness of the Registration
Statement or any amendment thereof shall have been issued; no
proceedings for the issuance of such an order shall be pending or
threatened; and any request of the
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<PAGE>
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have
been complied with to the Underwriters' satisfaction.
(b) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the
Company nor any Subsidiary shall have incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions not in the ordinary course of business;
and there shall not have been any change in the capital stock
(other than capital stock issued upon exercise of outstanding stock
options or upon conversion of convertible debentures), or any
material change in the short-term or long-term debt of the Company,
or any material adverse change, or any development involving a
prospective material adverse change, in the general affairs,
condition (financial or otherwise), business, key personnel,
property, prospects, net worth or results of operations of the
Company and the Subsidiaries, considered as a whole, that, in your
judgment, makes it unpractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the
Prospectus.
(c) On each Closing Date, there shall have been
furnished to the Underwriters, the opinion (which may be governed
by the Legal Opinion Accord of the ABA Section of Business Law
(1991)) of Haynes and Boone, L.L.P., counsel for the Company, dated
such Closing Date and addressed to the Underwriters, to the effect
that:
(i) The Company has all requisite corporate
power to execute, deliver and perform this Agreement.
This Agreement has been duly authorized by all requisite
corporate action necessary on behalf of the Company, duly
executed and delivered by the Company and is enforceable
against the Company, subject to the General
Qualifications.
(ii) The Company has all requisite corporate
power to execute, deliver and perform its obligations
under the Indenture. The Indenture has been duly
authorized by all requisite corporate action necessary on
behalf of the Company, has been duly executed and
delivered by the Company and is enforceable against the
Company, subject to the General Qualifications. The Notes
being delivered on the Closing Date have been duly
authorized, and, when executed, authenticated, issued and
delivered in accordance with the terms of the Indenture,
will be enforceable against the Company, subject to the
General Qualifications. The Indenture and the form of
Certificate representing the Notes conform in all
material respects, as to legal matters, to the
descriptions thereof contained in the Registration
Statement and the Prospectus. The Indenture complies in
all material respects with the Trust Indenture Act. The
Notes have been listed for trading on the New York Stock
Exchange, Inc.
(iii) The execution and delivery by the Company
of, and performance of its obligations in, this
Agreement, the Indenture and the Notes being delivered on
the Closing Date do not (a) violate the Company's or any
Material Subsidiary's
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<PAGE>
Constituent Documents, (b) breach, or result in a default
under, any existing obligation of the Company (or, as
applicable, the Material Subsidiaries) under the written
contracts listed on an exhibit to such opinion, or (c)
violate applicable provisions of statutory law or
regulation. Except for permits and similar
authorizations required under the Act, the Trust
Indenture Act and the securities or Blue Sky laws of
certain jurisdictions and except for permits and
authorizations which have been obtained and registrations
which have been effected, no consent, approval,
authorization, registration or order of, or filing with,
any court or governmental agency or body is required in
connection with the sale of the Notes by the Company.
(iv) The Company's authorized, issued and
outstanding capital stock is as disclosed in the
Prospectus. All of the issued shares of capital stock of
the Company have been duly authorized and validly issued
and are fully paid and non-assessable. To such counsel's
Actual Knowledge, except as disclosed in the Prospectus,
there are no contracts, agreements or understandings
between the Company and any person granting such person
the right to require the Company to file a registration
statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to
require the Company to include such securities in the
Registration Statement for the Notes (or any such right
has been effectively waived) and to such counsel's Actual
Knowledge, none of the issued shares of capital stock of
the Company, its predecessors or any Material Subsidiary
has been issued in violation of any preemptive rights of
shareholders, and no person or entity, including any
holder of outstanding shares of capital stock of the
Company has any preemptive or, to such counsel's Actual
Knowledge, other similar rights to subscribe for any of
the Notes. All of the shares of capital stock of each
Material Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and to such
counsel's Actual Knowledge are owned of record by the
Company and the Company has not received notice of any
adverse claim, except for security interests in a
majority of the present and future capital stock of all
the Material Subsidiaries granted by the Company pursuant
to the Revolving Loan Agreement dated as of September 29,
1995, among the Company, NationsBank of Texas, N.A. as
agent and the banks which are parties thereto from time
to time.
(v) To such counsel's Actual Knowledge, the
Company is not named as a party to any pending or overtly
threatened litigation, arbitration, claim or proceeding
that is material to the Company and its Subsidiaries
taken as a whole, except as disclosed on the Company's
Defensive Litigation/Counterclaim Report for the Fourth
Quarter 1995, and all attachments thereto. The
statements contained in the Prospectus under the captions
"Recent Developments," "Management's Discussion and
Analysis of Financial Condition and Results of Operations
-- Liquidity and Capital Resources," "Description of the
Notes" and "Description of Other Indebtedness," insofar
as they purport to summarize the provisions of statutes,
legal and governmental proceedings or contracts or other
documents are materially
17
<PAGE>
accurate and fairly present in all material respects the
information required to be shown.
(vi) The Registration Statement is effective
under the Act and the Indenture has been qualified under
the Trust Indenture Act. To such counsel's Actual
Knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceeding for that purpose has been instituted or
threatened by the Commission.
(vii) Each of the Company and the Material
Subsidiaries has been duly incorporated and is existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation with full corporate power
to own or lease its properties and conduct its business
as described in the Registration Statement and
Prospectus.
(viii) The Registration Statement and the
Prospectus and each amendment or supplement thereto
(other than the financial statements and related
schedules therein and other than the Form T-1, as to each
of which such counsel need express no opinion), as of
their respective effective or issue dates, complied as to
form in all material respects with the requirements of
the Act, the Rules and Regulations, the Exchange Act and
the rules and regulations promulgated thereunder.
(ix) The Company is not, and immediately after
the applicable Closing Date will not be, required to be
registered under the Investment Company Act of 1940, as
amended, as an "investment company," and, to the Actual
Knowledge of such counsel, is not a company "controlled"
by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(x) A Texas court or a Federal court applying
Texas law should give effect to the choice of Minnesota
law set forth in the Indenture with respect to general
issues of contract validity, enforcement and
interpretation and should not apply Texas usury laws to
the Notes.
Such counsel shall also advise the Underwriters that
although they do not assume any responsibility for, and cannot
guarantee the accuracy, completeness or fairness of, the statements
contained in the Registration Statement or the Prospectus, on the
basis of the information such counsel developed during the course
of preparing the Registration Statement and the Prospectus, which
involved attending conferences with officers of the Company, the
Company's accountants and other parties and a review of documents
specifically referred to or incorporated by reference in the
Registration Statement and Prospectus (although such documents
incorporated by reference were prepared and filed by the Company
without, in certain cases, such counsel's participation), and as a
result of such counsel's participation in such conferences and
review of such documents, but otherwise without independent check
or verification except as specified, such counsel has no reason to
believe that the Registration
18
<PAGE>
Statement, at the time the Registration Statement became effective,
or any further amendment thereto upon filing thereof (but excluding
the financial statements and supporting schedules and other
financial or statistical information or other scheduled data
included or incorporated by reference therein and the Form T-1, as
to each of which such counsel need express no comment), contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
further amendment or supplement thereto (but excluding the
financial statements and supporting schedules and other financial
or statistical information or other scheduled data included or
incorporated by reference therein and the Form T-1, as to each of
which such counsel need express no comment) contained or contains
an untrue statement of a material fact or omits or omitted to state
a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
(d) On each Closing Date, there shall have been
furnished to the Underwriters, the opinion (which may be governed
by the Legal Opinion Accord of the ABA Section of Business Law
(1991)) of L. Keith Blackwell, Esq., General Counsel for the
Company, dated such Closing Date and addressed to the Underwriters,
to the effect that
(i) the Company is duly qualified to transact
business as a foreign corporation and in good standing under
the laws of each other jurisdiction in which it owns or leases
material property, or conducts material business, so as to
require such qualification, except where the failure to so
qualify would not have a material adverse effect on the
financial position of the Company and its Subsidiaries, taken
as a whole.
(ii) Each of the United States and Canadian
Subsidiaries of the Company is duly qualified to transact
business as a foreign corporation and is in good standing under
the laws of each other United States and Canadian jurisdiction
in which it owns or leases material property, or conducts
material business, so as to require such qualification, except
where the failure to so qualify would not have a material
adverse effect on the financial position of the Company and its
Subsidiaries, taken as a whole.
(iii) Each sale of the Company's capital stock during
the period from December 13, 1992 through each Closing Date
was, at the time of each sale, registered or exempt from the
registration requirements of the Act and applicable state
securities or Blue Sky laws.
(iv) To such counsel's Actual Knowledge, neither the
Company nor any of the Subsidiaries has (a) breached or
otherwise violated any existing obligation of the Company under
any court order that names the Company as a party or
(b) violated applicable provisions of statutory law or
regulation, in either case where any such breach or violation
would have a material adverse effect on the financial position
of the Company and its Subsidiaries, taken as a whole.
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<PAGE>
(v) To such counsel's Actual Knowledge, (a) the
Company has not violated its Certificate of Incorporation or
Bylaws and (b) neither the Company nor any of the Material
Subsidiaries has breached or otherwise violated any existing
obligation under any material agreement to which the Company or
any Material Subsidiary is a party, in either case where such
breach or violation would have a material adverse effect on the
financial position of the Company and its Subsidiaries, taken
as a whole.
(vi) Except as disclosed in the Registration
Statement and the Prospectus, such counsel knows of no action,
suit, investigation or proceeding, governmental or otherwise,
pending or overtly threatened against the Company or any
Subsidiary, or involving the business or properties of the
Company or any Subsidiary with respect to the issuance and
sale of the Securities pursuant to this Agreement and the
Indenture or which is required to be described in the
Registration Statement or Prospectus that is not disclosed as
required. The agreements, contracts and exhibits and
amendments thereto filed by the Company under the Exchange Act
to date constitute all of the material contracts to which the
Company or any of its Subsidiaries is a party which could be,
but are not, breached or violated in connection with the
execution and delivery by the Company of, and performance of
its obligations in, this Agreement, the Indenture and the Notes
and the consummation of the transactions herein and therein
contemplated. Such counsel does not know of any contracts or
documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which are not described
or filed as required. The descriptions contained in the
Registration Statement and Prospectus of contracts and other
documents are accurate and fairly present the information
required to be shown. The statements contained in the
Registration Statement or the Prospectus to the extent such
statements relate to matters of law, descriptions of statutes,
legal or governmental proceedings, regulatory matters or other
legal matters or conclusions of law, fairly summarize such
matters.
(e) On each Closing Date, there shall have been
furnished to the Underwriters, such opinion or opinions from
Lindquist & Vennum P.L.L.P., counsel for the Underwriters, dated
such Closing Date and addressed to the Underwriters, with respect
to the formation of the Company, the validity of the Securities,
the Registration Statement, the Prospectus and other related
matters as the Underwriters reasonably may request, and such
counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(f) On each Closing Date the Underwriters shall have
received letters from Deloitte & Touche, LLP, dated such Closing
Date and addressed to the Underwriters, confirming that they are
independent public accountants within the meaning of the Act and
are in compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of
the Commission, and stating, as of the date of such letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior
to the date of such letter), the conclusions and findings
20
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of said firm with respect to the financial information and other
matters covered by its letter (as provided in Exhibit A hereto)
delivered to the Underwriters concurrently with the execution of
this Agreement, and the effect of the letter so to be delivered on
such Closing Date shall be to confirm the conclusions and findings
set forth in such prior letter.
(g) On each Closing Date, there shall have been
furnished to the Underwriters a certificate, dated such Closing
Date and addressed to the Underwriters, signed by the Chief
Executive Officer and by the Chief Financial Officer of the
Company, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, in all
material respects, as if made at and as of such Closing
Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such Closing
Date;
(ii) To the best of their knowledge, no stop
order or other order suspending the effectiveness of the
Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has
been issued, and, to the best of their knowledge, no
proceeding for that purpose has been instituted or is
contemplated by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have
carefully examined the Registration Statement and the
Prospectus, and any amendments thereof or supplements
thereto, and (A) such documents contain all statements
and information required to be included therein, the
Registration Statement, or any amendment thereof, does
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, and the Prospectus, as amended or
supplemented, does not include any untrue statement of
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,
(B) since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amended or supplemented prospectus which has
not been so set forth, (C) except as disclosed in the
Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement
and the Prospectus, neither the Company nor any
Subsidiary has incurred any material liabilities or
obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of
business, or declared or paid any dividends or made any
distribution of any kind with respect to its capital
stock, and except as disclosed in the Prospectus, there
has not been any change in the capital stock, or any
material change in the short-term or long-term debt, or
any issuance of options, warrants, convertible securities
or other rights to purchase the capital stock of the
Company or any Subsidiary, or any material adverse
change, or any development involving a prospective
material adverse change, in the general affairs,
condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of
operations of the Company and the Subsidiaries,
considered as a whole, and (D) except as stated in the
Registration Statement and the Prospectus, there is not
21
<PAGE>
pending, or, to the knowledge of the Company, threatened
or contemplated, any action, suit or proceeding to which
the Company or any Subsidiary is a party before or by any
court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse
change in the condition (financial or otherwise),
business, prospects or results of operations of the
Company and the Subsidiaries, considered as a whole.
(h) The Company shall have furnished to the
Underwriters and their counsel such additional documents,
certificates and evidence as the Underwriters or their counsel may
have reasonably requested.
All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters. The Company will
furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and other documents as the
Underwriters shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or
incorporated therein by reference, including the information deemed
to be a part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A, if applicable, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses
reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action;
provided, however, that neither the Company nor any Subsidiary
shall be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with written information furnished
to the Company by the Underwriters specifically for use in the
preparation thereof; provided further, however, that the Company
shall not be liable to any Underwriter in respect of any untrue
statement or alleged untrue statement contained in, or omission or
alleged omission from, any Preliminary Prospectus to the extent
that (i) the Prospectus did not contain such untrue statement or
alleged untrue statement or omission or alleged omission giving
rise to such loss, claim, damage, liability or action, (ii) the
Prospectus was not sent or given to the purchaser of the Notes in
question at or prior to the time at which the written confirmation
of the sale of Notes was sent or given to such person, and (iii)
the failure to
22
<PAGE>
deliver such Prospectus was not the result of the Company's
non-compliance with its obligations under Section 4(e) hereof.
(b) Each Underwriter will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus,
or any such amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by
such Underwriter, specifically for use in the preparation thereof,
and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating
or defending against any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from
any liability that it may have to any indemnified party otherwise
than under such subsection or unless and to the extent that the
indemnifying party is substantially prejudiced thereby. In case
any such action shall be brought against any indemnified party, and
it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, that if, in the sole judgment of the Underwriters, it is
advisable for the Underwriters to be represented as a group by
separate counsel, the Underwriters shall have the right to employ a
single counsel to represent all Underwriters who may be subject to
a liability arising from any claim in respect of which indemnity
may be sought by the Underwriters under paragraph (a) of this
Section 6, in which event the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party or
parties and remitted to the Underwriters for payment to such
counsel as such fees and expenses are incurred. An indemnifying
party shall not be obligated under any settlement agreement
relating to any action under this Section 6 to which it has not
agreed in writing.
23
<PAGE>
(d) If the indemnification provided for in this
Section 6 is unavailable or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in subsection (a) or (b) above,
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending against any action or
claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations
and not joint.
(e) The obligations of the Company or any Subsidiary
under this Section 6 shall be in addition to any liability which
the Company or any Subsidiary may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 6 shall be in
addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person
who, with his consent, is named in the Registration Statement as
about
24
<PAGE>
to become a director of the Company), to each officer of the Company
who has signed the Registration Statement and to each person, if any,
who controls the Company within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the
Underwriters and the Company (and any Subsidiary) contained in Section 6
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling
person thereof, or the Company or any of its officers, directors, or
controlling persons and shall survive delivery of, and payment for, the
Securities to and by the Underwriters hereunder.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter shall fail to take up and pay for
the principal amount of Firm Notes agreed by such Underwriter to be
purchased hereunder, upon tender of such Firm Notes in accordance
with the terms hereof, and the principal amount of Firm Notes not
purchased does not in either case aggregate more than 10% of the
aggregate principal amount of Firm Notes set forth in Schedule I
hereto, the remaining Underwriters shall be obligated, severally,
in proportion to the respective principal amount of Firm Notes
which they are obligated to purchase hereunder, to take up and pay
for the principal amount of Firm Notes that the withdrawing or
defaulting Underwriter agreed but failed to purchase.
(b) If any Underwriter shall fail to take up and pay
for the principal amount of Firm Notes agreed by such Underwriter
to be purchased hereunder, upon tender of such Firm Notes in
accordance with the terms hereof, and the principal amount of Firm
Notes not purchased aggregates more than 10% of the aggregate
principal amount of Firm Notes set forth in Schedule I hereto, and
arrangements for the purchase of such Firm Notes by other persons
reasonably satisfactory to the Company are not made within 36 hours
thereafter, this Agreement shall terminate. In the event of any
such termination the Company shall not be under any liability to
any Underwriter (except to the extent provided in Section 4(h) and
Section 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some material
reason permitted under this Agreement, to purchase the principal
amount of Firm Notes agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company (except to the
extent provided in Section 6 hereof). Nothing contained herein
shall relieve a defaulting Underwriter from liability for its
default.
If Firm Notes to which a default relates are to be
purchased by non-defaulting Underwriters or by any other party or
parties, the non-defaulting Underwriters or the Company shall have
the right to postpone the First Closing Date for not more than
seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well
as any other arrangements, may be effected. As used herein, the
term "Underwriter" includes any person substituted for an
Underwriter under this Section 8.
