SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1999 or
( ) Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to _______
Commission File Number 1-7444
OAKWOOD HOMES CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0985879
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 McCloud Road, Greensboro, North Carolina 27409-9634
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(Address of principal executive offices)
Post Office Box 27081, Greensboro, North Carolina 27425-7081
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(Mailing address of principal executive offices)
(336) 664-2400
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(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of April 30, 1999.
Common Stock, Par Value $.50 Per Share . . . . . . . . . 47,063,892
1
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
QUARTERLY REPORT ON FORM 10-Q
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended March 31, 1999
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
Greensboro, North Carolina
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures contained herein are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
2
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Three months ended
March 31,
---------
1999 1998
---- ----
Revenues
Net sales $ 367,095 $ 250,352
Financial services revenues
Consumer finance 14,504 20,825
Special charges - (16,300)
Insurance 11,949 8,045
----------- -----------
26,453 12,570
Other income 2,800 1,971
----------- -----------
Total revenues 396,348 264,893
----------- -----------
Costs and expenses
Cost of sales 260,004 170,261
Selling, general and administrative expenses 93,660 64,964
Financial services operating expenses
Consumer finance 9,117 5,929
Insurance 7,212 6,488
----------- -----------
16,329 12,417
Provision for losses on credit sales 1,311 -
Interest expense
Non-financial services 2,532 678
Financial services 6,654 4,238
----------- -----------
Total costs and expenses 380,490 252,558
----------- -----------
Income before income taxes 15,858 12,335
Provision for income taxes 6,185 4,687
----------- -----------
Net income $ 9,673 $ 7,648
=========== ===========
Earnings per share
Basic $ .21 $ .17
Diluted $ .21 $ .16
Dividends per share $ .01 $ .01
Weighted average number of
common shares outstanding
Basic 46,434 46,214
Diluted 47,172 47,803
See accompanying notes to the consolidated financial statements.
3
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
Six months ended
March 31,
---------
1999 1998
---- ----
Revenues
Net sales $ 726,909 $ 472,245
Financial services revenues
Consumer finance 30,410 44,385
Special charges - (16,300)
Insurance 23,553 14,964
----------- -----------
53,963 43,049
Other income 4,860 4,262
----------- -----------
Total revenues 785,732 519,556
----------- -----------
Costs and expenses
Cost of sales 515,185 322,087
Selling, general and administrative expenses 184,353 123,425
Financial services operating expenses
Consumer finance 16,685 11,383
Insurance 15,590 12,071
----------- -----------
32,275 23,454
Provision for losses on credit sales 1,961 -
Interest expense
Non-financial services 4,829 1,385
Financial services 12,486 8,157
----------- -----------
Total costs and expenses 751,089 478,508
----------- -----------
Income before income taxes 34,643 41,048
Provision for income taxes 13,511 15,598
----------- -----------
Net income $ 21,132 $ 25,450
=========== ===========
Earnings per share
Basic $ .46 $ .55
Diluted $ .45 $ .54
Dividends per share $ .02 $ .02
Weighted average number of
common shares outstanding
Basic 46,423 46,132
Diluted 47,055 47,567
See accompanying notes to the consolidated financial statements.
4
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands except share and per share data)
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, September 30,
ASSETS 1999 1998
---- ----
Cash and cash equivalents $ 22,997 $ 28,971
Loans and investments 603,018 502,583
Other receivables 66,423 58,774
Inventories
Manufactured homes 363,112 242,867
Work-in-process, materials and supplies 48,717 42,068
Land/homes under development 9,789 6,417
------------- -------------
421,618 291,352
Properties and facilities 250,257 237,726
Deferred income taxes 13,640 14,850
Other assets 146,292 149,120
------------- -------------
$ 1,524,245 $ 1,283,376
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 286,447 $ 375,023
Notes and bonds payable 363,091 61,875
Accounts payable and accrued liabilities 222,720 226,867
Insurance reserves and unearned premiums 66,152 57,419
Other long-term obligations 14,171 14,517
Shareholders' equity
Common stock, $.50 par value; 100,000,000
shares authorized; 47,063,000 and 46,660,000
shares issued and outstanding 23,532 23,330
Additional paid-in capital 172,496 167,592
Retained earnings 380,220 360,025
------------- -------------
576,248 550,947
Less: Unearned compensation (4,584) (3,272)
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571,664 547,675
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$ 1,524,245 $ 1,283,376
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six months ended
March 31,
---------
<S> <C> <C>
1999 1998
---- ----
Operating activities
Net income $ 21,132 $ 25,450
Adjustments to reconcile net income to cash provided (used)
by operating activities
Depreciation and amortization 21,068 9,391
Deferred income taxes 1,210 (811)
Provision for losses on credit sales 1,961 -
(Gain) loss on sale of loans 1,565 (10,971)
Special charges - 16,300
Excess of cash receipts over REMIC residual income
recognized 12,102 7,245
Other 4,186 3,262
Changes in assets and liabilities
Other receivables (9,335) (411)
Inventories (130,266) (77,017)
Deferred insurance policy acquisition costs (1,602) (717)
Other assets (11,202) (1,864)
Accounts payable and accrued liabilities (4,555) 5,313
Insurance reserves and unearned premiums 8,733 8,121
Other long-term obligations (61) (98)
---------- ---------
Cash (used) by operations (85,064) (16,807)
Loans originated (671,594) (443,567)
Purchase of loans and securities (108,297) (5,045)
Sale of loans 641,723 459,033
Principal receipts on loans 17,652 21,823
---------- ---------
Cash provided (used) by operating activities (205,580) 15,437
---------- ---------
Investing activities
Acquisition of properties and facilities (26,170) (20,739)
Investment in and advances to joint venture 22,150 (10,454)
Other (8,470) (12,852)
---------- ---------
Cash (used) by investing activities (12,490) (44,045)
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6
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Financing activities
Net borrowings (repayments) on short-term credit facilities (88,576) 29,084
Issuance of notes and bonds payable 307,878 -
Payments on notes and bonds (6,432) (11,293)
Cash dividends (937) (928)
Proceeds from exercise of stock options 163 2,112
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Cash provided by financing activities 212,096 18,975
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Net decrease in cash and cash equivalents (5,974) (9,633)
Cash and cash equivalents
Beginning of period 28,971 28,717
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End of period $ 22,997 $ 19,084
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
7
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated financial statements reflect all adjustments, which are,
in the opinion of management, necessary to present fairly the results of
operations for the periods presented. Except for a special charge in the
amount of $16.3 million recorded for the three months ended March 31, 1998
relating to the carrying value of retained interests in certain REMIC
securitizations, such adjustments include only normal recurring
adjustments. Results of operations for any interim period are not
necessarily indicative of results to be expected for a full year.
2. On April 1, 1998 the Company acquired Schult Homes Corporation ("Schult"),
a producer of manufactured and modular housing headquartered in Middlebury,
Indiana. The acquisition was accounted for using the purchase method of
accounting. Schult's results of operations are included with those of the
Company from the April 1, 1998 acquisition date.
3. Certain of the Company's significant accounting policies are outlined below.
REVENUE RECOGNITION - MANUFACTURED HOUSING
Passage of title and risk of loss in a retail sale occurs upon the closing
of the sale, which includes, for the great majority of retail sales,
execution of loan documents and related paperwork and receipt of the
customer's down payment.
For those sales in which the home remains personal property, rather than
being converted to real property (i.e., sales under retail installment
contracts), the closing generally takes place before the home is delivered
to and installed on the customer's site. For such sales, delivery and
installation typically are straightforward and involve minimal preparation
of the customer's site, and typically occur shortly after closing.
Sales transactions in which the home is converted from personal property to
real property are financed as traditional mortgages rather than under
retail installment contracts. Such sales typically involve significant
preparation of the customer's site, which may include installation of
utilities, wells, extensive foundations, etc., and also require completion
of mortgage financing documentation, including title searches and
appraisals. As a consequence, the closing of these transactions occurs
after the home has been delivered and installed.
WARRANTY OBLIGATIONS
The Company provides a warranty against manufacturing defects from the date
of the retail sale. Estimated future warranty obligations are accrued at
the time of sale.
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4. The components of loans and investments are as follows:
March 31, September 30,
1999 1998
--------- -------------
(in thousands)
Loans held for sale $ 457,804 $ 365,126
Loans held for investment 58,940 62,669
Less: reserve for uncollectible receivables (3,745) (1,653)
---------- ----------
Total loans 512,999 426,142
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Retained interests in REMIC securitizations
(exclusive of loan servicing assets
included in other assets)
Regular interests, at amortized cost which
approximates fair value 43,724 22,822
Residual interests, at amortized cost which
approximates fair value 46,295 53,619
---------- ----------
Total retained REMIC interests 90,019 76,441
---------- ----------
$ 603,018 $ 502,583
========== ==========
5. The following table sets forth the computation of basic and diluted earnings
per share ("EPS"):
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
---------- ---------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
---- ---- ---- ----
(in thousands, except per share data)
Numerator for basic and diluted
EPS - Net income $ 9,673 $ 7,648 $ 21,132 $ 25,450
Denominator:
Weighted average number of
common shares outstanding 46,480 46,300 46,474 46,223
Unearned shares (46) (86) (51) (91)
--------- --------- ---------- ----------
Denominator for basic EPS 46,434 46,214 46,423 46,132
Dilutive effect of stock options and
restricted shares computed using
the treasury stock method 738 1,589 632 1,435
--------- --------- ---------- ----------
Denominator for diluted EPS 47,172 47,803 47,055 47,567
========= ========= ========== ==========
Earnings per common share - basic $ .21 $ .17 $ .46 $ .55
========= ========= ========== ==========
Earnings per common share - diluted $ .21 $ .16 $ .45 $ .54
========= ========= ========== ==========
</TABLE>
9
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Options to purchase 2,839,486 and 1,642,826 shares of common stock were not
included in the computation of diluted EPS for the first and second
quarters of fiscal 1999, respectively, because the options' exercise prices
were greater than the average market price of the Company's common stock
for that period and their inclusion would have been antidilutive.
6. In November 1998 the Company and certain of its present and former officers
and directors were named as defendants in lawsuits filed on behalf of
purchasers of the Company's common stock for various periods between April
11, 1997 and July 21, 1998 (the "Class Period"). These complaints, which
seek class action certification, allege violations of federal securities
law based on alleged false and misleading financial statements, reports
filed by the Company and other representations during the Class Period. The
Company intends to defend such lawsuits vigorously.
The Company is also subject to legal proceedings and claims which have
arisen in the ordinary course of its business and have not been finally
adjudicated. These actions, when ultimately concluded and determined will
not, in the opinion of management, have a material effect on the results of
operations or financial condition of the Company.
The Company is contingently liable as guarantor on installment sale
contracts sold to third parties on a full or limited recourse basis. The
amount of this contingent liability was approximately $29 million at March
31, 1999. The Company is also contingently liable as guarantor on
subordinated securities issued by REMIC trusts in the aggregate principal
amount of $80 million at March 31, 1999. The Company is also contingently
liable under terms of repurchase agreements with financial institutions
providing inventory financing for retailers of homes produced by Destiny
Industries, Inc. ("Destiny"), Golden West Homes ("Golden West") and Schult,
manufacturing subsidiaries of the Company doing business with independent
dealers. The Company estimates that its potential obligation under
repurchase agreements approximated $176 million at March 31, 1999.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three months ended March 31, 1999 compared to three months ended March 31, 1998
The following table summarizes certain statistics for the quarters
ended March 31, 1999 and 1998 :
1999 1998
---- ----
Retail sales (in millions) $ 267.7 $ 233.9
Other sales (in millions) $ 99.4 $ 16.5
Total sales (in millions) $ 367.1 $ 250.4
Gross profit % 29.2% 32.0%
New single-section homes sold - retail 2,999 3,384
New multi-section homes sold - retail 2,986 2,363
Used homes sold - retail 662 696
New single-section homes sold - wholesale 688 65
New multi-section homes sold - wholesale 2,247 451
Average new single-section sales price - retail $32,000 $30,700
Average new multi-section sales price - retail $55,500 $52,100
Average new single-section sales price - wholesale $21,900 $16,400
Average new multi-section sales price - wholesale $37,300 $32,800
Weighted average retail sales centers
open during the period 373 317
NET SALES
Retail sales dollar volume increased 14%, reflecting a 4% increase in new unit
volume, increases of 4% and 7% in the average new unit sales prices of
single-section and multi-section homes, respectively, and a shift in product mix
toward multi-section homes which have higher average selling prices than
single-section homes. Average retail sales prices rose due to price increases
and a shift in product mix toward higher price points. Multi-section homes
accounted for 50% of retail new unit sales compared to 41% in the second quarter
of fiscal 1998. The Company believes the multi-section performance reflects the
addition of new homes to the Company's product line in response to continuing
consumer preference for multi-section homes.
During the second quarter of fiscal 1999, the Company opened or acquired 27 new
sales centers compared to 15 sales centers during the second quarter of fiscal
1998. The Company also closed two underperforming sales centers during the
quarter ended March 31, 1999. Total new retail sales dollars at sales centers
open more than one year increased 3% during the second quarter of fiscal 1999.
Other sales dollar volume, which consists principally of wholesale sales to
independent dealers by the Company's Destiny, Golden West and Schult
subsidiaries, increased due to wholesale unit
11
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volume related to the acquisition of Schult on April 1, 1998 in a transaction
accounted for as a purchase. Schult sold 2,285 units, representing $78.5 million
of sales, to independent dealers during the quarter ended March 31, 1999.
Excluding the effects of the Schult acquisition, wholesale sales dollars
increased 27% from the second quarter of fiscal 1998. This increase reflects the
Company's efforts to add to its independent retailer network. During the second
quarter of fiscal 1999, 75% of Golden West's and Destiny's shipments were to
Company-owned sales centers, compared to 78% in the three months ended March 31,
1998; these shipments are not included in the dollar and unit sales in the table
above. Schult's higher average price points caused the overall average wholesale
selling prices of single-section and multi-section homes to rise 34% and 14%,
respectively.
GROSS PROFIT
Gross profit margin decreased to 29.2% in the second quarter of fiscal 1999 from
32.0% in fiscal 1998, reflecting the increased significance of relatively lower
margin wholesale sales as a result of the acquisition of Schult. Excluding the
effects of the Schult acquisition, gross profit margin increased to 33.1%
related to both improved efficiencies at manufacturing plants and higher retail
margins. Approximately 97% of new homes sold at retail were produced in
Company-owned manufacturing plants in the second quarter of fiscal 1999 compared
to 96% in the three months ended March 31, 1998.
FINANCIAL SERVICES REVENUES
Consumer finance revenues for the second quarter of fiscal 1999 increased to
$14.5 million from $4.5 million in fiscal 1998. The second quarter of fiscal
1998 includes a special charge of $16.3 million (approximately $10.1 million
after tax, or $.21 per share), relating to valuation of certain retained
interests in REMICs. Excluding the effects of the prior year quarter special
charge, consumer finance revenues for the three months ended March 31, 1999
declined $6.3 million compared to the three months ended March 31, 1998,
primarily as a result of a loss on the sale of asset-backed securities of
$118,000 compared to a gain in the prior year quarter of $5.0 million
(approximately $3.1 million after tax, or $.06 per share) and, to a lesser
extent, market value adjustments to the carrying value of residual interests
during the second quarter of fiscal 1999. An increase in the spread over
treasurys required by institutional purchasers of the Company's asset-backed
securities increased the Company's permanent financing costs and reduced the
estimated residual cash flow on the current quarter's securitization.
REMIC interests retained by the Company include servicing assets and REMIC
residual and regular interests. The Company estimates the fair value of retained
REMIC residual interests based, in part, upon default and prepayment assumptions
which management believes market participants would use for similar instruments.
The actual rate of voluntary prepayments and the amount and timing of credit
losses affect the Company's yield on retained REMIC residual interests and the
fair value of such interests in periods subsequent to the securitization; the
actual rate of voluntary prepayments and credit losses typically varies over the
life of each transaction and from transaction to transaction. If over time the
Company's actual experience is more favorable than that assumed, the Company's
yield on its REMIC residual interests will be enhanced. Similarly, if over time
the Company's actual experience is less favorable than that assumed, such yield
will be reduced or impairment of the residuals may result.
12
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For the quarter ended March 31, 1999, total credit losses on loans originated by
the Company, including losses relating to assets securitized by the Company,
loans held for investment, loans held for sale and loans sold with full or
partial recourse, amounted to approximately 2.43% on an annualized basis of the
average principal balance of the related loans, compared to approximately 1.71%
one year ago. Because losses on repossessions are reflected in the loss ratio
principally in the period during which the repossessed property is disposed of,
fluctuations in the number of repossessed properties disposed of from period to
period may cause variations in the charge-off ratio. During the quarter ended
March 31,1999 the Company experienced higher rates of repossession and reduced
its inventory of repossessed homes from 1,453 units at December 31, 1998 to 964
units at March 31, 1999. During the second quarter of fiscal 1999 the Company
sold 2,253 repossessed homes compared to 1,342 in the second quarter of fiscal
1998.
At March 31, 1999 the delinquency rate on Company originated loans, excluding
loans originated on behalf of Deutsche Financial Capital ("DFC"), the Company's
former consumer finance joint venture, was 3.0%, compared to 3.9% at September
30, 1998 and 3.0% at March 31, 1998.
REMIC residual income decreased from $3.2 million in the quarter ended March 31,
1998 to $1.9 million in second quarter of fiscal 1999, primarily reflecting a
decline in the average balance of residual interests.
Interest income earned on loans held for investment and on loans held for sale
prior to securitization increased from $7.0 million during the second quarter of
fiscal 1998 to $9.0 million in fiscal 1999. The increase reflects higher average
outstanding balances of loans held for sale prior to securitization due to
increased origination volume offset slightly by lower average interest rates on
the loans. The increase also reflects incremental interest income on retained
regular REMIC interests from the Company's August and November 1998
securitizations. This increase was partially offset by lower interest income on
loans held for investment, the principal balance of which is declining as these
loans are liquidated. Loan servicing fees decreased from $6.9 million during the
second quarter of fiscal 1998 to $5.0 million this year. Servicing fees did not
increase commensurately with the growth of the Company's securitized loan
portfolio because certain securitizations did not generate sufficient cash flows
to enable the Company to receive its full servicing fee. The Company has not
recorded revenues or receivables for these shortfalls, as the Company's right to
receive servicing fees is subordinate to the holders of regular REMIC interests.
Loan servicing fees are reflected net of servicing asset amortization which has
increased over the prior year primarily due to the addition of servicing assets
from securitizations subsequent to March 31, 1998.
Insurance revenues from the Company's captive reinsurance business increased 49%
to $11.9 million for the three months ended March 31, 1999 from $8.0 million for
the three months ended March 31, 1998. This increase is primarily due to the
increased size of the Company's portfolio, related to an increase in premiums
written resulting from retail sales growth and improved penetration, renewal and
cancellation rates. Because reinsurance claims costs are recorded as insured
events occur, reinsurance underwriting risk may increase the volatility of the
Company's earnings, particularly with respect to property and casualty
reinsurance. The Company has purchased catastrophe reinsurance to reduce its
underwriting exposure to natural disasters.
13
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased to 25.5% of net sales for
the three months ended March 31, 1999 from 25.9% of net sales last year. Higher
retail selling expenses were offset by lower selling, general and administrative
expenses as a percentage of sales at Schult. Excluding the effects of the Schult
acquisition, selling, general and administrative expenses for the second quarter
of fiscal 1999 were 28.9% of net sales compared to 25.9% of net sales last year,
primarily reflecting higher retail selling expenses.
FINANCIAL SERVICES OPERATING EXPENSES
Consumer finance operating expenses rose 54% during the second quarter of fiscal
1999 due principally to increased headcount and other compensation cost
increases, as well as increased servicing costs associated with higher
repossession volume. In the second quarter, the average number of loans serviced
increased 18% and total credit application volume increased 37% over last year.
Insurance operating costs increased 11% during the second quarter of fiscal 1999
principally due to higher claims costs associated with the increased size of the
business.
PROVISION FOR LOSSES
The provision for losses increased $1.3 million largely related to the increased
repossession activity during the quarter and the high balance of loans carried
on the Company's balance sheet prior to securitization.
INTEREST EXPENSE
Non-financial services interest expense rose from $678,000 for the second
quarter of fiscal 1998 to $2.5 million in 1999, due principally to interest
costs related to the financing of the Schult acquisition.
Financial services interest expense includes interest expense associated with
long-term debt secured by loans, interest expense associated with all short-term
line of credit borrowings, and interest expense on $200 million of the $300
million senior notes issued in a debt offering in March 1999 as discussed in the
Liquidity and Capital Resources section. Financial services interest expense
increased 57% for the second quarter of fiscal 1999 which reflects the higher
level of borrowings required to support the higher level of loans not yet
securitized and the higher interest rate on the fixed rate debt. This increase
was partially offset by lower interest expense on declining and retired
long-term debt balances.
INCOME TAXES
The Company's effective income tax rate was 39.0% for the second quarter of
fiscal 1999 compared to 38.0% in fiscal 1998 due to higher state income taxes
arising from the Schult acquisition.
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<PAGE>
Six months ended March 31, 1999 compared to six months ended March 31, 1998
The following table summarizes certain statistics for the six months
ended March 31, 1999 and 1998 :
1999 1998
---- ----
Retail sales (in millions) $ 509.3 $ 435.5
Other sales (in millions) $ 217.6 $ 36.7
Total sales (in millions) $ 726.9 $ 472.2
Gross profit % 29.1% 31.8%
New single-section homes sold - retail 4,895 5,520
New multi-section homes sold - retail 6,059 4,958
Used homes sold - retail 1,255 1,245
New single-section homes sold - wholesale 1,420 140
New multi-section homes sold - wholesale 4,855 969
Average new single-section sales price - retail $32,400 $30,500
Average new multi-section sales price - retail $55,900 $51,600
Average new single-section sales price - wholesale $21,800 $16,600
Average new multi-section sales price - wholesale $38,200 $34,300
Weighted average retail sales centers
open during the period 368 312
NET SALES
Retail sales dollar volume increased 17%, reflecting a 5% increase in new unit
volume, increases of 6% and 8% in the average new unit sales prices of
single-section and multi-section homes, respectively, and a shift in product mix
toward multi-section homes which have higher average selling prices than
single-section homes. Average retail sales prices rose due to price increases
and a shift in product mix toward higher price points. Multi-section homes
accounted for 55% of retail new unit sales compared to 47% in the six months
ended March 31, 1998. The Company believes the multi-section performance
reflects the addition of new homes to the Company's product line in response to
continuing consumer preference for multi-section homes.
During the first six months of fiscal 1999, the Company opened or acquired 31
new sales centers compared to 26 sales centers during the six months ended March
31, 1998. The Company also closed three underperforming sales centers during the
six months ended March 31, 1999 compared to two during the six months ended
March 31, 1998. Total new retail sales dollars at sales centers open more than
one year increased 3% during the six months ended March 31, 1999.
Other sales dollar volume increased due to wholesale unit volume related to the
acquisition of Schult. Schult sold 5,028 units, representing $176.1 million of
sales, to independent dealers during the six months ended March 31, 1999.
Excluding the effects of the Schult acquisition, wholesale sales dollars
increased 13% from the six months ended March 31, 1998. This increase is
primarily due to a 12% increase in units sold to independent dealers. During the
first six months of fiscal 1999, 76% of Golden West's and Destiny's shipments
were to Company-owned
15
<PAGE>
sales centers, compared to 75% in the six months ended March 31, 1998; these
shipments are not included in the dollar and unit sales in the table above.
Schult's higher average price points caused the overall average wholesale
selling prices of single-section and multi-section homes to rise 31% and 11%,
respectively.
GROSS PROFIT
Gross profit margin decreased to 29.1% in the six months ended March 31, 1999
from 31.8% in fiscal 1998, reflecting the increased significance of relatively
lower margin wholesale sales as a result of the acquisition of Schult. Excluding
the effect of the Schult acquisition, gross profit margin increased to 33.2% due
to both improved efficiencies at manufacturing and higher retail margins.
Approximately 97% of new homes sold at retail were produced in Company-owned
manufacturing plants in the six months ended March 31, 1999 compared to 95% in
the six months ended March 31, 1998.
FINANCIAL SERVICES REVENUES
Consumer finance revenues for the six months ended March 31, 1999 increased to
$30.4 million from $28.1 million in fiscal 1998. The second quarter of fiscal
1998 includes a special charge of $16.3 million (approximately $10.1 million
after tax, or $.21 per share), relating to valuation of certain retained
interests in REMICs. Excluding the effects of the prior year second quarter
special charge, consumer finance revenues for the six months ended March 31,
1999 declined $14.0 million primarily as a result of losses on the sale of
asset-backed securities of $1.6 million (approximately $955,000 after tax, or
$.02 per share) compared to a gains in the prior year of $11.0 million
(approximately $6.8 million after tax, or $.14 per share) and, to a lesser
extent, market value adjustments to the carrying value of residual interests in
fiscal 1999. An increase in the spread over treasurys required by institutional
purchasers of the Company's asset-backed securities increased the Company's
permanent financing costs and reduced the estimated residual cash flow on the
current year's securitizations.
For the six months ended March 31, 1999, total credit losses on loans originated
by the Company, including losses relating to assets securitized by the Company,
loans held for investment, loans held for sale and loans sold with full or
partial recourse, amounted to approximately 2.02% on an annualized basis of the
average principal balance of the related loans, compared to approximately 1.48%
one year ago.
REMIC residual income decreased from $6.3 million in the six months ended March
31, 1998 to $3.8 million in first six months of fiscal 1999, primarily
reflecting a decline in the average balance of residual interests.
