<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1995
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF
THE SECURITIES EXCHANGE ACT OF 1934
SOURCE ONE MORTGAGE SERVICES CORPORATION
(NAME OF THE ISSUER)
SOURCE ONE MORTGAGE SERVICES CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
------------------------
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
(TITLE OF CLASS OF SECURITIES)
836154 20 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ROBERT W. RICHARDS
CHAIRMAN
SOURCE ONE MORTGAGE SERVICES CORPORATION
27555 FARMINGTON ROAD
FARMINGTON HILLS, MI 48334-3357
(810) 488-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON
BEHALF OF THE PERSON(S) FILING STATEMENT)
Copy To:
JOHN A. MARXER, ESQ.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
1400 NORTH WOODWARD AVE.
SUITE 100
BLOOMFIELD HILLS, MI 48304
(810) 645-5000
This statement is filed in connection with (check the appropriate box):
a. / / The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of
1933.
c. /X/ A tender offer.
d. / / None of the above.
Check the following box if soliciting materials or an information statement
referred to in checking box (a) are preliminary copies: / /
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION AMOUNT OF FILING FEE
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<S><C>
N/A N/A
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/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which this offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount previously paid: $34,310.35 Filing Party: Source One Mortgage Services
Corporation
Form or registration no.: Form S-4; 33-62765 Date Filed: September 20, 1995
</TABLE>
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<PAGE> 2
This Rule 13e-3 Transaction Statement (the "Statement") relates to the
offer by Source One Mortgage Services Corporation, a Delaware corporation (the
"Company"), pursuant to its Offer to Exchange dated , 1995 (the
"Offer to Exchange") to exchange up to $100,000,000 aggregate principal amount
of its % Quarterly Income Capital Securities (the "Debentures")
(Subordinated Interest Deferrable Debentures, Due 2025) for any and all of its
8.42% Cumulative Preferred Stock, Series A.
The cross reference sheets on the following pages are being supplied
pursuant to General Instruction F to Schedule 13E-3 and show the location of the
information required to be included in response to the items of this Statement
(a) in the Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule
13E-4") filed by the Company with the Securities and Exchange Commission (the
"Commission") on the date hereof and (b) in the Registration Statement on Form
S-4 (File No. 33-62765), including the Prospectus, dated , 1995 (as
amended and together with the supplements thereto and the exhibits thereto
identified therein, the "Exchange Offer Statement") filed by the Company with
the Commission. The information set forth in (i) the Schedule 13E-4, which is
attached hereto as Exhibit (g), including all exhibits thereto, and (ii) the
Exchange Offer Statement, which is attached hereto as Exhibit (d)(1), including
all exhibits thereto, are each expressly incorporated by reference and responses
to each item herein are qualified in their entirety by the provisions of the
Schedule 13E-4 and of the Exchange Offer Statement.
<PAGE> 3
CROSS REFERENCE SHEET
TO SCHEDULE 13E-4
<TABLE>
<CAPTION>
ITEM IN WHERE LOCATED IN
SCHEDULE 13E-3 SCHEDULE 13E-4
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<S> <C>
Item 1(a).................................................................... Item 1(a)
Item 1(b).................................................................... Item 1(b)
Item 1(c).................................................................... Item 1(c)
Item 1(d).................................................................... *
Item 1(e).................................................................... *
Item 1(f).................................................................... *
Item 2(a).................................................................... *
Item 2(b).................................................................... *
Item 2(c).................................................................... *
Item 2(d).................................................................... *
Item 2(e).................................................................... *
Item 2(f).................................................................... *
Item 2(g).................................................................... *
Item 3(a)(1)................................................................. *
Item 3(a)(2)................................................................. *
Item 3(b).................................................................... *
Item 4(a).................................................................... *
Item 4(b).................................................................... *
Item 5(a).................................................................... Item 3(b)
Item 5(b).................................................................... Item 3(c)
Item 5(c).................................................................... Item 3(d)
Item 5(d).................................................................... Item 3(e)
Item 5(e).................................................................... Item 3(f)
Item 5(f).................................................................... Item 3(i)
Item 5(g).................................................................... Item 3(j)
Item 6(a).................................................................... Item 2(a)
Item 6(b).................................................................... *
Item 6(c).................................................................... Item 2(b)
Item 6(d).................................................................... *
Item 7(a).................................................................... Item 3
Item 7(b).................................................................... *
Item 7(c).................................................................... *