25
<PAGE>
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at
10:00 a.m., Minneapolis time, on the first business day following the
date hereof, or at such earlier time after the effective date of
the Registration Statement as the Underwriters in their discretion
shall first release the Securities for sale to the public. For the
purpose of this Section, the Securities shall be deemed to have
been released for sale to the public upon release by the
Underwriters of the publication of a newspaper advertisement
relating thereto or upon release by the Underwriters of telexes
offering the Securities for sale to securities dealers, whichever
shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, the Underwriters
or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except that the
provisions of Section 4(h) and Section 6 hereof shall at all times
be effective.
(b) The Underwriters shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any
time at or prior to the First Closing Date, and the option referred
to in Section 3(b), if exercised, may be canceled at any time prior
to the First Closing Date, if (i) the Company shall have failed,
refused or been unable, at or prior to such Closing Date, to
perform any agreement on its part to be performed hereunder, (ii)
any other condition of the Underwriters' obligations hereunder is
not fulfilled, (iii) trading on the New York Stock Exchange or the
American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required,
on the New York Stock Exchange or the American Stock Exchange, by
such Exchange or by order of the Commission or any other
governmental authority having jurisdiction, (v) a banking
moratorium shall have been declared by Federal, New York, Texas or
Minnesota authorities, or (vi) there has occurred any material
adverse change in the financial markets in the United States or an
outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration of war by Congress,
any other substantial national or international calamity or any
other event or occurrence of a similar character shall have
occurred since the execution of this Agreement that, in the
Underwriters' judgment, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 4(h)
and Section 6 hereof shall at all times be effective.
(c) If the Underwriters elect to prevent this
Agreement from becoming effective or to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by
the Underwriters by telephone or telegram, confirmed by letter. If
the Company elects to prevent this Agreement from becoming
effective, the Underwriters shall be notified by the Company by
telephone or telegram, confirmed by letter.
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements set
forth in the last paragraph of the cover page, in the last paragraph of page 3,
and under the caption "Underwriting" in any Preliminary Prospectus and in
the Prospectus constitute the written information furnished by or on behalf
of the Underwriters referred to in Section 2 and Section 6 hereof.
26
<PAGE>
11. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to the Underwriters
c/o Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402, Attn: Director of Corporate Finance, with a
copy to Patrick Delaney, Esq., Lindquist & Vennum P.L.L.P., 4200 IDS Center,
Minneapolis, MN 55402, except that notices given to an Underwriter pursuant
to Section 6 hereof shall be sent, if to Piper Jaffray Inc., to the address
listed above; if to J. C. Bradford & Co., to 330 Commerce Street, Nashville,
TN 37201, Attn: Director of Corporate Finance; and if to Morgan Keegan &
Company, Inc., to 50 North Front Street, 20th Floor, Memphis, TN 38103, Attn:
Director of Corporate Finance; if to the Company, shall be mailed,
telegraphed or delivered to it at 1845 Woodall Rodgers Freeway, Dallas, Texas
75201 Attention: Chief Executive Officer, with a copy to Michael M. Boone,
Esq., Haynes and Boone, L.L.P., 3100 NationsBank Plaza, 901 Main Street,
Dallas, Texas 75202. All notices given by telegram shall be promptly
confirmed by letter. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns and the controlling persons, officers
and directors referred to in Section 6. Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation any
legal or equitable remedy or claim under or in respect of this Agreement or
any provision herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the
Securities from any of the Underwriters.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
27
<PAGE>
Please sign and return to the Company the enclosed duplicates of
this letter whereupon this letter will become a binding agreement between the
Company and the Underwriters in accordance with its terms.
Very truly yours,
AMRESCO, INC.
By /s/ Robert H. Lutz, Jr.
---------------------------------
Its Chairman and CEO
-----------------------------
CONFIRMED
as of the date first
above mentioned
By: PIPER JAFFRAY INC.
By /s/ Joyce Nelson Schuette
--------------------------------
Managing Director
Acting on behalf of itself
and the other Underwriters
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF FIRM NOTES(1)
- ----------- ----------------
<S> <C>
Piper Jaffray Inc. . . . . . . . . . . . . . . . . . . . $25,000,000
J. C. Bradford & Co. . . . . . . . . . . . . . . . . . . 12,500,000
Morgan Keegan & Company, Inc.. . . . . . . . . . . . . . 12,500,000
-----------
Total . . . . . . . . . . . . . . $50,000,000
-----------
-----------
</TABLE>
____________
(1) The Underwriters may purchase up to an additional $7,500,000 in
aggregate principal amount of Notes, to the extent the option to
purchase Option Notes described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the
Agreement.
<PAGE>
EXHIBIT A
ACCOUNTANTS' LETTERS
1. A letter from Deloitte & Touche, LLP dated and delivered on
the date this Agreement is executed and a similar certificate or letter dated
and delivered on each Closing Date, confirming that they are independent
public accountants within the meaning of the Act and the published rules and
regulations thereunder, shall be issued to the Underwriters stating that:
(a) in their opinion, the consolidated financial statements
and schedules audited by them and included in the Prospectus and the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; the financial statements
of the Company as and for the nine month period ended September 30,
1995 (the "Latest Balance Sheet Date") were reviewed by them in
accordance with the standards established by the American Institute of
Certified Public Accountants and based upon their review they are not
aware of any material modifications that should be made to such
financial statements for them to be in conformity with generally
accepted accounting principles, and such financial statements comply
as to form in all material respects with the applicable accounting
requirements of the Act and the applicable rules and regulations
thereunder;
(c) on the basis of a limited review of unaudited consolidated
financial statements, including a reading of the latest available
financial statements, a reading of the minutes of the meetings of the
Board of Directors of the Company, and discussions with officials of
the Company responsible for financial and accounting matters as to
transactions and events subsequent to the Latest Balance Sheet Date,
and such other inquiries and procedures as they may specify, nothing
has come to their attention which, in their judgment, would indicate,
(i) that the unaudited consolidated financial
statements of the Company included or incorporated by reference
in the Registration Statement and Prospectus do not comply in
form in all material respects with the applicable accounting
requirements of the Act and of the related published rules and
regulations, or that such unaudited consolidated financial
information contained or incorporated by reference in the
Registration Statement was not prepared in conformity with
generally accepted accounting principles applied on a basis
substantially consistent, in all material respects, with those
followed in the preparation of the audited financial statements
of the Company included therein;
(ii) at the date of the latest balance sheet read by
them and at a subsequent specified date not more than five
business days prior to the date of such letter there was any
decrease in the common stock or increase in long-term debt of
the Company as compared with amounts shown in the unaudited
consolidated balance sheet dated as of the Latest Balance Sheet
Date, included in the Registration Statement, except for
changes which the Registration Statement discloses have
occurred or may occur;
<PAGE>
(iii) at the date of the latest balance sheet read by
them and at a subsequent specified date not more than five
business days prior to the date of such letter there were any
decreases, as compared with amounts shown in the balance sheet
dated as of the Latest Balance Sheet Date included in the
Registration Statement, in total assets, stockholders' equity
of the Company, except for decreases which the Registration
Statement discloses have occurred or may occur or which are
described in such letter;
(iv) for the period from the Latest Balance Sheet
Date to the date of the latest statement of operations read by
them there were any decreases, as compared with the
corresponding period of the preceding year, in revenues or the
total or per share amounts of net income of the Company, except
for decreases which the Registration Statement discloses have
occurred or may occur or which are described in such letter;
(v) for the period from the date of the latest
statement of operations to a subsequent specified date not more
than five business days prior to the date of such letter, that
certain conclusions described in such letter were not correct,
except as otherwise described in the Registration Statement or
such letter; and
(d) they have compared specific dollar amounts, numbers
of shares, and other financial information pertaining to the Company
set forth in the Registration Statement, which have been specified by
the Underwriters prior to the date of this Agreement, to the extent
that such amounts, numbers and information may be derived from the
general accounting records of the Company, and excluding any questions
requiring any interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an
audit in accordance with generally accepted auditing standards) set
forth in the letter, and found them to be in agreement.
<PAGE>
CONFORMED COPY
AMRESCO, INC.
AS ISSUER
TO
BANK ONE, COLUMBUS, N.A.
AS TRUSTEE
INDENTURE
JANUARY 15, 1996
10% SENIOR SUBORDINATED NOTES DUE 2003
<PAGE>
AMRESCO, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED
AND INDENTURE, DATED AS OF JANUARY 15, 1996
Trust Indenture Act Indenture
Section Section
Section 310 (a)(1) . . . . . . . . . . . . . . . . . 608
Section 310 (a)(2) . . . . . . . . . . . . . . . . . 608
Section 310 (a)(3) . . . . . . . . . . . . . . . . . Inapplicable
Section 310 (a)(4) . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . 605
. . . . . . . . . . . . . . . . . . 609
Section 311 . . . . . . . . . . . . . . . . . . 605
Section 312 (a) . . . . . . . . . . . . . . . . . . 701
. . . . . . . . . . . . . . . . . . 702
(b) . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . 702
Section 313 (a) . . . . . . . . . . . . . . . . . . 703
(b)(1). . . . . . . . . . . . . . . . . . Inapplicable
(b)(2). . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . 703
Section 314 (a) . . . . . . . . . . . . . . . . . . 704
. . . . . . . . . . . . . . . . . . 1012
(b) . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1). . . . . . . . . . . . . . . . . . 102
(c)(2). . . . . . . . . . . . . . . . . . 102
(c)(3). . . . . . . . . . . . . . . . . . Inapplicable
(d) . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . 601
. . . . . . . . . . . . . . . . . . 603
(b) . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . 601
. . . . . . . . . . . . . . . . . . 603
(e) . . . . . . . . . . . . . . . . . . 603
. . . . . . . . . . . . . . . . . . 607
Section 316 (a)(1)(A) . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . 513
ii
<PAGE>
(a)(2). . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . 104
Section 317 (a)(1). . . . . . . . . . . . . . . . . . 503
(a)(2). . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . 1003
Section 318 (a) . . . . . . . . . . . . . . . . . . 108
______________________________________________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iii
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ACQUIRED INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . 2
ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AUTHENTICATING AGENT. . . . . . . . . . . . . . . . . . . . . . . 2
AUTHORIZED NEWSPAPER. . . . . . . . . . . . . . . . . . . . . . . 2
BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . 3
BOARD RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . 3
BUSINESS DAY. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CAPITALIZED LEASE OBLIGATION. . . . . . . . . . . . . . . . . . . 3
COMMISSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
COMPANY REQUEST AND COMPANY ORDER . . . . . . . . . . . . . . . . 3
CONSOLIDATED. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CONSOLIDATED CAPITALIZATION . . . . . . . . . . . . . . . . . . . 3
CONSOLIDATED EBITDA . . . . . . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED INTEREST EXPENSE . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED NET INCOME . . . . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED NET WORTH. . . . . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . 4
CORPORATE TRUST OFFICE. . . . . . . . . . . . . . . . . . . . . . 4
CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DEFAULT NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . 4
DEFAULTED INTEREST. . . . . . . . . . . . . . . . . . . . . . . . 4
DEPOSITORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 5
EXCLUSIVE POWER . . . . . . . . . . . . . . . . . . . . . . . . . 5
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GOVERNMENT OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . 5
HOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INDEBTEDNESS FOR MONEY BORROWED . . . . . . . . . . . . . . . . . 5
INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . . . . . 6
INITIAL INTEREST ACCRUAL DATE . . . . . . . . . . . . . . . . . . 6
INTEREST COVERAGE RATIO . . . . . . . . . . . . . . . . . . . . . 6
INTEREST PAYMENT DATE . . . . . . . . . . . . . . . . . . . . . . 6
ISSUE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
JUNIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . 6
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LEGAL HOLIDAY . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MATERIAL SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . 7
MATURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MAXIMUM ANNUAL REPAYMENT AMOUNT . . . . . . . . . . . . . . . . . 7
MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
NONRECOURSE INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . 7
NOTE OR NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
NOTE REGISTER AND NOTE REGISTRAR. . . . . . . . . . . . . . . . . 8
OFFICE OR AGENCY. . . . . . . . . . . . . . . . . . . . . . . . . 8
OFFICERS' CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . 8
OPINION OF COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . 8
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PAYING AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PERMITTED PAYMENTs. . . . . . . . . . . . . . . . . . . . . . . . 9
PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PLACE OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 9
PREDECESSOR NOTE. . . . . . . . . . . . . . . . . . . . . . . . . 9
REDEMPTION DATE . . . . . . . . . . . . . . . . . . . . . . . . . 9
REDEMPTION PRICE. . . . . . . . . . . . . . . . . . . . . . . . . 9
REGULAR RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . 9
REPAYMENT DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 9
REPAYMENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . .10
RESPONSIBLE OFFICER . . . . . . . . . . . . . . . . . . . . . . .10
RESTRICTED PAYMENT. . . . . . . . . . . . . . . . . . . . . . . .10
SENIOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . .10
SENIOR EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . .10
SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . .10
SENIOR RECOURSE INDEBTEDNESS. . . . . . . . . . . . . . . . . . .10
SPECIAL RECORD DATE . . . . . . . . . . . . . . . . . . . . . . .10
STATED MATURITY . . . . . . . . . . . . . . . . . . . . . . . . .10
SUBORDINATED INDEBTEDNESS . . . . . . . . . . . . . . . . . . . .10
SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . .10
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . .11
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
UNITED STATES . . . . . . . . . . . . . . . . . . . . . . . . . .11
VICE PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . .11
VOTING STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS.. . . . . . . . . .11
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.. . . . . . . . .12
Section 104. ACTS OF HOLDERS. . . . . . . . . . . . . . . . . . . . .12
Section 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.. . . . . . . . . .14
Section 106. NOTICE TO HOLDERS OF NOTES; WAIVER.. . . . . . . . . . .14
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Section 107. LANGUAGE OF NOTICES. . . . . . . . . . . . . . . . . . .15
Section 108. CONFLICT WITH TRUST INDENTURE ACT. . . . . . . . . . . .15
Section 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.. . . . . . . .15
Section 110. SUCCESSORS AND ASSIGNS.. . . . . . . . . . . . . . . . .15
Section 111. SEPARABILITY CLAUSE. . . . . . . . . . . . . . . . . . .15
Section 112. BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . .16
Section 113. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . .16
Section 114. LEGAL HOLIDAYS.. . . . . . . . . . . . . . . . . . . . .16
Section 115. SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . .16
Section 116. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . .16
ARTICLE TWO - FORM OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 201. FORMS GENERALLY. . . . . . . . . . . . . . . . . . . . .17
Section 202. FORM OF FACE OF NOTE.. . . . . . . . . . . . . . . . . .18
Section 203. FORM OF REVERSE OF NOTE. . . . . . . . . . . . . . . . .20
Section 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. . . . .23
Section 205. NOTES IN GLOBAL FORM.. . . . . . . . . . . . . . . . . .23
ARTICLE THREE - THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 301. TITLE AND TERMS. . . . . . . . . . . . . . . . . . . . .24
Section 302. CURRENCY; DENOMINATIONS. . . . . . . . . . . . . . . . .24
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING . . . . .25
Section 304. TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . .26
Section 305. REGISTRATION, TRANSFER AND EXCHANGE. . . . . . . . . . .26
Section 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. . . . . . .28
Section 307. PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED. . . .29
Section 308. PERSONS DEEMED OWNERS. . . . . . . . . . . . . . . . . .30
Section 309. CANCELLATION.. . . . . . . . . . . . . . . . . . . . . .31
Section 310. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. . . . . .31
Section 311. COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . .31
Section 312. MAXIMUM INTEREST RATE. . . . . . . . . . . . . . . . . .32
ARTICLE FOUR - SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . .32
Section 401. SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . .32
Section 402. APPLICATION OF TRUST MONEY.. . . . . . . . . . . . . . .33
ARTICLE FIVE - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 501. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . .33
Section 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT . . .35
Section 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . .36
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.. . . . . . . . . . . .37
Section 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES .38
Section 506. APPLICATION OF MONEY COLLECTED.. . . . . . . . . . . . .38
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Section 507. LIMITATIONS ON SUITS.. . . . . . . . . . . . . . . . . .39
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST. . . . . . . . . . . . . . . . . . . . . . . .40
Section 509. RESTORATION OF RIGHTS AND REMEDIES.. . . . . . . . . . .40
Section 510. RIGHTS AND REMEDIES CUMULATIVE.. . . . . . . . . . . . .40
Section 511. DELAY OR OMISSION NOT WAIVER.. . . . . . . . . . . . . .40
Section 512. CONTROL BY HOLDERS OF NOTES. . . . . . . . . . . . . . .41
Section 513. WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . .41
Section 514. UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . .41
Section 515. WAIVER OF STAY OR EXTENSION LAWS.. . . . . . . . . . . .42
ARTICLE SIX - THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 601. CERTAIN DUTIES AND RESPONSIBILITIES. . . . . . . . . . .42
Section 602. NOTICE OF DEFAULTS.. . . . . . . . . . . . . . . . . . .43
Section 603. CERTAIN RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . .44
Section 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. . . .45
Section 605. MAY HOLD NOTES.. . . . . . . . . . . . . . . . . . . . .45
Section 606. MONEY HELD IN TRUST. . . . . . . . . . . . . . . . . . .45
Section 607. COMPENSATION AND REIMBURSEMENT.. . . . . . . . . . . . .45
Section 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. . . . . . . . .46
Section 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. . . .47
Section 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.. . . . . . . . .48
Section 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS . . . . . . . . . . . . . . . . . . . . . . .48
Section 612. APPOINTMENT OF AUTHENTICATING AGENT. . . . . . . . . . .49
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . .50
Section 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS . . . . . . . . . . . . . . . . . . . . . . . .50
Section 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS .51
Section 703. REPORTS BY TRUSTEE.. . . . . . . . . . . . . . . . . . .51
Section 704. REPORTS BY COMPANY.. . . . . . . . . . . . . . . . . . .51
ARTICLE EIGHT - CONSOLIDATION, MERGER AND SALES . . . . . . . . . . . . . . .52
Section 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.. .52
Section 802. SUCCESSOR PERSON SUBSTITUTED FOR COMPANY.. . . . . . . .53
ARTICLE NINE - SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . .54
Section 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.. . .54
Section 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. . . . .54
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES.. . . . . . . . . .55