Interest income earned on loans held for investment and on loans held for sale
prior to securitization increased from $14.2 million during the first six months
of fiscal 1998 to $19.7 million in fiscal 1999. The increase reflects higher
average outstanding balances of loans held for sale prior to securitization due
to increased origination volume offset slightly by lower average interest rates
on the loans. The increase also reflects incremental interest income on retained
regular REMIC interests from the Company's August and November 1998
securitizations. This increase was partially offset by lower interest income on
loans held for investment, the principal balance of which is declining as these
loans are liquidated. Loan servicing fees decreased from $13.4 million during
the six months ended March 31, 1998 to $11.4 million this year. Servicing
16
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fees did not increase commensurately with the growth of the Company's
securitized loan portfolio because certain securitizations did not generate
sufficient cash flows to enable the Company to receive its full servicing fee.
The Company has not recorded revenues or receivables for these shortfalls, as
the Company's right to receive servicing fees is subordinate to the holders of
regular REMIC interests. Loan servicing fees are reflected net of servicing
asset amortization which has increased over the prior year primarily due to the
addition of servicing assets from securitizations subsequent to March 31, 1998.
Insurance revenues from the Company's captive reinsurance business increased 57%
to $23.6 million for the six months ended March 31, 1999 from $15.0 million for
the six months ended March 31, 1998. This increase is primarily due to the
increased size of the portfolio, relating to an increase in premiums written
resulting from retail sales growth and improved penetration, renewal and
cancellation rates.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased to 25.4% of net sales for
the six months ended March 31, 1999 from 26.1% of net sales last year. Higher
retail selling expenses were offset by lower selling, general and administrative
expenses as a percentage of sales at Schult. Excluding the effects of the Schult
acquisition, selling, general and administrative expenses for the first six
months of fiscal 1999 were 29.2% of net sales compared to 26.1% of net sales
last year, primarily reflecting higher retail selling expenses caused by
compensation plan changes implemented in the second quarter of fiscal 1998 and
an increase in commissions paid for sales of repossessed homes.
FINANCIAL SERVICES OPERATING EXPENSES
Consumer finance operating expenses rose 47% during the six months ended March
31, 1999 due principally to increased headcount and other compensation cost
increases. In the first six months of fiscal 1999, the average number of loans
serviced increased 19% and total credit application volume increased 42% over
last year. Insurance operating costs increased 29% during the six months ended
March 31, 1999 principally due to higher claims costs associated with the
increased size of the business.
PROVISION FOR LOSSES
The provision for losses increased $2.0 million largely related to the increase
in repossession activity during the first six months of fiscal 1999 and the high
balance of loans carried on the Company's balance sheet prior to securitization.
INTEREST EXPENSE
Non-financial services interest expense rose from $1.4 million for the six
months ended March 31, 1998 to $4.8 million in 1999, due principally to interest
costs related to the financing of the Schult acquisition.
Financial services interest expense includes interest expense associated with
long-term debt secured by loans, interest expense associated with all short-term
line of credit borrowings, and interest expense on $200 million of the $300
million senior notes issued in a debt offering in
17
<PAGE>
March 1999 as discussed in the Liquidity and Capital Resources section.
Financial services interest expense increased 53% for the first six months of
fiscal 1999 primarily due to a higher average overall interest rate due to the
fixed rate term debt and higher average borrowings This increase was partially
offset by lower interest expense on declining and retired long-term debt
balances.
INCOME TAXES
The Company's effective income tax rate was 39.0% for the six months ended March
31, 1999 compared to 38.0% in fiscal 1998 due to higher state income taxes
arising from the Schult acquisition.
YEAR 2000 ISSUES
During 1997 the Company formed an ongoing project team to address the Year 2000
issue. The Year 2000 issue relates to the way computer hardware and software
process calendar dates. With the turn of the century at midnight, January 1,
2000, it is possible that some systems may interpret a year stored as '00 as
1900 instead of 2000. Calculations involving these dates would then be adversely
affected.
The Company's Year 2000 conversion project has several phases, including
assessment of the hardware and software affected by the Year 2000 issue;
identification of critical suppliers and assessment of their state of readiness;
conversion of existing processes, hardware and software as required; testing of
modified, existing and new processes; implementation of Year 2000 compliant
systems; and development and implementation of contingency and business
continuation plans as considered necessary. The Company is also conducting
ongoing awareness campaigns with employees and key vendors.
Assessment of hardware and software has been conducted with internal resources
that researched all of the Company's internal systems and hardware platforms. As
a result of the assessment effort, a plan was developed to convert and test all
hardware and software deemed to be non-compliant. Based upon the status of
remediation undertaken to date, the Company believes that substantially all
significant internal system issues associated with Year 2000 compliance have
been resolved. The Company intends to continue testing throughout the year as
well as resolving any remaining system issues.
Separately all of the Company's significant external suppliers and business
partners were included in the project to determine their state of readiness for
the Year 2000 issue. General surveys were sent to all significant external
suppliers and business partners upon which the Company relies for services. The
intention of these surveys was to assess the organization's overall readiness.
Additionally, specific inquiry letters were sent to external suppliers and
business partners upon which the Company relies for a specific product.
Recently the Company has begun to focus attention to mission critical suppliers.
The Company believes that its most likely worst case scenario would result from
an external supplier's inability to provide raw materials for use in the
Company's manufacturing processes. In order to alleviate the worst case
scenario, the Company is exploring plans to stockpile raw materials inventory.
In
18
<PAGE>
addition, the Company is planning on stockpiling finished goods inventory and
evaluating a modified holiday vacation schedule around the first of the year.
The other mission critical suppliers upon which the Company is dependent supply
services including insurance and loan servicing. No contingency plans have been
developed at this point in time should these suppliers prove to be
non-compliant. However, the Company is working with these organizations in order
to obtain further assurances regarding their compliance.
The costs incurred by the Company for the assessment and conversion of systems
related to Year 2000 readiness, which have been charged to expense, have not
been material. Recently the Company has begun to incur additional costs for
independent review and testing of compliance. The Company has acquired and is in
the process of developing computing platforms specifically for allowing a
qualified third party review of all internal systems. While the costs associated
with this effort are not expected to be material, they do represent a commitment
on the part of the executive management team to ensure the Company's position
related to the Year 2000 issue. While the Company believes its efforts will
provide reasonable assurance that material disruptions will not occur, there can
be no assurance that interruption will not occur.
LIQUIDITY AND CAPITAL RESOURCES
The increase in inventories since September 30, 1998 reflects primarily the
manufacture of inventory in preparation for the summer selling season, the
increase in the number of retail sales centers since September 30, 1998, and an
increase in the percentage of inventories represented by multi-section homes,
which have higher average unit costs than single-section homes.
The increase in loans and investments since September 30, 1998 principally
reflects an increase in loans held for sale from $365 million at September 30,
1998 to $458 million at March 31, 1999. The Company originates loans and
warehouses them until sufficient receivables have been accumulated for a
securitization. In addition, during the quarter ended December 31, 1998 the
Company purchased, at par, from a financial institution loans having an
aggregate principal balance of approximately $7 million. Such purchase was
financed by a term loan from the financial institution.
Retail financing of sales of the Company's products is an integral part of the
Company's vertical integration strategy. Such financing consumes substantial
amounts of capital, which the Company has obtained principally by securitizing
such loans, primarily using REMICs. Since 1994, the Company generally has sold
to investors securities having a principal balance approximately equal to the
principal balance of the loans securitized, and accordingly has not been
required to seek the permanent capital required to fund its finance business
outside of the asset-backed securities market.
Late in 1998, global economic conditions significantly reduced the liquidity in
the asset-backed securities market, and credit spreads over treasurys demanded
by purchasers of the Company's asset-backed securities rose significantly. In
addition, demand for the most deeply subordinated asset-backed securities
offered for sale by the Company has decreased significantly. Widening credit
spreads adversely affect the Company's permanent funding costs, and adversely
affect the Company's profitability if the Company is unable to increase rates
charged to customers to compensate for these higher costs. Moreover, decreased
demand for asset-backed securities
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<PAGE>
could require the Company to seek alternative sources of financing for the loans
originated by the consumer finance business.
At March 31, 1999 the Company owned subordinated asset-backed securities having
a principal balance of approximately $39 million associated with the Company's
August and November 1998 securitizations. Such securities are regular REMIC
interests and are included in the related caption in the table appearing in Note
4. During April 1999 the Company sold its interest from the November 1998
securitization which had a principal balance of approximately $26 million. The
Company intends to sell the remaining security from the August 1998
securitization if an offer acceptable to the Company can be obtained.
On May 13, 1999 the Company securitized approximately $255 million of loans, and
sold all the securities created in such transaction, except for the residual
interest which has been retained by the Company consistent with past practice.
In recent years, the Company has financed internal growth of its retail and
manufacturing business principally using internally generated funds and
short-term lines of credit. On March 2, 1999, the Company closed a $300 million
debt offering comprised of $175 million of senior notes at 8.125% due on March
1, 2009 and $125 million of senior notes at 7.875% due on March 1, 2004. The
proceeds of this offering were used to pay outstanding indebtedness, including
$100 million borrowed from a commercial bank to finance the Schult acquisition.
The Company has several credit facilities in place to provide for its short-term
liquidity needs. The Company has a $325 million credit facility with a conduit
commercial paper issuer to provide warehouse financing for loans prior to
securitization. The Company also has a $175 million revolving credit facility
with a group of banks which is available to fund additional working capital
needs, a $20 million cash management line of credit and $10 million of
uncommitted lines of credit.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In November 1998 four shareholder suits were filed against the
Company and certain of its directors and officers, three in the United States
District Court for the Middle District of North Carolina and one in the United
States District Court in Little Rock, Arkansas. These lawsuits generally allege
that certain of the Company's financial statements were false and misleading and
that certain other disclosures were inaccurate. One of the lawsuits also alleges
that certain officers of the Company traded in the Company's common stock with
knowledge of the allegedly misleading financial statements and disclosures.
Responsive pleadings are not yet due in any of these lawsuits. The Company
intends to defend these lawsuits vigorously.
The Company is a defendant in a number of lawsuits that are
incidental to the conduct of its business.
Item 4. Submission of Matters to a Vote of Security Holders
Information required by this item was provided in the Form 10-Q
filed for the quarter ended December 31, 1998.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(1.1) Underwriting Agreement dated as of February 25, 1999 by and among Oakwood
Homes Corporation, NationsBanc Montgomery Securities LLC, First Union Capital
Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated
(1.2) Terms Agreement dated as of February 25, 1999 by and among Oakwood Homes
Corporation, NationsBanc Montgomery Securities LLC, First Union Capital
Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated
(4.1) Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and The
First National Bank of Chicago, as Trustee
(4.2) First Supplemental Indenture dated as of March 2, 1999 between Oakwood Homes
Corporation and The First National Bank of Chicago, as Trustee
(4.3) Agreement to Furnish Copies of Instruments with Respect to Long-term Debt
(27) Financial Data Schedule
</TABLE>
21
<PAGE>
b) Reports on Form 8-K
On April 9, 1999 the Company filed a report on Form
8-K in which the Company announced the issuance of a
press release concerning its anticipated results of
operations for the quarter ended March 31, 1999.
Items 2, 3 and 5 are inapplicable and are
omitted.
22
<PAGE>
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 17, 1999
OAKWOOD HOMES CORPORATION
BY: s/ Robert A. Smith
------------------------
Robert A. Smith
Executive Vice President
(Chief Financial Officer)
(Duly Authorized Officer)
23
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
ITEM 6(a)
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
March 31, 1999 1-7444
OAKWOOD HOMES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
----------- -------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1.1 Underwriting Agreement dated as of February 25, 1999 by and among Oakwood
Homes Corporation, NationsBanc Montgomery Securities LLC, First Union
Capital Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated
1.2 Terms Agreement dated as of February 25, 1999 by and among Oakwood Homes
Corporation, NationsBanc Montgomery Securities LLC, First Union Capital
Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated
4.1 Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and
The First National Bank of Chicago, as Trustee
4.2 First Supplemental Indenture dated as of March 2, 1999 between Oakwood Homes
Corporation and The First National Bank of Chicago, as Trustee
4.3 Agreement to Furnish Copies of Instruments with Respect to Long-term Debt
27 Financial Data Schedule
</TABLE>
24
<PAGE>
25
Exhibit 1.1
================================================================================
OAKWOOD HOMES CORPORATION
(a North Carolina corporation)
UNDERWRITING AGREEMENT
February 25, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Representations and Warranties................................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.........................3
(b) OFFICER'S CERTIFICATES...............................................14
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING........................14
(a) UNDERWRITTEN SECURITIES..............................................14
(b) OPTION UNDERWRITTEN SECURITIES.......................................14
(c) PAYMENT..............................................................15
(d) DENOMINATIONS; REGISTRATION..........................................16
SECTION 3. COVENANTS OF THE COMPANY..........................................16
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.......16
(b) FILING OF AMENDMENTS.................................................16
(c) DELIVERY OF REGISTRATION STATEMENTS..................................17
(d) DELIVERY OF PROSPECTUSES.............................................17
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS............................18
(f) BLUE SKY QUALIFICATIONS..............................................18
(g) EARNINGS STATEMENT...................................................18
(h) REPORTS TO SECURITYHOLDERS...........................................18
(j) LISTING..............................................................19
(k) RESTRICTION ON SALE OF SECURITIES....................................19
(l) REPORTING REQUIREMENTS...............................................19
SECTION 4. PAYMENT OF EXPENSES...............................................19
(a) EXPENSES.............................................................19
(b) TERMINATION OF AGREEMENT.............................................20
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS...........................20
(a) EFFECTIVENESS OF REGISTRATION STATEMENT..............................20
(b) OPINION OF COUNSEL FOR COMPANY.......................................20
(c) OPINION OF COUNSEL FOR UNDERWRITERS..................................21
(d) OFFICERS' CERTIFICATE................................................21
(e) ACCOUNTANT'S COMFORT LETTER..........................................21
(f) BRING-DOWN COMFORT LETTER............................................22
(g) RATINGS..............................................................22
(h) APPROVAL OF LISTING..................................................22
(i) NO OBJECTION.........................................................22
(j) LOCK-UP ARRANGEMENTS.................................................22
(k) OVER-ALLOTMENT OPTION................................................22
(l) ADDITIONAL DOCUMENTS.................................................23
(m) TERMINATION OF TERMS AGREEMENT.......................................23
i
<PAGE>
SECTION 6. INDEMNIFICATION...................................................24
(a) INDEMNIFICATION OF UNDERWRITERS......................................24
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS...................25
(c) ACTIONS AGAINST PARTIES; NOTIFICATION................................25
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE...................26
SECTION 7. CONTRIBUTION......................................................27
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY....28
SECTION 9. TERMINATION.......................................................28
(a) UNDERWRITING AGREEMENT...............................................28
(b) TERMINATION; GENERAL.................................................29
(c) LIABILITIES..........................................................29
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.......................29
SECTION 11. NOTICES..........................................................30
SECTION 12. PARTIES..........................................................31
SECTION 13. GOVERNING LAW AND TIME...........................................31
SECTION 14. EFFECT OF HEADINGS...............................................31
ii
<PAGE>
OAKWOOD HOMES CORPORATION
(a North Carolina corporation)
Debt Securities
UNDERWRITING AGREEMENT
February 25, 1999
To the Representative of the
Underwriters named in the
Terms Agreement
hereinafter described
Ladies and Gentlemen:
Oakwood Homes Corporation, a North Carolina corporation (the "Company"),
proposes to issue and sell up to $400,000,000 aggregate initial public offering
price of its senior or subordinated debt securities (the "Debt Securities"), or
any combination thereof, from time to time, in or pursuant to one or more
offerings on terms to be determined at the time of sale.
The Debt Securities will be issued in one or more series as senior
indebtedness (the "Senior Debt Securities") or as senior subordinated or
subordinated indebtedness (the "Subordinated Debt Securities") under an
indenture relating to the Debt Securities (the "Indenture"), between the Company
and The First National Bank of Chicago, as trustee (the "Trustee"),
substantially in the form filed as an exhibit to the Registration Statement (as
defined below). Each series of Debt Securities may vary, as applicable, as to
title, aggregate principal amount, rank, interest rate or formula and timing of
payments thereof, stated maturity date, redemption and/or payment provisions,
sinking fund requirements, guarantors and any other variable terms established
by or pursuant to the Indenture. As used herein, "Securities" shall mean the
Senior Debt Securities or Subordinated Debt Securities, or any combination
thereof, initially issuable by the Company.
Whenever the Company determines to make an offering of Securities, the
Company will enter into an agreement (each, a "Terms Agreement") providing for
the sale of such Securities to, and the purchase and offering thereof by, the
underwriters named in the applicable Terms Agreement (the "Underwriters," which
term shall include any Underwriter substituted pursuant to Section 10 hereof),
for whom the firm designated as representative of the Underwriters of such
Underwritten Securities in the Terms Agreement relating thereto will act as
representative (the
1
<PAGE>
"Representative"). The Terms Agreement relating to the offering of Securities
shall specify the aggregate principal amount, as the case may be, of Securities
to be initially issued (the "Initial Underwritten Securities"), the name of each
Underwriter participating in such offering (subject to substitution as provided
in Section 10 hereof) and the name of any Underwriter(s) acting as co-manager in
connection with such offering, the aggregate principal amount, as the case may
be, of Initial Underwritten Securities which each such Underwriter severally
agrees to purchase, whether such offering is on a fixed or variable price basis
and, if on a fixed price basis, the initial offering price, the price at which
the Initial Underwritten Securities are to be purchased by the Underwriters, the
form, time, date and place of delivery and payment of the Initial Underwritten
Securities and any other material variable terms of the Initial Underwritten
Securities. In addition, if applicable, such Terms Agreement shall specify
whether the Company has agreed to grant to the Underwriters an option to
purchase additional Securities to cover over-allotments, if any, and the number
or aggregate principal amount, as the case may be, of Securities subject to such
option (the "Option Underwritten Securities"). As used herein, the term
"Underwritten Securities" shall include the Initial Underwritten Securities and
all or any portion of any Option Underwritten Securities. The Terms Agreement,
which shall be substantially in the form of EXHIBIT A hereto, may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Representative, acting for itself and, if applicable, as
representative of any other Underwriters. Each offering of Underwritten
Securities will be governed by this Underwriting Agreement, as supplemented by
the applicable Terms Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-47053) for the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"), and the Company has filed such post-effective amendments
thereto as may be required prior to the execution of the applicable Terms
Agreement. Such registration statement (as so amended, if applicable) has been
declared effective by the Commission and each Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such
registration statement (as so amended, if applicable), including the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
1933 Act regulations (the "Rule 430A Information") or Rule 434(d) of the 1933
Act Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement;" and the final prospectus and the final prospectus
supplement relating to the offering of the Underwritten Securities, in the form
first furnished to the Underwriters by the Company for use in connection with
the offering of the Underwritten Securities, are collectively referred to herein
as the "Prospectus;" PROVIDED, HOWEVER, that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Terms Agreement; PROVIDED FURTHER, that if
2
<PAGE>
the Company files a registration statement with the Commission pursuant to Rule
462(b) of the 1933 Act Regulations (the "Rule 462(b) Registration Statement"),
then, after such filing, all references to "Registration Statement" shall also
be deemed to include the Rule 462(b) Registration Statement; and PROVIDED
FURTHER, that if the Company elects to rely upon Rule 434 of the 1933 Act
Regulations, then all references to "Prospectus" shall also be deemed to include
the final or preliminary prospectus and the applicable term sheet or abbreviated
term sheet (the "Term Sheet"), as the case may be, in the form first furnished
to the Underwriters by the Company in reliance upon Rule 434 of the 1933 Act
Regulations, and all references in this Underwriting Agreement to the date of
the Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the registration
statement became effective and any prospectus that omitted, as applicable, the
Rule 430A Information, the Rule 434 Information or other information to be
included upon pricing in a form of prospectus filed with the Commission pursuant
to Rule 424(b) of the 1933 Act Regulations, that was used after such
effectiveness and prior to the execution and delivery of the applicable Terms
Agreement. For purposes of this Underwriting Agreement, all references to (i)
the Registration Statement, Prospectus, Term Sheet or preliminary prospectus or
to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR"), (ii) the Indenture shall be
deemed to include, as applicable, any indenture supplemental thereto, and (iii)
the Representative shall be deemed to include, as applicable, all such
Representatives if there shall be more than one Representative .
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Underwriting Agreement to
amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be.
SECTION 1. Representations and Warranties
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to the Representative, as of the date hereof, and to
each Underwriter named in the applicable Terms Agreement, as of the date
thereof, as of the Closing Time (as defined below) and, if applicable, as of
each Date of Delivery (as defined below) (in each case, a "Representation
Date"), as follows:
3
<PAGE>
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with. In addition, the Indenture has been duly qualified under the 1939
Act. At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at each Representation Date, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations")
and did not and will 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 not misleading. At the date of the Prospectus, at the Closing
Time and at each Date of Delivery, if any, the Prospectus and any amendments and
supplements thereto did not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company elects to rely upon Rule 434 of the 1933
Act Regulations, the Company will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter through the
Representative expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection with the offering
of Underwritten Securities will, at the time of such delivery, be identical to
any electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus
(including the filing of the Company's most recent Annual Report on Form 10-K
with the Commission (the "Annual Report on Form 10-K")), at the time they were
or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations") and, when
read together with the other information in the Prospectus, at the date of the
Prospectus, at the Closing Time and at each Date of Delivery, if any, did not
and will not include an untrue statement of a
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material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules thereto included in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements of the Company
included in the Registration Statement and the Prospectus, together with the
related schedules and notes, as well as those financial statements, schedules
and notes of any other entity included therein, present fairly the financial
position of the Company and its consolidated subsidiaries, or such other entity,
as the case may be, at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries, or such other entity, as the case may be, for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any, included in
the Registration Statement and the Prospectus present fairly in accordance with
GAAP the information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectus, if any,
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus. In addition, any pro forma financial
statements of the Company and its subsidiaries and the related notes thereto
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition (financial or otherwise), earnings, assets,
properties, operations, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C) except
for regular dividends on the Company's common stock or preferred stock, in
amounts per share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
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(vi) GOOD STANDING OF THE COMPANY. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of the
state of North Carolina and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Underwriting Agreement and the applicable Terms
Agreement. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the Company
(each, a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect. Except as
otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding capital stock of each such Subsidiary has been duly
authorized and is validly issued, fully paid and non-assessable and, except as
set forth on Schedule A hereto, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity (except for the capital stock of Tarheel Insurance
Company, Ltd., all of which capital stock is pledged in connection with the
Company's $175.0 million revolving credit facility with First Union National
Bank, as agent). None of the outstanding shares of capital stock of any
Subsidiary was issued in violation of preemptive or other similar rights of any
securityholder of such Subsidiary.
(viii) CAPITALIZATION. If the Prospectus contains a "Capitalization"
section, the authorized, issued and outstanding shares of capital stock of the
Company is, to the extent set forth in such section, as set forth in the column
entitled "Actual" under such section (except for subsequent issuances thereof,
if any, contemplated under this Underwriting Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options referred to in
the Prospectus). Such shares of capital stock have been duly authorized and
validly issued by the Company and are fully paid and non-assessable; and none of
such shares of capital stock was issued in violation of preemptive or other
similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF THIS UNDERWRITING AGREEMENT AND TERMS AGREEMENT.
This Underwriting Agreement has been, and the applicable Terms Agreement as
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of the date thereof will have been, duly authorized, executed and delivered by
the Company.
(x) AUTHORIZATION OF SENIOR DEBT SECURITIES AND/OR SUBORDINATED DEBT
SECURITIES. The Underwritten Securities have been, or as of the date of such
Terms Agreement will have been, duly authorized by the Company for issuance and
sale pursuant to this Underwriting Agreement and such Terms Agreement. Such
Underwritten Securities, when issued and authenticated in the manner provided
for in the applicable Indenture and delivered against payment of the
consideration therefor specified in such Terms Agreement, will constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles. Such Underwritten Securities will be in the form contemplated by,
and each registered holder thereof is entitled to the benefits of, the
applicable Indenture.
(xi) AUTHORIZATION OF THE INDENTURE. The Indenture has been, or prior to
the issuance of the Debt Securities thereunder will have been, duly authorized,
executed and delivered by the Company and, upon such authorization, execution
and delivery, will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equitable principles.
(xii) EMPLOYEE BENEFITS MATTERS. Each employee benefit plan of the
Company intended to be qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (or any successor code or statute) (the "Internal
Revenue Code") has heretofore been determined by the Internal Revenue Service to
so qualify, and each trust created thereunder has heretofore been determined by
the Internal Revenue Service to so qualify, and each trust created thereunder
has heretofore been determined by the Internal Revenue Service to be exempt from
tax under the provisions of Section 501(a) of the Internal Revenue Code, and
nothing has occurred since the date of the most recent determination (including
the merger of the Company's Employee Stock Ownership Plan into the Oakwood
Savings Plan) that would cause any such employee plan or trust to fail to
qualify under Section 401(a) or 501(a) of the Internal Revenue Code. Both before
and after giving effect to the offering of the Debt Securities, no ERISA Events
have occurred or are reasonably expected to occur which, individually or in the
aggregate, resulted in or might reasonably be expected to result in a liability
of the Company or any of its subsidiaries or any of their respective ERISA
Affiliates which would have a Material Adverse Effect. The Company, its
subsidiaries and their respective ERISA Affiliates do not sponsor, and have not
at any time within the five calendar years immediately preceding the date hereof
sponsored, a defined benefit plan subject to Title IV of ERISA.