Item 7(d).................................................................... *
Item 8(a).................................................................... *
Item 8(b).................................................................... *
Item 8(c).................................................................... *
Item 8(d).................................................................... *
Item 8(e).................................................................... *
Item 8(f).................................................................... *
Item 9(a).................................................................... *
Item 9(b).................................................................... *
Item 9(c).................................................................... *
Item 10(a)................................................................... *
Item 10(b)................................................................... Item 4
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
ITEM IN WHERE LOCATED IN
SCHEDULE 13E-3 SCHEDULE 13E-4
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<S> <C>
Item 11...................................................................... Item 5
Item 12(a)................................................................... *
Item 12(b)................................................................... *
Item 13(a)................................................................... *
Item 13(b)................................................................... *
Item 13(c)................................................................... *
Item 14(a)................................................................... Item 7(a)
Item 14(b)................................................................... Item 7(b)
Item 15(a)................................................................... *
Item 15(b)................................................................... Item 6
Item 16...................................................................... Item 8(e)
Item 17(a)................................................................... Item 9(b)
Item 17(b)................................................................... *
Item 17(c)................................................................... Item 9(c)
Item 17(d)................................................................... Item 9(a)
Item 17(e)................................................................... *
Item 17(f)................................................................... Item 9(f)
</TABLE>
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* The item is located in the Schedule 13E-3 only.
ii
<PAGE> 5
CROSS REFERENCE SHEET
TO EXCHANGE OFFER STATEMENT
<TABLE>
<CAPTION>
ITEM IN WHERE LOCATED IN
SCHEDULE 13E-3 EXCHANGE OFFER STATEMENT
- ---------------------------------------------------- ---------------------------------------
<S> <C>
Item 1(a)........................................... Front cover page; The Company
Item 1(b)........................................... Cover page of Offer to Exchange; Risk
Factors; Market and Trading Information
Item 1(c)........................................... Market and Trading Information
Item 1(d)........................................... Market and Trading Information;
Description of Preferred Stock
Item 1(e)........................................... Transactions and Arrangements
Concerning the Shares of the Preferred
Stock
Item 1(f) .......................................... Transactions and Arrangements
Concerning Shares of the Preferred
Stock
Item 2(a)........................................... Not Applicable
Item 2(b)........................................... Not Applicable
Item 2(c)........................................... Not Applicable
Item 2(d)........................................... Not Applicable
Item 2(e)........................................... Not Applicable
Item 2(f) .......................................... Not Applicable
Item 2(g)........................................... Not Applicable
Item 3(a)(1)........................................ Not Applicable
Item 3(a)(2)........................................ Not Applicable
Item 3(b)........................................... Not Applicable
Item 4(a)........................................... Risk Factors; Special Factors; The
Exchange Offer
Item 4(b)........................................... None
Item 5(a)........................................... Special Factors
Item 5(b)........................................... Special Factors
Item 5(c)........................................... Special Factors
Item 5(d)........................................... Special Factors
Item 5(e)........................................... Special Factors
Item 5(f) .......................................... Special Factors
Item 5(g)........................................... Special Factors
Item 6(a)........................................... The Exchange Offer; Description of
QUICS
Item 6(b)........................................... The Exchange Offer
Item 6(c)........................................... Description of QUICS
Item 6(d)........................................... Not Applicable
Item 7(a)........................................... Special Factors
Item 7(b)........................................... Not Applicable
Item 7(c)........................................... Special Factors
Item 7(d)........................................... Prospectus Summary; Special Factors
Item 8(a)........................................... Special Factors
Item 8(b)........................................... Special Factors
Item 8(c)........................................... Risk Factors; The Exchange Offer
Item 8(d)........................................... Special Factors
Item 8(e)........................................... Special Factors
Item 8(f) .......................................... Not Applicable
Item 9(a)........................................... Special Factors
Item 9(b)........................................... Not Applicable
Item 9(c)........................................... Not Applicable
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
ITEM IN WHERE LOCATED IN