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES. . . . . . . . . . . .56
Section 905. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. . . . . .56
Section 906. EFFECT ON SENIOR INDEBTEDNESS. . . . . . . . . . . . . .56
Section 907. RECORD DATE. . . . . . . . . . . . . . . . . . . . . . .56
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ARTICLE TEN - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Section 1001. PAYMENT OF PRINCIPAL AND INTEREST. . . . . . . . . . . .57
Section 1002. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . .57
Section 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. . . . . . .57
Section 1004. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . .58
Section 1005. MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . .59
Section 1006. RESTRICTIONS ON DIVIDENDS, REDEMPTIONS AND OTHER
PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . .59
Section 1007. LIMITATION ON INDEBTEDNESS FOR MONEY BORROWED. . . . . .60
Section 1008. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . .60
Section 1009. PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . .61
Section 1010. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . .61
Section 1011. STATEMENT BY OFFICERS AS TO DEFAULT. . . . . . . . . . .61
Section 1012. WAIVER OF CERTAIN COVENANTS. . . . . . . . . . . . . . .62
Section 1013. LIMITATION ON RANKING OF FUTURE INDEBTEDNESS . . . . . .62
Section 1014. LIMITATIONS ON RESTRICTING SUBSIDIARY DIVIDENDS. . . . .62
Section 1015. LIMITATION ON TRANSACTIONS WITH AFFILIATES . . . . . . .63
Section 1016. MINIMUM INTEREST COVERAGE RATIO. . . . . . . . . . . . .63
Section 1017. EXCEPTIONS TO COVENANTS. . . . . . . . . . . . . . . . .64
ARTICLE ELEVEN - REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . .64
Section 1101. RIGHT OF REDEMPTION. . . . . . . . . . . . . . . . . . .64
Section 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. . . . . . . . . .64
Section 1103. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.. . . . . .64
Section 1104. NOTICE OF REDEMPTION.. . . . . . . . . . . . . . . . . .65
Section 1105. DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . .66
Section 1106. NOTES PAYABLE ON REDEMPTION DATE.. . . . . . . . . . . .66
Section 1107. NOTES REDEEMED IN PART.. . . . . . . . . . . . . . . . .66
ARTICLE TWELVE - REPAYMENT AT THE OPTION OF HOLDERS . . . . . . . . . . . . .67
Section 1201. REPAYMENT OPTION UPON DEATH OF HOLDER. . . . . . . . . .67
Section 1202. DEPOSIT OF REPAYMENT PRICE.. . . . . . . . . . . . . . .68
Section 1203. NOTES PAYABLE ON REPAYMENT DATE. . . . . . . . . . . . .68
Section 1204. NOTES REPAID IN PART.. . . . . . . . . . . . . . . . . .69
ARTICLE THIRTEEN - SUBORDINATION OF NOTES . . . . . . . . . . . . . . . . . .69
Section 1301. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS. . . . . . . .69
Section 1302. SUBROGATION. . . . . . . . . . . . . . . . . . . . . . .73
Section 1303. OBLIGATION OF COMPANY UNCONDITIONAL. . . . . . . . . . .74
Section 1304. PAYMENTS ON NOTES PERMITTED. . . . . . . . . . . . . . .74
Section 1305. EFFECTUATION OF SUBORDINATION BY TRUSTEE.. . . . . . . .74
Section 1306. NOTICE TO TRUSTEE AND KNOWLEDGE OF TRUSTEE.. . . . . . .74
Section 1307. TRUSTEE MAY HOLD SENIOR INDEBTEDNESS.. . . . . . . . . .75
Section 1308. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED. .75
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ARTICLE FOURTEEN - RIGHT TO REQUIRE REPURCHASE . . . . . . . . . . . . . . .75
Section 1401. RIGHT TO REQUIRE REPURCHASE. . . . . . . . . . . . . . .75
Section 1402. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT. . . . . .76
Section 1403. DEPOSIT OF REPURCHASE PRICE. . . . . . . . . . . . . . .77
Section 1404. NOTES NOT REPURCHASED ON REPURCHASE DATE . . . . . . . .77
Section 1405. NOTES REPURCHASED IN PART. . . . . . . . . . . . . . . .77
Section 1406. PRIORITY OF REPURCHASE RIGHTS. . . . . . . . . . . . . .77
Section 1407. DEFINITION OF REPURCHASE EVENT . . . . . . . . . . . . .77
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INDENTURE, dated as of January 15, 1996 (the "Indenture"), between
AMRESCO, INC., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter called the "Company"), having executive
offices located at 1845 Woodall Rodgers Freeway, Suite 1700, Dallas, Texas
75201 and Bank One, Columbus, N.A., a national banking association duly
organized and existing under the laws of United States (hereinafter called
the "Trustee"), having its principal corporate trust office at 100 East Broad
Street, Columbus, Ohio 43215.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 10% Senior Subordinated Notes
due 2003 (hereinafter called the "Notes"), to be issued in such amount and to
have such provisions as are hereinafter set forth. All things necessary to
make this Indenture a valid agreement of the Company, in accordance with its
terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder that are required to be part of
this Indenture and, to the extent applicable, shall be governed by such
provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders (as hereinafter defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders
from time to time of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
Except as otherwise expressly provided in this Indenture or unless
the context otherwise requires, for all purposes of this Indenture:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act (as hereinafter defined), either directly or by
reference therein, have the meanings assigned to them therein;
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(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with United States
generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board in
effect from time to time ("GAAP") and, except as otherwise herein
expressly provided, the term "GAAP" with respect to any computation
required or permitted hereunder shall mean GAAP at the date of such
computation;
(4) the words "herein", "hereof", "hereto" and
"hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(5) the word "or" is always used inclusively (for
example, the phrase "A or B" means "A or B or both", not "either A
or B but not both").
Certain terms used principally in certain Articles hereof are
defined in those Articles.
"ACQUIRED INDEBTEDNESS" means indebtedness of a Person existing at
the time such Person becomes a Subsidiary of the Company or assumed in
connection with the acquisition by the Company or a Subsidiary of the Company
of assets from such Person, and not incurred in connection with, or in
anticipation of, such Person becoming a Subsidiary of the Company or such
acquisition.
"ACT", when used with respect to any Holder, has the meaning
specified in Section 104.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee
pursuant to Section 612 to act on behalf of the Trustee to authenticate Notes.
"AUTHORIZED NEWSPAPER" means a newspaper, in an official language of
the place of publication or in the English language, customarily published on
each day that is a Business Day in the place of publication, whether or not
published on days that are Legal Holidays in the place of publication, and of
general circulation in each place in connection with which the term is used
or in the financial community of each such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in
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different newspapers in the same city meeting the foregoing requirements and
in each case on any day that is a Business Day in the place of publication.
"BOARD OF DIRECTORS" means the board of directors of the Company or
any duly authorized committee of that board.
"BOARD RESOLUTION" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification and delivered to the Trustee.
"BUSINESS DAY", with respect to any Place of Payment or other
location, means each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a Legal Holiday in such Place of Payment or other location.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal property which
obligations are required to be classified and accounted for as capital lease
obligations on a balance sheet of such Person under GAAP and, for purposes of
this Indenture, the amount of such obligations at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934
or, if at any time after the execution of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, a written
request or order, as the case may be, signed in the name of the Company by
the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive
Officer, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, or by
another officer of the Company duly authorized to sign by a Board Resolution,
and delivered to the Trustee.
"CONSOLIDATED" when used in conjunction with any other defined term
means the aggregate amount of the items included within the defined term of
the Company on a consolidated basis, eliminating inter-company items.
"CONSOLIDATED CAPITALIZATION" means Subordinated Indebtedness plus
Consolidated Net Worth.
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"CONSOLIDATED EBITDA" means, for any period, determined in
accordance with GAAP on a consolidated basis for the Company and its
Subsidiaries, the sum of Consolidated Net Income before taxes and
non-recurring gains or losses, plus depreciation, plus amortization, plus
interest expense, each as deducted in determining such consolidated net
income before taxes.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense which is required to be shown as such on the financial statements of
the Company and its Subsidiaries, on a consolidated basis, prepared in
accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the amount of
consolidated net income (loss) of the Company determined in accordance with
GAAP; PROVIDED, HOWEVER, that there shall not be included in Consolidated Net
Income (1) any net income (loss) of a Subsidiary for any period during which
it was not a Consolidated Subsidiary or (2) any net income (loss) of
businesses, properties or assets acquired or disposed of (by way of merger,
consolidation, purchase, sale or otherwise) by the Company or any Subsidiary
for any period prior to the acquisition thereof or subsequent to the
disposition thereof.
"CONSOLIDATED NET WORTH" means the excess, as determined in
accordance with GAAP, of (1) the assets of the Company and its Consolidated
Subsidiaries over (2) the liabilities of the Company and its Consolidated
Subsidiaries; PROVIDED, HOWEVER, that any write-up in the book value of any
assets owned subsequent to the date of this Indenture (other than a write-up
required for assets acquired in connection with the purchase of a Person or
business and taken at the time of such acquisition) shall not be taken into
account.
"CONSOLIDATED SUBSIDIARY" means a Subsidiary of the Company the
financial statements of which are consolidated with the financial statements
of the Company.
"CORPORATE TRUST OFFICE" means the principal corporate trust office
of the Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of original execution of this
Indenture is located at 100 East Broad Street, Columbus, Ohio 43215.
"CORPORATION" includes corporations, associations, companies, joint
stock companies, limited liability companies or business trusts.
"DEFAULT NOTICE" has the meaning specified in Section 1301.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DEPOSITORY" means, with respect to any Note issued in the form of
one or more global Notes, the Person designated as Depository by the Company
in or pursuant to this Indenture, which Person must be, to the extent
required by applicable law or regulation, a clearing agency registered under
the Securities Exchange Act of 1934, as amended, and any successor to such
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Person. If at any time there is more than one such Person, "Depository"
shall mean, with respect to any Notes, the qualifying entity which has been
appointed with respect to such Notes.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCLUSIVE POWER" has the meaning specified in Section 1301.
"GAAP" has the meaning specified in Section 101(3).
"GOVERNMENT OBLIGATIONS" means direct obligations of the United
States of America, or any Person controlled or supervised by and acting as an
agency or instrumentality of such government, in each case where the payment
or payments thereunder are unconditionally guaranteed as a full faith and
credit obligation by such government and which are not callable or redeemable
at the option of the issuer or issuers thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest
on or principal of or other amount with respect to any such Government
Obligation held by such custodian for the account of the holder of a
depository receipt, PROVIDED that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder
of such depository receipt from any amount received by the custodian in
respect of the Government Obligation or the specific payment of interest on
or principal of or other amount with respect to the Government Obligation
evidenced by such depository receipt.
"HOLDER", when used with respect to the Notes, means the Person in
whose name such Note is registered in the Note Register.
"INDEBTEDNESS FOR MONEY BORROWED" means any of the following
obligations of the Company or any Subsidiary which by its terms matures at,
or is extendable or renewable at the sole option of the obligor without
requiring the consent of the obligee to, a date more than 360 days after the
date of the creation or incurrence of such obligation: (1) any obligations,
contingent or otherwise, for borrowed money or for the deferred purchase
price of property, assets, securities or services (including, without
limitation, any interest accruing subsequent to an event of default), (2) all
obligations (including the Notes) evidenced by bonds, notes, debentures or
other similar instruments, (3) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), except any such obligation that constitutes a trade payable
and an accrued liability arising in the ordinary course of business, if and
to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet prepared in accordance with GAAP, (4) all Capitalized
Lease Obligations, (5) liabilities of the Company actually due and payable
under bankers acceptances and letters of credit, (6) all indebtedness of the
type referred to in Clause (1), (2), (3), (4) or (5) above secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien upon or
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security interest in property of the Company or any Subsidiary (including,
without limitation, accounts and contract rights), even though the Company or
any Subsidiary has not assumed or become liable for the payment of such
indebtedness, and (7) any guarantee or endorsement (other than for collection
or deposit in the ordinary course of business) or discount with recourse of,
or other agreement, contingent or otherwise, to purchase, repurchase, or
otherwise acquire, to supply, or advance funds or become liable with respect
to, any indebtedness or any obligation of the type referred to in any of the
foregoing Clauses (1) through (6), regardless of whether such obligation
would appear on a balance sheet.
"INDENTURE" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"INDEPENDENT PUBLIC ACCOUNTANTS" means a nationally recognized firm
of accountants that, with respect to the Company, are independent public
accountants within the meaning of the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder, who may
be the independent public accountants regularly retained by the Company or
who may be other independent public accountants. Such accountants or firm
shall be entitled to rely upon any Opinion of Counsel as to the
interpretation of any legal matters relating to the Indenture or certificates
required to be provided hereunder.
"INITIAL INTEREST ACCRUAL DATE" as to any Note means the date from
which interest shall begin to accrue in connection with the original issuance
of such Note, which shall be the date as of which such Note originally issued
by the Company to the initial purchaser thereof shall be dated, which shall
be the date upon which it was originally sold to such initial purchaser as
designated by the Company Order requesting authentication and delivery
thereof.
"INTEREST COVERAGE RATIO" means, for any date of determination, the
ratio of (1) Consolidated EBITDA for the immediately preceding twelve
calendar months to (2) Consolidated Interest Expense for the immediately
preceding twelve calendar months.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment
of interest on the Notes.
"ISSUE DATE" means the date on which the Notes are originally issued
in accordance with the terms of this Indenture.
"JUNIOR INDEBTEDNESS" means the principal amount of, and interest
on, any Indebtedness for Money Borrowed, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, PROVIDED that in the instrument
creating or evidencing such Indebtedness for Money Borrowed or pursuant to
which such Indebtedness for Money Borrowed is outstanding it is provided that
(1) such indebtedness is junior in right of payment to the Notes; (2) no
payments with respect to such indebtedness may be made at any time that an
Event of Default shall have
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occurred and be continuing and (3) no payments other than the payment of
interest may be made with respect to such indebtedness at any time the Notes
are Outstanding; PROVIDED FURTHER that the Company's 8% Convertible
Subordinated Debentures due 2005, in the current aggregate outstanding
principal amount of $45,000,000, shall be considered "Junior Indebtedness"
and shall be subordinate to the Notes in right of payment and in rights upon
liquidation.
"LEGAL HOLIDAY" with respect to any Place of Payment or other
location, means a Saturday, a Sunday or a day on which banking institutions
or trust companies in such Place of Payment or other location are not
authorized or obligated to be open.
"MATERIAL SUBSIDIARY" means Holliday Fenoglio, Inc., AMRESCO
Management, Inc., AMRESCO Residential Mortgage Corporation, AMRESCO Advisors,
Inc., AMRESCO Residential Credit Corporation, AMRESCO Capital Corporation,
AMRESCO New England, Inc., Oak Cliff Financial, Inc. and any other Subsidiary
whose assets or revenues comprise at least five percent (5%) of the assets or
revenues of the Company and the Subsidiaries on a consolidated basis as of
the end of, or for the, Company's most recently completed fiscal quarter, as
determined from time to time.
"MATURITY" means the date on which the principal of the Notes or an
installment of principal becomes due and payable as provided in this
Indenture, whether at the Stated Maturity or by declaration of acceleration,
notice of redemption, notice of option to elect repayment or otherwise, and
includes any Redemption Date.
"MAXIMUM ANNUAL REPAYMENT AMOUNT" means $300,000.
"MONEY", with respect to any payment, deposit or other transfer
pursuant to or contemplated by the terms hereof, means United States dollars
or other equivalent unit of legal tender for payment of public or private
debts in the United States of America.
"NONRECOURSE INDEBTEDNESS" means Indebtedness for Money Borrowed of
the Company or any of its Subsidiaries that is (A) (i) specifically advanced
to finance the acquisition of assets classified on the Company's balance
sheet as "assets held for sale" and (ii) either (a) secured by the assets to
which such indebtedness relates without recourse to the Company or any of its
Subsidiaries or (b) issued under a loan agreement that requires each advance
to be repaid upon sale of the assets to which such advance specifically
relates within no more than one (1) year from the date of such advance or (B)
advanced to a Subsidiary or group of Subsidiaries formed for the sole purpose
of acquiring or holding a portfolio of assets (i) against which a loan is
obtained that is made without recourse to, and with no cross-collaterization
against the assets of, the Company or any other Subsidiary, and (ii) upon
complete or partial liquidation of which the loan must be correspondingly
completely or partially repaid, as the case may be .
"NOTE" or "NOTES" means any note or notes, as the case may be,
authenticated and delivered under this Indenture.
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"NOTE REGISTER" AND "NOTE REGISTRAR" have the respective meanings
specified in Section 305.
"OFFICE OR AGENCY" means an office or agency of the Company
maintained or designated in a Place of Payment for the Notes pursuant to
Section 1002 or any other office or agency of the Company maintained or
designated for, the payment or surrender of the Notes pursuant to Section
1002 or, to the extent designated or required by Section 1002 in lieu of such
office or agency, the Corporate Trust Office of the Trustee.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, that complies with
the requirements of Section 314(e) of the Trust Indenture Act and is
delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
an employee of or counsel for the Company or other counsel who shall be
reasonably acceptable to the Trustee, that complies with the requirements of
Section 314 (e) of the Trust Indenture Act.
"OUTSTANDING", when used with respect to any Notes, means, as of the
date of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(1) any Note theretofore canceled by the Trustee or the Note
Registrar or delivered to the Trustee or the Note Registrar
for cancellation;
(2) any Note or portion thereof for whose payment at the Maturity
thereof Money in the necessary amount has been theretofore
deposited pursuant hereto with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of the Notes,
PROVIDED that, if the Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(3) any Note with respect to which the Company has effected
defeasance pursuant to Clauses (1)(b) and (3) of Section 401
hereof; and
(4) any Note which has been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture,
unless there shall have been presented to the Trustee proof
satisfactory to it that such Note is held by a bona fide
purchaser in whose hands such Note is a valid obligation of
the Company;
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PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in making any such determination or relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes which
the Trustee knows to be so owned shall be so disregarded. Notes so owned
which shall have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee (a) the pledgee's
right so to act with respect to such Notes and (b) that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the
Company or such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or interest on any Note on behalf of the Company.