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As used herein, the following terms shall have the respective meaning
ascribed to each below:
"Employee Pension Benefit Plan" means any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time
within the five calendar years immediately preceding the date hereof,
was at any time, sponsored, maintained or contributed to by the Company
or its subsidiaries or any of their respective ERISA Affiliates or (ii)
with respect to which any of the Company or its subsidiaries retains any
liability, including any potential joint and several liability as a
result of an affiliation with an ERISA Affiliate or a party that would
be an ERISA Affiliate except for the fact the affiliation ceased more
than five calendar years prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder and any successor statute, regulations and
rulings.
"ERISA Affiliate" of any person, means (i) any corporation which is,
or was at any time within the five calendar years immediately preceding
the date hereof, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that
person is, or was at any time within the five calendar years immediately
preceding the date hereof, a member; (ii) any trade or business (whether
or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a
group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that person is, or
was at any time within the five calendar years immediately preceding the
date hereof, a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that person, any corporation described in clause
(i) above, or any trade business described in clause (ii) above is, or
was at any time within the five calendar years immediately preceding the
date hereof, a member.
"ERISA Event" means (i) the withdrawal by the Company or any of its
subsidiaries or any of their respective ERISA Affiliates in a complete
or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by the Company or any of its subsidiaries or
any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (ii) the occurrence of
an act or omission which could reasonably be expected to give rise to
the imposition on the Company or any of its subsidiaries or any of their
respective ERISA Affiliates of fines, penalties, taxes or
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related charges under Chapter 43 of the Internal Revenue Code or under
Section 406, 409, 502(i) or 502(l) of ERISA in respect of any Employee
Pension Benefit Plan; or (iii) receipt from the Internal Revenue Service
of notice of the failure of any Employee Pension Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue Code to
qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Employee Pension Benefit Plan
to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any of the Company, its
subsidiaries or any of their respective ERISA Affiliates is making or
accruing an obligation to make contributions, or has within any of the
preceding five years made or accrued an obligation to make
contributions.
(xiii) DESCRIPTION OF THE UNDERWRITTEN SECURITIES AND INDENTURE. The
Underwritten Securities being sold pursuant to the applicable Terms Agreement
and the Indenture, as of the date of the Prospectus, will conform in all
material respects to the statements relating thereto contained in the Prospectus
and will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any subsidiary is
subject (collectively, "Agreements and Instruments"), except for such defaults
that would not result in a Material Adverse Effect. The execution, delivery and
performance of this Underwriting Agreement, the applicable Terms Agreement and
the Indenture, and any other agreement or instrument entered into or issued or
to be entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Registration Statement and the
Prospectus and the consummation of the transactions contemplated herein and in
the Registration Statement and the Prospectus (including the issuance and sale
of the Underwritten Securities and the use of the proceeds from the sale of the
Underwritten Securities as described under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, property or operations of the Company or
any of its subsidiaries pursuant to, any Agreements and Instruments nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation,
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judgment, order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries.
(xv) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvi) ABSENCE OF PROCEEDINGS. There is not pending or threatened any
action, suit, proceeding, inquiry or investigation before or brought by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company threatened, against or affecting the Company or any
of its subsidiaries which is required to be disclosed in the Registration
Statement and the Prospectus (other than as stated therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated under this Underwriting Agreement, the applicable
Terms Agreement or the Indenture or the performance by the Company of its
obligations hereunder and thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective assets, properties or operations is
the subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse Effect.
(xvii) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus or
the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xviii)ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or foreign,
is necessary or required for the performance by the Company of its obligations
under this Underwriting Agreement or the applicable Terms Agreement or in
connection with the transactions contemplated under this Underwriting Agreement,
such Terms Agreement or any applicable Indenture, except such as have been
already obtained, or except such as may be required under state securities laws
(as to which the Company makes no representation).
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(xix) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xx) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such material permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
(including without limitation all such regulatory agencies or bodies relating to
financing and insurance activities) ("Governmental Authorities") necessary to
conduct the business now operated by them. The Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
result in a Material Adverse Effect. All of the Governmental Licenses are valid
and in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not result in a Material Adverse Effect. Neither the Company nor
any of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xxi) TITLE TO PROPERTY. The Company and its subsidiaries have good and
marketable title to all material real property owned by the Company and its
subsidiaries and good title to all other material properties owned by them, in
each case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except (A) as otherwise stated
in the Registration Statement and the Prospectus or (B) those which do not,
singly or in the aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries. All of the leases and subleases material to
the business of the Company and its subsidiaries considered as one enterprise,
and under which the Company or any of its subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any of its subsidiaries has received any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries
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under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease.
(xxii) COMMODITY EXCHANGE ACT. The Debt Securities, upon issuance, will
be excluded or exempted under, or beyond the purview of, the Commodity Exchange
Act, as amended (the "Commodity Exchange Act"), and the rules and regulations of
the Commodity Futures Trading Commission under the Commodity Exchange Act.
(xxiii) INVESTMENT COMPANY ACT. Neither the Company nor any of its
subsidiaries is, and upon the issuance and sale of the Underwritten Securities
as herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus will not be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xxiv) ENVIRONMENTAL LAWS. Except as otherwise stated in the
Registration Statement and the Prospectus and except as would not, singly or in
the aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxv) REGISTRATION RIGHTS. There are no holders of securities (debt or
equity) of the Company or holders of rights (including, without limitation,
preemptive rights), warrants or options to obtain securities of the Company, who
have the right to request the Company to register securities held by them under
the 1933 Act, other than holders who have waived or will
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not have such rights for a specified period to be agreed upon among the Company
and the Underwriters, and have waived their rights with respect to the inclusion
of their securities in the Registration Statement.
(xxvi) ACCOUNTING CONTROLS. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxvii) COMPLIANCE WITH APPLICABLE LAW. The Company has complied in all
material respects with all material federal, state, local, foreign and similar
statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
judgements, and decrees applicable to the Company or any of its subsidiaries or
to any of the Company's or its subsidiary's properties or assets, or with
respect to any of the Company's or its subsidiary's officers, directors,
employees or agents in their capacity as such ("Applicable Laws"). None of the
Company or any of its subsidiaries has received any written notice or other
written communication from any Governmental Authority or arbitrator regarding
any violation by the Company of, or a failure on the part of the Company to
comply with any Applicable Laws, other than any such violation or failure to
comply which would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect.
(xxviii) TAX RETURNS. All material Tax Returns required to be filed by
the Company and each of its subsidiaries in any jurisdiction have been filed,
and all material Taxes (whether or not actually shown on such Tax Returns) for
which any of them is directly or indirectly liable or to which any of their
respective properties or assets are subject have been paid other than Taxes
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP. All such Tax Returns are true, correct and
complete in all material respects and accurately set forth all items to the
extent required to be reflected or included in such Tax Returns by applicable
federal, state, local or foreign Tax Laws, regulations or rules. There is no
material proposed Tax assessment against the Company or any of its subsidiaries,
and, to the best knowledge of the Company, there is no basis for such
assessment, except for contested claims. As used herein, the following terms
shall have the respective meanings given to them below:
"Tax Return" means a report, return or other information
(including any amendments) required to be supplied to a governmental
entity with respect to Taxes
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including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Company or any of its
subsidiaries.
"Taxes" means all taxes however denominated, including any
interest or penalties that may become payable in respect thereof,
imposed by any federal, state, local or foreign government or any agency
or political subdivision of any such government, which taxes shall
include all income taxes (including, but not limited to, United States
federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, environmental, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, withholding taxes, workers' compensation, and other
obligations of the same or similar nature.
(xxix) INSURANCE. Each of the Company and its subsidiaries is insured
(including in each case self-insurance and reinsurance) by insurers of
recognized financial responsibility against such losses and risks and in such
amounts and covering such risks as management reasonably believes are prudent
and customary in the businesses in which it is engaged and all such insurance is
in full force and effect; neither the Company nor any of its subsidiaries has
been refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries 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; except in the case of each of the foregoing as would
not have a Material Adverse Effect.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to any Underwriter or to
counsel for the Underwriters in connection with the offering of the Underwritten
Securities shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby on the date of such certificate
and, unless subsequently amended or supplemented, at each Representation Date
subsequent thereto.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) UNDERWRITTEN SECURITIES. The several commitments of the Underwriters
to purchase the Underwritten Securities pursuant to the applicable Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties herein contained and shall be subject to the terms and conditions
herein set forth.
(b) OPTION UNDERWRITTEN SECURITIES. In addition, subject to the terms
and conditions herein set forth, the Company may grant, if so provided in the
applicable Terms Agreement, an option to the Underwriters, severally and not
jointly, to purchase up to the number
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or aggregate principal amount, as the case may be, of the Option Underwritten
Securities set forth therein at a price per Option Underwritten Security equal
to the price per Initial Underwritten Security. Such option, if granted, will
expire 30 days after the date of such Terms Agreement, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Underwritten Securities upon notice by the
Representative to the Company setting forth the aggregate principal amount, as
the case may be, of Option Underwritten Securities as to which the several
Underwriters are then exercising the option and the time, date and place of
payment and delivery for such Option Underwritten Securities. Any such time and
date of payment and delivery (each, a "Date of Delivery") shall be determined by
the Representative, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, unless
otherwise agreed upon by the Representative and the Company. If the option is
exercised as to all or any portion of the Option Underwritten Securities, each
of the Underwriters, severally and not jointly, will purchase that proportion of
the total number or aggregate principal amount, as the case may be, of Option
Underwritten Securities then being purchased which the number or aggregate
principal amount, as the case may be, of Initial Underwritten Securities each
such Underwriter has severally agreed to purchase as set forth in such Terms
Agreement bears to the aggregate principal amount, as the case may be, of
Initial Underwritten Securities, subject to such adjustments as the
Representative in its discretion shall make to eliminate any sales or purchases
of a fractional number or aggregate principal amount, as the case may be, of
Option Underwritten Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Underwritten Securities shall be made at the
offices of Kennedy Covington Lobdell & Hickman, L.L.P. or at such other place as
shall be agreed upon by the Representative and the Company, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date of the applicable
Terms Agreement (unless postponed in accordance with the provisions of Section
10 hereof), or such other time not later than ten business days after such date
as shall be agreed upon by the Representative and the Company (such time and
date of payment and delivery being herein called "Closing Time"). In addition,
in the event that the Underwriters have exercised their option, if any, to
purchase any or all of the Option Underwritten Securities, payment of the
purchase price for, and delivery of such Option Underwritten Securities, shall
be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Representative and the Company, on the relevant Date of
Delivery as specified in the notice from the Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Underwriters of the
Underwritten Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Underwritten
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Securities which it has severally agreed to purchase. The Representative,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Underwritten
Securities to be purchased by any Underwriter whose funds have not been received
by the Closing Time or the relevant Date of Delivery, as the case may be, but
such payment shall not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. The Underwritten Securities shall be in
such denominations and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The Underwritten Securities will
be made available for examination and packaging by the Representative in
Charlotte, North Carolina not later than 9:00 A.M. (Eastern time) on the
business day prior to the Closing Time or the relevant Date of Delivery, as the
case may be.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with the Representative and with each Underwriter
participating in the offering of Underwritten Securities, as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and
as applicable, and will notify the Representative immediately, and confirm the
notice in writing, of (i) the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Underwritten Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424 and will take such steps as it deems necessary to ascertain promptly
whether Prospectus transmitted for filing under Rule 424 was received for filing
by the Commission and, in the event that it was not, it will promptly file the
Prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. During the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, the Company will
give the Representative notice of its intention to file or prepare any amendment
to the Registration Statement (including any filing under Rule 462(b) of the
1933 Act Regulations), any Term Sheet or any amendment,
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supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Representative with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which the Representative or counsel for the Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Representative and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. Copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(d) DELIVERY OF PROSPECTUSES. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus as such Underwriter may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
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(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Underwritten Securities as contemplated in this Underwriting Agreement and the
applicable Terms Agreement and in the Registration Statement and the Prospectus.
If at any time when the Prospectus is required by the 1933 Act or the 1934 Act
to be delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement in order that the Registration Statement will 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 not misleading
or to amend or supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Underwritten Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representative may designate and to
maintain such qualifications in effect for a period of not less than one year
from the date of the applicable Terms Agreement; PROVIDED, HOWEVER, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Underwritten Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the date of such Terms Agreement.
(g) EARNINGS STATEMENT. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(h) REPORTS TO SECURITYHOLDERS. Through its fiscal year ending in 1999,
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the Company will deliver to the Representative copies of all reports or other
communications (financial or otherwise) made to securityholders of the Company.
(i) USE OF PROCEEDS. The Company will use the net proceeds received by
it from the sale of the Underwritten Securities in the manner specified in the
Prospectus under "Use of Proceeds."
(j) LISTING. The Company will use its best efforts to effect the listing
of the Underwritten Securities, prior to the Closing Time, on any national
securities exchange or quotation system if and as specified in the applicable
Terms Agreement.
(k) RESTRICTION ON SALE OF SECURITIES. Between the date of the
applicable Terms Agreement and the Closing Time or such other date specified in
such Terms Agreement, the Company will not, without the prior written consent of
the Representative, directly or indirectly, issue, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, the securities specified in
such Terms Agreement.
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Underwriting Agreement or the
applicable Terms Agreement, including (i) the preparation, printing and filing
of the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Underwriting Agreement, any Terms
Agreement, any agreement among underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Underwritten Securities, (iii) the preparation,
issuance and delivery of the Underwritten Securities to the Underwriters,
including any transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Underwritten Securities to the Underwriters,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors or agents (including transfer agents and registrars), as well as the
fees and disbursements of any Trustees and their respective counsel, (v) the
qualification of the Underwritten Securities under state securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey and any Legal Investment Survey, and any
amendment thereto, (vi) the printing and delivery to the
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Underwriters of copies of each preliminary prospectus, any Term Sheet, and the
Prospectus and any amendments or supplements thereto, (vii) the fees charged by
nationally recognized statistical rating organizations for the rating of the
Underwritten Securities, if applicable, (viii) the fees and expenses incurred
with respect to the listing of the Underwritten Securities, if applicable, (ix)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review, if any, by the
National Association of Securities Dealers, Inc. (the "NASD") of the terms of
the sale of the Underwritten Securities, (x) the fees and expenses of any
Underwriter acting in the capacity of a "qualified independent underwriter" (as
defined in the bylaws of the NASD), if applicable and (xi) the expenses of the
Company and the Underwriters incurred in connection with the "road show"
relating to the offering of the Securities.
(b) TERMINATION OF AGREEMENT. If the applicable Terms Agreement is
terminated by the Representative in accordance with the provisions of Section 5
or Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for the Underwritten Securities pursuant to
the applicable Terms Agreement are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective under the
1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been initiated or be pending or threatened by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing information relating to the description of
the Underwritten Securities, the specific method of distribution and similar
matters shall have been filed with the Commission in accordance with Rule
424(b)(1), (2), (3), (4) or (5), as applicable (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A), or, if the Company
has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet
including the Rule 434 Information shall have been filed with the Commission in
accordance with Rule 424(b)(7).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Representative
shall have received the favorable opinion, dated as of Closing Time, of Kennedy
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Covington Lobdell & Hickman, L.L.P., counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth in EXHIBIT B hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of McGuire Woods Battle & Boothe, LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, with respect to the matters set forth in clauses (1), (6), (7),
(8), (10), (11) (solely as to the information in the Prospectus under
"Description of Notes" and "Description of Capital Stock," if any, or any
caption purporting to describe any such Securities), (17), (18) and the
penultimate paragraph of EXHIBIT B hereto. In giving such opinion, such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
laws of the State of New York and the federal laws of the United States, upon
the opinions of counsel satisfactory to the Representative. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date of the applicable Terms Agreement or since the respective dates
as of which information is given in the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1 are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of the
applicable Terms Agreement, the Representative shall have received from
PricewaterhouseCoopers LLP (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements are, or are required to be,
included in the Registration Statement) a letter dated such date, in form and
substance satisfactory to the Representative, together with signed or reproduced
copies of such letter for each of the other Underwriters, including matters
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such as those set forth in Annex I hereto and containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At the Closing Time, the Representative
shall have received from PricewaterhouseCoopers LLP (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements are,
or are required to be, included in the Registration Statement) a letter, dated
as of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section 5, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(g) RATINGS. At Closing Time and at any relevant Date of Delivery, the
Underwritten Securities shall have the ratings accorded by any "nationally
recognized statistical rating organization," as defined by the Commission for
purposes of Rule 436(g)(2) of the 1933 Act Regulations, if and as specified in
the applicable Terms Agreement, and the Company shall have delivered to the
Representative a letter, dated as of such date, from each such rating
organization, or other evidence satisfactory to the Representative, confirming
that the Underwritten Securities have such rating. Since the time of execution
of such Terms Agreement, there shall not have occurred a downgrading in the
rating assigned to the Underwritten Securities or any of the Company's other
securities by any such rating organization, and no such rating organization
shall have publicly announced that it has under surveillance or review its
rating of the Underwritten Securities or any of the Company's other securities.
(h) APPROVAL OF LISTING. At Closing Time, the Underwritten Securities
shall have been approved for listing, subject only to official notice of
issuance, if any, as specified in the applicable Terms Agreement.
(i) NO OBJECTION. If the Registration Statement or an offering of
Underwritten Securities has been filed with the NASD for review, the NASD shall
not have raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(j) LOCK-UP ARRANGEMENTS. On the date of the applicable Terms Agreement,
the Representative shall have received, in form and substance satisfactory to
it, each lock-up agreement, if any, specified in such Terms Agreement as being
required to be delivered by the persons listed therein.
(k) OVER-ALLOTMENT OPTION. In the event that the Underwriters are
granted an over-allotment option by the Company in the applicable Terms
Agreement and the Underwriters
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exercise their option to purchase all or any portion of the Option Underwritten
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company or any of its
subsidiaries hereunder shall be true and correct as of each Date of Delivery,
and, at the relevant Date of Delivery, the Representative shall have received:
(i) A certificate, dated such Date of Delivery, of the President or a
Vice President of the Company and the chief financial officer or chief
accounting officer of the Company, confirming that the certificate
delivered at the Closing Time pursuant to Section 5(d) hereof remains
true and correct as of such Date of Delivery.
(ii) The favorable opinion of Kennedy Covington Lobdell & Hickman,
L.L.P., counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Underwritten Securities and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iii) The favorable opinion of McGuire, Woods, Battle & Boothe, LLP,
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Underwritten Securities and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
(iv) A letter from PricewaterhouseCoopers LLP (and such other
accountants) in form and substance satisfactory to the Representative
and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representative pursuant to
Section 5(f) hereof, except that the "specified date" on the letter
furnished pursuant to this paragraph shall be a date not more than three
business days prior to such Date of Delivery.
(l) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Underwritten Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Underwritten Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and counsel for the Underwriters.
(m) TERMINATION OF TERMS AGREEMENT. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be fulfilled,
the applicable Terms Agreement (or, with respect to the Underwriters' exercise
of any applicable over-allotment option for the purchase of Option Underwritten
Securities on a Date of Delivery after the Closing Time, the obligations of the
Underwriters to purchase the Option Underwritten Securities on such Date
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of Delivery) may be terminated by the Representative by notice to the Company at
any time at or prior to the Closing Time (or such Date of Delivery, as
applicable), and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7 and
8 shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information deemed to be a part thereof, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; PROVIDED that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Representative),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
PROVIDED, HOWEVER, that (A) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission
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or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through the
Representative expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information
deemed to be a part thereof, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and (B) the foregoing
indemnity with respect to any untrue statement contained in or any omission from
the preliminary prospectus shall not inure to the benefit of any Underwriter (or
any person controlling such Underwriter) from whom the person asserting any such
loss, liability, claim, damage or expense purchased any of the Debt Securities
that are the subject thereof if, and to the extent that the Company is
materially prejudiced thereby, the Company shall sustain the burden of proving,
and a determination shall have been made by a court of competent jurisdiction by
final and nonappealable judgment, that (i) the untrue statement or omission
contained in the preliminary prospectus was corrected in the Prospectus; (ii)
such person was not sent or given a copy of the Prospectus (excluding documents
incorporated by reference) which corrected the untrue statement or omission at
or prior to the written confirmation of the sale of such Debt Securities to such
person if required by applicable law; and (iii) the Company had previously
satisfied its obligation pursuant to Section 3(d) of this Agreement to provide a
sufficient number of copies of the Prospectus to the Underwriters..
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action; PROVIDED, HOWEVER, that counsel to the indemnifying
party shall not (except with
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the consent of the indemnified party) also be counsel to the indemnified party.
The indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest in the reasonable
judgment of the indemnified party, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall have authorized the indemnified party to employ separate counsel at
the expense of the indemnifying party. Except as set forth above, the
indemnifying parties shall not be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance
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with such request prior to the date of such settlement. Notwithstanding the
immediately preceding sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, an indemnifying party shall not be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
consent if such indemnifying party (i) reimburses such indemnified party in
accordance with such request to the extent it considers such request to be
reasonable and (ii) provides written notice to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (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 hand, from the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement or (ii) if
the allocation provided by clause (i) 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 of the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, 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 hand, in connection with the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of such Underwritten Securities (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet bear to the
aggregate initial public offering price of such Securities as set forth on such
cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the
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<PAGE>
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 above in this Section 7. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 7 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number or aggregate principal amount, as the case may be, of
Initial Underwritten Securities set forth opposite their respective names in the
applicable Terms Agreement and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Underwriting Agreement or the applicable Terms Agreement or in certificates of
officers of the Company submitted pursuant hereto or thereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of and payment for the Underwritten
Securities.
SECTION 9. TERMINATION.
(a) UNDERWRITING AGREEMENT. This Underwriting Agreement (excluding the
applicable Terms Agreement) may be terminated for any reason at any time by the
Company or
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<PAGE>
by the Representative upon the giving of 30 days' prior written notice of such
termination to the other party hereto.
(b) TERMINATION; GENERAL. The Representative may terminate the
applicable Terms Agreement, by notice to the Company, at any time at or prior to
the Closing Time or any relevant Date of Delivery, if (i) there has been, since
the time of execution of this Agreement or since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) there has
occurred any material adverse change in the financial markets in the United
States or in the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representative, impracticable to market the Underwritten
Securities or to enforce contracts for the sale of the Underwritten Securities,
or (iii) trading in any securities of the Company has been suspended or limited
by the Commission or any national securities exchange or quotation system on
which the Company's common stock is listed or quoted, or if trading generally on
the New York Stock Exchange or the American Stock Exchange or in the Nasdaq
National Market has been suspended or limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required, by any
of said exchanges or by such system or by order of the Commission, the NASD or
any other governmental authority, or (iv) a banking moratorium has been declared
by either Federal, New York, or North Carolina authorities or, if the
Underwritten Securities include Debt Securities denominated or payable in, or
indexed to, one or more foreign or composite currencies, by the relevant
authorities in the related foreign country or countries, or (v) there is any
downgrading in the rating accorded the Underwritten Securities by any
"nationally recognized statistical rating organization" as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act or if any
such rating organization shall have publicly announced that it has placed any of
such Underwritten Securities on what is commonly termed a "watch list" for
possible downgrading.
(c) LIABILITIES. If this Underwriting Agreement or the applicable Terms
Agreement is terminated pursuant to this Section 9, such termination shall be
without liability of any party to any other party except as provided in Section
4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail at the Closing Time or the
relevant Date of Delivery, as the case may be, to purchase the Underwritten
Securities which it or they are obligated to purchase under the applicable Terms
Agreement (the "Defaulted Securities"), then
29
<PAGE>
the Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities does not exceed 10% of the number or aggregate
principal amount, as the case may be, of Underwritten Securities to be
purchased on such date pursuant to such Terms Agreement, the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations under such Terms Agreement
bear to the underwriting obligations of all non-defaulting Underwriters,
or
(b) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities exceeds 10% of the number or aggregate principal
amount, as the case may be, of Underwritten Securities to be purchased
on such date pursuant to such Terms Agreement, such Terms Agreement (or,
with respect to the Underwriters' exercise of any applicable
over-allotment option for the purchase of Option Underwritten Securities
on a Date of Delivery after the Closing Time, the obligations of the
Underwriters to purchase, and the Company to sell, such Option
Underwritten Securities on such Date of Delivery) shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in (i) a
termination of the applicable Terms Agreement or (ii) in the case of a Date of
Delivery after the Closing Time, a termination of the obligations of the
Underwriters and the Company with respect to the related Option Underwritten
Securities, as the case may be, either the Representative or the Company shall
have the right to postpone the Closing Time or the relevant Date of Delivery, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any other
documents or arrangements.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the address of the Representative as set forth
in the Terms Agreement; notices to the Company shall be directed to the Company
at 7800 McCloud Road, Greensboro, North Carolina 27409-9634, attention of
General Counsel.
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SECTION 12. PARTIES. This Underwriting Agreement and the applicable
Terms Agreement shall each inure to the benefit of and be binding upon the
Company, the Representative and, upon execution of such Terms Agreement, any
other Underwriters and their respective successors. Nothing expressed or
mentioned in this Underwriting Agreement or such Terms Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Underwriting Agreement or such Terms Agreement or
any provision herein or therein contained. This Underwriting Agreement and such
Terms Agreement and all conditions and provisions hereof and thereof are
intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Underwritten
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND ANY
APPLICABLE TERMS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Underwriting Agreement, along with all counterparts, will become a binding
agreement between the Representative and the Company in accordance with its
terms.