SCHEDULE 13E-3 EXCHANGE OFFER STATEMENT
- ---------------------------------------------------- ---------------------------------------
<S> <C>
Item 10(a).......................................... Transactions and Arrangements
Concerning the Shares of the Preferred
Stock
Item 10(b).......................................... Transactions and Arrangements
Concerning the Shares of the Preferred
Stock
Item 11............................................. Transactions and Arrangements
Concerning the Shares of the Preferred
Stock
Item 12(a).......................................... Not Known At This Time
Item 12(b).......................................... Special Factors
Item 13(a).......................................... Risk Factors
Item 13(b).......................................... Not Applicable
Item 13(c).......................................... Risk Factors; Special Factors
Item 14(a).......................................... Prospectus Summary; Capitalization;
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividend
Requirements; Incorporation of Certain
Documents by Reference
Item 14(b).......................................... Prospectus Summary; Capitalization;
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividend
Requirements
Item 15(a).......................................... None
Item 15(b).......................................... The Exchange Offer
Item 16............................................. Offer to Exchange; Letter of
Transmittal
Item 17(a).......................................... Exhibit 4(a) and (b)
Item 17(b).......................................... Not Applicable
Item 17(c).......................................... Not Applicable
Item 17(d).......................................... Exhibits
Item 17(e).......................................... Not Applicable
Item 17(f) ......................................... Exhibits
</TABLE>
iv
<PAGE> 7
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The name of the issuer is Source One Mortgage Services Corporation, a
Delaware corporation (the "Company"), which has its principal executive offices
at 27555 Farmington Road, Farmington Hills, Michigan 48334-3357 (Telephone
Number (810) 488-7000).
(b) The information set forth in the front cover page, "Risk Factors" and
"Market and Trading Information" of the Offer to Exchange dated , 1995
(the "Offer to Exchange"), a copy of which is attached hereto as Exhibit (d)(1),
is incorporated herein by reference.
(c)-(d) The information set forth in "Market and Trading Information" and
"Description of Preferred Stock" of the Offer to Exchange is incorporated herein
by reference.
(e)-(f) The information set forth in "Transactions and Arrangements
Concerning the Shares of the Preferred Stock" of the Offer to Exchange is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
The person filing this statement is the issuer.
(a)-(g) Not applicable.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) Not applicable.
(b) Except for the consideration by the Company of the advantages of making
this Exchange Offer, there have been no contacts or negotiations concerning any
transactions between any affiliates of the issuer concerning, or between the
issuer or any of its affiliates and any person who would have a direct interest
in, a merger, consolidation or acquisition, a tender offer for or other
acquisition of securities of any class of the issuer, an election of directors
of the issuer or a sale or other transfer of a material amount of assets of the
issuer and its subsidiaries which have been entered into or which have occurred
since the commencement of the issuer's second full fiscal year preceding the
date of this Schedule.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in "Risk Factors"; "Special Factors" and "The
Exchange Offer" of the Offer to Exchange is incorporated herein by reference.
(b) None.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(g) The information set forth in "Special Factors" of the Offer to
Exchange is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Exchange Offer -- Dealer
Managers", "-- Fees and Expenses; Transfer Taxes", "-- Accrued Dividends", "--
Exchange Agent and Information Agent", "Certain United States Federal Income Tax
Consequences", and "Description of QUICS" of the Offer to Exchange is
incorporated herein by reference.
(c) The information set forth in "Description of QUICS" of the Offer to
Exchange is incorporated herein by reference.
(d) Not applicable.
1
<PAGE> 8
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth in "Special Factors" of the Offer to Exchange
is incorporated herein by reference.
(b) Not applicable.
(c) The information set forth in "Special Factors" of the Offer to Exchange
is incorporated herein by reference.
(d) The information set forth in "Prospectus Summary", "-- Comparison of
QUICS and Preferred Stock", "Special Factors" and Certain United States Federal
Income Tax Consequences of the Offer to Exchange is incorporated herein by
reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The information set forth in "Special Factors" of the Offer to
Exchange is incorporated herein by reference.
(c) The information set forth in "Risk Factors" and "The Exchange
Offer -- General," "-- Expiration; Extension; Termination; Amendment" and
"-- Conditions of the Exchange Offer" is incorporated herein by reference.
(d)-(e) The information set forth in "Special Factors" of the Offer to
Exchange is incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The information set forth in "Special Factors" of the Offer to Exchange
is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) The information set forth in "Transactions and Arrangements
Concerning the Shares of the Preferred Stock" of the Offer to Exchange is
incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in "Transactions and Arrangements Concerning the
Shares of the Preferred Stock" of the Offer to Exchange is incorporated herein
by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) The information required by Item 12(a) is not available to the issuer
at this time. Such information shall be filed with the Commission in accordance
with the instructions for responding to Item 12(a).