"PERMITTED PAYMENTS" has the meaning specified in Section 1301.
"PERSON" means any individual, Corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" has the meaning set forth in Section 301.
"PREDECESSOR NOTE" of a Note means every previous Note evidencing
all or a portion of the same debt as that evidenced by such particular Note;
and, for the purposes of this definition, any Note authenticated and
delivered under Section 306 in exchange for or in lieu of a lost, destroyed,
mutilated or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed, mutilated or stolen Note.
"REDEMPTION DATE", with respect to any Note or portion thereof to be
redeemed, means the date fixed for such redemption pursuant to Article Eleven
of this Indenture.
"REDEMPTION PRICE", with respect to any Note or portion thereof to
be redeemed, means the price at which it is to be redeemed pursuant to
Article Eleven of this Indenture.
"REGULAR RECORD DATE" for the interest payable on any Note on any
Interest Payment Date therefor means the date, if any, specified in or
pursuant to this Indenture as the "Regular Record Date".
"REPAYMENT DATE", with respect to any Note or portion thereof to be
repaid pursuant to Article Twelve, means the date fixed for such repayment
pursuant to Article Twelve of this Indenture.
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"REPAYMENT PRICE", with respect to any Note or portion thereof to be
repaid pursuant to Article Twelve, means the price at which it is to be
repaid pursuant to Article Twelve of this Indenture.
"RESPONSIBLE OFFICER" means any officer of the Trustee at its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"RESTRICTED PAYMENT" has the meaning specified in Section 1006.
"SENIOR AGENT" has the meaning specified in Section 1301.
"SENIOR EVENT OF DEFAULT" has the meaning specified in Section 1301.
"SENIOR INDEBTEDNESS" means the principal amount of, and interest on
and all other amounts due on or in connection with (1) any Indebtedness for
Money Borrowed, whether now outstanding or hereafter created, incurred,
assumed or guaranteed, unless in the instrument creating or evidencing such
Indebtedness for Money Borrowed or pursuant to which such Indebtedness for
Money Borrowed is outstanding it is provided that such indebtedness is
subordinate in right of payment or in rights upon liquidation to any other
Indebtedness for Money Borrowed and (2) renewals, extensions and refundings
of any such indebtedness.
"SENIOR RECOURSE INDEBTEDNESS" means Senior Indebtedness of the
Company and its Subsidiaries, on a consolidated basis, minus Nonrecourse
Indebtedness of the Company and its Subsidiaries, on a consolidated basis.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
any Note means a date fixed by the Trustee pursuant to Section 307.
"STATED MATURITY" with respect to any Note or any installment of
principal thereof or interest thereon means the date established by this
Indenture as the fixed date on which the principal of such Note or such
installment of principal or interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means all Indebtedness for Money
Borrowed except Senior Indebtedness.
"SUBSIDIARY" means any Corporation of which at the time of
determination the Company or one or more Subsidiaries owns or controls
directly or indirectly more than 50% of the shares of Voting Stock;
"TRANSACTION" has the meaning specified in Section 1015.
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"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean each Person who is then a Trustee hereunder.
"UNITED STATES", except as otherwise provided herein, means the
United States of America (including the states thereof and the District of
Columbia), its territories and possessions and other areas subject to its
jurisdiction.
"VICE PRESIDENT", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President".
"VOTING STOCK" means stock of a Corporation of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such Corporation
PROVIDED that, for the purposes hereof, stock which carries only the right to
vote conditionally on the happening of an event shall not be considered
Voting Stock whether or not such event shall have happened.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as
to which the furnishing of such documents or any of them is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;
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(2) 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;
(3) a statement that, in the opinion of each such
individual, such individual has made such examination or investigation
as is necessary to enable such individual to express an informed
opinion as to whether or not such condition or covenant has been
complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition orcovenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of
counsel or Opinion of Counsel or representation of counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of,
or representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Note, they may, but need not, be
consolidated and form one instrument.
SECTION 104. ACTS OF HOLDERS.
(1) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing. Except
as herein otherwise expressly provided, such action shall become
effective when such instrument or
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instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the
holding by any Person of a Note, shall be sufficient for any
purpose of this Indenture and (subject to Section 315 of the Trust
Indenture Act) conclusive in favor of the Trustee and the Company
and any agent of the Trustee or the Company, if made in the manner
provided in this Section.
Without limiting the generality of this Section, unless
otherwise provided in or pursuant to this Indenture, a Holder,
including a Depository that is a Holder of a global Note, may make,
give or take, by a proxy, or proxies, duly appointed in writing,
any request, demand, authorization, direction, notice, consent,
waiver or other action provided in or pursuant to this Indenture to
be made, given or taken by Holders, and a Depository that is a
Holder of a global Note may provide its proxy or proxies to the
beneficial owners of interests in any such global Note through such
Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of
determining the Persons who are beneficial owners of interests in
any permanent global Note held by a Depository entitled under the
procedures of such Depository to make, give or take, by a proxy or
proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action
provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on
such record date or their duly appointed proxy or proxies, and only
such Persons, shall be entitled to make, give or take such request,
demand, authorization, direction, notice, consent, waiver or other
action, whether or not such Holders remain Holders after such
record date. No such request, demand, authorization, direction,
notice, consent, waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.
(2) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient and in accordance with
such reasonable rules as the Trustee may determine; and the Trustee
may in any instance require further proof with respect to any of
the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers
of Notes held by any Person, and the date of the commencement and
the date of the termination of holding the same, shall be proved by
the Note Register.
(4) If the Company shall solicit from the Holders of
any Notes any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may at its option (but is
not obligated to), by Board Resolution, fix in advance a record date
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for the determination of Holders of Notes entitled to give such
request, demand, authorization, direction, notice, consent, waiver
or other Act. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the
Holders of Notes of record at the close of business on such record
date shall be deemed to be Holders for the purpose of determining
whether Holders of the requisite proportion of Outstanding Notes
have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and
for that purpose the Outstanding Notes shall be computed as of such
record date; PROVIDED that no such authorization, agreement or
consent by the Holders of Notes on such record date shall be deemed
effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the
record date.
(5) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any Note
shall bind every future Holder of the same Note and the Holder of
every Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or
suffered to be done by the Trustee, any Note Registrar, any Paying
Agent or the Company in reliance thereon, whether or not notation
of such action is made upon such Note.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee or any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, or sent by facsimile and U.S. mail, first-class postage
prepaid, to the Company addressed to the attention of its Chief
Financial Officer at the address of its principal office specified
in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS OF NOTES; WAIVER.
Except as otherwise expressly provided in this Indenture, where this
Indenture provides for notice to Holders of Notes of any event, such notice
shall be sufficiently given to Holders of Notes if in writing and mailed,
first-class postage prepaid, to each Holder of a Note affected by
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such event, at such Holder's address as it appears in the Note Register, not
later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice.
In any case where notice to Holders of Notes is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Note shall affect the sufficiency of
such notice with respect to other Holders of Notes. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have
been duly given or provided. In case by reason of the suspension of regular
mail service or by reason of any other cause it shall be impracticable to
give such notice by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders of Notes shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 107. LANGUAGE OF NOTICES.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language.
SECTION 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with any
duties under any required provision of the Trust Indenture Act imposed hereon
by Section 318(d) thereof, such required provision shall control.
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, either wholly or partially, the validity,
legality and enforceability of the remaining
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provisions shall not in any way be affected or impaired thereby, and such
provisions shall be given effect to the fullest extent permitted by law.
SECTION 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, any Note Registrar, any
Paying Agent, any Authenticating Agent and their respective successors
hereunder and the Holders of Notes, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 113. GOVERNING LAW.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to agreements
made or instruments entered into and, in each case, performed in said state,
without regard to principles of conflict of laws.
SECTION 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity of any Note shall be a Legal Holiday at any
Place of Payment, then (notwithstanding any other provision of this
Indenture) payment need not be made at such Place of Payment on such date,
but may be made on the next succeeding day that is a Business Day at such
Place of Payment with the same force and effect as if made on the Interest
Payment Date, Redemption Date, Repayment Date or at the Stated Maturity, and
no interest shall accrue on the amount payable on such date or at such time
for the period from and after such Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity, as the case may be.
SECTION 115. SCHEDULES.
Any Schedules attached hereto are by this reference made a part
hereof with the same effect as if herein set forth in full.
SECTION 116. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each
of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
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ARTICLE TWO
FORM OF NOTES
SECTION 201. FORMS GENERALLY.
Each Note issued pursuant to this Indenture shall be in substantially
the forms set forth in this Article, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture or any indenture supplemental hereto and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rule or regulation of any stock exchange or as may, consistently
herewith, be determined by the officers executing such Note as evidenced by
their execution of such Note. The Notes shall be issuable in global and
registered form only without coupons. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
Definitive Notes shall be printed, lithographed or engraved or produced
by any combination of these methods on a steel engraved border or steel
engraved borders or may be produced in any other manner, all as determined by
the officers of the Company executing such Notes, as evidenced by their
execution of such Notes.
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SECTION 202. FORM OF FACE OF NOTE.
AMRESCO, INC.
10% SENIOR SUBORDINATED NOTE DUE 2003
$________________________ NO._____________________
AMRESCO, INC., a Delaware corporation (herein called the "Company"), for
value received, hereby promises to pay to _____________________
______________________________ or its registered assigns, the principal sum
of ________________________ Dollars on January 15, 2003 and to pay interest
thereon at the rate of 10% per annum from the Initial Interest Accrual Date
or from the most recent Interest Payment Date to which interest has been paid
or duly provided for, on the fifteenth (15th) day of each month commencing
March 15, 1996 (each an "Interest Payment Date"), until the principal hereof
is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, except as provided in the Indenture
hereinafter referred to, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the tenth (10th) day,
whether or not a Business Day, of the month of the respective Interest
Payment Date. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and either may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the Trustee,
notice whereof shall be given to the Holders not less than ten days prior to
such Special Record Date, or may be paid at any time in any other lawful
manner, all as more fully provided in the Indenture. Payment of the
principal of and interest on this Note will be made at the office or agency
of the Company maintained for that purpose in Borough of Manhattan, New York,
New York and Columbus, Ohio, or in such other office or agency as may be
established by the Company pursuant to the Indenture (initially the principal
corporate trust office of the Trustee in Columbus, Ohio (the "Corporate Trust
Office")), in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest on any Interest Payment Date
other than at Maturity may be made at the option of the Company by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register. Payments of principal and interest at maturity
will be made against presentation of this Note at the Corporate Trust Office
(or such other office as may be established pursuant to the Indenture), by
check.
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Reference is hereby made to the further provisions of this Note set
forth on the reverse side hereof, which further provisions shall for all
purposes have the same effect as though fully set forth at this place.
Unless the Certificate of Authentication hereon has been executed by the
Trustee or an Authenticating Agent under the Indenture referred to on the
reverse hereof by the manual signature of one of its authorized officers,
this Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by the manual or facsimile signature of its Chief Executive Officer, its
President, its Treasurer or one of its Vice Presidents and its corporate
seal, or a facsimile thereof, to be impressed or imprinted hereon, attested
by the manual or facsimile signature of its Secretary or one of its Assistant
Secretaries.
Date:
AMRESCO, INC.
[Corporate Seal]
By:____________________________________
Robert H. Lutz, Jr.
Chairman of the Board and
Chief Executive Officer
ATTEST:
____________________________________
L. Keith Blackwell
Secretary
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SECTION 203. FORM OF REVERSE OF NOTE.
AMRESCO, INC.
10% SENIOR SUBORDINATED NOTE DUE 2003
This Note is one of a duly authorized issue of Notes of the Company
designated as its 10% Senior Subordinated Notes due 2003 (herein called the
"Notes") limited in aggregate principal amount to $50,000,000 (except for
such additional principal amounts, not to exceed $7,500,000, of Notes issued
to cover over-allotments in the initial public offering of the Notes) issued
and to be issued under an Indenture dated as of January 15, 1996 (herein
called the "Indenture"), between the Company and Bank One, Columbus, N.A., as
Trustee (herein called the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Company, the Trustee and the Holders of
the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered.
The indebtedness of the Company evidenced by the Notes, including the
principal thereof and interest thereon (including post-default interest), (1)
is expressly subordinated, to the extent and to the manner set forth in the
Indenture, in right of payment to the prior payment in full of all of the
Company's obligations to holders of Senior Indebtedness and (2) is unsecured
by any collateral, including the assets of the Company or any of its
Subsidiaries or Affiliates. Each Holder of Notes, by acceptance hereof, (a)
agrees to and shall be bound by such provisions of the Indenture and all
other provisions of the Indenture; (b) authorizes and directs the Trustee to
take such action on such Holder's behalf as may be necessary or appropriate
to effectuate the Subordination of the Notes as provided in the Indenture;
and (c) appoints the Trustee as such Holder's attorney-in-fact for any and
all such purposes.
The Notes may not be redeemed by the Company prior to January 15, 2001.
On or after January 15, 2001, the Notes may be redeemed, at the option of the
Company, in whole at any time or from time to time in part in increments of
$1,000, at 100% of the principal amount thereof, without premium, together
with interest thereon accrued to such Redemption Date. If fewer than all
Notes are redeemed, the Trustee will select the Notes to be redeemed by lot
or by such other method as the Trustee may deem fair and appropriate.
Notice of redemption shall be given to the Holders of Notes to be
redeemed by mailing a notice of such redemption not less than 30 or more than
60 days prior to the Redemption Date at their addresses as they shall appear
on the Note Register, all as provided in the Indenture.
If this Note (or a portion hereof) is duly called for redemption and
funds for payment are duly provided, this Note (or such portion hereof) shall
cease to bear interest from and after such Redemption Date.
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Upon the death of the Holder of this Note (if such person is a natural
Person), and upon the further receipt of a written request for repayment from
a duly authorized representative of the deceased Holder, along with a
certified copy of the Holder's death certificate, the Company will repay the
principal amount of this Note (up to $30,000 in principal amount per Holder
in any calendar year), together with interest accrued to the Repayment Date,
within 30 days following receipt of such request (which shall be accompanied
by the Notes to be repaid and evidence of such representative's authority to
act on behalf of the Holder), in accordance with the provisions of the
Indenture, if (1) this Note has been registered in the Holder's name since
its issue date or for a period of at least six months prior to the date of
the Holder's death, whichever is less, (2) either the Company or the Trustee
receives such written request for repayment within one year after the
Holder's death or, in the case of subsequent requests for repayment, within
one year of the preceding request, provided that if either the Company or the
Trustee receives such a written request it will promptly notify the other,
(3) the aggregate principal amount of Notes repaid during the then current
calendar year on account of the deaths of all Holders does not exceed the
Maximum Annual Repayment Amount (if such aggregate principal amount exceeds
the Maximum Annual Repayment Amount, the Company shall repay such Notes up to
the Maximum Annual Repayment Amount in principal amount in the order in which
requests for repayment were received), (4) the Company is not and, after
giving effect to such repayment, would not be in default under any Senior
Indebtedness, and (5) the Company is not subject to any law, regulation,
agreement or administrative directive preventing such repayment.
In accordance with the terms of the Indenture, upon the occurrence of a
Repurchase Event, the Holder of this Note shall have the right, at such
Holder's option, to require the Company to purchase, and upon exercise of
such right, the Company shall purchase, all or any part of this Note on the
date that is 30 days after the date the Company gives notice of the
Repurchase Event at a price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest.
Interest installments whose Stated Maturity is on the Redemption Date or
Repayment Date will be payable to the Holders of such Notes, or one or more
Predecessor Notes, of record at the close of business on the relevant Regular
Record Date referred to on the face hereof, all as provided in the Indenture.
In the event of redemption or repayment of this Note in part only, a new
Note or Notes for the unredeemed or unrepaid portion hereof shall be issued
in the name of the Holder hereof upon the surrender hereof.
Except as may be provided in the Indenture, if an Event of Default with
respect to the Notes shall occur and be continuing, the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Notes may
declare the principal of all the Notes due and payable in the manner and with
the effect provided in the Indenture. The Indenture provides that such
declaration and its consequences may, in certain events, be annulled by the
Holders of a majority in principal amount of the Outstanding Notes.
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The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provisions of this Note or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, places and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Note Register
of the Company, upon surrender of this Note for registration of transfer at
the office or agency of the Company to be maintained for that purpose in the
Borough of Manhattan, New York, New York and Columbus, Ohio or at such other
office or agency as may be established by the Company for such purpose
pursuant to the Indenture (initially the principal corporate trust office of
the Trustee in Columbus, Ohio), duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, and duly executed
by the Holder hereof or such Holder's attorney duly authorized in writing,
and thereupon one or more new Notes, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee
or transferees.
The Notes are issuable only in registered form, without coupons, in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000. As provided in the Indenture, and subject to certain
limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes in authorized denominations, as requested
by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to the due presentment of this Note for registration of transfer
or exchange, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and
neither the Company, the Trustee, nor any such agent shall be affected by
notice to the contrary.
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Each Holder of a Note covenants and agrees by such Holder's acceptance
hereof to comply with and be bound by the foregoing provisions.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 612, the Trustee's certificate of authentication
shall be in substantially the following form:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described herein
BANK ONE, COLUMBUS, N.A.
as Trustee
By:
Authorized Signatory
SECTION 205. NOTES IN GLOBAL FORM.