Very truly yours,
OAKWOOD HOMES CORPORATION
By: /s/ Douglas R. Muir
------------------------------------
Name: Douglas R. Muir
Title: Senior Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
NATIONSBANC MONTGOMERY SECURITIES LLC
FIRST UNION CAPITAL MARKETS CORP.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: NATIONSBANC MONTGOMERY SECURITIES LLC
By: /s/ Lynn T. McConnell
-----------------------------
Authorized Signatory
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EXHIBIT A
OAKWOOD HOMES CORPORATION
(a North Carolina corporation)
Debt Securities
TERMS AGREEMENT
_________ ___, 1999
To: Oakwood Homes Corporation
7800 McCloud Road
Greensboro, North Carolina 27409-9634
Ladies and Gentlemen:
We understand that Oakwood Homes Corporation, a North Carolina
corporation (the "Company"), proposes to issue and sell $[__________] aggregate
principal amount of its [senior] [subordinated] debt securities (the "Debt
Securities") (such securities also being hereinafter referred to as the
"[Initial] Underwritten Securities"). Subject to the terms and conditions set
forth or incorporated by reference herein, we [the underwriters named below (the
"Underwriters")] offer to purchase [, severally and not jointly,] the principal
amount of Underwritten Securities [opposite their names set forth below] at the
purchase price set forth below [, and a proportionate share of Option
Underwritten Securities set forth below, to the extent any are purchased].
Principal Amount
Underwriter of [Initial] Underwritten Securities
- --------------- ---------------------------------------------
Total _____________________
[$]
=====================
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The Underwritten Securities shall have the following terms:
Title:
Rank:
Ratings:
Aggregate principal amount:
Denominations:
Currency of payment:
Interest rate or formula:
Interest payment dates:
Regular record dates:
Stated maturity date:
Redemption provisions:
Sinking fund requirements:
Defeasance provisions:
Listing requirements:
Black-out provisions:
Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering
If Fixed Price Offering: initial public offering price: [__]% of the
principal amount, plus accrued interest, if any, or amortized original
issue discount, if any, from ________________.
Purchase price: ___% of principal amount, plus accrued interest, if any,
or amortized original issue discount, if any, from ____________.
Form:
Other terms and conditions:
Closing date and location:
Additional co-managers, if any:
All of the provisions contained in the document attached as Annex I
hereto entitled "Oakwood Homes Corporation--Debt Securities--Underwriting
Agreement" are hereby incorporated by reference in their entirety herein and
shall be deemed to be a part of this Terms Agreement to the same extent as if
such provisions had been set forth in full herein. Terms defined in such
document are used herein as therein defined.
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<PAGE>
Please accept this offer no later than ____ o'clock P.M. (New York City
time) on ________________ by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
Very truly yours,
[NAME OF REPRESENTATIVE]
By: _____________________________
Authorized Signatory
[Acting on behalf of itself and the other named
Underwriters.]
Accepted:
OAKWOOD HOMES CORPORATION
By: ____________________________
Name:
Title:
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EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of North Carolina.
(2) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, the Underwriting Agreement and the applicable Terms
Agreement.
(3) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction set forth on Schedule I
attached hereto.
(4) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction set forth on Schedule I attached hereto. Except as
otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding capital stock of each Subsidiary has been duly authorized
and is validly issued, fully paid and non-assessable and, except as set forth on
Schedule II attached hereto is owned of record by the Company, directly or
through subsidiaries, and to the best of our knowledge, is free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity (except
for the capital stock of Tarheel Insurance Company, Ltd. all which capital stock
is pledged in connection with the Company's $175.0 million revolving credit
facility with First Union National Bank, as agent). To the best of our
knowledge, none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any securityholder of
such Subsidiary.
(5) [Include if the Prospectus contains a "Capitalization" section, to
the extent set forth in such section.] The authorized, issued and outstanding
shares of capital stock of the Company is as set forth in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances
thereof, if any, contemplated under the Underwriting Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options referred to in
the Prospectus). Such shares of capital stock have been duly authorized and
validly issued by the Company and are fully paid and non-assessable, and none of
such shares of capital stock was issued in violation of preemptive or other
similar rights of any securityholder of the Company.
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(6) The Underwriting Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by the Company.
(7) The Underwritten Securities have been duly authorized by the Company
for issuance and sale pursuant to the Underwriting Agreement and the applicable
Terms Agreement. The Underwritten Securities, when issued and authenticated in
the manner provided for in the Indenture and delivered against payment of the
consideration therefor specified in such Terms Agreement, will constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles. Such Underwritten Securities will be in the form contemplated by,
and each registered holder thereof is entitled to the benefits of, the
Indenture.
(8) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming due authorization, execution and delivery thereof by
the Trustee) constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(9) [Reserved]
(10) The Underwritten Securities being sold pursuant to the applicable
Terms Agreement conform in all material respects to the statements relating
thereto contained in the Prospectus.
(11) The information in the Prospectus under "Description of Debt
Securities, "Description of Notes" and "Description of Capital Stock," if any,
or any caption purporting to describe any such Securities, and "Certain Federal
Income Tax Considerations," if any, and in the Registration Statement under Item
15, to the extent that it constitutes matters of law, summaries of legal
matters, the Company's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
(12) To the best of our knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws and no default by the
Company or any of its subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
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(13) The execution, delivery and performance of the Underwriting
Agreement, the applicable Terms Agreement and the Indenture and any other
agreement or instrument entered into or issued or to be entered into or issued
by the Company in connection with the transactions contemplated in the
Registration Statement and the Prospectus and the consummation of the
transactions contemplated in the Underwriting Agreement and such Terms Agreement
and in the Registration Statement and the Prospectus (including the issuance and
sale of the Underwritten Securities and the use of the proceeds from the sale of
the Underwritten Securities as described under the caption "Use Of Proceeds")
and compliance by the Company with its obligations thereunder do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the assets, properties or operations of the Company or any of its
subsidiaries is subject, and which has been filed by the Company as an exhibit
to the Registration Statement or pursuant to the 1933 Act, the 1934 Act, the
1933 Act Regulations or the 1934 Act Regulations, or which is set forth in
Schedule III attached hereto, except for such conflicts, breaches, defaults,
events or liens, charges or encumbrances that would not result in a Material
Adverse Effect, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any of its subsidiaries or, to the
best of our knowledge any applicable law, statute, rule, regulation, judgment,
order, writ or decree, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets, properties or operations.
(14) To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation to which the Company or
any of its subsidiaries thereof is a party or to which the assets, properties or
operations of the Company or any of its subsidiaries thereof is subject, before
or by any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect or which might
reasonably be expected to materially and adversely affect the assets, properties
or operations thereof or the consummation of the transactions contemplated under
the Underwriting Agreement, the applicable Terms Agreement or the Indenture or
the performance by the Company of its obligations thereunder. [Certain aspects
of the foregoing opinion may be given by in-house counsel.]
(15) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects. To the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
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Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(16) The Registration Statement has been declared effective under the
1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b). To the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(17) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, and each Trustee's Statement of Eligibility on Form T-1 (the
"Form T-1s"), as to which we express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(18) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules therein or omitted
therefrom, as to which we express no opinion), when they were filed with the
Commission complied as to form in all material respects with the requirements of
the 1934 Act and the rules and regulations of the Commission thereunder.
(19) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Company of its obligations under the Underwriting Agreement
or the applicable Terms Agreement or in connection with the transactions
contemplated under the Underwriting Agreement, such Terms Agreement or the
Indenture other than under the 1933 Act, the 1933 Act Regulations, the 1939 Act
and the 1939 Act Regulations, which have been obtained, or as may be required
under state securities or blue sky laws (as to which we express no opinion).
(20) The Underwritten Securities, upon issuance, will be excluded or
exempted under, or beyond the purview of, the Commodity Exchange Act, as amended
(the "Commodity Exchange Act"), and the rules and regulations of the Commodity
Futures Trading Commission under the Commodity Exchange Act.
(21) Neither the Company nor any of its subsidiaries is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment
4
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Company Act of 1940, as amended.
As counsel to the Company, we have examined various documents and
records and have participated in the preparation of and reviewed the
Registration Statement and the Prospectus, participated in discussions with
representatives of the Company and its counsel and accountants, and
representatives of the Underwriters and their counsel, and advised the Company
as to the requirements of the 1933 Act and the 1934 Act and the 1933 Act
Regulations and the 1934 Act Regulations.
Nothing has come to our attention that would lead us to believe that the
Registration Statement or any post-effective amendment thereto, including the
Rule 430A Information and Rule 434 Information (if applicable) (including the
filing of the Company's Annual Report on Form 10-K with the Commission) (except
for financial statements and schedules and other financial data included therein
or omitted therefrom and for the Form T-1s, as to which we make no statement),
at the time such Registration Statement or any post-effective amendment thereto
became effective or at the date of the applicable Terms Agreement, 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 amendment or supplement thereto (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which we make no statement), at the time the Prospectus
was issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
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SCHEDULE I
Foreign Jurisdictions
[Intentionally Left Blank]
6
<PAGE>
SCHEDULE II
Non-Wholly-Owned Subsidiaries of
Oakwood Homes Corporation
1. DEUTSCHE FINANCIAL CAPITAL LIMITED LIABILITY COMPANY. 50% owned directly
or indirectly through its subsidiaries by Oakwood Homes Corporation
("OHC") and 50% owned by Deutsche Financial Services Corporation, an
entity in which OHC has no direct or indirect ownership interest.
2. DEUTSCHE FINANCIAL CAPITAL I CORP. 50% owned directly or indirectly
through its subsidiaries by OHC and 50% owned by Deutsche Financial
Services Corporation.
3. DEUTSCHE FINANCIAL CAPITAL SECURITIZATION LLC. 99% owned by Deutsche
Financial Capital Limited Liability Company and 1% owned by Deutsche
Financial Capital I Corp. Accordingly, Deutsche Financial Capital
Securitization LLC is 50% owned directly or indirectly by OHC and 50%
owned directly or indirectly by Deutsche Financial Services Corporation.
4. CONCEPT ENTERPRISES, INC. 50% owned directly or indirectly through its
subsidiaries by OHC and 50% owned by James Craig.
5. BUSH PARK ASSOCIATES. 50% owned directly or indirectly through its
subsidiaries by OHC and 50% owned by J.K. Partnership, an entity in
which OHC has no direct or indirect ownership interest.
6. NEW DIMENSION OF MONTROSE, LLC. 57.5% owned directly or indirectly
through its subsidiaries by OHC and 42.5% owned by Trident-Montrose,
LLC, an entity in which OHC has no direct or indirect ownership
interest.
7. NEW DIMENSION OF LONG NECK, LLC. 75% owned directly or indirectly
through its subsidiaries by OHC and 25% owned by Tunnell Properties, LP,
an entity in which OHC has no direct or indirect ownership interest.
8. NEW DIMENSION OF IOWA, LLC. 50% owned directly or indirectly through its
subsidiaries by OHC, 25% owned by James R. Miller and 25% owned by
Steven S. Bright.
9. NEW DIMENSION OF MISSOURI, LLC. 57.5% owned directly or indirectly
through its subsidiaries by OHC and 42.5% owned by Hackley Farms, LLC,
an entity in which OHC has no direct or indirect ownership interest.
7
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SCHEDULE III
Material Debt Instruments
of
Oakwood Homes Corporation
1. $325,000,000 Transfer and Administration Agreement dated as of March 28,
1998 by Oakwood Acceptance Corporation, Oakwood Homes Corporation,
NationsBank, N.A., and Enterprise Funding Corporation.
2. $175,000,000 Amended and Restated Credit Agreement dated as of February 27,
1998 among Oakwood Homes Corporation and First Union National Bank.
3. $100,000,000 Credit Agreement dated as of March 31, 1998 by and between
Oakwood Homes Corporation and NationsBank, N.A.
4. $50,000,000 Credit Agreement dated as of January 14, 1999 by and between
Oakwood Homes Corporation and First Union National Bank.
5. 1991 Prudential Senior Debt Series C in aggregate principal amount of
$[29,381,815].
6. Oakwood Homes Corporation Series B Reset Debentures due 2007 in aggregate
principal amount of $23,000,000.
7. $20,000,000 Swingline Credit Agreement dated as of November 8, 1998 by and
between Oakwood Homes Corporation and First Union National Bank.
8. Oakwood Homes Corporation Series A Reset Debentures due 2007 in aggregate
principal amount of $17,000,000.
9. $14,400,000 Term Loan Agreement dated as of July 16, 1993 by and between
Oakwood Acceptance Corporation and First Union National Bank.
10. $12,953,689 subordinate series note issued to Massachusetts Mutual Life
Insurance Company pursuant to the 1991 Prudential Debt Series A, B, and C.
11. $10,800,000 Credit Agreement dated as of December 31, 1998 by and among
Oakwood Acceptance Corporation and First Union National Bank.
12. $10,000,000 short term uncommitted revolving line of credit extended to
Oakwood Homes
8
<PAGE>
Corporation by The Sakura Bank, Limited.
13. $10,000,000 short term uncommitted revolving line of credit extended to
Oakwood Homes Corporation by The Sumitomo Bank, Limited.
14. $8,350,000 subordinate series note issued to Westinghouse Credit Corporation
pursuant to the 1989 Prudential Debt Series A, B and C.
15. $6,900,000 aircraft lease dated as of March 29, 1995 by and between PNC
Leasing Corporation and Oakwood Homes Corporation.
16. $6,200,000 aggregate principal amount of Economic Development Bonds Series
1998 issued by Kosciusko County, Indiana to Schult Operating Company, as
Borrower.
17. $6,000,000 Credit Agreement dated as of July 15, 1996 by and between Oakwood
Acceptance Corporation and NationsBank, N.A.
18. $3,000,000 aggregate principal amount of economic development bonds issued
by The Moore County Industrial Facilities and Pollution Control Financing
Authority to Homes by Oakwood, Inc., as Borrower.
19. $2,397,565.38 loan made by NBD Bank to the ESOP Trust under the Employee
Stock Ownership and Profit Sharing Plan.
20. $1,500,000 aggregate principal amount of economic development bonds issued
by Elkhart County, Indiana to Schult Operating Company, as Borrower.
21. $1,456,852 aggregate principal amount of economic development bonds governed
by a loan agreement dated as of September 3, 1987 by and between Milton Area
Industrial Development Association, the Pennsylvania Industrial Development
Authority and Midwest Commerce Banking Company.
9
<PAGE>
ANNEX I
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)
(i) We are independent public accountants with respect to the Company
within the meaning of the 1933 Act and the applicable published 1933 Act
Regulations.
(ii) In our opinion, the audited financial statements and the related
financial statement schedules included or incorporated by reference in the
Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder.
(iii) On the basis of procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of the
unaudited interim consolidated financial statements of the Company for the
_____-month periods ended _________, 19___ and _________, 19___, included in the
Registration Statement and the Prospectus (the "____-month financials"), [a
reading of the latest available unaudited interim consolidated financial
statements of the Company], a reading of the minutes of all meetings of the
stockholders and directors of the Company and its subsidiaries and the and
Committees of the Company's Board of Directors and any subsidiary committees
since _________________, inquiries of certain officials of the Company and its
subsidiaries responsible for financial and accounting matters, a review of
interim financial information in accordance with standards established by the
American Institute of Certified Public Accountants in Statement on Auditing
Standards No. 71, Interim Financial Information ("SAS 71"), with respect to the
_____-month financials, and such other inquiries and procedures as may be
specified in such letter, nothing came to our attention that caused us to
believe that:
(A) the _____-month financials included in the Registration Statement
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act Regulations
applicable to unaudited interim financial statements included in registration
statements or any material modifications should be made to the _____-month
financials included in the Registration Statement and the Prospectus for them to
be in conformity with generally accepted accounting principles;
(B) at _________, 19___ and at a specified date not more than five
days(1) prior to the date of the applicable Terms Agreement, there was any
change in the capital stock of the Company and its subsidiaries or any decrease
in the total assets or stockholders investment of the Company and its
subsidiaries or any increase in the notes and bonds payable and total
liabilities of the Company and its subsidiaries, in each case as compared with
amounts shown in the latest balance sheet included in the Registration Statement
and the Prospectus, except in each case for changes, decreases or increases that
the Registration Statement and the Prospectus disclose have occurred or may
occur; or
1
<PAGE>
(C) for the period from _________, 19___ to _________, 19___ and for the
period from _________, 19___ to a specified date not more than five days prior
to the date of the applicable Terms Agreement, there was any decrease in
consolidated total revenues, operating income, or net income, in each case as
compared with the comparable period in the preceding year, except in each case
for any decreases that the Registration Statement and the Prospectus discloses
have occurred or may occur.
(iv) Based upon the procedures set forth in clause (iii) above and a
reading of the Selected Financial Data included in the Registration Statement
and the Prospectus and a reading of the financial statements from which such
data were derived, nothing came to our attention that caused us to believe that
the Selected Financial Data included in the Registration Statement and the
Prospectus do not comply as to form in all material respects with the disclosure
requirements of Item 301 of Regulation S-K of the 1933 Act, that the amounts
included in the Selected Financial Data are not in agreement with the
corresponding amounts in the audited consolidated financial statements for the
respective periods or that the financial statements not included in the
Registration Statement and the Prospectus from which certain of such data were
derived are not in conformity with generally accepted accounting principles.
(v) We have compared the information in the Registration Statement and
the Prospectus under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures specified
herein, nothing came to our attention that caused us to believe that this
information does not comply as to form in all material respects with the
disclosure requirements of Items 302, 402 and 503(d), respectively, of
Regulation S-K.
- ------------------------------
(1) According to Example A of SAS No. 72, the specified date should be five
calendar days prior to the date of the applicable Terms Agreement. However, in
unusual circumstances, five business days may be used.
- ------------------------------
(vi) We are unable to and do not express any opinion on the Pro Forma
Financial Information (the "Pro Forma Statement") included in the Registration
Statement and the Prospectus or on the pro forma adjustments applied to the
historical amounts included in the Pro Forma Statement; however, for purposes of
this letter we have:
(A) read the Pro Forma Statement;
(B) performed an audit of the financial statements to which the pro
forma adjustments were applied;
(C) made inquiries of certain officials of the Company who have
responsibility for
2
<PAGE>
financial and accounting matters about the basis for their determination of the
pro forma adjustments and whether the Pro Forma Statement complies as to form in
all material respects with the applicable accounting requirements of Rule 11-02
of Regulation S-X; and
(D) proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the Pro Forma Statement; and on the
basis of such procedures and such other inquiries and procedures as specified
herein, nothing came to our attention that caused us to believe that the Pro
Forma Statement included in the Registration Statement does not comply as to
form in all material respects with the applicable requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements.
(vii) In addition to the procedures referred to in clause (ii) above, we
have performed other procedures, not constituting an audit, with respect to
certain amounts, percentages, numerical data and financial information appearing
in the Registration Statement and the Prospectus, which are specified herein,
and have compared certain of such items with, and have found such items to be in
agreement with, the accounting and financial records of the Company.
3
Exhibit 1.2
OAKWOOD HOMES CORPORATION
(a North Carolina corporation)
$125,000,000 7.875% Senior Notes Due 2004
$175,000,000 8.125% Senior Notes Due 2009
TERMS AGREEMENT
February 25, 1999
To: Oakwood Homes Corporation
7800 McCloud Road
Greensboro, North Carolina 27409-9634
Ladies and Gentlemen:
We understand that Oakwood Homes Corporation, a North Carolina
corporation (the "Company"), proposes to issue and sell $125,000,000 aggregate
principal amount of its 7.875% Senior Notes Due 2004 and $175,000,000 aggregate
principal amount of its 8.125% Senior Notes Due 2009 (collectively, the "Notes")
(such securities also being hereinafter referred to as the "Underwritten
Securities"). Subject to the terms and conditions set forth or incorporated by
reference herein, we the underwriters named below (the "Underwriters") offer to
purchase, severally and not jointly, the principal amount of Underwritten
Securities opposite their names set forth below at the purchase price set forth
below. Capitalized terms used herein and not otherwise defined shall have the
respective meanings given to such terms under the form of Indenture (the
"Indenture") filed as an Exhibit to Amendment No. 2 to the Registration
Statement on Form S-3 (No. 333-47053) and under the First Supplemental Indenture
(the "Supplemental Indenture") between the Company and the Trustee (as defined
therein) relating to the Notes, which is attached hereto as Annex I, including
in the case of certain terms the respective meanings given to such terms under
the form of the Notes included in the Supplemental Indenture. This Terms
Agreement supplements the terms and conditions of the Underwriting Agreement
attached hereto as Annex II, dated the date hereof between the Company and the
Underwriters, which shall govern the offering of the Underwritten Securities.
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Underwriters of Notes Due 2004 of Notes Due 2009
- ------------ ----------------- -----------------
<S> <C> <C>
NationsBanc Montgomery Securities LLC $75,000,000 $105,000,000
First Union Capital Markets Corp. $25,000,000 $ 35,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated $25,000,000 $ 35,000,000
----------------- -----------------
Total $125,000,000 $175,000,000
================= =================
Price to the Company: 99.128% 98.785%
<PAGE>
<CAPTION>
Company Proceeds: $123,910,000 $172,873,750
</TABLE>
The Underwritten Securities shall have the following terms:
Title: $125,000,000 7.875% Senior Notes Due 2004
$175,000,000 8.125% Senior Notes Due 2009
Rank: Pari passu with all of the Company's other
unsecured and unsubordinated indebtedness.
Ratings: Baa3/BBB-
Aggregate principal amount: $125,000,000 5 year Notes
$175,000,000 10 year Notes
------------
$300,000,000 Total
Denominations: $1,000.00
Currency of payment: U.S. Dollars
Interest rate or formula: 7.875% per annum (5 year Notes)
8.125% per annum (10 year Notes)
Interest payment dates: Semi-annually on March 1 and September 1,
beginning September 1, 1999
Regular record dates: February 15 and August 15 of each year
Stated maturity dates: March 1, 2004 (5 year Notes)
March 1, 2009 (10 year Notes)
Redemption provisions: Redeemable, in whole or in part, at the
Company's option at any time on not less
than 30 nor more than 60 days' notice at the
greater of (i) 100% of principal amount of
the Notes being redeemed or (ii) as
determined by the Quotation Agent, the sum
of the present values of the remaining
scheduled payments of principal and interest
on the Notes (not including any portion of
those payments of interest accrued as of the
Redemption Date) discounted to the
Redemption Date on a semi-annual basis at
the Adjusted Treasury Rate plus 25 basis
points plus, in each case, accrued and
unpaid interest to the Redemption Date.
Redeemable by the Company, at the option of
each Holder of the Notes, in whole or in
part upon the occurrence of a Change in
Control Triggering Event, for cash equal to
101% of the principal amount of the Notes
tendered for
2
<PAGE>
redemption plus any interest accrued and
unpaid through the Purchase Date.
The terms and conditions relating to any
such redemption shall be as set forth under
the Supplemental Indenture (including the
form of the Notes contained therein).
Sinking fund requirements: None.
Defeasance provisions: The Notes are subject to defeasance and the
Company will be discharged from its
obligations with respect to the Notes upon
compliance with certain conditions.
The Company may omit to comply with certain
restrictive covenants applicable to the
Notes upon compliance with certain
conditions.
The terms and conditions relating to any
such defeasance and covenant defeasance
shall be as set forth under the Supplemental
Indenture.
Listing requirements: The Notes will not be listed on any
securities exchange or included in any
automated quotation system.
Black-out provisions: None.
Fixed or Variable Price Offering: Fixed price offering with an initial public
offering price of 99.728% of the principal
amount of the Notes Due 2004, and 99.435% of
the principal amount of the Notes Due 2009,
plus in each case accrued interest, if any,
from March 2, 1999 or from the most recent
date to which interest has been paid or
provided for.
Form: The form of the Notes shall be as set forth
in the Supplemental Indenture.
OTHER TERMS AND CONDITIONS: The terms and conditions of the Notes shall
be as set forth in the Supplemental
Indenture and under the Indenture, as
provided for in the Supplemental Indenture.
Closing date and location: March 2, 1999 at 9:00 A.M. (Eastern time) at
the offices of Kennedy Covington Lobdell &
Hickman, L.L.P., 100 North Tryon Street,
42nd Floor, Charlotte, North Carolina
28202-4006 or at such other time and place
as shall be agreed upon by the
Representatives of the Underwriters and the
Company.
3
<PAGE>
Co-managers: First Union Capital Markets Corp. Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
ALL OF THE PROVISIONS CONTAINED IN THE SUPPLEMENTAL INDENTURE ATTACHED
AS ANNEX I HERETO AND IN THE UNDERWRITING AGREEMENT ATTACHED AS ANNEX II HERETO
ARE HEREBY INCORPORATED BY REFERENCE IN THEIR ENTIRETY HEREIN AND SHALL BE
DEEMED TO BE A PART OF THIS TERMS AGREEMENT TO THE SAME EXTENT AS IF SUCH
PROVISIONS HAD BEEN SET FORTH IN FULL HEREIN.
Please accept this offer no later than 5:00 P.M. (Eastern time) on
February 25, 1999 by signing a copy of this Terms Agreement in the space set
forth below and returning the signed copy to us.