(b) The information set forth in the front cover page and "Special Factors"
of the Offer to Exchange is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in "Risk Factors -- Certain Legal Matters;
Regulatory and Foreign Approvals; No Appraisal Rights" of the Offer to Exchange
is incorporated herein by reference.
(b) Not applicable.
2
<PAGE> 9
(c) The information set forth in "Risk Factors -- Listing and Trading of
QUICS and Preferred Stock" and "Special Factors" of the Offer to Exchange is
incorporated herein by reference.
ITEM 14. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Prospectus Summary -- Selected
Consolidated Financial Data"; "Capitalization"; "Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividend Requirements" and in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 (including the
pages of the Company's Annual Report to Shareholders that have been incorporated
by reference in such Annual Report on Form 10-K) and the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995,
incorporated in "Incorporation of Certain Documents by Reference" of the Offer
to Exchange is incorporated herein by reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) None.
(b) The information set forth in the front cover page, "The Exchange
Offer -- Dealer Managers", "-- Fees and Expenses; Transfer Taxes", and
"-- Exchange Agent and Information Agent" of the Offer to Exchange is
incorporated herein by reference.
ITEM 16. ADDITIONAL INFORMATION.
Reference is hereby made to the Offer to Exchange and the Letter of
Transmittal, copies of which are attached as Exhibits (d)(1) and (d)(2),
respectively, and incorporated in their entirety by reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
*(a)(1) Form of Indenture between Source One Mortgage Services Corporation and IBJ
Schroeder Bank & Trust Company, as trustee.
*(a)(2) Form of First Supplemental Indenture between Source One Mortgage Services
Corporation and IBJ Schroeder Bank & Trust Company, as trustee.
(b) Not applicable.
(c) Not applicable.
*(d)(1) Form of Offer to Exchange dated , 1995.
*(d)(2) Form of Letter of Transmittal.
*(d)(3) Form of Notice of Guaranteed Delivery.
*(d)(4) Form of letter to brokers, dealers, commercial banks, trust companies and
other nominees dated , 1995.
*(d)(5) Form of letter to clients for use by brokers, dealers, commercial banks,
trust companies and other nominees dated , 1995.
*(d)(6) Form of letter to holders of shares of Preferred Stock dated , 1995.
**(d)(7) Press Release dated , 1995.
**(d)(8) Form of summary advertisement dated , 1995.
*(d)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(e) Not applicable.
*(f) Form of Questions and Answers Sheet to be sent to holders of shares of the
Preferred Stock and to be used by brokers, dealers, commercial banks, trust
companies and other nominees in responding to inquiries from their clients.
**(g)(1) Issuer Tender Offer Statement on Schedule 13E-4.
</TABLE>
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* Filed herewith.
** To be Filed by Amendment.
3
<PAGE> 10
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
SOURCE ONE MORTGAGE SERVICES
CORPORATION, Delaware corporation
By /s/ ROBERT W. RICHARDS
------------------------------------
Name: Robert W. Richards
Title: Chairman
Dated: October 16, 1995
4
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
*(a)(1) Form of Indenture between Source One Mortgage Services
Corporation and IBJ Schroeder Bank & Trust Company, as trustee.
*(a)(2) Form of First Supplemental Indenture between Source One Mortgage
Services Corporation and IBJ Schroeder Bank & Trust Company, as
trustee.
(b) Not applicable.
(c) Not applicable.
*(d)(1) Form of Offer to Exchange dated , 1995.
*(d)(2) Form of Letter of Transmittal.
*(d)(3) Form of Notice of Guaranteed Delivery.
*(d)(4) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees dated , 1995.
*(d)(5) Form of letter to clients for use by brokers, dealers, commercial
banks, trust companies and other nominees dated , 1995.
*(d)(6) Form of letter to holders of shares of Preferred Stock dated
, 1995.
**(d)(7) Press Release dated , 1995.
**(d)(8) Form of summary advertisement dated , 1995.
*(d)(9) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(e) Not applicable.