Notes may be issuable in global form (i.e., in the name of the nominee
of a Depository for purposes of book entry transfer), such that any such Note
may provide that it or any number of such Notes shall represent the aggregate
amount of all Outstanding Notes (or such lesser amount as is permitted by the
terms thereto from time to time endorsed thereon) and may also provide that
the aggregate amount of Outstanding Notes represented thereby may from time
to time be increased or reduced to reflect exchanges. Any endorsement of any
Note in global form to reflect the amount, or any increase or decrease in the
amount, or changes in the rights of Holders, of Outstanding Notes represented
thereby shall be made in such manner and by such Person or Persons as shall
be specified therein or in the Company Order to be delivered pursuant to
Section 303 or 304 with respect thereto. Subject to the provisions of
Section 303 and, if applicable, Section 304, the Trustee shall deliver and
redeliver any Note in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304
has been, or simultaneously is, delivered, any instructions by the Company
with respect to a Note in global form shall be in writing but need not be
accompanied by or contained in an Officers' Certificate and need not be
accompanied by an Opinion of Counsel.
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ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $50,000,000 (except for such
additional principal amounts, not to exceed $7,500,000, of Notes issued to
cover over-allotments in the initial public offering of the Notes), except
for Notes authenticated and delivered upon transfer of, or in exchange for, or
in lieu of other Notes pursuant to Sections 304, 305, 306, 905, 1107 and 1204.
The Notes shall be known and designated as the "10% Senior Subordinated
Notes due 2003 of the Company". The Stated Maturity of all principal shall
be January 15, 2003, and they shall bear interest from the date and at the
rate per annum specified in, and such interest shall be payable on the dates
specified in, the form of Note set forth in Sections 202 and 203, until the
principal thereof is paid or made available for payment.
The principal of and interest on the Notes shall be payable at the
Office or Agency of the Company in the Borough of Manhattan, New York, New
York and Columbus, Ohio ("PLACE OF PAYMENT") maintained for such purposes
pursuant to Section 1002; PROVIDED, HOWEVER, that, at the option of the
Company, payment of interest may be made (subject to collection) by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Note Register.
The Notes shall be redeemable prior to their Stated Maturity as provided
in Article Eleven.
The Notes may be repayable prior to their Stated Maturity as provided in
Article Twelve upon the death of a Noteholder or as provided in Article
Fourteen upon the occurrence of a Repurchase Event.
The Notes shall be subordinated in right of payment to Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
created, as provided in Article Thirteen.
SECTION 302. CURRENCY; DENOMINATIONS.
The principal of and interest on the Notes shall be payable in United
States dollars or other equivalent unit of legal tender for payment of public
or private debts in the United States of America. Notes shall be issuable in
registered form only without coupons in denominations of $1,000 and any
integral multiple thereof.
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SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Notes shall be executed on behalf of the Company by its Chairman of the
Board, one of its Vice Chairmen of the Board, its Chief Executive Officer,
its President, its Treasurer or one of its Vice Presidents under its
corporate seal reproduced thereon and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Notes
may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes, executed by the Company, to
the Trustee for authentication and, PROVIDED that a Company Order for the
authentication and delivery of such Notes has been delivered to the Trustee,
the Trustee, in accordance with the Company Order and subject to the
provisions hereof, shall authenticate and deliver such Notes.
The Company may establish by Company Order that the Notes are to be
issued in whole or in part in the form of one or more global Notes. If so
established, the Company shall execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to such Notes,
authenticate and deliver one or more global Notes in permanent form that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of the Outstanding Notes to be represented by such global
Note or Notes, (ii) shall be registered in the name of the Depository for
such global Note or Notes or the nominee of such Depository, (iii) shall be
delivered by the Trustee to such Depository or pursuant to such Depository's
instruction and (iv) shall bear a legend substantially to the following
effect: "Unless and until it is exchanged in whole or in part for Notes in
certificated form, this Note may not be transferred except 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 or by the Depository
or any such nominee to a successor Depository or a nominee of such successor
Depository" or to such other effect as the Depository and the Trustee may
agree.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in
Section 204 or 612 executed by or on behalf of the Trustee by the manual
signature of one of its authorized officers or by an Authenticating Agent.
Such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
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SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute and
deliver to the Trustee and, upon Company Order, the Trustee shall
authenticate and deliver, in the manner provided in Section 303, temporary
Notes in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued, in registered form and with such appropriate insertions, omissions,
substitutions and other variations as the officers of the Company executing
such Notes may determine, as conclusively evidenced by their execution of
such Notes. Such temporary Notes may be in global form.
Except in the case of temporary Notes in global form, which shall be
exchanged in accordance with the provisions thereof, if temporary Notes are
issued, the Company shall cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, such
temporary Notes shall be exchangeable for such definitive Notes upon
surrender of such temporary Notes at an Office or Agency for such Notes,
without charge to any Holder thereof. Upon surrender for cancellation of any
one or more temporary Notes, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Unless otherwise provided in
or pursuant to this Indenture with respect to a temporary global Note, until
so exchanged the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept a register (herein sometimes referred
to as the "NOTE REGISTER") at an Office or Agency maintained pursuant to
Section 1002 in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Notes and of
transfers of the Notes. The Trustee is hereby initially appointed as Note
Registrar for the Notes. In the event that the Trustee shall cease to be
Note Registrar it shall have the right to examine the Note Register at all
reasonable times.
Upon surrender for registration of transfer of any Note at the Office or
Agency of the Company, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, denominated as authorized in this
Indenture, of a like aggregate principal amount bearing a number not
contemporaneously outstanding and containing identical terms and provisions.
At the option of the Holder, Notes (except a global Note representing
all of the Outstanding Notes) may be exchanged for other Notes, in any
authorized denominations, and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such Office or Agency. Whenever
any Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
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Whenever any Notes are surrendered for exchange as contemplated by the
immediately preceding two paragraphs, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in or
pursuant to this Indenture, any global Note shall be exchangeable for
definitive Notes only if (i) the Depository is at any time unwilling, unable
or ineligible to continue as Depository and a successor depository is not
appointed by the Company within 60 days of the date the Company is so
informed in writing, (ii) the Company executes and delivers to the Trustee a
Company Order to the effect that such global Note shall be so exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to
the Notes. If the beneficial owners of interests in a global Note are
entitled to exchange such interests for definitive Notes of such series and
of like tenor and principal amount of any authorized form and denomination as
specified as contemplated by Section 304, then without unnecessary delay but
in any event not later than the earliest date on which such interests may be
so exchanged, the Company shall deliver to the Trustee definitive Notes in
such form and denominations as are required by or pursuant to this Indenture,
containing identical terms and in aggregate principal amount equal to the
principal amount of such global Note, executed by the Company. On or after
the earliest date on which such interests may be so exchanged, such global
Note shall be surrendered from time to time by the Depository, and in
accordance with instructions given to the Trustee and the Depository (which
instructions shall be in writing but need not be contained in or accompanied
by an Officers' Certificate or be accompanied by an Opinion of Counsel), as
shall be specified in the Company Order with respect thereto to the Trustee,
as the Company's agent for such purpose, to be exchanged; provided, however,
that no such exchanges may occur during a period beginning at the opening of
business 15 days before any such selection of Notes for redemption of the
same series and containing identical terms to be redeemed and ending on the
relevant Redemption Date. Promptly following any such exchange in part, such
global Note shall be returned by the Trustee to such Depository in accordance
with the instructions of the Company referred to above. If a Note is issued
in exchange for any portion of a global Note after the close of business at
the Office or Agency for such Note where such exchange occurs on or after (i)
any Regular Record Date for such Note and before the opening of business at
such Office or Agency on the next Interest Payment Date, or (ii) any Special
Record Date for such Note and before the opening of business at such Office
or Agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, interest shall not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Note, but shall be payable on such Interest Payment Date or proposed
date for payment, as the case may be, only to the Person to whom interest in
respect of such portion of such global Note shall be payable in accordance
with the provisions of this Indenture.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company evidencing the same debt and
entitling the Holders thereof to the same benefits under this Indenture as
the Notes surrendered upon such registration of transfer or exchange.
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Every Note presented or surrendered for registration of transfer or for
exchange or redemption shall (if so required by the Company or the Note
Registrar for such Note) be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 304, 905 or 1107 not involving any transfer.
The Company shall not be required (1) to issue, register the transfer of
or exchange any Notes during a period beginning at the opening of business 15
calendar days before the day of the selection for redemption of Notes under
Section 1103 and ending at the close of business on the day of the mailing of
the relevant notice of redemption, or (2) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except in
the case of any Note to be redeemed in part, the portion thereof not to be
redeemed, or (3) to issue, register the transfer of or exchange any Note
which, in accordance with its terms, has been surrendered for repayment at
the option of the Holder, except the portion, if any, of such Note not to be
so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee, subject to the
provisions of this Section, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Note containing identical
terms and of like principal amount and bearing a number not contemporaneously
outstanding.
If there be delivered to the Company and to the Trustee (1) evidence to
their satisfaction of the destruction, loss or theft of any Note, and (2)
such Note or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser (or any equivalent person under any applicable statute, rule or
regulation or interpretation then in effect), the Company shall execute and,
upon the Company's request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such destroyed, lost or stolen Note, a new
Note containing identical terms and of like principal amount and bearing a
number not contemporaneously outstanding.
Notwithstanding the foregoing provisions of this Section, in case any
mutilated, destroyed, lost or stolen Note has become or is about to become
due and payable or redeemed by the Company pursuant to Article Eleven hereof,
the Company in its discretion may, instead of issuing a new Note, pay such
Note.
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Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an additional original contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant to
this Indenture, shall be exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.
SECTION 307. PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED.
Any interest on any Note which shall be payable and is punctually paid
or duly provided for on any Interest Payment Date shall be paid to the Person
in whose name such Note (or one or more Predecessor Notes) is registered as
of the close of business on the Regular Record Date for such interest.
Any interest on any Note which shall be payable, but shall not be
punctually paid or duly provided for, on any Interest Payment Date for such
Note (herein called "DEFAULTED INTEREST") shall forthwith cease to be payable
to the Holder thereof on the relevant Regular Record Date by virtue of having
been a Holder on such date; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted
Interest to the Person in whose name such Note (or a Predecessor
Note thereof) shall be registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be paid
on such Note and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of Money equal
to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed
payment, such Money when so deposited to be held in trust for the
benefit of the Person entitled to such Defaulted Interest as in this
Clause provided. Thereupon, the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the
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expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to the Holder of such Note (or
a Predecessor Note thereof) at such Holder's address as it appears in
the Note Register not less than 10 days prior to such Special Record
Date. The Trustee may, in its discretion, in the name and at the
expense of the Company cause a similar notice to be published at least
once in an Authorized Newspaper of general circulation in each Place
of Payment, but such publication shall not be a condition precedent to
the establishment of such Special Record Date and the failure of a
Holder to observe such published notice shall not entitle such Holder
to additional benefits or interest with respect to such Holder's Notes.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Person in whose name such Note
(or a Predecessor Note thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such payment shall be deemed practicable by the Trustee.
At the option of the Company, interest on the Notes may be paid (i) by
mailing a check to the address of the Person entitled thereto as such address
shall appear in the Note Register, or (ii) by wire transfer to an account
maintained by the Person entitled thereto as specified in the Note Register,
the cost of such wire transfer to be borne by the Company.
Subject to the foregoing provisions of this Section and Section 305,
each Note delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Note shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of transfer or
exchange, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Note is registered in the
Note Register as the owner of such Note for the purpose of receiving payment
of principal of and (subject to Sections 305 and 307) interest on such Note
and for all other purposes whatsoever, whether or not any payment with
respect to such Note shall be overdue, and neither the Company, nor the
Trustee or any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any global Note held on its
behalf by a Depository shall have any rights under this Indenture with
respect to such global Note, and such Depository
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may be treated by the Company, the Trustee, and any agent of the Company or
the Trustee as the owner of such global Note for all purposes whatsoever.
None of the Company, the Trustee, any Paying Agent or the Note Registrar will
have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a global
Note or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, redemption, repayment pursuant to
Article Twelve, registration of transfer or exchange shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee, and any such
Notes, as well as Notes surrendered directly to the Trustee for any such
purpose, shall be canceled promptly by the Trustee. The Company may at any
time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Notes so delivered shall be canceled promptly
by the Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Trustee shall be
destroyed by the Trustee (who shall deliver a certificate of destruction
thereof to the Company), unless by a Company Order the Company directs their
return to it.
SECTION 310. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, or from
time to time thereafter, Notes up to the aggregate principal amount of
$50,000,000 (plus such additional principal amounts, not to exceed
$7,500,000, of Notes issued to cover over allotments in the initial public
offering of the Notes) may be executed by the Company and delivered to the
Trustee for authentication, and shall thereupon be authenticated and
delivered by the Trustee upon Company Order, without any further action by
the Company.
SECTION 311. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months. Interest shall be payable through and excluding any
Interest Payment Date and interest shall be payable through and including any
Redemption Date or Repayment Date.
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SECTION 312. MAXIMUM INTEREST RATE.
Regardless of any provision contained in any Note or this Indenture,
the Holders of the Notes shall never be entitled to receive, collect or apply
as interest on the Notes any amount in excess of the maximum rate permitted
by applicable law, and, in the event that the Holders ever receive, collect,
or apply as interest any such excess, the amount which would be excessive
interest shall be deemed to be a partial prepayment of principal and treated
hereunder as such; and, if the principal amount of the Notes is paid in full,
any remaining excess shall forthwith be paid to the Company.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
Upon the direction of the Company by a Company Order, this Indenture
shall cease to be of further effect and the Trustee, on receipt of such
Company Order, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(a) all Notes theretofore authenticated and
delivered (other than (i) Notes which have been mutilated,
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306 and (ii) Notes for whose
payment Money has theretofore been deposited in trust with
the Trustee or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
(b) as to all Notes not so theretofore
delivered to the Trustee for cancellation the Company has
irrevocably deposited or caused to be deposited with the
Trustee, as trust funds and/or obligations in trust for such
purpose, Money and/or Government Obligations which through
the payment of interest and principal in respect thereof in
accordance with their terms, without consideration of any
reinvestment thereof, will provide not later than the
opening of business on the due dates of any payment of
principal and interest with respect thereto, or a
combination thereof, Money in an amount sufficient to pay
and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation,
including the principal thereof and interest thereon, to the
date of such deposit (in the case of Notes which have become
due and payable) or to the Maturity thereof, as the case may
be;
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(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company, including amounts owing to
the Trustee; and
(3) the Company has delivered to the Trustee a
certificate of Independent Public Accountants certifying as to the
sufficiency of the amounts deposited pursuant to subclause (b) of
Clause (1) of this Section for payment of the principal and interest
on the dates such payments are due, and an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent
herein providing for or relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 612 and,
if Money and/or Government Obligations shall have been deposited with the
Trustee pursuant to subclause (b) of Clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
Money and Government Obligations deposited with the Trustee pursuant to
Section 401 and all Money received by the Trustee in respect of Government
Obligations deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal and interest
for whose payment such Money has or Government Obligations have been
deposited with or received by the Trustee; but such Money and Government
Obligations need not be segregated from other funds of the Trustee except to
the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether
it shall be voluntary or be effected by operation of law pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
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(1) default in the payment of any interest on any Note
when such interest becomes due and payable, and continuance of such
default for a period of 10 days, whether or not such payment is
prohibited by the provisions of Article Thirteen; or
(2) default in the payment of the principal of any Note
when it becomes due and payable at its Maturity or upon redemption
or repayment, whether or not such payment is prohibited by the
provisions of Article Thirteen; or
(3) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture or the Notes
(other than a covenant or warranty a default in the performance or
the breach of which is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Notes
a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(4) default in the payment at stated maturity of any
indebtedness of the Company or any Subsidiary for money borrowed in
principal amount due at stated maturity in excess of $1,000,000, and
such default shall continue, without being cured, waived or
consented to and without such indebtedness being discharged, for a
period of 30 days beyond any applicable period of grace; or
(5) the occurrence of an event of default as defined in
any mortgage, indenture or instrument under which there may be
issued, or by which there may be secured or evidenced, any
indebtedness of the Company or any Subsidiary for money borrowed (or
the payment of which is guaranteed by the Company), whether such
indebtedness now exists or shall hereafter be created, PROVIDED,
HOWEVER, that no such event of default shall constitute an Event of
Default hereunder unless the effect of such event of default is to
cause the acceleration of such indebtedness prior to its expressed
maturity, which together with the principal amount of any such other
indebtedness so caused to be accelerated, aggregates $1,000,000 or
more at any one point in time and such default shall not have been
cured or waived and such acceleration shall not have been rescinded
or annulled; or
(6) the entry by a court or agency or supervisory
authority having competent jurisdiction of:
(a) a decree or order for relief in respect
of the Company or any Material Subsidiary in an
involuntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law and such
decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
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(b) a decree or order adjudging the Company
or any Material Subsidiary to be insolvent, or approving a
petition seeking reorganization, arrangement, adjustment
or composition of the Company or any Material Subsidiary
and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(c) a decree or order appointing any Person
to act as a custodian, receiver, liquidator, assignee,
trustee or other similar official of the Company or any
Material Subsidiary or of any substantial part of the
property of the Company or any Material Subsidiary, as the
case may be, or ordering the winding up or liquidation of
the affairs of the Company or any Material Subsidiary and
such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(7) the commencement by the Company or any Material
Subsidiary of a voluntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or of a
voluntary proceeding seeking to be adjudicated insolvent or the
consent by the Company or any Material Subsidiary to the entry of a
decree or order for relief in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any insolvency proceedings against it,
or the filing by the Company or any Material Subsidiary of a
petition or answer or consent seeking reorganization or relief under
any applicable law, or the consent by the Company or any Material
Subsidiary to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee or similar official of the Company or any Material
Subsidiary or any substantial part of the property of the Company or
any Material Subsidiary or the making by the Company or any Material
Subsidiary of an assignment for the benefit of creditors, or the
taking of corporate action by the Company or any Material Subsidiary
in furtherance of any such action; or
(8) a final judgment, judicial decree or order for the
payment of money in excess of $5,000,000 shall be rendered against
the Company or any Subsidiary and such judgment, decree or order
shall continue unsatisfied for a period of 30 days without a stay of
execution.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then the Trustee or
the Holders of not less than 25% in principal amount of the outstanding Notes
may declare the principal of all the Notes, and the interest accrued thereon,
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by the Holders), and upon any such declaration such
amount shall become immediately due and payable.