4
<PAGE>
Very truly yours,
NationsBanc Montgomery Securities LLC
First Union Capital Markets Corp.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: NationsBanc Montgomery Securities LLC
By: /s/ Lynn T. McConnell
-----------------------------------
Authorized Signatory
Acting on behalf of itself and the
other named Underwriters
Accepted:
OAKWOOD HOMES CORPORATION
By: /s/ Douglas R. Muir
----------------------------------
Name: Douglas R. Muir
Title: Senior Vice President
5
<PAGE>
Annex I
Form of Supplemental Indenture
[Omitted]
6
<PAGE>
Annex II
Underwriting Agreement
[Omitted]
7
Exhibit 4.1
================================================================================
OAKWOOD HOMES CORPORATION,
as Issuer,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
INDENTURE
Dated as of March 2, 1999
================================================================================
<PAGE>
OAKWOOD HOMES CORPORATION
Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
ss. 310 (a)(1)............................................609
(a)(2)............................................609
(a)(3)............................................Not Applicable
(a)(4)............................................Not Applicable
(a)(5)............................................609
(b)...............................................608, 610
ss. 311 (a)...............................................610, 613
(b)...............................................613
(c)...............................................Not Applicable
ss. 312 (a)...............................................701, 702(a)
(b)...............................................702(b)
(c)...............................................702(c)
ss. 313 (a)...............................................703(a)
(b)...............................................703(a)
(c)...............................................703(a), 602
(d)...............................................703(b)
ss. 314 (a)...............................................704
(a)(4)............................................101,1009
(b)...............................................Not Applicable
(c)(1)............................................102
(c)(2)............................................102
(c)(3)............................................Not Applicable
(d)...............................................Not Applicable
(e)...............................................102
ss. 315 (a)...............................................601
(b)...............................................602
(c)...............................................601
(d)...............................................601, 603
(e)...............................................514
ss. 316 (a)(last sentence)................................101
(a)(1)(A).........................................502, 512
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
(a)(1)(B).........................................513
(a)(2)............................................Not Applicable
(b)...............................................508
(c)...............................................104(c)
ss. 317 (a)(1)............................................503
(a)(2)............................................504
(b)...............................................1003
ss. 318 (a)...............................................107
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..........................1
Section 101. Definitions..................................................................1
Section 102. Compliance Certificates and Opinions.........................................8
Section 103. Form of Documents Delivered to Trustee.......................................9
Section 104. Acts of Holders; Record Dates................................................9
Section 105. Notices, Etc., to Trustee and Company.......................................11
Section 106. Notice to Holders; Waiver...................................................12
Section 107. Conflict with Trust Indenture Act...........................................12
Section 108. Effect of Headings and Table of Contents....................................12
Section 109. Successors and Assigns......................................................12
Section 110. Separability Clause.........................................................12
Section 111. Benefits of Indenture.......................................................12
Section 112. Governing Law...............................................................13
Section 113. Legal Holidays..............................................................13
Section 114. Independence of Covenants...................................................13
ARTICLE TWO SECURITY FORMS..................................................................13
Section 201. Forms of Securities.........................................................13
Section 202. Form of Legend for Book-Entry Securities....................................14
Section 203. Form of Trustee's Certificate of Authentication.............................14
ARTICLE THREE THE SECURITIES................................................................15
Section 301. Amount Unlimited; Issuable in Series........................................15
Section 302. Denominations...............................................................18
Section 303. Execution, Authentication, Delivery and Dating..............................18
Section 304. Temporary Securities........................................................19
Section 305. Registration, Registration of Transfer and Exchange.........................20
Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................22
Section 307. Payment of Interest; Interest Rights Preserved..............................23
Section 308. Persons Deemed Owners.......................................................24
Section 309. Cancellation................................................................24
Section 310. Computation of Interest; Default Rate......................................24
Section 311. CUSIP Numbers...............................................................25
ARTICLE FOUR SATISFACTION AND DISCHARGE.....................................................25
Section 401. Satisfaction and Discharge of Indenture.....................................25
Section 402. Application of Trust Money..................................................26
Section 403. Defeasance and Discharge of Securities of Any Series........................27
ARTICLE FIVE................................................................................29
REMEDIES....................................................................................29
Section 501. Events of Default...........................................................29
Section 502. Acceleration of Maturity; Rescission and Annulment..........................30
iii
<PAGE>
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.............31
Section 504. Trustee May File Proofs of Claim............................................32
Section 505. Trustee May Enforce Claims Without Possession of Securities.................33
Section 506. Application of Money Collected..............................................33
Section 507. Limitation on Suits.........................................................33
Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest....34
Section 509. Restoration of Rights and Remedies..........................................34
Section 510. Rights and Remedies Cumulative..............................................34
Section 511. Delay or Omission Not Waiver................................................34
Section 512. Control by Holders..........................................................35
Section 513. Waiver of Past Defaults.....................................................35
Section 514. Undertaking for Costs.......................................................36
Section 515. Waiver of Stay or Extension Laws............................................36
ARTICLE SIX THE TRUSTEE.....................................................................36
Section 601. Certain Duties and Responsibilities.........................................36
Section 602. Notice of Defaults..........................................................37
Section 603. Certain Rights of Trustee...................................................37
Section 604. Not Responsible for Recitals or Issuance of Securities......................39
Section 605. May Hold Securities.........................................................39
Section 606. Money Held in Trust.........................................................39
Section 607. Compensation and Reimbursement..............................................39
Section 608. Disqualification; Conflicting Interests.....................................40
Section 609. Corporate Trustee Required; Eligibility.....................................40
Section 610. Resignation and Removal; Appointment of Successor...........................41
Section 611. Acceptance of Appointment by Successor......................................42
Section 612. Merger, Conversion, Consolidation or Succession to Business.................43
Section 613. Preferential Collection of Claims Against Company...........................43
Section 614. Appointment of Authenticating Agent.........................................44
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................45
Section 701. Company to Furnish Trustee Names and Addresses of Holders...................45
Section 702. Preservation of Information; Communications to Holders......................45
Section 703. Reports by Trustee..........................................................46
Section 704. Reports by Company..........................................................47
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..........................47
Section 801. Restrictions on Mergers, Consolidations and Transfers of Assets.............47
Section 802. Repayment of Securities......................................................48
Section 803. Exercise of Option...........................................................48
Section 804. When Securities Presented for Purchase Become Due and Payable................49
Section 805. Securities Purchased in Part.................................................49
ARTICLE NINE SUPPLEMENTAL INDENTURES........................................................49
Section 901. Supplemental Indentures Without Consent of Holders..........................49
Section 902. Supplemental Indentures with Consent of Holders.............................51
Section 903. Execution of Supplemental Indentures........................................52
iv
<PAGE>
Section 904. Effect of Supplemental Indentures...........................................52
Section 905. Conformity with Trust Indenture Act.........................................52
Section 906. Reference in Securities to Supplemental Indentures..........................52
Section 907. Notice of Supplemental Indentures...........................................53
ARTICLE TEN COVENANTS.......................................................................53
Section 1001. Payment of Principal, Premium and Interest.................................53
Section 1002. Maintenance of Office or Agency............................................53
Section 1003. Money for Securities Payments to Be Held in Trust..........................53
Section 1004. Corporate Existence........................................................55
Section 1005. Payment of Taxes and Other Claims..........................................55
Section 1006. Maintenance of Properties..................................................55
Section 1007. Maintenance of Insurance...................................................56
Section 1008. Defeasance of Certain Obligations..........................................56
Section 1009. Statement as to Compliance.................................................57
Section 1010. Waiver of Certain Covenants................................................57
Section 1011. Restrictions on Secured Debt................................................58
Section 1012. Restrictions on Debt of Subsidiaries........................................59
Section 1013. Restrictions on Sale and Leaseback Transactions.............................60
ARTICLE ELEVEN REDEMPTION OF SECURITIES.....................................................61
Section 1101. Applicability of Article...................................................61
Section 1102. Election to Redeem; Notice to Trustee......................................61
Section 1103. Selection by Trustee of Securities to Be Redeemed..........................61
Section 1104. Notice of Redemption.......................................................62
Section 1105. Deposit of Redemption Price................................................62
Section 1106. Securities Payable on Redemption Date......................................63
Section 1107. Securities Redeemed in Part................................................63
ARTICLE TWELVE SINKING FUNDS................................................................63
Section 1201. Applicability of Article...................................................63
Section 1202. Satisfaction of Sinking Fund Payments with Securities......................64
Section 1203. Redemption of Securities for Sinking Fund..................................64
ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF THE HOLDERS.....................................64
Section 1301. Applicability of Article....................................................64
Section 1302. Repayment of Securities.....................................................64
Section 1303. Exercise of Option..........................................................65
Section 1304. When Securities Presented for Repayment Become Due and Payable..............65
Section 1305. Securities Repaid in Part...................................................66
ARTICLE FOURTEEN SUBORDINATION OF SECURITIES................................................66
Section 1401. Securities Subordinate to Senior Indebtedness..............................66
</TABLE>
v
<PAGE>
INDENTURE
INDENTURE, dated as of March 2, 1999, between OAKWOOD HOMES CORPORATION,
a North Carolina corporation (the "Company"), having its principal office at
7800 McCloud Road, Greensboro, North Carolina 27425, and THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee hereunder (the "Trustee"), having its Corporate Trust
Office at One North State Street, 9th Floor, Chicago, Illinois 60602.
RECITALS OF THE COMPANY
The Company deems it advisable to issue from time to time for its lawful
purposes its unsecured debentures, notes or other evidences of indebtedness
(hereinafter called the "Securities") in one or more series as in this Indenture
provided, and has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of the Securities, unlimited as to
principal amount, to bear interest at the rates or formulas, to mature at such
times and to have such other provisions as shall be fixed as hereinafter
provided.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act that are required to be part of and to govern
indentures qualified under the Trust Indenture Act.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have, when capitalized, the
meanings assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them
<PAGE>
in accordance with generally accepted accounting principles, and except as
otherwise herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally accepted at the date of
the Indenture;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "dollars", "$", "U.S. dollars", "United States
dollars" or "cash" shall refer to the lawful currency of the United States of
America; and
(f) the definitions included herein may be modified, expanded, deleted
or otherwise amended in a supplemental indenture after the date hereof.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" means, with respect to any specified Person, any other
Person which, directly or indirectly, is in control of, is controlled by or is
under common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Attributable Debt from a Sale and Leaseback" means, as of any
particular time, the aggregate present values (discounted at the weighted
average effective interest cost of Outstanding Securities determined on a
weighted average basis and compounded semi-annually) of all remaining rental
payments for which the Company or any Subsidiary is obligated under all leases
relating to a Sale and Leaseback due through the date through which such leases
have been or may, at the option of the lessor, be extended or, if earlier,
through the earliest date on which the lessee may terminate such leases upon
payment of a penalty (which penalties will be considered in calculating the
present value), after excluding all amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water and utility rates
and similar charges.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee pursuant to Section 614.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted or
consented to by the Board of Directors or any committee thereof and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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"Book-Entry Security" means a Security bearing the legend specified in
Section 202 evidencing all or part of a series of Securities, authenticated and
delivered to the Depositary for such series or its nominee, and registered in
the name of such Depositary or nominee.
"Business Day" when used with respect to any Place of Payment means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in the Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of the 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 Indenture until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any one of its Chairman of the Board, its
Vice Chairman, its Chief Executive Officer, its President or a Vice President
(regardless of Vice Presidential designation), and by any one of its Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary and delivered to the
Trustee.
"Consolidated Net Tangible Assets" means, at any date, the total assets
appearing on the Company's and Subsidiaries' most recently prepared consolidated
balance sheet at the end of a fiscal quarter of the Company, prepared in
accordance with generally accepted accounting principals at the time of
calculation, less (a) all current liabilities as shown on such balance sheet and
(b) Intangible Assets.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be administered, which
office as of the date of this Indenture is the address of the Trustee set forth
in Section 105.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Book-Entry
Securities, The Depository Trust Company, its nominees and successors, or
another Person designated as Depositary by the Company pursuant to Section 301,
which must be a clearing agency registered under the Exchange Act, and if at any
time there is more than one such Person, "Depositary" shall mean the Depositary
with respect to the Securities of that series.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any statute successor thereto.
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"Expiration Date" has the meaning specified in Section 104.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means (i) all obligations for borrowed money, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations in respect of letters of credit or bankers acceptances or
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (v)
all obligations as lessee which are capitalized in accordance with generally
accepted accounting principles, and (vi) all Indebtedness of others guaranteed
by the Company or any of its subsidiaries or for which the Company or any of its
subsidiaries is otherwise responsible or liable (whether by agreement to
purchase indebtedness of, or to supply funds or to invest in, others).
"Indemnified Party or Parties" has the meaning specified in Section 607.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular series of Securities established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
those particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"Intangible Assets" means the value (net of applicable reserves), as
shown on or reflected in the Company's and Subsidiaries' most recently prepared
consolidated balance sheet at the end of a fiscal quarter of the Company, of (a)
all trade names, trademarks, licenses, patents, copyrights, and goodwill; (b)
organizational costs; and (c) deferred charges (other than prepaid items such as
insurance, taxes, interest, commissions, rents and similar items and intangible
assets being amortized). In no event, however, will the term "Intangible Assets"
include product development costs.
"Interest", when used with respect to an Original Issue Discount
Security which by its
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terms bears interest only after Maturity, shall mean interest payable after
Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Securities.
"Liens" means any mortgage, pledge, security interest, lien or
encumbrance.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Vice Chairman, the Chief Executive Officer, the President or a Vice
President (regardless of Vice Presidential designation), and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary of the Company, and
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 the Trustee unless an independent
opinion of counsel is required pursuant to the terms of this Indenture.
"Opinion of Independent Counsel" means a written opinion of counsel, who
may be regular outside counsel for the Company, which is issued by a Person who
is not an employee or consultant of the Company and who shall be reasonably
acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities; provided,
that if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and Securities, except to the
extent provided in Section 403, with respect to which the Company has
effected defeasance as provided in Section 403; and
(iii) Securities which have been returned pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this
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Indenture, other than any such Securities in respect of which there
shall have been presented to the Trustee proof reasonably satisfactory
to it that such Securities are held by a bona fide purchaser in whose
hands such Securities are valid obligations of the Company; provided,
however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
(i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof pursuant to
Section 502, (ii) the principal amount of any Indexed Security of any
series that may be counted in making such determination or calculation
and that shall be deemed outstanding for such purpose shall be equal to
the principal face amount of such Indexed Security at original issuance,
unless otherwise established as contemplated by Section 301 with respect
to such Security, and (iii) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as established as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
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"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date for that purpose established
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means any
officer assigned by the Trustee to administer corporate trust matters 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.
"Sale and Leaseback" shall have the meaning specified in Section 1013.
"Security" has the meaning stated in the first recital of this Indenture
and, more particularly, means any Security or Securities authenticated and
delivered under this Indenture; provided, however, that, if at any time there is
more than one Person acting as Trustee under this Indenture, "Securities" with
respect to the Indenture as to which such Person is Trustee shall have the
meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered under this Indenture,
exclusive, however, of Securities of any series as to which such Person is not
Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" has the meaning determined pursuant to Section
301(17).
"Special Record Date" for the payment of any Defaulted Interest on the
Securities of any series means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means (i) any corporation at least a majority of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries of the Company, or by the Company
and one or more other Subsidiaries of the Company, (ii) any partnership or
limited liability company in which the Company or a Subsidiary of the Company
holds a majority interest in the equity capital or profits of such partnership
or limited liability company, or (iii) any other Person in which the Company, a
Subsidiary of the Company or the Company and one or more other Subsidiaries of
the Company, directly or indirectly, at the date of determination has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this
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instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. 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 U.S. Government Obligation or the specific
payment of interest on or principal of the U.S. Government Obligation evidenced
by such depository receipt.
"Yield to Maturity" means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
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
such certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(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;
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(3) a statement that, in the opinion of each such individual, the
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
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant 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 or opinion of counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or 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 shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or
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writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any date not more than 60 days nor less than 10 days prior to
the date of any of the following actions as the record date for the purpose of
determining the Holders of Securities of any series entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Holders of Securities of such series. If not set by the Company prior to the
first solicitation of a Holder of Securities of such series made by any Person
in respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be. Notwithstanding the foregoing, the Company may not set a record date
for, and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
the next paragraph. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities of the relevant series on such record date,
and no other Holders, shall be entitled to take the relevant action, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Promptly after any record date is
set pursuant to this paragraph, the Company, at its own expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to each Holder of Securities of the relevant series
in the manner set forth in Section 106.
(d) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the relevant series in the manner set forth in Section
106.
(e) With respect to any record date set pursuant to this Section, the
party hereto
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which sets such record dates may designate any day as the "Expiration Date" and
from time to time may change the Expiration Date to any earlier or later day;
provided that no such change shall be effective unless notice of the proposed
new Expiration date is given to the other party hereto in writing, and to each
Holder of Securities of the relevant series in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(f) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
(g) The ownership of Securities shall be proved by the Security
Register.
(h) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(i) For purposes of this Indenture, any action by the Holders which may
be taken in writing may be taken by electronic means or as otherwise reasonably
acceptable to the Trustee.
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 by 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, One North State Street, 9th Floor,
Chicago, Illinois 60602, Attention: Corporate Trust Department, or at any other
address previously furnished in writing by the Trustee to the Holders or the
Company or any other obligor on the Securities, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished or filed in writing to or with the Company addressed to it at
the address of its principal office specified in the first paragraph of this
instrument to the "Attention of the Treasurer" with a copy to the Company's
General Counsel or at any other address previously furnished in writing to the
Trustee by the Company. Any such communication shall be effective upon receipt.
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Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
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.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the Trust Indenture Act provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or excluded, as the case may
be.
Section 108. 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 109. 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 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
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Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be deemed to be a contract under
the laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of such state, without regard to principles of
conflicts of laws.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment for
such Security, then notwithstanding any other provision of this Indenture or of
the Security (other than a provision of the Security established as contemplated
by Section 301 and which specifically states that such provision shall apply in
lieu of this Section 113), payment of interest or principal (and premium, if
any) need not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, and no interest shall accrue on such payment for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, to the next succeeding Business Day.
Section 114. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants or agreements, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default or an Event of Default if such action is
taken or condition exists.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms of Securities.
The Securities of each series shall be in substantially the forms as
shall be established by or pursuant to one or more Board Resolutions (as set
forth in a Board Resolution or, to the extent established pursuant to rather
than as set forth in a Board Resolution, an Officer's Certificate detailing such
establishment) or in one or more indentures supplemental hereto, shall have 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 or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities
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may be listed or of the Depositary therefore, or to conform to usage. The
definitive Securities shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
or automated quotation system on which the Securities of such series may be
listed or traded, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
Section 202. Form of Legend for Book-Entry Securities.
Any Book-Entry Security authenticated and delivered hereunder shall bear
a legend in substantially the following form:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN."
Section 203. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
"TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
The First National Bank of Chicago, as Trustee
By: _________________________________
Authorized Signatory"
If at any time there shall be an Authenticating Agent appointed with
respect to one or more series of Securities, then in lieu of the Trustee's
certificate of authentication, an alternative certificate of authentication
shall be borne by such Securities substantially in the following form:
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"TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
By:[____________________],
as Authenticating Agent
By: ___________________________
Authorized Signatory"
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited. All Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of any Holder, for issuances of additional
Securities of such series.
The Securities may be issued in one or more series. With respect to any
series of Securities which may be designated and authenticated and delivered
under this Indenture, there shall be established in or pursuant to one or more
Board Resolutions (and to the extent established pursuant to rather than as set
forth in a Board Resolution, in an Officers' Certificate detailing such
establishment) or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series (except as provided in the
last paragraph of this Section 301), the following:
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) the aggregate principal amount of the Securities and any limit upon
the aggregate principal amount of the Securities of the series which may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the series pursuant to Section 304, 305,
306, 906 or 1107 and except for any Securities which, pursuant to Section 303,
are deemed never to have been authenticated and delivered hereunder), which
limit, unless otherwise expressly established, may be changed from time to time
by or pursuant to Board Resolution, Officers' Certificate or indentures
supplemental hereto without the consent of any Holders;
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(3) the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;
(4) the date or dates, or the method by which such date or dates will be
determined, on which the principal and premium, if any, of the Securities of the
series is payable;
(5) the rate or rates (which may be fixed, floating, or adjustable) at
which the Securities of the series shall bear interest, if any, or the method or
methods by which such rate or rates shall be determined, the date or dates from
which such interest shall accrue or method by which such date or dates shall be
determined, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date, if any, for any interest payable on any
Interest Payment Date, or the method by which such date shall be determined, and
the basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(6) the place or places where the principal of and any premium and
interest on Securities of the series shall be payable and the place or places
where the Securities of such series may be presented for requisition of
exchange;
(7) the period or periods within which, the price or prices at which,
the currencies, currency units or composite currencies in which, and the other
terms and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company and if other than by a Board
Resolution, the manner in which any election by the Company to redeem the
Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which, and the other terms and conditions upon which
Securities of the series shall be redeemed, repaid or purchased, in whole or in
part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(10) the application, if any, of Section 403 to the Securities of the
series;
(11) the application, if any, of Section 1008 to the Securities of the
series;
(12) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference to an
index, formula or other method (which index, formula or method may be based,
without limitation, on one or more currencies, currency units, composite
currencies, commodities, equity indices or other indices), the manner in which
such amounts shall be determined;
(13) whether the Securities of the series shall be issued in whole or in
part in the form
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of one or more Book-Entry Securities and, in such case, the Depositary with
respect to such Book-Entry Security or Securities and the circumstances under
which any such Book-Entry Security may be registered for transfer or exchange,
or authenticated and delivered, in the name of a Person other than such
Depositary or its nominee, if other than as set forth in Section 305;
(14) if other than the entire principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(15) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be specified;
(16) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Securities of the series,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth herein;
(17) the terms pursuant to which the Securities of the series will be
made subordinate and subject in right of payment to the prior payment in full of
all Senior Indebtedness of the Company, and the definition of any such Senior
Indebtedness;
(18) whether the payment of principal, premium and interest and other
amounts due hereunder, and performance of the Company's other obligations
hereunder, will be guaranteed by one or more guarantors, including subsidiaries
of the Company;
(19) whether the Securities of such series are registered securities,
bearer securities or, alternatively, bearer and registered securities, and
whether any bearer securities will be issued with coupons, without coupons or
both, and any restrictions applicable to the offer, sale or delivery of bearer
securities and the terms, if any, upon which bearer securities of the series may
be exchanged for registered securities of the series and vice versa; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided by or pursuant to the
Board Resolution or Officer's Certificate referred to above or as set forth in
any indenture supplemental hereto.
The Securities of any series need not be issued at the same time but may
be issued from time to time and the terms of any Security may be established
prior to the issuance thereof but after the issuance of other Securities of the
same series.
If any of the terms of the Securities of such series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or Company Order setting forth the terms of the series.
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Section 302. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be established as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents, under its corporate seal
which may, but need not, be attested by its Treasurer, one of its Assistant
Treasurers, its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.
Securities 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 Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities to or upon
the order of the Company or pursuant to such procedures acceptable to the
Trustee and to such recipients as the case may be as specified from time to time
by a Company Order. If all the Securities of any series are not to be issued at
one time and if the terms of such Securities established as contemplated by
Section 301 so permit, such Company Order may set forth procedures acceptable to
the Trustee for the completion and authentication of such Securities from time
to time. In authenticating Securities of any series, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon,
(i) any Board Resolution, Officers' Certificate and/or indenture
supplemental hereto by or pursuant to which the forms and terms of such
Securities are established as contemplated by Sections 201 and 301;
(ii) an Officers' Certificate setting forth the forms and terms of such
Securities and stating that the forms and terms of such Securities have been
established pursuant to Sections 201 and 301 and comply with this Indenture, and
covering such other matters as the Trustee may reasonably request; and
(iii) an Opinion of Independent Counsel substantially to the effect
that:
(a) the forms and the terms of such Securities have been duly
authorized and
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established in conformity with the provisions of this Indenture,
(b) all conditions precedent provided for in this Indenture
relating to the Trustee's authentication of such Securities have been
complied with, and
(c) such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Independent Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles and to such other matters as such
counsel may specify.
The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Company Order, Board Resolution,
indentures supplemental hereto, Officers' Certificate and Opinion of Independent
Counsel otherwise required pursuant to such preceding paragraph at or prior to
the time of authentication of each Security of such series if such documents
(with such modifications as may be appropriate) are delivered at or prior to the
authentication upon original issuance of the first Security of such series to be
issued and reasonably contemplate such authentication of each such Security.
Each Security shall be dated the date of its authentication, unless
otherwise established therefor as contemplated by Section 301.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities of such Series which are printed, lithographed,
typewritten, mimeographed or otherwise produced,
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in any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute, and the Trustee
shall authenticate and deliver in exchange therefor, one or more definitive
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided. If any indenture supplemental hereto
refers to any transfer agents (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Securities, the Company
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent in each Place of
Payment for such series. The Company may at any time designate additional
transfer agents with respect to any series of Securities.
Upon surrender for registration of transfer of any Security of any
series at the office or agency in a Place of Payment for Securities of that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
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All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange or redemption shall (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, 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 Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
Neither the Company nor the Trustee shall be required (i) to issue,
register the transfer of or exchange Securities of any series, if such Security
may be among those selected for redemption, during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
Notwithstanding the foregoing, no Book-Entry Security shall be
registered for transfer or exchange, or authenticated and delivered, whether
pursuant to this Section, Sections 304, 306, 906 or 1107 or otherwise, in the
name of a Person other than the Depositary for such Book-Entry Security or its
nominee until (i) the Depositary with respect to a Book-Entry Security notifies
the Company that it is unwilling or unable to continue as Depositary for such
Book-Entry Security or the Depositary ceases to be a clearing agency registered
under the Exchange Act, (ii) the Company executes and delivers to the Trustee a
Company Order that such Book-Entry Security shall be so transferable and
exchangeable or (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities of such series. Upon the occurrence in
respect of any Book-Entry Security of any series of any one or more of the
conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or
such other conditions as may be established as contemplated by Section 301 for
Securities of such series, such Book-Entry Security may be registered for
transfer or exchange for Securities registered in the names of, or authenticated
and delivered to, such Persons as the Depositary with respect to such series
shall direct.
Except as provided in the preceding paragraph, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Book-Entry Security, whether pursuant to this Section,
Section 304, 306, 906 or 1107 or otherwise, shall also be a Book-Entry Security
and bear the legend specified in Section 202.