*(f) Form of Questions and Answers Sheet to be sent to holders of
shares of the Preferred Stock and to be used by brokers, dealers,
commercial banks, trust companies and other nominees in
responding to inquiries from their clients.
**(g)(1) Issuer Tender Offer Statement on Schedule 13E-4.
</TABLE>
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* Filed herewith.
** To be Filed by Amendment.
<PAGE> 1
=================================================================
SOURCE ONE MORTGAGE SERVICES CORPORATION,
Issuer
AND
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
Subordinated Indenture
Dated as of _____________, 1995
__________
Subordinated Debt Securities
=================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . 3
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
covenant defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dollar; $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Foreign Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Holder; Holder of Securities;
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
original issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Registered Global Security . . . . . . . . . . . . . . . . . . . . . . . 5
Registered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Required Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Security; Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . 6
Unregistered Security . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . 6
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . 8
SECTION 2.4 Authentication and Delivery of Securities . . . . . . . . . . . . . . . 11
SECTION 2.5 Execution of Securities . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.6 Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.7 Denomination and Date of Securities;
Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.8 Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . 16
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.10 Cancellation of Securities;
Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . 22
SECTION 3.2 Offices for Payments, etc. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3 Appointment to Fill a Vacancy in
Office of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.5 Written Statement to Trustee . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.6 Luxembourg Publications . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.7 Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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TABLE OF CONTENTS (Continued)
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ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information
as to Names and Addresses of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2 Preservation and Disclosure of
Securityholders Lists . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.4 Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration
of Maturity; Waiver of Default . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2 Collection of Indebtedness by Trustee;
Trustee May Prove Debt . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.3 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.4 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.5 Restoration of Rights on Abandonment
of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6 Limitations on Suits by Securityholders . . . . . . . . . . . . . . . . 36
SECTION 5.7 Unconditional Right of Securityholders
to Institute Certain Suits . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.8 Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default . . . . . . . . . . . . . . . . . . . 37
SECTION 5.9 Control by Holders of Securities . . . . . . . . . . . . . . . . . . . 37
SECTION 5.10 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.11 Trustee to Give Notice of Default, But
May Withhold in Certain Circumstances . . . . . . . . . . . . . . . . . 38
SECTION 5.12 Right of Court to Require Filing of
Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the
Trustee; During Default; Prior to Default . . . . . . . . . . . . . . . 39
SECTION 6.2 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.3 Trustee Not Responsible for Recitals,
Disposition of Securities or Application
of Proceeds Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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SECTION 6.4 Trustee and Agents May Hold Securities
or Coupons; Collections, etc. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.6 Compensation and Indemnification of
Trustee and Its Prior Claim . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.8 Qualification of Trustee; Conflicting
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.9 Persons Eligible for Appointment as
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.11 Acceptance of Appointment by Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.12 Merger, Conversion, Consolidation or
Succession to Business of Trustee . . . . . . . . . . . . . . . . . . . 47
SECTION 6.13 Preferential Collection of Claims
Against the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . 48
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.2 Proof of Execution of Instruments and
of Holding of Securities . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.3 Holders to be Treated as Owners . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.4 Securities Owned by Issuer Deemed Not
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.5 Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . 51
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent
of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2 Supplemental Indentures With Consent of
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.3 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . 55
SECTION 8.4 Documents to Be Given to Trustee . . . . . . . . . . . . . . . . . . . 55
SECTION 8.5 Notation on Securities in Respect of
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.6 Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . . . . 56
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ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . 56
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . 57
SECTION 10.2 Application by Trustee of Funds
Deposited for Payment of Securities . . . . . . . . . . . . . . . . . . 63
SECTION 10.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . 63
SECTION 10.4 Return of Moneys Held by Trustee and
Paying Agent Unclaimed for Two Years . . . . . . . . . . . . . . . . . 64
SECTION 10.5 Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . 64
SECTION 10.6 Excess Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from
Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.2 Provisions of Indenture for the Sole
Benefit of Parties and Holders of