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At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the Money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders
of not less than a majority in principal amount of the Outstanding Notes, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee
a sum of Money sufficient to pay
(a) all overdue installments of any interest on
all Notes,
(b) the principal of any Notes which have
become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by such
Notes,
(c) to the extent that payment of such interest
is lawful, interest upon overdue installments of any
interest at the rate borne by such Notes, and
(d) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the non-payment of
the principal of and interest on Notes which shall have become due
solely by such declaration of acceleration, shall have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any installment
of interest on any Note when such interest shall have become due and
payable and such default continues for a period of 10 days, or
(2) default is made in the payment of the principal of
any Note at its Maturity, the Company shall, upon demand of the
Trustee, pay to the Trustee, for the benefit of the Holders of such
Notes, the whole amount of money then due and payable with respect
to such Notes, with interest upon the overdue principal and, to the
extent that payment of such interest shall be legally enforceable,
upon any overdue installments of interest at the rate borne by such
Notes, and, in addition thereto, such further amount of Money as
shall be sufficient to cover the costs and expenses of collection,
including the reasonable
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compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay the Money it is required to pay the
Trustee pursuant to the preceding paragraph forthwith upon the demand of the
Trustee, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the Money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and
may enforce the same against the Company or any other obligor upon such Notes
and collect the Money adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Notes, wherever situated.
If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Notes by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or such Notes or in aid of the exercise of any
power granted herein or therein, or to enforce any other proper remedy.
The rights and remedies under this Section 503 are in addition to
the other rights and remedies available under this Article 5 or otherwise
legally available.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor
upon the Notes or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of any overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents or counsel) and of the Holders of Notes allowed in
such judicial proceeding, and
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(2) to collect and receive any Money or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder of Notes to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Holders of Notes, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under
Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Note
any plan of reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder of a Note in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
All rights of action and claims under this Indenture or any of the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery or judgment,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, shall be
for the ratable benefit of each and every Holder of a Note in respect of
which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any Money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such Money on account of principal or
interest, upon presentation of the Notes, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and
any predecessor Trustee under Section 607;
SECOND: In the case the principal of the Notes shall not
have become due and payable, to the payment of the amounts then due
and unpaid upon the Notes for interest in respect of which or for
the benefit of which such Money has been collected, in the order of
the Maturity of the installments of such interest, with interest, to
the extent that such interest is lawful and has been collected by
the Trustee, upon overdue installments of interest at the rate borne
by the Notes, such payments to be made ratably, without preference
or priority of any kind, according to the aggregate amounts due and
payable on such Notes for interest;
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THIRD: In the case the principal of the Notes shall have
become due and payable, to the payment of the amounts then due and
unpaid upon the Notes for principal and interest in respect of which
or for the benefit of which such Money has been collected, with
interest, to the extent that such interest is lawful and has been
collected by the Trustee, upon overdue installments of interest at
the rate borne by the Notes, such payments to be made ratably,
without preference or priority of any kind, according to the
aggregate amounts due and payable on such Notes for principal and
interest, respectively; and
FOURTH: The balance, if any, to the Company.
SECTION 507. LIMITATIONS ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Notes shall have made written request to
the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against the costs, fees,
expenses and liabilities to be incurred in compliance with such
request (including reasonable fees of counsel);
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture or any Note to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
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SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Sections 305 and 307)
interest on such Note on the respective Stated Maturity or Maturities
therefor specified in such Note (or, in the case of redemption, on the
Redemption Date or, in the case of repayment at the option of such Holder, on
the date such repayment is due) and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Note has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case the
Company, the Trustee and each such Holder shall, subject to any determination
in such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee
and each such Holder shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to each and every Holder of a Note is intended to be exclusive of
any other right or remedy, and every right and remedy, to the extent
permitted by law, shall 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 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default
or an acquiescence therein. Every right and remedy given by this Article or
by law to the Trustee or to any Holder of a Note may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by such
Holder, as the case may be.
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SECTION 512. CONTROL BY HOLDERS OF NOTES.
The Holders of a majority in principal amount of the Outstanding
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any
trust or power conferred on the Trustee with respect to the Notes, PROVIDED
that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture,
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and
(3) subject to Section 601, the Trustee need not take
any action which might be unjustly prejudicial to the rights of the
other Holders of Notes not joining in such action.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes on behalf of the Holders of all the Notes may waive any
past default hereunder and its consequences, except a default
(1) in the payment of the principal of or interest on
any Note, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Note.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party
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litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 25% in principal amount of the Outstanding Notes, or to any suit
instituted by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Note on or after the respective
Stated Maturities expressed in such Note (or, in the case of redemption, on
or after the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants that (to the extent that it may lawfully do
so) it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company expressly
waives (to the extent that it may lawfully do so) 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.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(1) Except during the continuance of an Event of Default,
(a) the Trustee undertakes to perform such duties, and
only such duties, as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(b) 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; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(2) In case 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 their exercise, as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
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(3) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(a) this Subsection shall not be construed to limit the
effect of Subsection (1) of this Section;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Notes, relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Notes,
provided such direction shall not be in conflict with any rule of
law or with this Indenture; and
(d) 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.
(4) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any Event of Default
hereunder, the Trustee shall transmit to the Holders of Notes, in the manner
and to the extent provided in Section 313 (c) of the Trust Indenture Act,
notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case
of a default in the payment of the principal of or interest on any Note, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Notes; and
PROVIDED, FURTHER, that in the case of any default of the character specified
in Section 501 (3) with respect to Notes, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become, an Event of Default.
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SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or a
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence shall be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate and/or Opinion of Counsel;
(4) the Trustee may consult with counsel and the
written 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;
(5) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture
at the request or direction of any of the Holders of Notes pursuant
to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, fees,
expenses and liabilities which might be incurred by it, including
reasonable fees of counsel, in complying with such request or
direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine,
during business hours and upon reasonable notice, the books, records
and premises of the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee
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shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
certificate of authentication, shall be taken as the statements of the
Company and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Notes, except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Notes and perform its obligations hereunder
and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Company are true and accurate,
subject to the qualifications set forth therein. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of the Notes or the proceeds thereof. The Trustee shall not be
responsible for any statement made in any prospectus or similar document used
to sell the Notes.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other Person that may be an agent of the Trustee or the
Company, in its individual or any other capacity, may become the owner or
pledgee of Notes and, subject to Sections 310(b) and 311 of the Trust
Indenture Act, may otherwise deal with the Company with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Note
Registrar or such other Person.
SECTION 606. MONEY HELD IN TRUST.
Except as provided in Section 402 and Section 1003, Money held by
the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law and shall be held uninvested. The Trustee
shall be under no liability for interest on any Money received by it
hereunder except as otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable costs,
expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the
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reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or
advance as may be attributable to the Trustee's negligence or
willful misconduct; and
(3) to indemnify the Trustee and its agents for, and to
hold them harmless against, any loss, liability or expense incurred
without negligence or willful misconduct on their part, arising out
of or in connection with the acceptance or administration of the
trust hereunder, including the costs and expenses of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Notes upon all
property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of principal of and interest on Notes.
"Trustee" for the purposes of this Section includes any predecessor Trustee,
but negligence or bad faith of any Trustee shall not be attributed to any
other Trustee.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable compensation, expenses and disbursements
of its counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.
The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute an additional obligation hereunder and shall
survive the satisfaction and discharge of this Indenture and the resignation
or removal of the Trustee and each predecessor Trustee.
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder that is a
Corporation organized and doing business under the laws of the United States
of America, any state thereof or the District of Columbia, authorized under
such laws to exercise corporate trust powers, or any other person permitted
by the Trust Indenture Act to act as trustee under an indenture qualified
under the Trust Indenture Act and that has a combined capital and surplus
(computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of
at least $50,000,000. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
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SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(1) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee pursuant to Section 610.
(2) The Trustee may resign at any time by giving
written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 610 shall not
have been delivered to the Trustee within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
(3) The Trustee may be removed at any time by Act of
the Holders of a majority in principal amount of the Outstanding
Notes delivered to the Trustee and the Company.
(4) If at any time:
(a) the Trustee shall fail to comply with the
obligations imposed upon it under Section 310(b) of
the Trust Indenture Act after written request
therefor by the Company or any Holder of a Note who
has been a bona fide Holder of a Note for at least
six months, or
(b) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent
or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take
charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee, or (ii) subject to Section 315
(e) of the Trust Indenture Act, any Holder of a Note who has been a
bona fide Holder of a Note for at least six months may, on behalf of
such Holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(5) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by or pursuant to a Board
Resolution, shall promptly appoint a successor Trustee and shall
comply with the applicable requirements of Section 610. If, within
one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed
by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the
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applicable requirements of Section 610, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the
Holders of Notes and accepted appointment in the manner required by
Section 610, any Holder of a Note who has been a bona fide Holder of
a Note for at least six months may, on behalf of such Holder and all
others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(6) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Notes as their names and
addresses appear in the Note Register. Each notice shall include
the name of the successor Trustee and the address of its Corporate
Trust Office.
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Upon the appointment hereunder of any successor Trustee, such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Company and the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties hereunder of the retiring Trustee; but, on the request of the Company
or such successor Trustee, such retiring Trustee, upon payment of all of its
charges, shall execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and Money held by such retiring Trustee hereunder, subject
nevertheless to its claim, if any, provided for in Section 607.
Upon request of any Person appointed hereunder as a successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in this Section.
No Person shall accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person shall be
qualified and eligible under this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS.
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Notes shall have been
authenticated but not delivered by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee
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may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
SECTION 612. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint one or more Authenticating Agents acceptable
to the Company with respect to the Notes which shall be authorized to act on
behalf of the Trustee to authenticate Notes issued upon original issue,
exchange, registration of transfer, partial redemption or pursuant to Section
306, and Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and,
except as provided in this Indenture, shall at all times be a Corporation
that would be permitted by the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act, is authorized under
applicable law and by its charter to act as an Authenticating Agent and has a
combined capital and surplus (computed in accordance with Section 310(a) (2)
of the Trust Indenture Act) of at least $50,000,000. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and
with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any Corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall be the
successor of such Authenticating Agent hereunder, provided such Corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to
all Holders of Notes, if any, as their names and addresses appear in the Note
Register. Any successor Authenticating Agent, upon acceptance of its
appointment hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named
as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
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The Company agrees to pay each Authenticating Agent from time to
time reasonable compensation for its services under this Section. If the
Trustee makes such payments, it shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to
each Authenticating Agent.
If an Authenticating Agent is appointed pursuant to this Section,
the Notes may have endorsed thereon, in addition to or in lieu of the
Trustee's certificate of authentication, an alternate certificate of
authentication in the following form:
This is one of the Notes described herein.
__________________________________________
As Authenticating Agent
By________________________________________
Authorized Signatory
Authentication Date
____________________
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
In accordance with Section 312 (a) of the Trust Indenture Act, the
Company shall furnish or cause to be furnished to the Trustee
(1) semi-annually on January 15 and July 15 of each
year, a list, in each case in such form as the Trustee may
reasonably require, of the names and addresses of Holders as of
January 10 and July 10, respectively, of such year, and
(2) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished,
PROVIDED, HOWEVER, that so long as the Trustee is the Note Registrar no such
list shall be required to be furnished for Notes for which the Trustee acts
as Note Registrar.
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SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company, the Trustee, any
Paying Agent or any Note Registrar shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Holders of Notes in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, and that
the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(1) Within 60 days after May 15 of each year, if
required by Section 313(a) of the Trust Indenture Act, the Trustee
shall transmit, pursuant to Section 313(c) of the Trust Indenture
Act, a brief report dated as of such May 15 with respect to any of
the events specified in said Section 313 (a) which may have occurred
since the later of the immediately preceding May 15 and the date of
this Indenture.
(2) The Trustee shall transmit the reports required by
Section 313(b) of the Trust Indenture Act at the times specified
therein.
(3) Reports pursuant to this Section shall be
transmitted in the manner and to the Persons required by Sections
313(c) and 313(d) of the Trust Indenture Act.
SECTION 704. REPORTS BY COMPANY.
The Company, pursuant to Section 314(a) of the Trust Indenture Act,
shall:
(1) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of
the annual reports and of the information documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a Note listed
and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations; provided
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that notwithstanding the requirements of such rules and regulations,
so long as any Note is Outstanding the Company shall file with the
Trustee at a minimum (a) as soon as practicable, but in any event no
more than ninety (90) days, after the end of each fiscal year,
copies of a balance sheet and statements of income and retained
earnings of the Company as of the end of and for such fiscal year,
audited by Independent Public Accountants, and (b) as soon as
practicable, but in any event no more than forty-five (45) days,
after the end of each quarterly fiscal period, except for the last
quarterly fiscal period in each fiscal year, a summary statement
(which need not be audited) of income and retained earnings of the
Company for such period;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time
by the Commission, such additional information, documents and
reports with respect to compliance by the Company, as the case may
be, with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit to the Holders of Notes within 30 days
after the filing thereof with the Trustee, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, such
summaries of any information, documents and reports required to be
filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from
time to time by the Commission; provided that notwithstanding the
requirements of such rules and regulations, so long as any Note is
Outstanding the Company shall transmit to the Holders of Notes,
within 30 days after the filing thereof with the Trustee, in the
manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, the information, documents and other reports required
to be filed by the Company pursuant to paragraph (1) of this
Section; PROVIDED FURTHER that in lieu of any Annual Report on Form
10-K or Quarterly Report on Form 10-Q, the Company may transmit an
annual or quarterly report, respectively, containing financial
statements and an undertaking to transmit such Form 10-K or Form
10-Q, as the case may be, to any Holder upon request; and
(4) furnish to the Trustee the Officers' Certificates
and notices required by Section 1011 hereof.
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture shall prevent any consolidation
or merger of the Company with or into any other Person or Persons (whether or
not affiliated with the Company),
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or successive consolidations or mergers in which the Company or its successor
or successors shall be a party or parties, or shall prevent any conveyance,
transfer or lease of the property of the Company as an entirety or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company); PROVIDED, HOWEVER, that:
(1) in case the Company shall consolidate with or merge
into another Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, the entity formed
by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an
entirety shall be a Person organized and existing under the laws of
the United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed by the successor Person and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of and interest on all the Notes and the
performance of every other covenant of this Indenture on the part of
the Company to be performed or observed;
(2) immediately after giving effect to such
transaction, no event which, after notice or lapse of time, or both,
would become an Event of Default shall have occurred and be
continuing; and
(3) either the Company or the successor Person shall
have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indenture comply
with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
For purposes of this Section and Section 802, a conveyance,
transfer, sale or lease of the properties and assets of the Company
"substantially as an entirety" shall mean a conveyance, transfer or lease of
properties and assets of the Company representing 80% or more of the fair
value (as determined in good faith by the Board of Directors) of all the
Company's properties and assets on the date of such conveyance, transfer,
sale or lease.
SECTION 802. SUCCESSOR PERSON SUBSTITUTED FOR COMPANY.
Upon any consolidation or merger or any conveyance, transfer or
lease of the properties and assets of the Company substantially as an
entirety to any Person in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is merged or to which
such conveyance, transfer or lease 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 successor Person had been
named as the Company herein; and thereafter, except in the case of a lease to
another Person, the predecessor Person shall be released from all obligations
and covenants under this Indenture and the Notes.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder of Notes, the Company (when
authorized by or pursuant to a Board Resolution) and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, which shall conform with the requirements of the Trust Indenture Act
as then in effect and be in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants
of the Company herein and in the Notes; or
(2) to add to or change any of the provisions of this
Indenture to change or eliminate any restrictions on the payment of
principal of or interest on Notes or to permit or facilitate the
issuance of Notes in uncertificated form, provided any such action
shall not adversely affect the interests of the Holders of Notes in
any material respect; or
(3) to cure any ambiguity or to correct or supplement
any provision herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture which shall not
adversely affect the interests of the Holders of Notes in any
material respect; or
(4) to supplement any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of any Notes pursuant to
Article Four; provided that any such action shall not adversely
affect the interests of any Holder of a Note in any material
respect; or
(5) to add to the covenants of the Company for the
benefit of the Holders of the Notes (as shall be specified in such
supplemental indenture or indentures) or to surrender any right or
power herein conferred upon the Company; or
(6) to evidence and provide acceptance of the
appointment of a successor Trustee hereunder.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Notes, by Act of said Holders delivered
to the Company and the Trustee, the
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Company (when authorized by or pursuant to a Board Resolution), and the
Trustee may enter into one or more indentures supplemental hereto (which
shall conform with the requirements of the Trust Indenture Act as then in
effect) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Notes under this Indenture; PROVIDED,
HOWEVER, that no such supplemental indenture, without the consent of the
Holder of each Outstanding Note, shall
(1) change the Stated Maturity of the principal of, or
any installment of interest on, any Note, or reduce the principal
amount payable upon the redemption thereof or otherwise, or change
the rate of interest thereon, or adversely affect the right of
repayment at the option of any Holder as contemplated by Article
Twelve, or change the Place of Payment, currency in which the
principal of or interest on, is payable, or impair the right to
institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date or, in the case of repayment at the option
of the Holder, on or after the date for repayment), or
(2) reduce the percentage in principal amount of the
Outstanding Notes, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders
of which is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, or
Section 513 or Section 1012, except to increase any such percentage
or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each
Outstanding Note.
It shall not be necessary for any Act of Holders of Notes under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
As a condition to executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 315 of the Trust
Indenture Act) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of a Note theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 905. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Notes.