If the Securities are Book-Entry Securities, the Depositary or its
nominee, as registered owner of a Book-Entry Security, shall be the Holder of
such Book-Entry Security for all
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purposes under the Indenture and each series of the Securities, and owners of
beneficial interests in a Book-Entry Security shall hold such interests pursuant
to the applicable procedures of the Depositary. Accordingly, any such owner's
beneficial interest in a Book-Entry Security will be shown only on, and the
transfer of such interest shall be effected only through, records maintained by
the Depositary or its nominee.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with
such security or indemnity as may be requested by the Company or the Trustee to
save each of them harmless the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security 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 Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding. If, after the delivery of such new Security,
a bona fide purchaser of the original Security in lieu of which such new
Security was issued presents for payment or registration such original Security,
the Trustee shall be entitled to recover such new Security from the party to
whom it was delivered or any party taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Company and the Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security 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 Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are 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 Securities.
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Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise established as contemplated by Section 301 with
respect to Securities of any series, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest at the office or agency of the Company maintained for such
purpose pursuant to Section 1002; provided, however, that, except in the case of
a Book-Entry Security, each installment of interest on any Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Security Register or (ii)
wire transfer to an account maintained by the payee located inside the United
States.
Any Paying Agents will be identified in a supplemental indenture hereto.
The Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however, the Company at all times will be
required to maintain a Paying Agent in each Place of Payment for each series of
Securities.
Except as otherwise established as contemplated by Section 301 with
respect to Securities of any series, any interest on any Security which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in paragraph (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are 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 each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money in cash equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as provided in this clause.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall not be more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of such Securities at his address as
it appears in the Security Register, not less than 10 days prior to such Special
Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date
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therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names such Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may pay any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which such Securities may
be listed or traded, and upon such notice as may be required by such exchange or
automated quotation system, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, repayment at the
option of the Holder, registration of transfer or exchange or for credit against
any sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
Section 310. Computation of Interest; Default Rate.
Except as otherwise established as contemplated by Section 301 in
respect of Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year of twelve 30-day months and
interest on the Securities of each series for any partial period
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shall be computed on the basis of a 360-day year of twelve 30-day months and the
number of days elapsed in any partial month. Unless otherwise specified,
interest on any overdue amounts of any series of Securities, whether for
interest or principal, shall bear interest at the rate of interest for the
underlying Securities.
Section 311. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company shall promptly notify
the Trustee in writing of any change in "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Order cease to be of further effect
with respect to Securities of any series specified in such Company Order (except
as to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, upon receipt of Company Order,
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture as to such series,
when
(1) either
(A) all Securities of such series theretofore authenticated and
delivered (other than (i) Securities of such series which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306 and (ii) Securities of such series for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all Securities of such series not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
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and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose cash or U.S. Government Obligations
which through the payment of interest and principal in respect thereof
in accordance with their terms will provide not later than the opening
of business on the due date of any payment referred to in clause (i),
(ii) or (iii) of subparagraph (B) money in an amount sufficient, without
consideration of any reinvestment of such principal and interest, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge (i) the principal of (and premium, if
any) and each installment of principal (and premium, if any) and
interest on such Outstanding Securities of that series on each
applicable Stated Maturity of such principal or installment of principal
or interest and (ii) any mandatory sinking fund payments or analogous
payments applicable to Securities of such series on the day on which
such payments are due and payable in accordance with the terms of this
Indenture and of such Securities;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company in respect of such Securities; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture with
respect to such Securities have been complied with and that such satisfaction
and discharge will not result in a breach of violation of, or constitute a
default under, this Indenture or any other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series pursuant to this Section 401, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 614 and, if money 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, in each case with respect to such Securities, shall
survive.
Section 402. Application of Trust Money.
(a) Subject to the provisions of the last paragraph of Section 1003, all
cash and U.S. Government Obligations deposited with the Trustee pursuant to
Section 401, 403 or 1008 and all money received by the Trustee in respect of
U.S. Government Obligations deposited with the Trustee pursuant to Section 401,
403 or 1008, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with or received by the Trustee or to make mandatory sinking fund
payments or analogous payments as contemplated by Section 403 or 1008.
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(b) The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 401, 403 or 1008 or the interest and
principal received in respect of such obligations other than any payable by or
on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or U.S. Government Obligations held by it as
provided in Section 401, 403 or 1008 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are then in excess of the amount
thereof which then would have been required to be deposited for the purpose for
which such money or U.S. Government Obligations were deposited or received.
(d) If the Trustee for any series or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section 401, 403 or
1008, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the series
of Securities shall be revived and reinstated with respect to such series, with
present and prospective effect, as though no deposit had occurred pursuant to
Section 401, 403 or 1008, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such cash or U.S. Government Obligations
in accordance with Section 401, 403 or 1008, as the case may be; provided,
however, that if the Company makes any payment to the Trustee or Paying Agent of
principal of, premium, if any, or interest on any Security following the
reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay
any such amount to the Holders of the Securities and the Company shall be
subrogated to the rights of the Holders of such series of Securities to receive
such payment from the cash and U.S. Government Obligations held by the Trustee
or Paying Agent.
Section 403. Defeasance and Discharge of Securities of Any Series.
If this Section 403 is established, as contemplated by Section 301, to
be applicable to Securities of any series, then notwithstanding Section 401, (a)
the Company shall be deemed to have paid and discharged the entire indebtedness
on all the Outstanding Securities of that series, (b) the provisions of this
Indenture as it relates to such Outstanding Securities (except as to the rights
of Holders of Securities to receive, from the trust funds described in
subparagraph (1) below, payment of the principal of (and premium, if any) and
any installment of principal of (and premium, if any) or interest on such
Securities on each Stated Maturity of such principal or installment of principal
or interest or any mandatory sinking fund payments or analogous payments
applicable to the Securities of that series on the day on which such payments
are due and payable in accordance with the terms of the Indenture and of such
Securities, the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 403, 1002 and 1003 and the rights, powers, trusts,
duties and immunities of the Trustee hereunder) shall no longer be in effect,
and (c) the Trustee, at the expense of the Company, shall upon Company Request,
execute proper instruments acknowledging the same, provided that the following
conditions shall have been satisfied:
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(1) the Company shall have deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of Section 609),
irrevocably (irrespective of whether the conditions in subparagraphs (2), (3),
(4) and (5) below have been satisfied, but subject to the provisions of Section
402(c) and the last paragraph of Section 1003), as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of the Securities of that series, with reference to this Section
403, cash or U.S. Government Obligations, or a combination thereof, which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide not later than the opening of business on the due
date of any payment referred to in clause (i) or (ii) of this subparagraph (1)
money in an amount sufficient, without consideration of any reinvestment of such
principal and interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge (i) the principal of (and
premium, if any) and each installment of principal (and premium, if any) and
interest on such Outstanding Securities of that series on each applicable Stated
Maturity of such principal or installment of principal or interest and (ii) any
mandatory sinking fund payments or analogous payments applicable to Securities
of such series on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities;
(2) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(3) no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default with respect to the
Securities of that series shall have occurred and be continuing on the date of
such deposit and no Event of Default under Section 501(5) or Section 501(6) or
event which with the giving of notice or lapse of time or both, would become an
Event of Default under Section 501(5) or Section 501(6) shall have occurred and
be continuing on the 91st day after such date;
(4) the Company has delivered to the Trustee an Opinion of Independent
Counsel to the effect that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date first
set forth herein above, there has been a change in the applicable United States
federal income tax law or the judicial interpretation thereof, in either case
(A) or (B) to the effect that, and based thereon such opinion shall confirm
that, Holders of the Securities of that series will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to United States federal income tax on the
same amount and in the same manner and at the same times, as would have been the
case if such deposit, defeasance and discharge had not occurred;
(5) such defeasance or covenant defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder;
(6) the Company shall have delivered to the Trustee an Opinion of
Independent Counsel in the United States to the effect that after the 91st day
following the deposit, the trust
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funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and
(7) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance and discharge of the entire indebtedness on all
Outstanding Securities of any such series as contemplated by this Section have
been complied with.
Notwithstanding any other provisions of this Section, such defeasance
shall be effected in compliance with any additional or substitute terms,
conditions or limitations which may be established as contemplated by Section
301 in respect of the Securities of that series. Opinions required to be
delivered under this Section may have qualifications customary for opinions of
the type required.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series as and when the same shall become due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or
(4) default in the performance or breach of any covenant or warranty of
the Company in this Indenture (other than any such default or breach which is
elsewhere in this Section specifically dealt with or which is expressly not
applicable to Securities of that series), and continuance of such default or
breach for a period of 45 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 Securities
of that series a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable
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bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or
the written consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable law, or the written consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action; or
(7) any other Event of Default established as contemplated by Section
301 with respect to Securities of that series.
Upon receipt by the Trustee of any Notice of Default pursuant to this Section
501 with respect to Securities of a series all or part of which is represented
by a Book-Entry Security, the Trustee shall establish a record date for
determining Holders of Outstanding Securities of such series entitled to join in
such Notice of Default, which record date shall be at the close of business on
the day the Trustee receives such Notice of Default. The Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to join in such Notice of Default, whether or not such Holders remain Holders
after such record date; provided, that, except with respect to an Event of
Default arising under Section 501(4), unless Holders of at least 25% in
principal amount of the Outstanding Securities of such series, or their proxies,
shall have joined in such Notice of Default prior to the applicable Expiration
Date, such Notice of Default shall automatically and without further action by
any Holder be cancelled and of no further effect. Nothing in this paragraph
shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of
such applicable Expiration Date, a new Notice of Default identical to a Notice
of Default which has been cancelled pursuant to the proviso to the sentence in
which event a new record date shall be established pursuant to the provisions of
this Section 501.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities of that series
may declare the principal amount (or, if any of the
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Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof) of all of the Securities of that series to be
immediately due and payable by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series 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 a majority in principal amount of the
Outstanding Securities of that series, 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 sufficient
in cash to pay:
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all amounts owing the Trustee pursuant to Section 607 in respect
of Securities of that series; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal and premium, if any, of Securities
of that series which have become due solely by such declaration of acceleration,
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 interest on any Security when
such interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, all principal, and any premium, and
interest due and payable on such Securities and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal
and premium and on any overdue interest, at the rate or rates prescribed
therefor in such Securities, and, in addition thereto, such further amount as
shall be sufficient to
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cover the amounts due the Trustee pursuant to Section 607 in respect of such
Securities.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
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
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of any Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of 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, or such lesser
amount as may be provided for in the Securities of any series, of principal, and
premium, if any, and interest owing and unpaid in respect of such Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee pursuant to Section 607 and of the Holders
allowed in such judicial proceeding, and
(2) to collect and receive any moneys 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 to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay the Trustee any amount due it pursuant to 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 any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the amounts due the Trustee pursuant to Section
607, be for the ratable benefit of the Holders of the Securities 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 or otherwise
on behalf of the Holders or the Trustee pursuant to this Article or through any
proceeding or any arrangement or restructuring in anticipation or in lieu of any
proceeding contemplated by this Article shall be applied, subject to applicable
law, 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 any premium or
interest, upon presentation of the Securities 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 under Section 607;
and
SECOND: To the payment of the amounts then due and unpaid for principal
of and any premium and interest payable on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and any premium and interest, respectively.
Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver, assignee, trustee, liquidator or
sequestrator (or other similar official), or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series 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 reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of
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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 Securities of that series; 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 to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307) any
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder 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, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders 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 Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
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
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remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture or be unduly prejudicial to Holders not joining therein, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to Securities of
a series all or part of which is represented by a Book-Entry Security, the
Trustee shall establish a record date for determining Holders of Outstanding
Securities of such series entitled to join in such direction, which record date
shall be at the close of business on the day the Trustee receives such
direction. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such direction, whether or
not such Holders remain Holders after such record date; provided, that unless
such majority in principal amount shall have been obtained prior to the
applicable Expiration Date, such direction shall automatically and without
further action by any Holder be cancelled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such applicable Expiration Date, a new direction identical
to a direction which has been cancelled pursuant to the provisions to the
preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 512.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security of such series, 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 Security of such series affected.
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
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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 Security of
any series 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 in respect of the Securities
of such series, 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 litigant; but the provisions of this
Section shall not apply to any suit instituted by the Company or the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of such series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
of, premium, if any, or interest on the Securities contemplated herein or in the
Securities or which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act and this Indenture. Notwithstanding the foregoing, 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. 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.
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Section 602. Notice of Defaults.
Within 45 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit to all
Holders of Securities of such series, in the manner and to the extent provided
in Trust Indenture Act Section 313(c), notice of such default hereunder, 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 premium, if any) or
interest on any Security of such series, or in the payment of any sinking fund
installment with respect to the Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a committee of Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Securities of such series. 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 with respect to the Securities of such
series. Subject to Trust Indenture Act Section 315(b), the Trustee shall not be
deemed to have, or be required to take, notice of any default or Event of
Default (other than a default described in paragraph (1), (2), or (3) of Section
501) except upon (A) written notification from the Company or (B) written
notification from a Holder and, in the absence of such notice, the Trustee may
conclusively presume that there is no default or Event of Default except as
aforesaid. Subject to Section 601 of this Indenture, such notification shall not
be deemed to include receipt of information obtained in any report or other
documents furnished under Section 704 of this Indenture, which reports and
documents the Trustee shall have no duty to examine.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon receipt by it of any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
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(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Independent 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;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture other than any liabilities
arising out of the negligence of the Trustee;
(i) 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;
(j) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and certificates of
opinions furnished to it 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;
(k) 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;
(l) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities of any
series, relating to the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series; and
(m) no provision of this Indenture shall require the Trustee to
determine the maximum interest rate permissible under applicable law.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and 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 Securities or any
prospectus prepared in connection with the offering of the Securities, except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Securities 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. The Trustee or any Authenticating Agent
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed 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 it 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 and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any provision of this Indenture
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(including the reasonable compensation and the expenses and disbursements of its
agents and counsel and the reasonable fees of in-house counsel in the regular
employ of the Trustee which are allocable to this trust and the expenses and
disbursements of such counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and each predecessor Trustee and the
officers, directors, employees and agents of the Trustee or any such predecessor
Trustee (the Trustee, each predecessor Trustee and such officers, directors,
employees and agents being hereinafter referred to in this Section collectively
as the "Indemnified Parties" and individually as an "Indemnified Party") for,
and to hold each Indemnified Party harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder; provided that any Indemnified Party shall promptly
notify the Company of the commencement of any action, or proceeding for which it
intends to seek indemnity hereunder, will permit the Company to conduct the
defense thereof on its behalf and will not compromise or settle any such action,
suit or proceeding without the prior approval of the Company.
The Company's payment obligations pursuant to this Section 607 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of an Event of Default specified in Section 501(5) or (6), the
expenses are intended to constitute expenses of administration under any
bankruptcy law.
Section 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $250,000,000. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
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 610. Resignation and Removal; Appointment of Successor.
(a) 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 in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may, or any Holder who has been a
bona fide Holder of a Security of the applicable series for at least one month
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder of a Security
who has been a bona fide Holder of a Security for at least six months,
or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security
for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (i)
the Company by or pursuant to Board Resolution may remove the Trustee
with respect to all Securities or the Securities of any series, or (ii)
subject to Section 514, any Holder who has been a bona fide Holder of a
Security of any series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all
Securities of such series and the appointment of a successor Trustee or
Trustees with respect thereto.
(e) 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, with
respect to the Securities of one or more series, the Company, by or pursuant to
a Company Request or Company Order, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series) and
shall comply with the applicable
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requirements of Section 611. If, within six months after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series 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 applicable requirements of Section 611, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series to all
Holders of Securities of such series in the manner provided in Section 106. Each
notice of such appointment shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate Trust
Office. Notices of resignation, removal and appointment may be combined into a
single notice.
Section 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
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retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraphs (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. 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 the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent 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 continue to be an
Authenticating Agent, 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 for such series and to the Company. The Trustee for any
series of Securities may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee for such series 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 Securities of the series with respect to
which such Authenticating Agent will serve, as their names and addresses appear
in the Security 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 to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than 15 days after each Regular Record Date
for Securities of each series at the time Outstanding, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders as
of such Regular Record Date (or a date to be established as contemplated by
Section 301 for Original Issue Discount Securities) and
(b) 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; excluding from any such list names and addresses received by the
Trustee in its capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act, 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 the Trust Indenture Act.
(d) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form
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of proxy or other communication which such applicants propose to transmit, then
the Trustee shall, within five business days after the receipt of such
application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved at
the time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable promptness after
a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interest of the Holders or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
Section 703. Reports by Trustee.
(a) Within 60 days after each May 15, beginning with May 15, 2000, the
Trustee shall transmit to the Holders such reports concerning the Trustee and
its actions under this Indenture as may be required pursuant to Trust Indenture
Act Section 313(a) in the manner provided pursuant thereto, and such other
reports as may be required under the Trust Indenture Act in the manner and at
the times provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to the Holders, be filed by the Trustee with the Company and, to the extent
required, with each stock exchange upon which any Securities are listed and with
the Commission. The Company will notify the Trustee when any Securities are
listed on any stock exchange.
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Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801 Restrictions on Mergers, Consolidations and Transfers of Assets.
The Company will not, and the Company will not permit any Subsidiary to,
consolidate or merge into or sell, assign, transfer, lease or otherwise dispose
of all or substantially all of its assets other than in the ordinary course of
its business or any of the capital stock or other equity interests of any
Subsidiary held by the Company or a Subsidiary to another person unless:
(a) (i) the person is a corporation, trust or partnership organized under
the laws of the United States of America or any state thereof or the
District of Columbia;
(ii) the person assumes by supplemental indenture all of the Company's
obligations or the obligations of the Subsidiary, as the case may be,
relating to the Securities or arising under this Indenture; and
(iii) immediately after the transaction no Event of Default, and no
event which, after notice or lapse of time or both, would become an
Event of Default, exists; provided that this clause (iii) will not
restrict or be applicable to a merger, consolidation or liquidation of a
Subsidiary with or into the Company or with or into another Subsidiary
that is wholly-owned, directly or indirectly, by the Company; or
(b) in the case of the sale, assignment, transfer, lease or other disposition of
all or substantially all of the assets or any capital stock or other equity
interests of any Subsidiary, the Company or a Subsidiary (A) receives, upon the
occurrence of such an event, cash consideration at least equal to the fair
market value of the assets, stock or equity interests sold, as determined in
good faith by the Board of Directors of the Company, and (B) applies within 180
days of such an action the proceeds received to (1) permanently repay
Indebtedness of the Company or of a Subsidiary ranking pari passu with the
Securities, (2) the purchase of property or assets (including the origination of
consumer loans) of a business related to any business that the Company or any
Subsidiary conducts at that time, (3) redemption of the Securities, or (4) any
combination of clauses 1, 2 and 3.
The procedures to be followed by the Company in making an offer to
purchase Securities from the holders pursuant to clause (b)(B)(3) above, and for
the acceptance of the offer by the Holders, shall be in accordance with the
terms of such Securities and (except as otherwise
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specified as contemplated by Section 301 for Securities of any series) in
accordance with Sections 802 through 805.
Except as set forth in clause (b) of this Section 801, upon any such
consolidation, merger, sale, assignment, transfer, lease or other disposition,
the successor corporation will be substituted for the Company or the Subsidiary,
as the case may be, under this Indenture. The successor corporation may then
exercise every power and right of the Company or of the Subsidiary under the
Indenture, and the Company or the Subsidiary, as the case may be, will be
released from all of the Company's or the Subsidiary's liabilities and
obligations relating to the Securities or arising under the Indenture. If the
Company or any Subsidiary leases all or substantially all of the Company's or
the Subsidiary's assets, the lessee corporation will be the successor to the
Company or the Subsidiary and may exercise every power and right of the Company
or of the Subsidiary, as the case may be, under the Indenture, but the Company
or the Subsidiary, as the case may be, will not be released from the Company's
or the Subsidiary's obligations to pay the principal of and premium, if any, and
interest, if any, on the Securities.
Section 802. Repayment of Securities.
Securities of any series subject to purchase pursuant to Section
801(b)(B)(3) in whole or in part at the option of the Holders thereof will,
unless otherwise provided in the terms of such Securities, be repaid at a price
equal to the principal amount thereof, together with interest and/or premium, if
any, thereon accrued to the Repayment Date specified in or pursuant to the terms
of such Securities. The Company covenants that on or before the Repayment Date
it will 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 principal (or, if so
provided by the terms of the Securities of any series, a percentage of the
principal) of, the premium, if any, and (except if the Repayment Date shall be
an Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.
Section 803. Exercise of Option.
Securities of any series subject to purchase pursuant to Section
801(b)(B)(3) will contain an "Option to Elect Repayment" form on the reverse of
such Securities. Except as otherwise may be provided by the terms of any
Security providing for purchase pursuant to Section 801(b)(B)(3), any Security
so providing for such purchase with the "Option to Elect Repayment" form on the
reverse of such Security duly completed by the Holder (or by the Holder's
attorney duly authorized in writing) must be received by the Company at the
Place of Payment therefor specified in the terms of such Security (or at such
other place or places of which the Company shall from time to time notify the
Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, the premium, if any, to be paid, and
the denomination or denominations of the Security or Securities to be issued to
the Holder for the portion of the principal amount of such Security surrendered
that is not to be repaid, must be specified. The principal amount of any
Security
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providing for such purchase may not be repaid in part if, following such
purchase, the unpaid principal amount of such Security would be less than the
minimum authorized denomination of Securities of the series of which such
Security to be repaid is a part. Except as otherwise may be provided by the
terms of any Security providing for such purchase and as provided in Section
308, exercise of the option by the Holder to accept the offer of the Company to
purchase Securities shall be irrevocable unless waived by the Company.
Section 804. When Securities Presented for Purchase Become Due and Payable.
If Securities of any series providing for such purchase shall have been
surrendered as provided in this Article and as provided by or pursuant to the
terms of such Securities, such Securities or the portions thereof, as the case
may be, to be purchased shall become due and payable and shall be paid by the
Company on the Repayment Date therein specified, and on and after such Repayment
Date (unless the Company shall default in the payment of such Securities on such
Repayment Date) such Securities shall, if the same were interest-bearing, cease
to bear interest. Upon surrender of any such Security for purchase in accordance
with such provisions, the principal amount of such Security so to be purchased
(or, if so provided by the terms of the Securities of any series, a percentage
of the principal) shall be paid by the Company, together with accrued interest
and/or premium, if any, to the Repayment Date; provided, however, that
installments of interest, if any, whose Stated Maturity is on or prior to the
Repayment Date shall be payable (but without interest thereon, unless the
Company shall default in the payment thereof) to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If the principal amount of any Security surrendered for purchase shall
not be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
Section 805. Securities Purchased in Part.
Upon surrender of any Security which is to be purchased in part only,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge and at the expense of the
Company, a new Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be purchased. .
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
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Without the consent of any Holders, the Company, when authorized by a
Board Resolution (which Board Resolution may provide general terms or parameters
for such action and may provide that the specific terms of such action may be
determined in accordance with or pursuant to a Company Order), and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants, agreements and obligations of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of the Securities of all or any series (and if such covenants are to be
for the benefit of the Securities of less than all series, stating that such
covenants are expressly being included solely for the benefit of the Securities
of such series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of Securities
in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any such
addition, change or elimination (i) shall neither (A) apply to any Security of
any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding; or
(6) to establish the forms or terms of Securities of any series as
contemplated by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; or
(8) to secure the Securities; or
(9) to supplement any of the provisions of this Indenture to such extent
as shall be necessary to permit or facilitate the defeasance, covenant
defeasance or satisfaction and discharge of the Securities of any series
pursuant to this Indenture; provided that any such action shall not adversely
affect the interests of the Holders of Securities of such series or any other
series of Securities; or
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(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture, provided that such action pursuant to this clause (10) shall not
adversely affect the interests of the Holders of Securities of any series;
(11) to add a guarantor or guarantors for any series or all series of
the Securities; or
(12) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
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 Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolution (which Board
Resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of or waive a default in the payment of
the principal of, or any installment of principal of or interest on, any
Security, or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where any Security or any premium or
interest thereon is payable, change the currency in which any Security or any
premium or interest thereon 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 fixed for
repayment), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders 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, Section 513 or Section
1010, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby, or
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(4) in the case of any series of subordinated Securities, modify any
provisions hereof that relate to subordination or to the definition of "Senior
Indebtedness" applicable to such series in a manner adverse to the Holders of
such subordinated Securities.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of the Securities of one or more particular series, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders 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.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) 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.
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 Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act, as then in effect at the
time of execution thereof.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, 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 Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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Section 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of such supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities of
each series that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities of that series and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for the Securities of
any series of Securities an office or agency where Securities of that series may
be presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series 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. 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.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to the Securities of any series, it will, on or before each due date of
the principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum in cash sufficient to pay the principal and any premium and
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interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities of any series, it will, prior to each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a Paying
Agent a sum in cash sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent for the Securities of any
series, other than the Trustee, to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (i) hold all sums
held by it for the payment of the principal of or any premium or interest on
Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (ii) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities of that series) in the making of any
payment of principal or any premium or interest on the Securities of that
series; (iii) during the continuance of any default by the Company (or any other
obligor upon the Securities of that series) in the making of any payment in
respect of the Securities of that series, and upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series; and (iv) comply
with the provisions of the Trust Indenture Act applicable to it as a Paying
Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once in a newspaper of general circulation in The City of New York
or mailed to each Holder entitled to such money notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
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Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence and related rights and franchises (charter and statutory) of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise or the corporate existence of
any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer necessary or desirable in the conduct
of the business of the Company and its Subsidiaries as a whole; and provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Subsidiary or any of its assets in compliance with the terms of
this Indenture.