SECTION 906. EFFECT ON SENIOR INDEBTEDNESS.
No supplemental indenture shall directly or indirectly modify the
provisions of Article Thirteen in any manner which might terminate or impair
the rights and benefits of subordination provided to the holders of Senior
Indebtedness pursuant to Article Thirteen.
SECTION 907. RECORD DATE.
If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, 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 supplemental indenture,
agreement or instrument or any waiver, and shall promptly notify the Trustee
of any such record date. If a record date is fixed those Persons who were
Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such supplemental indenture,
agreement or instrument or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date.
The record date shall be a date no more than 30 days prior to the first
solicitation of Holders generally in connection therewith and no later than
the date such solicitation is completed. No such consent shall be valid or
effective for more than six months after such record date. Subject to
applicable law, until any supplemental indenture, agreement, instrument or
waiver becomes effective, or a consent to it by a Holder of a Note shall
cease to be valid and effective as set forth in the preceding sentence, such
consent is a continuing consent by the Holder and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note.
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ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and
interest on the Notes in accordance with the terms thereof and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment an Office or
Agency where Notes may be presented or surrendered for payment, where Notes
may be surrendered for registration, transfer or exchange and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such Office or Agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee
as its Office or Agency for each of the foregoing purposes. If at any time
the Company shall fail to maintain any such required Office or Agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it
shall, on or before each due date of the principal of or interest on the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum of Money sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and shall promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it shall,
on or prior to each due date of the principal of or interest on the Notes,
deposit with any Paying Agent a sum of Money sufficient to pay the principal
or interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to
act.
The Company shall cause each Paying Agent other than the Trustee or
the Company to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent shall:
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(1) hold all sums held by it for the payment of the
principal of or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as provided in this Indenture;
(2) give the Trustee notice of any Event of Default by
the Company (or any other obligor upon the Notes) in the making of
any payment of principal or interest on the Notes; and
(3) at any time during the continuance of any such
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same terms as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such Money.
Any Money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest
on any Note and remaining unclaimed for two years after such principal or
interest shall have become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
Money, and all liability of the Company as trustee thereof, shall thereupon
cease.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be done
all things reasonably necessary to preserve and keep in full force and effect
the corporate existence, rights (charter and statutory) and franchises of the
Company and its Material Subsidiaries; PROVIDED, HOWEVER, that the foregoing
shall not obligate the Company to preserve any such right or franchise if the
Company shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Material Subsidiaries
and that the loss thereof will not have a material adverse effect on the
business or financial condition of the Company and its Subsidiaries, taken as
a whole.
SECTION 1005. MAINTENANCE OF PROPERTIES.
The Company will:
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(1) cause its properties and the properties of its
Material Subsidiaries (other than properties obtained by the Company
or any Material Subsidiary through foreclosure or other resolution
of any loan) used or useful in the conduct of the business of the
Company and its Material Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with all
necessary facilities and equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that the foregoing shall not prevent the Company or a
Material Subsidiary from discontinuing the operation and maintenance
of any of its properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and will
not have a material adverse effect on the business or financial
condition of the Company and its Subsidiaries, taken as a whole;
(2) take all appropriate steps to preserve, protect and
maintain the trademarks, trade names, copyrights, licenses and
permits used in the conduct of the business of the Company and its
Material Subsidiaries; PROVIDED, HOWEVER, that the foregoing shall
not prevent the Company or a Material Subsidiary from selling,
abandoning or otherwise disposing of any such trademark, trade name,
copyright, license or permit if such sale, abandonment or
disposition is, in the judgment of the Company, desirable in the
conduct of its business and will not have a material adverse effect
on the business or financial condition of the Company and its
Subsidiaries, taken as a whole; and
(3) The Company and each of its Material Subsidiaries
shall comply with all statutes, laws, ordinances, or government
rules and regulations to which it is subject, noncompliance with
which would materially adversely affect the business or financial
condition of the Company and its Subsidiaries, taken as a whole.
SECTION 1006. RESTRICTIONS ON DIVIDENDS, REDEMPTIONS AND OTHER
PAYMENTS.
The Company shall 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 through any Subsidiary, in respect of the Company's
capital stock (such dividends, purchases, redemptions, retirements, payments
and distributions being herein collectively called "RESTRICTED PAYMENTS") if,
after giving effect thereto,
(1) an Event of Default would have occurred; or
(2) (A) the sum of (i) such Restricted Payments plus
(ii) the aggregate amount of all Restricted
Payments made during the period after December 31,
1995 would exceed (B) the sum of (i) $10 million
plus (ii) 50% of the
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Company's Consolidated Net Income for each fiscal
year commencing subsequent to December 31, 1995
(with 100% reduction for a loss in any fiscal
year), plus (iii) the cumulative net proceeds
received by the Company from the issuance or sale
after December 31, 1995 of capital stock of the
Company (including in such net proceeds the face
amount of any indebtedness that has been converted
into common stock of the Company after December 31,
1995).
Notwithstanding the foregoing, the Company may make a previously-declared
Restricted Payment if the, declaration of such Restricted Payment was
permitted under this Section when made. For purposes of this Section, the
amount of any Restricted Payment payable in property shall be deemed to be
the fair market value of such property as determined by the Board of
Directors of the Company.
SECTION 1007. LIMITATION ON INDEBTEDNESS FOR MONEY BORROWED.
Neither the Company nor any Subsidiary will create, incur, assume,
guarantee or become liable with respect to any Indebtedness for Money
Borrowed if, immediately after giving effect to any such creation,
incurrence, assumption or guarantee (including giving effect to the
retirement of any existing indebtedness from the proceeds of such additional
Indebtedness for Money Borrowed):
(1) The aggregate amount of Senior Recourse Indebtedness
outstanding would exceed 450% of the Company's Consolidated
Capitalization; or
(2) The aggregate amount of Subordinated Indebtedness outstanding
would exceed 100% of the Company's Consolidated Net Worth.
SECTION 1008. INSURANCE.
The Company shall carry and maintain, and cause each of its
Subsidiaries to carry and maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering
such risks as is usually carried by similarly-situated companies engaged in
similar operations and owning similar properties in similar geographic areas
in which the Company or such Subsidiary operates, PROVIDED that such
insurance is generally available at commercially reasonable rates, and
further PROVIDED that the Company may self-insure, or insure through captive
insurers or insurance cooperatives to the extent consistent with prudent
business practices. Such insurance shall be in such amounts, contain such
terms, be in such forms and be for such periods as are customary for such
similarly-situated companies in the Company's industry or insurance markets
reasonably accessible by the Company. The Company will provide and will
cause each Subsidiary to provide such information and documents reasonably
requested by the Trustee from time to time with respect to the Company's
provision for insurance. The obligations evidenced by this covenant shall be
interpreted to reflect changes in insurance practices related to
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the method in which insurance risks are covered in the North American and
European markets or in any other market in which the Company or its
Subsidiaries, as the case may be, reasonably places coverage.
SECTION 1009. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary
or upon the income, profits or property of the Company or any Subsidiary and
(2) all material lawful claims for labor, material and supplies which, if
unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; 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 whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 1010. BOOKS AND RECORDS.
The Company shall, and shall cause each Material Subsidiary to, at
all times keep proper books of record and account in which proper entries
shall be made in accordance with GAAP and, to the extent applicable,
regulatory accounting principles.
SECTION 1011. STATEMENT BY OFFICERS AS TO DEFAULT.
(1) The Company will deliver to the Trustee, within 45
days after the end of each calendar quarter, an Officers'
Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this
Indenture (other than a term, provision or condition specifically
dealt with in Clause (2) of this Section 1011), setting forth the
arithmetical computations required to show compliance with the
provisions of Sections 1006, 1007 and 1015 during the previous
twelve month period, and, if the Company shall be in default,
specifying all such defaults and the nature and status thereof of
which they may have knowledge.
(2) The Company will deliver to the Trustee, within
five days after any officer eligible hereunder to sign an Officers'
Certificate becomes aware of the occurrence thereof, written notice
of any event which after notice or lapse of time or both would
become an Event of Default pursuant to Clause (4) of Section 501, or
the occurrence of any Repurchase Event pursuant to Article Fourteen
hereof.
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SECTION 1012. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 through 1007 and 1013
through 1015 with respect to the Notes if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Notes, by Act of such Holders, either shall waive such compliance in such
instance or generally shall have waived compliance with such term, provision
or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
SECTION 1013. LIMITATION ON RANKING OF FUTURE INDEBTEDNESS.
The Company will not, directly or indirectly, incur, create, assume or
guarantee any Indebtedness for Money Borrowed which is expressly subordinate
in right of payment to any Senior Indebtedness, other than Junior
Indebtedness or indebtedness that is pari passu with the Notes in right of
payment. For purposes of this Section 1013, the incurrence of Senior
Indebtedness which is unsecured shall not, because of its unsecured status,
be deemed to be subordinate in right of payment to any Senior Indebtedness
which is secured.
SECTION 1014. LIMITATIONS ON RESTRICTING SUBSIDIARY DIVIDENDS.
The Company shall not and shall not permit any Subsidiary of the Company
to, create or otherwise cause to become effective any consensual encumbrance
or restriction of any kind on the ability of any Subsidiary of the Company to
(a) pay dividends or make any other distribution on its capital stock, (b)
pay any indebtedness owed to the Company or any other Subsidiary of the
Company or (c) make loans, advances, or capital contributions to the Company
or any other Subsidiary of the Company except (i) as set forth in the
instrument evidencing or the agreement governing Acquired Indebtedness of any
acquired entity which becomes a Subsidiary of the Company, PROVIDED, that any
restriction or encumbrance under such instrument or agreement existed at the
time of acquisition, was not put in place in anticipation of such
acquisition, and is not applicable to any Person, other than the Person or
property or assets of the Person so acquired; (ii) by agreements and
transactions permitted under Section 1006; (iii) customary provisions
restricting subletting or assignment of any lease or license of the Company
or any Subsidiary of the Company; (iv) any encumbrance or restriction arising
under applicable law; (v) any encumbrance or restriction arising under
indebtedness or other agreements existing on the date of original issuance of
the Notes; (vi) any restrictions, with respect to a Subsidiary of the Company
imposed pursuant to an agreement that has been entered into for the sale or
disposition of the stock, business, assets or properties of such Subsidiary;
(vii) any encumbrance or restriction arising under the terms of purchase
money obligations, but only to the extent such purchase money obligations
restrict or prohibit the transfer of the property so acquired; (viii) any
encumbrance or restriction arising under customary non-assignment provisions
in installment
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purchase contracts; (ix) any encumbrance or restriction on the ability of any
Subsidiary to transfer any of its property acquired after the date hereof to
the Company or any Subsidiary that is required by a lender to, or purchaser
of any indebtedness of, such Subsidiary in connection with a financing of the
acquisition of such property (including with respect to the purchase of asset
portfolios and pursuant to the underwriting or origination of mortgage loans)
by such Subsidiary; and (x) any encumbrance or restriction pursuant to any
agreement that extends, refinances, renews or replaces any agreement
described in the foregoing clauses (i) through (ix).
SECTION 1015. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Material
Subsidiaries to, enter into any transaction (or series of related
transactions), including, without limitation, any loan, advance, guarantee or
capital contribution to, or for the benefit of, or any sale, purchase, lease,
exchange or other disposition of any property or the rendering of any
service, or any other direct or indirect payment, transfer or other
disposition (a "Transaction"), involving payments in excess of $60,000, with
any Affiliate of the Company (other than a wholly-owned Subsidiary), on terms
and conditions less favorable to the Company or such Material Subsidiary, as
the case may be, than would be available at such time in a comparable
Transaction in arm's length dealings with an unrelated Person as determined
by the Board of Directors, such approval to be evidenced by a Board
Resolution.
The provisions of the immediately preceding paragraph will not apply to:
(1) Restricted Payments otherwise permitted pursuant to this
Indenture;
(2) fees and compensation (including amounts paid pursuant to
employee benefit plans) paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any
Subsidiary, as determined by the Board of Directors or the senior
management thereof in the exercise of their reasonable business judgment;
or
(3) payments for goods and services purchased in the ordinary
course of business on an arms-length basis.
SECTION 1016. MINIMUM INTEREST COVERAGE RATIO.
The Company will not permit the Interest Coverage Ratio to be less than
1.25 to 1.00.
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SECTION 1017. EXCEPTIONS TO COVENANTS.
The Company shall not, and shall not permit any Subsidiary to, take or
permit to be taken any action or fail to take any action which is permitted
by any of the covenants contained in this Indenture if such action or
omission would result in the breach of any other covenant contained in this
Indenture.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. RIGHT OF REDEMPTION.
The Notes shall not be redeemable at the option of the Company prior to
January 15, 2001. The Company may, at its option, redeem all or any part of
the Notes at any time on or after January 15, 2001, at the Redemption Price
of 100% of the principal amount thereof, without premium, together with
interest accrued to the Redemption Date. Redemption of Notes at the option
of the Company as permitted hereby shall be made in accordance with the terms
of such Notes and this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of
the Company of less than all of the Notes, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed.
SECTION 1103. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not less than 30 days prior to the Redemption
Date by the Trustee from the Outstanding Notes, by lot or by such other
method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions of the principal amount of
Notes; PROVIDED, HOWEVER, that no such partial redemption shall reduce the
portion of the principal amount of a Note not redeemed to less than the
minimum denomination for a Note established herein.
The Trustee shall promptly notify the Company and the Note Registrar (if
other than itself) in writing of the Notes selected for redemption and, in
the case of any Notes selected for partial redemption, the principal amount
thereof to be redeemed.
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For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion
of the principal of such Notes which has been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section
106, not less than 30 nor more than 60 days prior to the Redemption Date, to
the Holders of Notes to be redeemed. Failure to give notice by mailing in
the manner herein provided to the Holder of any Notes designated for
redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption
of any other Notes or portion thereof.
Any notice that is mailed to the Holder of any Notes in the manner
herein provided shall be conclusively presumed to have been duly given,
whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if fewer than all Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the principal
amount) of the particular Notes to be redeemed,
(4) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date,
upon surrender of such Note, the Holder of such Note will receive, without
charge to such Holder, a new Note or Notes of authorized denominations
for the principal amount thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Note or portion thereof to be redeemed and
that interest thereon shall cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price, and
(7) the CUSIP number of such Notes, if any (or any other numbers used
by a Depository to identify such Notes).
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Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) Money,
in funds available for payment by the Trustee on the Redemption Date, in an
amount sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any accrued interest on,
all the Notes or portions thereof which are to be redeemed on that date.
SECTION 1106. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any
such Note for redemption in accordance with said notice, such Note shall be
paid by the Company at the Redemption Price, together with any accrued
interest to the Redemption Date; PROVIDED, HOWEVER, that installments of
interest on Notes whose Stated Maturity is on or prior to the Redemption Date
shall be payable to the Holders of such Notes, or one or more Predecessor
Notes, registered as such at the close of business on the Regular Record
Dates therefor according to their terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal, until paid, shall bear interest from
the Redemption Date at the rate prescribed therefor in the Note.
SECTION 1107. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
any Office or Agency for such Note (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Note, without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
of the Note so surrendered. If a Note in global form is so surrendered, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Depository for such Note in global form as shall be specified in the Company
Order with respect thereto to the Trustee,
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without service charge, a new Note in global form in a denomination equal to
and in exchange for the unredeemed portion of the principal of the Note in
global form so surrendered.
ARTICLE TWELVE
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1201. REPAYMENT OPTION UPON DEATH OF HOLDER.
(1) Upon the death of any Holder of Notes who is a natural Person,
and upon the further receipt by the Company or the Trustee of a written
request for repayment and satisfaction of the conditions set forth in
subsection (2) below, the Company shall be required to pay, in accordance
with the terms of this Article, the Repayment Price of, and (except if the
Repayment Date shall be an Interest Payment Date) any accrued interest on
all or such portion (which portion shall be an integral multiple of $1,000
in excess of the minimum authorized denomination) of the Note or Notes
held by the deceased Holder at the date of such Holder's death as
requested, provided that the Company shall not be required to make
repayment payments aggregating more than $30,000 in principal amount
(plus accrued interest) in any calendar year on a Note or Notes held by
any one deceased Holder or aggregating more than the Maximum Annual
Repayment Amount in principal amount (plus accrued interest) in any
calendar year on Notes held by any number of deceased Holders. The
"REPAYMENT PRICE" of any Note repaid pursuant to this Article shall be
100% of the principal amount thereof. Subject to subsection (2) below,
repayment of such Notes shall be made in the order in which requests
therefor are received (subject to the aforesaid Maximum Annual Repayment
Amount limitation) within 30 days following receipt by the Company or
the Trustee of the following:
(a) a written request for repayment of the Note or Notes
signed by a duly authorized representative of the Holder, which
request shall set forth the name of the deceased Holder, the date
of death of the deceased Holder, and the principal amount of the
Note or Notes to be repaid; and
(b) the certificates representing the Note or Notes to be repaid;
and
(c) evidence satisfactory to the Company and the Trustee of the
death of such deceased Holder and the authority of the representative
to such extent as may be required by the Trustee.
Notes not repaid in any calendar year because of the Maximum Annual
Repayment Amount may be held by the Trustee at the request of the authorized
representative of the deceased Holder and repaid in subsequent years in the
order in which such Notes are received.
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(2) A Note or Notes held by the deceased Holder shall not be
entitled to repayment pursuant to this Section unless all of the following
conditions are met:
(a) the Notes to be repaid shall have been registered on the
Note Register in the name of the deceased Holder since the issue
date of such Notes or for a period of at least six months prior to
the date of the deceased Holder's death, whichever is less; and
(b) the Company or the Trustee shall have received a written
request for repayment within one year after the date of the deceased
Holder's death or, in the case of requests for a subsequent repayment
of a Note or Notes held by such deceased Holder, within one year
after any such preceding request; and
(c) the Company shall not, after giving effect to such repayment,
have made repayment payments aggregating more than the Maximum
Annual Repayment Amount in principal amount (plus accrued interest)
of Notes within any twelve month period; and
(d) the Company shall not, after giving effect to such repayment,
be in default with respect to any Senior Indebtedness; and
(e) the Company shall not be subject to any law, regulation,
agreement or administrative directive preventing such repayment.