Section 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged, on
or before the date the same shall become due and payable, (a) all taxes,
assessments and governmental charges levied or imposed upon the Company or any
of its Subsidiaries shown to be due on any return of the Company or any of its
Subsidiaries or otherwise assessed or upon the income, profits or property of
the Company or any of its Subsidiaries if failure to pay or discharge the same
could reasonably be expected to have a material adverse effect on the ability of
the Company to perform its obligations hereunder and (b) all lawful claims for
labor, materials and supplies, which, if unpaid, would by law become a lien upon
the property of the Company or any of its Subsidiaries, if failure to pay or
discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Company to perform its obligations hereunder;
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 properly instituted and diligently conducted and in
respect of which appropriate reserves (in the good faith judgment of management
of the Company) are being maintained in accordance with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the Company or
any of its Subsidiaries or used or held for use in the conduct of its business
or the business of any of its Subsidiaries to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the reasonable judgment of the Company may be consistent with sound business
practice and necessary so that the business carried on in connection therewith
may be properly conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the maintenance of any of
such properties if such discontinuance is, in the reasonable judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries; and provided, further, however, that the foregoing shall not
prohibit a sale, transfer or conveyance of a Subsidiary or any of its properties
or assets in compliance with the terms of this Indenture.
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Section 1007. Maintenance of Insurance.
The Company shall at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company in good faith to be financially sound and responsible, against loss
or damage to the extent that property of similar character is usually so insured
by corporations similarly situated and owning like properties in the same
general geographic areas in which the Company and its Subsidiaries operate,
except where the failure to do so could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), earnings,
business affairs or prospects of the Company and its Subsidiaries, taken as a
whole.
Section 1008. Defeasance of Certain Obligations.
To the extent that this Section 1008 is established as contemplated by
Section 301 to be applicable to Securities of any series or any covenant
applicable thereto, (i) the Company may omit to comply with any term, provision
or condition of the covenants contained in Sections 1005 through 1007 and 1011
through 1013 hereof and any covenants established as contemplated by Section 301
and to which this Section 1008 is so established as applicable, and (ii) such
omission shall be deemed not to be an Event of Default pursuant to Section
501(4), in each case with respect to the Securities of that series, provided
that the following conditions have been satisfied:
(1) the Company has deposited or caused to be deposited with the Trustee
(or another trustee satisfying the requirements of Section 609) irrevocably
(irrespective of whether the conditions in subparagraphs (2), (3), (4) and (5)
below have been satisfied, but subject to the provisions of Section 402(c) and
the last paragraph of Section 1003), as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
the Securities of that series, with reference to this Section 1008, cash or U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide not later than the
opening of business on the due date of any payment referred to in clause (i) or
(ii) of this subparagraph (1) money in an amount sufficient, without
consideration of any reinvestment of such principal and interest, in the opinion
of a nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge (i) the principal (and premium, if any) and each installment of
principal (and premium, if any) and interest on such Outstanding Securities on
the Stated Maturity of such principal or installment of principal or interest
and (ii) any mandatory sinking fund payments or analogous payments applicable to
Securities of such series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Securities;
(2) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(3) no Event of Default or event which with the giving of notice or
lapse of time, or
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both, would become an Event of Default with respect to the Securities of that
series shall have occurred and be continuing on the date of such deposit and no
Event of Default under Section 501(5) or Section 501(6) or event which with the
giving of notice or lapse of time, or both, would become an Event of Default
under Section 501(5) or Section 501(6) shall have occurred and be continuing on
the 91st day after such date;
(4) the Company has delivered to the Trustee an Opinion of Independent
Counsel to the effect that Holders of the Securities of such series will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such deposit and defeasance of certain obligations and will be
subject to United States federal income tax on the same amount and in the same
manner and at the same times, as would have been the case if such deposit and
defeasance had not occurred;
(5) such defeasance or covenant defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder;
(6) the Company shall have delivered to the Trustee an Opinion of
Independent Counsel in the United States to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and
(7) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance as contemplated by this Section have been
complied with.
Opinions required to be delivered under this Section may have
qualifications customary for opinions of the types required.
Section 1009. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in compliance with all conditions and covenants of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder); and if the Company shall not be in compliance, specifying such
non-compliance and the nature and the status thereof as to which such signer may
have knowledge. Such certificate shall contain a certification from the
principal executive officer, principal financial officer or principal accounting
officer of the Company as to his or her knowledge of the Company's compliance
with all conditions and covenants under this Indenture (without regard to any
period of grace or requirement of notice provided hereunder).
Section 1010. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or
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condition of the covenants established as contemplated by Section 301 with
respect to the Securities of any series, except to the extent the terms of such
Securities established as contemplated by Section 301 make this Section 1010
inapplicable to any such term, provision or condition of any such covenant if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
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 1011. Restrictions on Secured Debt.
So long as any Securities remain Outstanding, the Company will not
issue, assume or guarantee, and will not permit any Subsidiary to issue, assume
or guarantee, any Indebtedness secured by a Lien on any of the Company's or any
Subsidiary's property, or on the shares of stock or debt of any Subsidiary now
owned by the Company or acquired after the date hereof. This restriction will
not apply if the Securities are secured by a Lien ranking ratably with and equal
to (or at the Company's option, prior to) the secured Indebtedness. In any
event, the foregoing restriction will not apply to the following:
(i) Liens relating to Indebtedness outstanding or available to the
Company or any Subsidiary under facilities existing on the date
of original issuance of the Securities;
(ii) Liens relating to Indebtedness secured by the stock of a
Subsidiary and Indebtedness of a Subsidiary existing when the
Subsidiary becomes a Subsidiary, other than Indebtedness created
in connection with the transaction by which the Subsidiary
becomes a Subsidiary;
(iii) Liens relating to Indebtedness of the Company or any Subsidiary
having a term of less than 365 days arising from any funding
arrangement with one or more financial institutions or other
lenders or purchasers exclusively to finance the purchase,
origination or production of loans held or to be held for sale by
the Company or by any Subsidiaries for the purpose of pooling
those loans prior to securitization or sale of those loans in the
ordinary course of the Company's or any Subsidiary's business;
(iv) Liens on property at the time of its acquisition by the Company
or a Subsidiary that secure obligations assumed by the Company or
a Subsidiary, or on the property of an entity at the time it is
merged into the Company or a Subsidiary (other than Indebtedness
created in contemplation of the acquisition of the property or
the consummation of such a merger);
(v) Liens to secure the payment of some or all of the purchase price
of property or loan portfolios upon the acquisition of that
property or those loan portfolios by the
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Company or a Subsidiary;
(vi) Liens relating to Indebtedness arising from conditional sales
agreements or title retention agreements relating to property
acquired by the Company or a Subsidiary;
(vii) Liens relating to Indebtedness owed by a Subsidiary to the
Company or to another Subsidiary that is wholly-owned (directly
or indirectly) by the Company;
(viii) mechanics', materialmen's, carriers' or similar Liens arising in
the ordinary course of business (including in the construction of
facilities) relating to obligations not due or which are being
contested;
(ix) Liens for taxes not due or being contested, landlords' Liens,
tenants' rights under leases, and similar Liens not impairing the
use or value of the property involved;
(x) Liens on any property to secure all or part of the cost of
improvements or construction on the property or Indebtedness
incurred to provide funds for that purpose in a principal amount
not exceeding the cost of the improvements or construction;
(xi) Liens incurred in connection with any amendment, restatement,
supplement, renewal, replacement, extension, refinancing or
refunding in whole or in part, of Indebtedness, provided that the
principal amount of the Indebtedness secured by a Lien will not
exceed the principal amount of Indebtedness secured at the time
any such action is taken (other than with respect to the
Company's $175.0 million revolving credit facility with First
Union National Bank, as to which the principal amount of
Indebtedness may be increased) and that any such action will be
limited to the portion of assets that secured the Lien at the
time any such action was taken.
In addition, the Company and any Subsidiary may issue, assume or
guarantee Indebtedness that would be subject to the foregoing restrictions
without equally and ratably securing the Securities if immediately thereafter
the sum of (i) the aggregate principal amount of all Indebtedness outstanding
that would be subject to the foregoing restrictions (excluding Indebtedness
permitted under the exceptions to the restriction set forth above), and (ii) all
Attributable Debt from a Sale and Leaseback (excluding any Sale and Leaseback as
to which the net proceeds of the property sold or transferred are applied to
retire Indebtedness or to the purchase of property as described in Section 1013)
as of the date of determination would not exceed 15% of Consolidated Net
Tangible Assets.
Section 1012..Restrictions on Debt of Subsidiaries.
So long as any Securities remain Outstanding, the Company will not
permit any Subsidiary to issue, assume or guarantee any Indebtedness. The
foregoing restriction will not apply to the following:
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(i) any Indebtedness of any Subsidiary permitted under Section 1011 above;
(ii) Indebtedness existing on the date of original issuance of the
Securities;
(iii) Indebtedness of a Subsidiary existing when the Subsidiary becomes a
Subsidiary, other than Indebtedness created in connection with the
transaction by which the Subsidiary becomes a Subsidiary;
(iv) Indebtedness owed by a Subsidiary to the Company or to another
Subsidiary that is wholly-owned (directly or indirectly) by the Company;
and
(v) any amendment, restatement, supplement, renewal, replacement, extension
or refunding in whole or in part, of Indebtedness permitted at the time
of its original incurrence.
In addition, any Subsidiary may issue, assume or guarantee Indebtedness
if immediately thereafter the sum of (i) the aggregate principal amount of all
Indebtedness outstanding (excluding Indebtedness permitted under this Section
1012 and under Section 1011), and (ii) all Attributable Debt from a Sale and
Leaseback (excluding any Sale and Leaseback as to which the net proceeds of the
property sold or transferred are applied to retire Indebtedness or to the
purchase of property as described in Section 1013) as of the date of
determination would not exceed 15% of Consolidated Net Tangible Assets.
Section 1013..Restrictions on Sale and Leaseback Transactions.
The Company will not, and the Company will not permit any Subsidiary to,
sell or transfer, except to one another, any property if such a sale or transfer
is made with the agreement, commitment or intention of leasing that property
back to the Company or to a Subsidiary for a period of more than three years (a
"Sale and Leaseback"), unless:
(i) notice is promptly given to the Trustee of the Sale and Leaseback;
(ii) the Company or the Subsidiary receives fair value for the property sold
(as promptly determined in good faith by the Board of Directors of the
Company and a copy of the resolution setting forth that determination is
delivered to the Trustee); and
(iii) the Company or a Subsidiary, within 180 days after completion of the
Sale and Leaseback, applies an amount equal to the net proceeds from the
Sale and Leaseback to either (A) the redemption or retirement of the
Securities or the repayment of other Indebtedness ranking pari passu
with the Securities, or (B) the purchase by the Company or the
Subsidiary of property substantially similar to the property sold or
transferred. In lieu of applying any or all of the net proceeds from a
Sale or Leaseback to the redemption or retirement of Indebtedness, the
Company may deliver Securities to the Trustee for cancellation and
reduce the amount to be applied to the redemption of Securities by an
amount equal to the aggregate principal amount of Securities delivered.
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In addition, the Company and any Subsidiary may enter into a Sale and Leaseback
if immediately afterward the sum of (i) the aggregate amount of all Indebtedness
outstanding (excluding Indebtedness permitted under Section 1011) and (ii) all
Attributable Debt from a Sale and Leaseback (excluding any Sale and Leaseback as
to which the net proceeds of the property sold or transferred are applied to
retire Indebtedness or to the purchase of property as described in clause (B) of
the immediately preceding paragraph) as of the date of determination would not
exceed 15% of Consolidated Net Tangible Assets.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms established as
contemplated by Section 301 and (except as otherwise expressly established as
contemplated by Section 301 in respect of Securities of such series) in
accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution or by action taken pursuant to a Board Resolution. In case
of any redemption at the election of the Company of less than all the Securities
of any series, the Company shall, at least 35 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not less
than 30 nor more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral multiple
thereof) of the principal amount of Securities of such series of a denomination
larger than the minimum authorized denomination for Securities of that series.
If less than all of the Securities of such series and of a specified tenor are
to be redeemed, the particular Securities to be redeemed shall be selected not
less than 30 nor more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series and specified tenor not
previously called for redemption in accordance with the preceding sentence.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the
Redemption Date upon surrender of such Security, new Security or
Securities in the aggregate principal amount equal to the unredeemed
portion thereof will be issued,
(5) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said
date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price,
(7) that the redemption is for a sinking fund, if such is the
case, and
(8) the CUSIP number, if any, relating to the Securities.
Notice of redemption of Securities 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) an amount in
cash sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
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Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the
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redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 and not more than 60 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF THE HOLDERS
Section 1301. Applicability of Article.
Repayment of securities of any series before their Stated Maturity at
the option of Holders thereof shall be made in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.
Section 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in part at the
option of the
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Holders thereof will, unless otherwise provided in the terms of such Securities,
be repaid at a price equal to the principal amount thereof, together with
interest and/or premium, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company covenants that on or
before the Repayment Date it will 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
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, the premium, if any, and (except if the
Repayment Date shall be an Interest Payment Date) accrued interest on, all the
Securities or portions thereof, as the case may be, to be repaid on such date.
Section 1303. Exercise of Option.
Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on the reverse
of such Securities. Except as otherwise may be provided by the terms of any
Security providing for repayment at the option of the Holder thereof, any
Security so providing for such repayment with the "Option to Elect Repayment"
form on the reverse of such Security duly completed by the Holder (or by the
Holder's attorney duly authorized in writing) must be received by the Company at
the Place of Payment therefor specified in the terms of such Security (or at
such other place or places of which the Company shall from time to time notify
the Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, the premium, if any, to be paid, and
the denomination or denominations of the Security or Securities to be issued to
the Holder for the portion of the principal amount of such Security surrendered
that is not to be repaid, must be specified. The principal amount of any
Security providing for repayment at the option of the Holder thereof may not be
repaid in part if, following such repayment, the unpaid principal amount of such
Security would be less than the minimum authorized denomination of Securities of
the series of which such Security to be repaid is a part. Except as otherwise
may be provided by the terms of any Security providing for repayment at the
option of the Holder thereof and as provided in Sections 308, exercise of the
repayment option by the Holder shall be irrevocable unless waived by the
Company.
Section 1304. When Securities Presented for Repayment Become Due and Payable.
If Securities of any series providing for repayment at the option of the
Holders thereof shall have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company shall default in the payment
of such Securities on such Repayment Date) such Securities shall, if the same
were interest-bearing, cease to bear interest. Upon surrender of any such
Security for repayment in accordance with such provisions, the principal amount
of such Security so to be repaid (or, if so provided by the terms of the
Securities of any series, a percentage of the principal) shall be paid by the
Company, together with accrued interest and/or premium, if any, to the Repayment
Date; provided, however, that installments of interest, if any, whose Stated
Maturity is on or prior to
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the Repayment Date shall be payable (but without interest thereon, unless the
Company shall default in the payment thereof) to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If the principal amount of any Security surrendered for repayment shall
not be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
Section 1305. Securities Repaid in Part.
Upon surrender of any Security which is to be repaid in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge and at the expense of the
Company, a new Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
Section 1401. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security of any
series, by his acceptance thereof, likewise covenants and agrees, that to the
extent and in the manner set forth pursuant to Section 301(17) hereof, the
indebtedness represented by the Securities of such series and the payment of
principal of (and premium, if any) and interest on each or all of the Securities
of such series are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
----------
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.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
OAKWOOD HOMES CORPORATION
By: /s/ Robert A. Smith
----------------------------------
Name: Robert A. Smith
Title: Executive Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Douglas R. Muir
-------------------------
Name: Douglas R. Muir
Title: Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ Jeffrey L. Kinney
----------------------------------
Name: /s/ Jeffrey L. Kinney
Title: Vice President
[CORPORATE SEAL]
<PAGE>
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF GUILFORD )
On the 1st day of March, 1999, before me personally came Robert A.
Smith, to me known, who, being by me duly sworn, did depose and say that he is
Executive Vice President of OAKWOOD HOMES CORPORATION, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
/s/ Dena B. Cardwell
----------------------------------------
Name: Dena B. Cardwell
Notary Public State of My Commission expires on 11/30/2000
Exhibit 4.2
================================================================================
OAKWOOD HOMES CORPORATION,
as Issuer,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 2, 1999
$125,000,000 7.875% SENIOR NOTES DUE 2004
$175,000,000 8.125% SENIOR NOTES DUE 2009
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of March 2, 1999, between OAKWOOD
HOMES CORPORATION, a North Carolina corporation (the "Company"), having its
principal office at 7800 McCloud Road, Greensboro, North Carolina 27425, and THE
FIRST NATIONAL BANK OF CHICAGO, as Trustee hereunder (the "Trustee"), having its
Corporate Trust Office at One North State Street, 9th Floor, Chicago, Illinois
60602. Terms used herein which are defined in the Indenture (as defined below)
shall have the respective meanings assigned to them in the Indenture.
RECITALS OF THE COMPANY
The Company and the Trustee have entered into an Indenture (the
"Indenture") dated as of the date hereof, providing for the issuance of debt
securities in series.
For its lawful corporate purposes, the Company desires to create and
authorize the series of 7.875% Senior Notes Due 2004 in an aggregate principal
amount of $125,000,000 (the "2004 Notes") and the series of 8.125% Senior Notes
Due 2009 in an aggregate principal amount of $175,000,000 (the "2009 Notes" and,
together with the 2004 Notes, the "Notes") and, to provide the terms and
conditions upon which the Notes are to be executed, registered, authenticated,
issued and delivered, the Company has duly authorized the execution and delivery
of this First Supplemental Indenture.
The 2004 Notes and the 2009 Notes are each a series of Securities (as
that term is defined in the Indenture) and are being issued under the Indenture,
as supplemented by this First Supplemental Indenture, and are subject to the
terms contained therein and herein.
WHEREAS, the 2004 Notes are to be substantially in the following form:
OAKWOOD HOMES CORPORATION
7 7/8 % Senior Note
Due 2004
No.___ $125,000,000
CUSIP NO.______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
<PAGE>
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Oakwood Homes Corporation, a corporation duly organized and existing
under the laws of the State of North Carolina (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of One Hundred Twenty Five Million Dollars
($125,000,000) on March 1, 2004 and to pay interest thereon from March 2, 1999
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on March 1 and September 1 in each year,
commencing September 1, 1999, at the rate of 7 7/8% per annum, until the
principal hereof is paid or made available for payment, and (to the extent that
the payment of such interest shall be legally enforceable) at the rate of 7 7/8%
per annum on any overdue principal and premium and on any overdue installment of
interest, provided that any principal and premium, and any such installment of
interest, which is overdue shall bear interest at the rate of 7 7/8% per annum
(to the extent permitted by applicable law), from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on this Security is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall
mean, when used with respect to any Place of Payment, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law or executive order
to close. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such 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 may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) 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 Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation
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<PAGE>
system on which the Securities of this series may be listed or traded, and upon
such notice as may be required by such exchange or automated quotation system,
all as more fully provided in said Indenture).
Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in either Chicago, Illinois or New York, New York, 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.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
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 instrument to be duly
executed under its corporate seal.
OAKWOOD HOMES CORPORATION
By:________________________
Attest:
- --------------------------
[Reverse of Note]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March 2, 1999, (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The First National Bank of Chicago, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture, the First Supplemental Indenture,
dated as of March 2, 1999 (herein called the "First Supplemental Indenture",
which term shall have the meaning assigned to it in such instrument) between the
Company and the Trustee and all other indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the
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Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof.
The Securities of this series are subject, at the election of the
Company, to redemption as a whole or in part at any time upon not less than 30
nor more than 60 days' notice by mail at the greater of (i) 100% of the
principal amount of the Securities being redeemed or (ii) as determined by the
Quotation Agent, the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities (not including any portion
of those payments of interest accrued as of the Redemption Date) discounted to
the Redemption Date on a semi-annual basis assuming a 360 day year consisting of
twelve 30 day months at the Adjusted Treasury Rate plus 25 basis points plus, in
each case, accrued and unpaid interest on the Securities to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
For purposes of determining the amount at which the Securities may be
redeemed, the following terms shall have the meanings set forth next to each of
them below:
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at
the time of a selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotation, or (ii) if the Trustee obtains fewer than three Reference
Treasury Dealer Quotations, the average of the quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
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<PAGE>
"Reference Treasury Dealer" means (i) each of NationsBanc Montgomery
Securities LLC, First Union Capital Markets Corp. and Merrill Lynch & Co.
and their respective successors; however, if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company will substitute another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by the Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day preceding the
redemption date.
In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
If a Change in Control Triggering Event occurs, the Holder of this
Security will have the right, at the Holder's option, subject to the terms and
conditions of the Indenture, to require the Company to purchase all or any part
of this Security (so long as the principal amount is $1,000 or an integral
multiple of $1,000) on the date that is 30 Business Days after the occurrence of
the Change in Control Triggering Event (the "Purchase Date"). If a Holder
exercises this option, the Company will purchase this Security for cash equal to
101% of the principal amount of this Security plus any interest accrued and
unpaid on this Security through the Purchase Date (the "Purchase Price").
Within 15 Business Days after a Change in Control Triggering Event, the
Company is obligated to mail to the Trustee and to the Holder of this Security
at such Holder's address as shown in the Securities Register (and to beneficial
owners as required by applicable law) a notice regarding the Change in Control
Triggering Event. The notice shall state, among other things, (i) the date by
which the Holder must give the Purchase Notice (defined below); (ii) the
Purchase Price; (iii) the Purchase Date; (iv) the name and address of the
Trustee and of any other office or agency maintained for the purpose of the
surrender of this Security for purchase; (v) the procedures for withdrawing a
Purchase Notice; and (vi) the procedures that the Holder of this Security must
follow to exercise these rights. The Company will publish the notice in a daily
newspaper of national circulation.
To exercise the right to have the Company purchase this Security, the
Holder of this Security must execute and deliver an "Option to Elect Repayment"
substantially in the form set forth below (the "Purchase Notice") to the Trustee
or to any other office or agency maintained for that purpose of the Holder's
exercise of that right before the close of business on the Business Day
immediately prior to the
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Purchase Date. The Holder of this Security may withdraw any Purchase Notice by
written notice of withdrawal delivered to the Trustee or to any other office or
agency maintained for such purpose no later than the Business Day immediately
prior to the Purchase Date. The notice of withdrawal must state the principal
amount and the certificate number of this Security and the principal amount, if
any, of this Security which remains subject to the original Purchase Notice. The
Option to Elect Repayment form shall be as follows:
OPTION TO ELECT REPAYMENT
(1) Pursuant to Article Thirteen of the Indenture, the
undersigned hereby elects to have this Security repurchased by the
Company.
(2) The undersigned hereby directs the Trustee or the Company to
pay it or ___________________________ an amount in cash equal to 101% of
the principal amount to be repurchased (as set forth below), plus
interest accrued to the Repurchase Date, as provided in the Indenture.
Dated: ________________
------------------------------
------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible Guarantor Institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange
Act of 1934.
------------------------------
Signature Guaranteed
Certificate No.__________________
Principal amount to be repurchased (must be an integral multiple of
$1,000):
$------------------
Remaining principal amount following such
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<PAGE>
repurchase:
$------------------
NOTICE: The signature to the foregoing Election must correspond to the
Name as written upon the face of this Security in every particular,
without alteration or any change whatsoever.
Payment of the Purchase Price for this Security for which a Purchase
Notice has been delivered and not withdrawn is conditioned on delivery of this
Security (together with any endorsements) to the Trustee or to any other office
or agency maintained for that purpose, at any time (whether prior to, on or
after the Purchase Date) after delivery of the Purchase Notice. Payment of the
Purchase Price for this Security will be made promptly following the later of
the Purchase Date or the time of delivery of this Security.
If the Company deposits with the Trustee, in accordance with the
Indenture, money sufficient to pay the Purchase Price of this Security on the
Purchase Date, then, on and after the Purchase Date, this Security will cease to
be outstanding and interest on this Security will cease to accrue, whether or
not this Security is delivered to the trustee or to any other office or agency
maintained for that purpose, and all other rights of the Holder will terminate
(other than the right to receive the Purchase Price on delivery of this
Security). In accordance with the Indenture, this Security may not be purchased
pursuant to a Change in Control Triggering Event if there has occurred and is
continuing an Event of Default other than a default in the payment of the
Purchase Price relating to this Security.
For purposes of determining the right of the Holder to require the
Company to purchase all or any part of this Security as set forth above, the
following terms shall have the meanings set forth next to each of them below:
"Change in Control" means, with regard to the Company, the occurrence
of:
(i) any consolidation, share exchange or merger regarding the Company in
which the Company is not the continuing or surviving corporation or
where the Company's voting stock would be converted into cash,
securities or other property, other than a merger in which the holders
of the Company's voting stock immediately prior to the merger have the
same or greater direct or indirect proportionate ownership of the
surviving corporation's voting stock immediately after the merger as
they had of the Company's voting stock immediately before the merger, or
(ii) any Person, including Affiliates of the Company (but not including
the Company, any Subsidiary, employee stock ownership plans or employee
benefit plans of the Company or any of the Subsidiaries), filing a
Schedule 13D or 14D-1 (or any successor schedule, form or report under
the Exchange
7
<PAGE>
Act) disclosing that such a Person has become the beneficial owner of
50% or more of the Company's voting stock.
"Change in Control Triggering Event" means the occurrence of both a
Change in Control and a Rating Decline.
"Investment Grade" means a rating of BBB- or higher by Standard & Poor's
Corporation ("S&P") and Baa3 or higher by Moody's Investors Service ("Moody's")
or the equivalent of those ratings by either of those Rating Agencies.
"Rating Agency" means (i) S&P, (ii) Moody's, or (iii) if S&P or Moody's
or both shall not make a rating of the Securities publicly available, a
nationally recognized securities rating agency or agencies selected by the
Company.