(3) Authorized representatives of a Holder shall include the
following: executors, administrators or other legal representatives of
an estate; trustees of a trust; joint owners of Notes owned in joint
tenancy or tenancy by the entirety; custodians; conservators; guardians;
attorneys-in-fact; and other Persons generally recognized as having legal
authority to act on behalf of another.
(4) For purposes of this Section, the death of a natural Person
owning a Note or Notes in joint tenancy or tenancy by the entirety with
another or others shall be deemed the death of the Holder of the Note or
Notes, and the entire principal amount of the Note or Notes so held shall
be subject to repayment, together with accrued interest thereon to the
Repayment Date, in accordance with the provisions of this Article. For
purposes of this Section, the death of a natural Person owning a Note or
Notes by tenancy in common shall be deemed the death of a Holder of Note
or Notes only with respect to the deceased Holder's interest in the Note
or Notes so held by tenancy in common; except that in the event a Note or
Notes are held by husband and wife as tenants in common, the death of
either shall be deemed the death of the Holder of the Note or Notes, and
the entire principal amount of the Note or Notes so held shall be subject
to repayment in accordance with the provisions of this Article. A natural
Person who, during such Person's lifetime, was entitled to substantially
all of the beneficial interests of ownership of Notes will, upon
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such Person's death, be deemed the Holder thereof for purposes of this
Section, regardless of the registered holder, if such beneficial interest
can be established to the satisfaction of the Trustee. Such beneficial
interest will be deemed to exist in typical cases of nominee ownership,
ownership under the Uniform Transfers (or Gifts) to Minors Act, community
property or other joint ownership arrangements between a husband and
wife, and trust arrangements where one Person has substantially all of
the beneficial ownership interests in Notes during such Person's lifetime.
Beneficial interests shall include the power to sell, transfer or otherwise
dispose of Notes and the right to receive the proceeds therefrom, as well
as principal thereof and interest thereon.
(5) If Notes are issued in global form (i.e., in the name of the
nominee of a Depository for purposes of book-entry transfer) the Company
or the Trustee may adopt appropriate procedures to allow beneficial owners
of Notes to obtain payment in accordance with the requirements of the
Depository in the event of a request for repayment of the Notes pursuant
to this Section.
SECTION 1202. DEPOSIT OF REPAYMENT PRICE.
Within 30 days after the receipt by the Company or the Trustee of any
request for repayment of a Note or Notes or any portion thereof duly made
pursuant to Section 1201, the Company shall deposit with the Trustee or with
a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of Money
sufficient to pay the Repayment Price of, and (except if the Repayment Date
shall be an Interest Payment Date) any accrued interest on all the Notes or
portions thereof which are to be repaid on that date.
SECTION 1203. NOTES PAYABLE ON REPAYMENT DATE.
A written request having been made as aforesaid, the Note or Notes so to
be repaid shall, on the Repayment Date, become due and payable at the
Repayment Price, and from and after such date (unless the Company shall
default in the payment of the Repayment Price and accrued interest) such
Notes shall cease to bear interest. Upon surrender of any such Note for
repayment in accordance with said request, such Note shall be paid by the
Company at the Repayment Price, together with any accrued interest to the
Repayment Date; PROVIDED, HOWEVER, that installments of interest on Notes
whose Stated Maturity is on or prior to the Repayment Date shall be payable
to the Holders of such Notes, or one or more Predecessor Notes, registered as
such at the close of business on the Regular Record Dates therefor according
to their terms and the provisions of Section 307.
If any Note to be repaid shall not be so paid upon surrender thereof for
repayment, the principal, until paid, shall bear interest from the Repayment
Date at the rate prescribed therefor in the Note.
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SECTION 1204. NOTES REPAID IN PART.
Any Note which is to be repaid only in part shall be surrendered at any
office or Agency for such Note (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Note, without service charge, a new Note or Notes, containing
identical terms and provisions, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unpaid portion of the principal of the Note so surrendered. If a Note in
global form is so surrendered, the Company shall execute, and the Trustee
shall authenticate and deliver to the Depository for such Note in global form
as shall be specified in the Company Order with respect thereto to the
Trustee, without service charge, a new Note in global form in a denomination
equal to and in exchange for the unpaid portion of the principal of the Note
in global form so surrendered.
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.
(1) The Company covenants and agrees, and each Holder of Notes, by
such Holder's acceptance thereof, likewise covenants and agrees, and for
purposes of Section 508 consents, that the indebtedness represented by the
Notes and the payment of the principal of and interest on each and all of
the Notes is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment
in full of all Senior Indebtedness.
(2) The Trustee, the Company and the Holders of Notes hereby agree
that, until all Senior Indebtedness has been paid in full, the Holders
of Notes shall be permitted to retain only the following payments of
principal and interest paid by the Company in respect of Notes (all such
payments being referred to herein as "PERMITTED PAYMENTS"), and all such
payments that are not Permitted Payments will be turned over by the
Trustee or the Holders of Notes to the holder or holders of Senior
Indebtedness or any agent therefor (a "SENIOR AGENT") for the benefit of
the holder or holders of Senior Indebtedness:
(a) principal payment of the Notes, whether (i) at the Stated
Maturity, (ii) at the Company's option as provided in Article Eleven,
(iii) as a result of the death of one or more Holders as provided in
Section 1201 or (iv) following exercise by a Holder of the repurchase
rights provided in Section 1401; provided
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that all such principal payments are subject to the restrictions set
forth in Section 1301(3) hereof; and
(b) payments of interest in respect of the Notes; provided that
all such principal payments are subject to the restrictions set forth
in Section 1301(3) hereof.
(3) From and after the receipt by the Trustee of a written notice
(the "Default Notice") from the holder or holders of not less than 51% in
principal amount of the outstanding Senior Indebtedness or any Senior
Agent specifying that an event of default under any Senior Indebtedness
(a "Senior Event of Default") has occurred, the Company may not make any
principal payments described in Section 1301(2)(a) or interest payments
described in Section 1301(2)(b) to the Holders of Notes and neither the
Trustee nor the Holders of not less than 25% in principal amount of the
Outstanding Notes may accelerate the maturity of such Notes as provided
in Section 502, until the first to occur of the following:
(a) such Senior Event of Default is cured, or
(b) such Senior Event of Default is waived by the holders of
such Senior Indebtedness or the Senior Agent, or
(c) the expiration of 180 days after the date the Default
Notice is received by the Trustee, if the maturity of such Senior
Indebtedness has not been accelerated at such time.
Upon payment in full of the Senior Indebtedness, payment of
principal and interest may be made to the Holders of Notes.
(4) Upon a payment or distribution to creditors of the Company in
a liquidation, dissolution, or winding up of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property or an assignment for
the benefit of creditors or any marshaling of the Company's assets and
liabilities:
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon in
respect of principal and interest, or adequate provision shall be
made for such payment, before the Holders of any of the Notes are
entitled to receive any payment on account of the principal of or
interest on the indebtedness evidenced by the Notes;
(b) any payment by, or distribution of assets of, the Company
of any kind or character, whether in cash, property or securities
(other than securities of
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the Company as reorganized or readjusted or securities of the
Company or any other Corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate,
at least to the extent provided in this Article with respect to the
Notes, to the payment of all Senior Indebtedness, provided that the
rights of the holders of Senior Indebtedness are not impaired by
such reorganization or readjustment), to which the Holders of any
of the Notes or the Trustee would be entitled except for the
provisions of this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or any Senior Agent,
ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to any concurrent
payment or distribution (or provision therefor) to the holders of
such Senior Indebtedness, before any payment or distribution is
made to the Holders of the indebtedness evidenced by the Notes or
to the Trustee under this Indenture; and
(c) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or
securities of the Company or any other Corporation provided for by
a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with
respect to the Notes, to the payment of all Senior Indebtedness,
provided that the rights of the holders of Senior Indebtedness are
not impaired by such reorganization or readjustment), shall be
received by the Trustee or the Holders of any of the Notes before
all Senior Indebtedness is paid in full, such payment or
distribution shall be paid over to the holders of such Senior
Indebtedness or any Senior Agent, ratably as aforesaid, for
application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution
(or provision therefor) to the holders of such Senior Indebtedness.
(5) The Holders and the Trustee acknowledge that the holders
of Senior Indebtedness and the Holders of Notes, respectively, are
entitled to exercise certain rights and powers with respect to the Company
from time to time, whether before or after an occurrence of an Event of
Default, and the exercise of any such right or power by one creditor may
preclude the exercise of a similar right or power by one or more other
creditors (any such right or power being herein called an "Exclusive
Power"). To the extent that any holder or holders of Senior Indebtedness
or any Senior Agent actually exercises any Exclusive Power, then the
Trustee and the Holders of Notes agree to refrain from exercising any
substantially similar Exclusive Power to the extent necessary to permit
the holders of Senior Indebtedness to benefit from their actions.
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(6) Any renewal or extension of the time of payment of any
Senior Indebtedness of the Company or the exercise by the holders of
Senior Indebtedness of the Company or any Senior Agent of any of their
rights under any instrument creating or evidencing Senior Indebtedness of
the Company, including without limiting the waiver of default thereunder,
may be made or done all without notice to or assent from the Holders of
the Notes or the Trustee. No compromise, alteration, amendment,
modification, extension, renewal or other change of, or waiver, consent
or other action in respect of, any liability or obligation under or in
respect of, or of any of the terms, covenants or conditions of any
indenture or other instrument under which any Senior Indebtedness of the
Company is outstanding or of such Senior Indebtedness of the Company,
whether or not such relief is in accordance with the provisions of any
applicable document, shall in any way alter or affect any of the
provisions of this Article Thirteen or of the Notes relating to the
subordination thereof.
(7) Notices to holders of Senior Indebtedness shall be made to
each holder of Senior Indebtedness or, if holders of Senior Indebtedness
have appointed a Senior Agent, then to such Senior Agent, and shall be
made in the manner specified in the document evidencing such holder's
Senior Indebtedness if such a manner is so specified therein.
(8) References in this Article Thirteen to "payment in full
of all Senior Indebtedness" shall mean payment in cash unless the holders
of such Senior Indebtedness or the Senior Agent consent to payment through
other means, including but not limited to restricted notes or in-kind
payments.
SECTION 1302. SUBROGATION.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Notes shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or Notes
of the Company applicable to such Senior Indebtedness until all amounts owing
on the Notes shall be paid in full, and, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Notes, no such payment or distribution made to the holders of Senior
Indebtedness by virtue of this Article which otherwise would have been made
to the Holders of the Notes shall be deemed to be a payment by the Company on
account of the Senior Indebtedness, and no such payments or distributions to
the Holders of the Notes of cash, property or Notes otherwise distributable
to the holders of Senior Indebtedness shall, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of
the Notes, be deemed to be a payment by the Company on account of the Notes,
it being understood that the provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Notes, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
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SECTION 1303. OBLIGATION OF COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of
the Notes, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of and
interest on the Notes 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 of the Notes and creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior
Indebtedness in respect of cash, property or Notes of the Company received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization
proceeding affecting the affairs of the Company is pending or upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit
of creditors, liquidating trustee or agent or other person making any payment
or distribution, delivered to the Trustee or to the Holders of the Notes, for
the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 1304. PAYMENTS ON NOTES PERMITTED.
Nothing contained in this Article or elsewhere in this Indenture, or in
any of the Notes, shall affect the obligation of the Company to make, or
prevent the Company from making, payment of the principal of and interest on
the Notes in accordance with the provisions hereof and thereof, except as
otherwise provided in this Article.
SECTION 1305. EFFECTUATION OF SUBORDINATION BY TRUSTEE.
Each Holder of Notes, by such Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
SECTION 1306. NOTICE TO TRUSTEE AND KNOWLEDGE OF TRUSTEE.
Notwithstanding the provisions of this Article or any other provisions
of this Indenture, the Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness
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and shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment of Moneys to or by the Trustee, or
the taking of any other action by the Trustee, unless and until the Trustee
shall have received written notice thereof from the Company, any Holder of
Notes, any Paying Agent of the Company or the holder or representative of any
class of Senior Indebtedness.
The Company shall give 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 Notes. Prior to the receipt of such notice, the
Trustee shall be entitled in all respects to assume that no such facts exist.
SECTION 1307. TRUSTEE MAY HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness at the time held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.
SECTION 1308. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company 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.
ARTICLE FOURTEEN
RIGHT TO REQUIRE REPURCHASE
SECTION 1401. RIGHT TO REQUIRE REPURCHASE.
In the event that there shall occur a Repurchase Event (as defined in
Section 1407), then each Holder shall have the right, at such Holder's
option, to require the Company to purchase, and upon the exercise of such
right, the Company shall purchase, all or any part of such Holder's Notes on
the date (the "Repurchase Date") that is 30 days after the date the Company
gives notice of the Repurchase Event as contemplated in Section 1402(a) at a
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest to the Repurchase Date. Such right
to require the repurchase of Notes shall not continue after a discharge of
the Company from its obligations with respect to the Notes in accordance with
Article Four.
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SECTION 1402. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(1) On or before the 15th day after the Repurchase Event, the
Company, or, upon Company Request transmitted to the Trustee within
5 days of such Repurchase Event, the Trustee (in the name and at the
expense of the Company), shall give notice of the occurrence of the
Repurchase Event and of the repurchase right set forth herein arising
as a result thereof by first-class mail, postage prepaid, to each
Holder of the Notes at such Holder's address appearing in the Note
Register. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(a) that the notice is being made pursuant to Section 1401 and a
description of the circumstances triggering the repurchase
right,
(b) the Repurchase Date,
(c) the date by which the repurchase right must be exercised,
(d) the Repurchase Price,
(e) the instructions a Holder must follow to exercise a
repurchase right, and
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. The Trustee shall
have no affirmative obligation to determine if there shall have occurred
a Repurchase Event.
(2) To exercise the repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the
notice referred to in (1) above) and to the Trustee on or before the
fifteenth (15th ) day prior to the Repurchase Date (i) written notice of
the Holder's exercise of such right, which notice shall set forth the
name of the Holder, the principal amount of the Note or Notes (or
portion of a Note) to be repurchased, and a statement that an election
to exercise the repurchase right is being made thereby, and (ii) the
Note or Notes with respect to which the repurchase right is being
exercised, duly endorsed for transfer to the Company. Such written
notice shall be irrevocable following the close of business on the fifth
(5th) day prior to the Repurchase Date; PROVIDED, HOWEVER, that the
Company, in its sole and absolute discretion, may consent to the
withdrawal of any Notes after such date and prior to the Repurchase
Date. If the Repurchase Date falls between any Regular Record Date
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and the next succeeding Interest Payment Date, Notes to be repurchased
must be accompanied by a check from the Holder of an amount equal to the
interest thereon which the registered Holder thereof is to receive on
such Interest Payment Date. Upon receipt of any such check, the Trustee
shall forward such check to the Company.
(3) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase
Date pay or cause to be paid in cash to the Holder thereof the
Repurchase Price of the Note or Notes as to which the repurchase right
had been exercised. In the event that a repurchase right is exercised
with respect to less than the entire principal amount of a surrendered
Note, the Company shall execute and deliver to the Trustee and the
trustee shall authenticate for issuance in the name of the Holder a new
Note or Notes in the aggregate principal amount of the unrepurchased
portion of such surrendered Note.
SECTION 1403. DEPOSIT OF REPURCHASE PRICE.
On or before the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money, which shall be good funds on the Repurchase Date, sufficient
to pay the Repurchase Price of the Notes which are to be repurchased on the
Repurchase Date.
SECTION 1404. NOTES NOT REPURCHASED ON REPURCHASE DATE.
If a Note surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at a rate per annum
borne by such Note.
SECTION 1405. NOTES REPURCHASED IN PART.
Any Note which is to be repurchased only in part shall be surrendered at
any office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Note so surrendered.
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SECTION 1406. PRIORITY OF REPURCHASE RIGHTS.
If the Repurchase Event is effected with respect to Junior Indebtedness,
the Holders of the Notes requiring the Company to repurchase Notes must be
paid in full pursuant to the terms and conditions of this Article Fourteen
prior to any payments being made to the Holders of Junior Indebtedness. If
the Repurchase Event is effected with respect to Subordinated Indebtedness
that is pari passu with the Notes, the Holders of the Notes requiring the
Company to repurchase Notes must be paid concurrently with the Holders of the
pari passu Subordinated Indebtedness.
SECTION 1407. DEFINITION OF REPURCHASE EVENT.
For purposes of this article, a "Repurchase Event" shall have occurred
upon the occurrence of any event requiring that the Company repurchase, or
make an offer to repurchase, any Subordinated Indebtedness, whether now
outstanding or issued in the future, other than the Notes, including, without
limitation, the repurchase options contained in the Section 1010 and Article
Fourteen of the Indenture dated as of November 27, 1995 between the Company
and First Interstate Bank of Texas, National Association, issued with respect
to the Company's 8% Convertible Subordinated Debentures Due 2005.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals, if any, to be hereunto
affixed, all as of the day and year first above written.
[SEAL] AMRESCO, INC.
By /s/ ROBERT H. LUTZ, JR.
------------------------------------
Name: Robert H. Lutz, Jr.
Title: Chairman and Chief Executive
Officer
Attest:
/s/ L. KEITH BLACKWELL
- ------------------------------
[SEAL] BANK ONE, COLUMBUS, N.A., AS TRUSTEE
By /s/ VICTORIA A. PAVLICK
------------------------------------
Name: Victoria A. Pavlick
Title: Authorized Signer
Attest:
/s/ MARK HOWARD
- ------------------------------
79