"Rating Category" means (i) regarding S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
regarding Moody's, any of the following categories: Ba, B, Caa, Ca and C (or
equivalent successor categories), and (iii) the equivalent of any such category
of S&P or Moody's used by another Rating Agency. Gradations within Rating
Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent
gradations for another Rating Agency) will be taken into account in determining
whether the rating of the Securities has decreased by one or more gradations.
For example, regarding S&P, a decline in rating from BB+ to BB will constitute a
decrease of one gradation.
"Rating Date" means the date that is 30 days prior to the earliest of
(i) a Change in Control, (ii) public notice of a Change in Control and (iii)
public notice of the intention by the Company to effect a Change in Control.
"Rating Decline" means the occurrence on or within 30 days after the
earlier of the date of public notice of the occurrence of a Change in Control or
the public announcement of the Company's intention to effect a Change in Control
(which period will be extended so long as the rating of the Securities is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies) of:
(i) If the Securities are rated by either Moody's or S&P on the Rating
Date as Investment Grade, the rating of the Securities by both Moody's
and S&P below Investment Grade, or
(ii) If the Securities are rated below Investment Grade by both Moody's
and S&P on the Rating Date, the rating of the Securities is decreased by
either Moody's or S&P by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories).
If the Company or any Subsidiary sells, assigns, transfers, leases or
otherwise disposes of all or substantially all of its assets other than in the
ordinary course of its
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<PAGE>
business or any capital stock or other equity interests of any Subsidiary held
by the Company or any Subsidiary (a "Subsidiary Sale"), and the Company applies
the proceeds therefrom to the redemption of the Securities in accordance with
Section 801(b)(B)(3) of the Indenture (a "Redemption Determination") the Holder
of this Security will have the right, at the Holder's option, subject to the
terms and conditions of the Indenture, to require the Company to purchase all or
any part of this Security (so long as the principal amount is $1,000 or an
integral multiple of $1,000) on the date that is 30 Business Days after the
Company's determination to offer to redeem Securities (the "Redemption Date").
If a Holder exercises this option, the Company will purchase this Security for
cash equal to 100% of the principal amount of this Security plus any interest
accrued and unpaid on this Security through the Redemption Date (the "Redemption
Purchase Price").
Within 15 Business Days after a Redemption Determination, the Company is
obligated to mail to the Trustee and to the Holder of this Security at such
Holder's address as shown in the Securities Register (and to beneficial owners
as required by applicable law) a notice regarding the Subsidiary Sale. The
notice shall state, among other things, (i) the date by which the Holder must
give the Redemption Purchase Notice (defined below); (ii) the Redemption
Purchase Price; (iii) the Redemption Date; (iv) the name and address of the
Trustee and of any other office or agency maintained for the purpose of the
surrender of this Security for purchase; (v) the procedures for withdrawing a
Redemption Purchase Notice; and (vi) the procedures that the Holder of this
Security must follow to exercise these rights. The Company will publish the
notice in a daily newspaper of national circulation.
To exercise the right to have the Company purchase this Security, the
Holder of this Security must execute and deliver an "Option to Elect Repayment"
substantially in the form set forth below (the "Redemption Purchase Notice") to
the Trustee or to any other office or agency maintained for that purpose of the
Holder's exercise of that right before the close of business on the Business Day
immediately prior to the Redemption Date. The Holder of this Security may
withdraw any Redemption Purchase Notice by written notice of withdrawal
delivered to the Trustee or to any other office or agency maintained for such
purpose no later than the Business Day immediately prior to the Redemption Date.
The notice of withdrawal must state the principal amount and the certificate
number of this Security and the principal amount, if any, of this Security which
remains subject to the original Redemption Purchase Notice. The Option to Elect
Repayment form shall be as follows:
OPTION TO ELECT REPAYMENT
(1) Pursuant to Article Eight of the Indenture, the undersigned
hereby elects to have this Security repurchased by the Company.
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<PAGE>
(2) The undersigned hereby directs the Trustee or the Company to
pay it or ___________________________ an amount in cash equal to 100% of
the principal amount to be repurchased (as set forth below), plus
interest accrued to the Redemption Date, as provided in the Indenture.
Dated: ________________
------------------------------
------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible Guarantor Institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange
Act of 1934.
------------------------------
Signature Guaranteed
Certificate No.__________________
Principal amount to be repurchased (must be an integral multiple of
$1,000):
$------------------
Remaining principal amount following such repurchase:
$------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
If the aggregate principal amount of Securities surrendered for
redemption by the Holders thereof in connection with a redemption following a
Subsidiary Sale exceeds the amount of net proceeds received by the Company or
any of its Subsidiaries in connection with such Subsidiary Sale, the Trustee
shall select the Securities or portions thereof to be purchased on a pro rata
basis, based on the principal amount of the Securities tendered, with such
adjustments as may be deemed
10
<PAGE>
appropriate by the Trustee, so that only Securities (or portions thereof) in
denominations of $1,000 or integral multiples thereof shall be purchased.
Payment of the Redemption Purchase Price for this Security for which a
Redemption Purchase Notice has been delivered and not withdrawn is conditioned
on delivery of this Security (together with any endorsements) to the Trustee or
to any other office or agency maintained for that purpose, at any time (whether
prior to, on or after the Redemption Purchase Date) after delivery of the
Redemption Purchase Notice. Payment of the Redemption Purchase Price for this
Security will be made promptly following the later of the Redemption Date or the
time of delivery of this Security.
If the Company deposits with the Trustee, in accordance with the
Indenture, money sufficient to pay the Redemption Price of this Security on the
Redemption Date, then, on and after the Redemption Date, this Security will
cease to be outstanding and interest on this Security will cease to accrue,
whether or not this Security is delivered to the trustee or to any other office
or agency maintained for that purpose, and all other rights of the Holder will
terminate (other than the right to receive the Redemption Purchase Price on
delivery of this Security). In accordance with the Indenture, this Security may
not be purchased pursuant to a Subsidiary Sale if there has occurred and is
continuing an Event of Default other than a default in the payment of the
Redemption Purchase Price relating to this Security.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for Defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
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 Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, 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 Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security
11
<PAGE>
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee
in its reasonable judgment, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth and set forth herein, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
12
<PAGE>
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 due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture or
the First Supplemental Indenture shall have the meanings assigned to them in the
Indenture or the First Supplemental Indenture, as the case may be.
THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: March 2, 1999 THE FIRST NATIONAL BANK OF CHICAGO,
As Trustee
By:_________________________________
Authorized Signatory
WHEREAS, the 2009 Notes are to be substantially in the following form:
OAKWOOD HOMES CORPORATION
8 1/8 % Senior Note
Due 2009
No.___ $175,000,000
CUSIP NO.______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
13
<PAGE>
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
Oakwood Homes Corporation, a corporation duly organized and existing
under the laws of the State of North Carolina (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of One Hundred Seventy Five Million
Dollars ($175,000,000) on March 1, 2009 and to pay interest thereon from March
2, 1999 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on March 1 and September 1 in each
year, commencing September 1, 1999, at the rate of 8 1/8 % per annum, until the
principal hereof is paid or made available for payment, and (to the extent that
the payment of such interest shall be legally enforceable) at the rate of 8 1/8
% per annum on any overdue principal and premium and on any overdue installment
of interest, provided that any principal and premium, and any such installment
of interest, which is overdue shall bear interest at the rate of 8 1/8 % per
annum (to the extent permitted by applicable law), from the dates such amounts
are due until they are paid or made available for payment, and such interest
shall be payable on demand. The amount of interest payable for any period shall
be computed on the basis of twelve 30-day months and a 360-day year. The amount
of interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on this Security is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall
mean, when used with respect to any Place of Payment, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law or executive order
to close. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such 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 may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) 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 Holders of Securities of this series not less than 10 days prior to
such
14
<PAGE>
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities of this series may be listed or traded,
and upon such notice as may be required by such exchange or automated quotation
system, all as more fully provided in said Indenture).
Payment of the principal of (and premium, if any) and any such interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in either Chicago, Illinois or New York, New York, 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.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
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 instrument to be duly
executed under its corporate seal.
OAKWOOD HOMES CORPORATION
By: ______________________________
Attest:
- --------------------------
[Reverse of Note]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March 2, 1999, (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The First National Bank of Chicago, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture, the First Supplemental Indenture,
dated as of March 2, 1999 (herein called the "First Supplemental Indenture",
which term shall have the meaning assigned to it in such instrument) between the
Company and the Trustee and all other indentures supplemental thereto reference
is hereby made for a statement of the respective
15
<PAGE>
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof.
The Securities of this series are subject, at the election of the
Company, to redemption as a whole or in part at any time upon not less than 30
nor more than 60 days' notice by mail at the greater of (i) 100% of the
principal amount of the Securities being redeemed or (ii) as determined by the
Quotation Agent, the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities (not including any portion
of those payments of interest accrued as of the Redemption Date) discounted to
the Redemption Date on a semi-annual basis assuming a 360 day year consisting of
twelve 30 day months at the Adjusted Treasury Rate plus 25 basis points plus, in
each case, accrued and unpaid interest on the Securities to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
For purposes of determining the amount at which the Securities may be
redeemed, the following terms shall have the meanings set forth next to each of
them below:
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at
the time of a selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest Reference Treasury
Dealer Quotation, or (ii) if the Trustee obtains fewer than three Reference
Treasury Dealer Quotations, the average of the quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
16
<PAGE>
"Reference Treasury Dealer" means (i) each of NationsBanc Montgomery
Securities LLC, First Union Capital Markets Corp. and Merrill Lynch & Co.
and their respective successors; however, if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company will substitute another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by the Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day preceding the
redemption date.
In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
If a Change in Control Triggering Event occurs, the Holder of this
Security will have the right, at the Holder's option, subject to the terms and
conditions of the Indenture, to require the Company to purchase all or any part
of this Security (so long as the principal amount is $1,000 or an integral
multiple of $1,000) on the date that is 30 Business Days after the occurrence of
the Change in Control Triggering Event (the "Purchase Date"). If a Holder
exercises this option, the Company will purchase this Security for cash equal to
101% of the principal amount of this Security plus any interest accrued and
unpaid on this Security through the Purchase Date (the "Purchase Price").
Within 15 Business Days after a Change in Control Triggering Event, the
Company is obligated to mail to the Trustee and to the Holder of this Security
at such Holder's address as shown in the Securities Register (and to beneficial
owners as required by applicable law) a notice regarding the Change in Control
Triggering Event. The notice shall state, among other things, (i) the date by
which the Holder must give the Purchase Notice (defined below); (ii) the
Purchase Price; (iii) the Purchase Date; (iv) the name and address of the
Trustee and of any other office or agency maintained for the purpose of the
surrender of this Security for purchase; (v) the procedures for withdrawing a
Purchase Notice; and (vi) the procedures that the Holder of this Security must
follow to exercise these rights. The Company will publish the notice in a daily
newspaper of national circulation.
To exercise the right to have the Company purchase this Security, the
Holder of this Security must execute and deliver an "Option to Elect Repayment"
substantially in the form set forth below (the "Purchase Notice") to the Trustee
or to any other office or agency maintained for that purpose of the Holder's
exercise of
17
<PAGE>
that right before the close of business on the Business Day immediately prior to
the Purchase Date. The Holder of this Security may withdraw any Purchase Notice
by written notice of withdrawal delivered to the Trustee or to any other office
or agency maintained for such purpose no later than the Business Day immediately
prior to the Purchase Date. The notice of withdrawal must state the principal
amount and the certificate number of this Security and the principal amount, if
any, of this Security which remains subject to the original Purchase Notice. The
Option to Elect Repayment form shall be as follows:
OPTION TO ELECT REPAYMENT
(1) Pursuant to Article Thirteen of the Indenture, the
undersigned hereby elects to have this Security repurchased by the
Company.
(2) The undersigned hereby directs the Trustee or the Company to
pay it or ___________________________ an amount in cash equal to 101% of
the principal amount to be repurchased (as set forth below), plus
interest accrued to the Repurchase Date, as provided in the Indenture.
Dated: ________________
------------------------------
------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible Guarantor Institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange
Act of 1934.
------------------------------
Signature Guaranteed
Certificate No.__________________
Principal amount to be repurchased (must be an integral multiple of
$1,000):
$------------------
18
<PAGE>
Remaining principal amount following such repurchase:
$------------------
NOTICE: The signature to the foregoing Election must correspond to the
Name as written upon the face of this Security in every particular,
without alteration or any change whatsoever.
Payment of the Purchase Price for this Security for which a Purchase
Notice has been delivered and not withdrawn is conditioned on delivery of this
Security (together with any endorsements) to the Trustee or to any other office
or agency maintained for that purpose, at any time (whether prior to, on or
after the Purchase Date) after delivery of the Purchase Notice. Payment of the
Purchase Price for this Security will be made promptly following the later of
the Purchase Date or the time of delivery of this Security.
If the Company deposits with the Trustee, in accordance with the
Indenture, money sufficient to pay the Purchase Price of this Security on the
Purchase Date, then, on and after the Purchase Date, this Security will cease to
be outstanding and interest on this Security will cease to accrue, whether or
not this Security is delivered to the trustee or to any other office or agency
maintained for that purpose, and all other rights of the Holder will terminate
(other than the right to receive the Purchase Price on delivery of this
Security). In accordance with the Indenture, this Security may not be purchased
pursuant to a Change in Control Triggering Event if there has occurred and is
continuing an Event of Default other than a default in the payment of the
Purchase Price relating to this Security.
For purposes of determining the right of the Holder to require the
Company to purchase all or any part of this Security as set forth above, the
following terms shall have the meanings set forth next to each of them below:
"Change in Control" means, with regard to the Company, the occurrence
of:
(i) any consolidation, share exchange or merger regarding the Company in
which the Company is not the continuing or surviving corporation or where the
Company's voting stock would be converted into cash, securities or other
property, other than a merger in which the holders of the Company's voting stock
immediately prior to the merger have the same or greater direct or indirect
proportionate ownership of the surviving corporation's voting stock immediately
after the merger as they had of the Company's voting stock immediately before
the merger, or
(ii) any Person, including Affiliates of the Company (but not including
the Company, any Subsidiary, employee stock ownership plans or employee benefit
plans of the Company or any of the Subsidiaries), filing a Schedule 13D or 14D-1
(or any successor schedule, form or report under the Exchange Act) disclosing
that such
19
<PAGE>
a Person has become the beneficial owner of 50% or more of the Company's voting
stock.
"Change in Control Triggering Event" means the occurrence of both a
Change in Control and a Rating Decline.
"Investment Grade" means a rating of BBB- or higher by Standard & Poor's
Corporation ("S&P") and Baa3 or higher by Moody's Investors Service ("Moody's")
or the equivalent of those ratings by either of those Rating Agencies.
"Rating Agency" means (i) S&P, (ii) Moody's, or (iii) if S&P or Moody's
or both shall not make a rating of the Securities publicly available, a
nationally recognized securities rating agency or agencies selected by the
Company.
"Rating Category" means (i) regarding S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
regarding Moody's, any of the following categories: Ba, B, Caa, Ca and C (or
equivalent successor categories), and (iii) the equivalent of any such category
of S&P or Moody's used by another Rating Agency. Gradations within Rating
Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent
gradations for another Rating Agency) will be taken into account in determining
whether the rating of the Securities has decreased by one or more gradations.
For example, regarding S&P, a decline in rating from BB+ to BB will constitute a
decrease of one gradation.
"Rating Date" means the date that is 30 days prior to the earliest of
(i) a Change in Control, (ii) public notice of a Change in Control and (iii)
public notice of the intention by the Company to effect a Change in Control.
"Rating Decline" means the occurrence on or within 30 days after the
earlier of the date of public notice of the occurrence of a Change in Control or
the public announcement of the Company's intention to effect a Change in Control
(which period will be extended so long as the rating of the Securities is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies) of:
(i) If the Securities are rated by either Moody's or S&P on the Rating
Date as Investment Grade, the rating of the Securities by both Moody's and S&P
below Investment Grade, or
(ii) If the Securities are rated below Investment Grade by both Moody's
and S&P on the Rating Date, the rating of the Securities is decreased by either
Moody's or S&P by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories).
If the Company or any Subsidiary sells, assigns, transfers, leases or
otherwise disposes of all or substantially all of its assets other than in the
ordinary course of its
20
<PAGE>
business or any capital stock or other equity interests of any Subsidiary held
by the Company or any Subsidiary (a "Subsidiary Sale"), and the Company applies
the proceeds therefrom to the redemption of the Securities in accordance with
Section 801(b)(B)(3) of the Indenture (a "Redemption Determination") the Holder
of this Security will have the right, at the Holder's option, subject to the
terms and conditions of the Indenture, to require the Company to purchase all or
any part of this Security (so long as the principal amount is $1,000 or an
integral multiple of $1,000) on the date that is 30 Business Days after the
Company's determination to offer to redeem Securities (the "Redemption Date").
If a Holder exercises this option, the Company will purchase this Security for
cash equal to 100% of the principal amount of this Security plus any interest
accrued and unpaid on this Security through the Redemption Date (the "Redemption
Purchase Price").
Within 15 Business Days after a Redemption Determination, the Company is
obligated to mail to the Trustee and to the Holder of this Security at such
Holder's address as shown in the Securities Register (and to beneficial owners
as required by applicable law) a notice regarding the Subsidiary Sale. The
notice shall state, among other things, (i) the date by which the Holder must
give the Redemption Purchase Notice (defined below); (ii) the Redemption
Purchase Price; (iii) the Redemption Date; (iv) the name and address of the
Trustee and of any other office or agency maintained for the purpose of the
surrender of this Security for purchase; (v) the procedures for withdrawing a
Redemption Purchase Notice; and (vi) the procedures that the Holder of this
Security must follow to exercise these rights. The Company will publish the
notice in a daily newspaper of national circulation.
To exercise the right to have the Company purchase this Security, the
Holder of this Security must execute and deliver an "Option to Elect Repayment"
substantially in the form set forth below (the "Redemption Purchase Notice") to
the Trustee or to any other office or agency maintained for that purpose of the
Holder's exercise of that right before the close of business on the Business Day
immediately prior to the Redemption Date. The Holder of this Security may
withdraw any Redemption Purchase Notice by written notice of withdrawal
delivered to the Trustee or to any other office or agency maintained for such
purpose no later than the Business Day immediately prior to the Redemption Date.
The notice of withdrawal must state the principal amount and the certificate
number of this Security and the principal amount, if any, of this Security which
remains subject to the original Redemption Purchase Notice. The Option to Elect
Repayment form shall be as follows:
OPTION TO ELECT REPAYMENT
(1) Pursuant to Article Eight of the Indenture, the undersigned
hereby elects to have this Security repurchased by the Company.
21
<PAGE>
(2) The undersigned hereby directs the Trustee or the Company to
pay it or ___________________________ an amount in cash equal to 100% of
the principal amount to be repurchased (as set forth below), plus
interest accrued to the Redemption Date, as provided in the Indenture.
Dated: ________________
------------------------------
------------------------------
Signature(s)
Signature(s) must be guaranteed by an Eligible Guarantor Institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange
Act of 1934.
------------------------------
Signature Guaranteed
Certificate No.__________________
Principal amount to be repurchased (must be an integral multiple of
$1,000):
$------------------
Remaining principal amount following such repurchase:
$------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
If the aggregate principal amount of Securities surrendered for
redemption by the Holders thereof in connection with a redemption following a
Subsidiary Sale exceeds the amount of net proceeds received by the Company or
any of its Subsidiaries in connection with such Subsidiary Sale, the Trustee
shall select the Securities or portions thereof to be purchased on a pro rata
basis, based on the principal amount of the Securities tendered, with such
adjustments as may be deemed
22
<PAGE>
appropriate by the Trustee, so that only Securities (or portions thereof) in
denominations of $1,000 or integral multiples thereof shall be purchased.
Payment of the Redemption Purchase Price for this Security for which a
Redemption Purchase Notice has been delivered and not withdrawn is conditioned
on delivery of this Security (together with any endorsements) to the Trustee or
to any other office or agency maintained for that purpose, at any time (whether
prior to, on or after the Redemption Purchase Date) after delivery of the
Redemption Purchase Notice. Payment of the Redemption Purchase Price for this
Security will be made promptly following the later of the Redemption Date or the
time of delivery of this Security.
If the Company deposits with the Trustee, in accordance with the
Indenture, money sufficient to pay the Redemption Price of this Security on the
Redemption Date, then, on and after the Redemption Date, this Security will
cease to be outstanding and interest on this Security will cease to accrue,
whether or not this Security is delivered to the trustee or to any other office
or agency maintained for that purpose, and all other rights of the Holder will
terminate (other than the right to receive the Redemption Purchase Price on
delivery of this Security). In accordance with the Indenture, this Security may
not be purchased pursuant to a Subsidiary Sale if there has occurred and is
continuing an Event of Default other than a default in the payment of the
Redemption Purchase Price relating to this Security.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for Defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
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 Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, 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 Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security
23
<PAGE>
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee
in its reasonable judgment, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth and set forth herein, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
24
<PAGE>
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 due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture or
the First Supplemental Indenture shall have the meanings assigned to them in the
Indenture or the First Supplemental Indenture, as the case may be.
THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: March 2, 1999 THE FIRST NATIONAL BANK OF CHICAGO,
As Trustee
By:__________________________________
Authorized Signatory
............................
All acts and things necessary to make the Notes of each such series,
when executed by the Company and authenticated and delivered by or on behalf of
the Trustee as provided in this Supplemental Indenture, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
indenture and agreement according to its terms, have been done and performed;
NOW, THEREFORE, in order to declare the terms and conditions upon which
the Notes of each such series are executed, registered, authenticated, issued
and delivered, and in consideration of the premises, of the purchase of such
Notes by the Holders thereof and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it
25
<PAGE>
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders from time to time of such Notes, as follows:
ARTICLE I
CREATION AND AUTHORIZATION OF SERIES
There is hereby created and authorized (i) the series of Notes entitled
the "7.875% Senior Notes Due 2004," which shall be a series in an aggregate
principal amount of $125,000,000, and (ii) the series of Notes entitled the
"8.125% Senior Notes Due 2009," which shall be a series in an aggregate
principal amount of $175,000,000.
ARTICLE II
SPECIAL PROVISIONS APPLICABLE TO SUCH SERIES
(a) Except as otherwise set forth herein and in the Notes, the terms of
the Notes shall be as set forth in the Indenture, including those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date of the Indenture (the
"Act"). Holders are referred to the Indenture and the Act for a statement of
such terms.
(b) The 2004 Notes shall include all of the terms in the form of the
2004 Notes contained in the Recitals to this First Supplemental Indenture. The
2009 Notes shall include all of the terms in the form of the 2009 Notes
contained in the Recitals to this First Supplemental Indenture.
(c) The aggregate principal amount of the Notes may be changed from time
to time pursuant to Section 301(2) of the Indenture. All the Notes need not be
issued at the same time and this series of the Notes may be reopened at any
time, without the consent of any Holder, for issuances of additional Notes.
(d) The provisions of Section 403 of the Indenture entitled "Defeasance
and Discharge of Securities of Any Series" shall be applicable to the Notes.
(e) The provisions of Section 1008 of the Indenture entitled "Defeasance
of Certain Obligations" shall be applicable to the Notes.
(f) The provisions of Article Twelve of the Indenture entitled "Sinking
Funds" shall not be applicable to the Notes.
(g) The paying agent for the Notes issued pursuant hereto shall be The
First National Bank of Chicago at its principal corporate trust office located
at One First National Plaza, Suite
26
<PAGE>
0126, Chicago, Illinois 60670-0126 or at its offices located at 14 Wall Street,
8th Floor, New York, New York 10005.
[Signature page follows]
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
OAKWOOD HOMES CORPORATION
By: /s/ Robert A. Smith
----------------------------
Name: Robert A. Smith
Title: Executive Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Douglas R. Muir
------------------------------
Name: Douglas R. Muir
Title: Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By: /s/ Jeffrey L. Kinney
----------------------------
Name: Jeffrey L. Kinney
Title: Vice President
[CORPORATE SEAL]
EXHIBIT 4.3
AGREEMENT TO FURNISH COPIES OF INSTRUMENTS
WITH RESPECT TO LONG-TERM DEBT
The Registrant has entered into certain agreements with respect to
long-term indebtedness which do not exceed ten percent of the total assets of
the Registrant and its subsidiaries on a consolidated basis. The Registrant
hereby agrees to furnish a copy of such agreements to the Commission upon
request of the Commission.
OAKWOOD HOMES CORPORATION
By: s/ Robert A. Smith
------------------------
Robert A. Smith
Executive Vice President
26
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (A) the
Registrant's consolidated financial statements for the quarter ended March 31,
1999 filed as part of the Registrants Form 10-Q for the quarter ended March 31,
1999 and is qualified in its entirety by reference to such (b) financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 22,997
<SECURITIES> 0
<RECEIVABLES> 673,186
<ALLOWANCES> 3,745
<INVENTORY> 421,618
<CURRENT-ASSETS> 0
<PP&E> 329,770
<DEPRECIATION> 79,513
<TOTAL-ASSETS> 1,524,245
<CURRENT-LIABILITIES> 509,167
<BONDS> 363,091
0
0
<COMMON> 23,532
<OTHER-SE> 548,132
<TOTAL-LIABILITY-AND-EQUITY> 1,524,245
<SALES> 726,909
<TOTAL-REVENUES> 785,732
<CGS> 515,185
<TOTAL-COSTS> 731,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,961
<INTEREST-EXPENSE> 17,315
<INCOME-PRETAX> 34,643
<INCOME-TAX> 13,511
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,132
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.45
</TABLE>