Securities and Coupons . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.3 Successors and Assigns of Issuer Bound
by Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.4 Notices and Demands on Issuer, Trustee
and Holders of Securities and Coupons . . . . . . . . . . . . . . . . 65
SECTION 11.5 Officers' Certificates and Opinions
of Counsel; Statements to Be Contained
Therein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.6 Payments Due on Saturdays, Sundays and
Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.7 Conflict of Any Provision of Indenture
with Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 67
SECTION 11.8 New York Law to Govern . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.10 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.11 Securities in a Foreign Currency or
in ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.12 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 12.2 Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . 70
SECTION 12.3 Payment of Securities Called for
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.4 Exclusion of Certain Securities from
Eligibility for Selection for Redemption . . . . . . . . . . . . . . . 72
SECTION 12.5 Mandatory and Optional Sinking Funds . . . . . . . . . . . . . . . . . 72
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1 Securities and Coupons Subordinated to
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.2 Disputes with Holders of Certain Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.3 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.4 Obligation of Issuer Unconditional . . . . . . . . . . . . . . . . . . 77
SECTION 13.5 Payments on Securities and Coupons
Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.6 Effectuation of Subordination by Trustee . . . . . . . . . . . . . . . 79
SECTION 13.7 Knowledge of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.8 Trustee May Hold Senior Indebtedness . . . . . . . . . . . . . . . . . 79
SECTION 13.9 Rights of Holders of Senior Indebtedness
Not Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.10 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . 80
SECTION 13.11 Trustee; Compensation Not Prejudiced . . . . . . . . . . . . . . . . . 80
</TABLE>
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<PAGE> 8
THIS INDENTURE, dated as of _____________, 1995 between SOURCE ONE
MORTGAGE SERVICES CORPORATION, a Delaware corporation (the "Issuer"), and
IBJ SCHRODER BANK & TRUST COMPANY, as trustee (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue from time to time of
its unsecured debentures, notes or other evidences of indebtedness to be issued
in one or more series (the "Securities") up to such principal amount or amounts
as may from time to time be authorized in accordance with the terms of this
Indenture;
WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication, delivery
and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;
NOW THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises and the purchases of the Securities
by the holders thereof, the Issuer and the Trustee mutually covenant and agree,
for the equal and proportionate benefit of the respective holders from time to
time of the Securities and of the Coupons, if any, appertaining thereto, as
follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Article. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939, including terms defined therein by reference to
the Securities Act of 1933 (except as herein otherwise expressly provided or
unless the context otherwise requires), shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force
at the date of this Indenture. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles in the United States, and the
term "generally accepted accounting principles" means such accounting
principles as are generally accepted in the United States at the date or time
of any computation. 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.
<PAGE> 9
The terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular.
"Additional Amounts" shall have the meaning set forth in
Section 2.3(15).
"Authenticating Agent" shall have the meaning set forth in
Section 6.14.
"Authorized Newspaper" means a newspaper (which, in the case
of The City of New York, will, if practicable, be The Wall Street Journal
(Eastern Edition), in the case of the United Kingdom, will, if practicable, be
the Financial Times (London Edition) and, in the case of Luxembourg, will, if
practicable, be the Luxemburger Wort) published in an official language of the
country of publication customarily published at least once a day for at least
five days in each calendar week and of general circulation in The City of New
York, the United Kingdom or in Luxembourg, as applicable. If it shall be
impractical in the opinion of the Trustee to make any publication of any notice
required hereby in an Authorized Newspaper, any publication or other notice in
lieu thereof which is made or given with the approval of the Trustee shall
constitute a sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act on its behalf,
or the director or directors and/or officer or officers duly authorized to act
on its behalf.
"Board Resolution" means (1) a copy of one or more
resolutions, certified by the secretary or an assistant secretary of the Issuer
to have been duly adopted or consented to by the Board of Directors of the
Issuer and to be in full force and effect on the date of such certification, or
(2) a certificate signed by the director or directors and/or officer or
officers to whom the Board of Directors of the Issuer shall have duly delegated
its authority, and delivered to the Trustee.
"Business Day" means, with respect to any Security, a day that
in the city (or in any of the cities, if more than one) in which amounts are
payable, as specified in the form of such Security, is not a day on which
banking institutions are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or if at any time after the execution and delivery of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.
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"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date as of which
this Indenture is dated, located in New York, New York.
"Coupon" means any interest coupon appertaining to a Security.
"covenant defeasance" shall have the meaning set forth in
Section 10.1(C).
"Depositary" means, with respect to the Securities of any
series issuable or issued in the form of one or more Registered Global
Securities, the Person designated as Depositary by the Issuer pursuant to
Section 2.3 until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall mean
or include each Person who is then a Depositary hereunder, and if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Registered Global Securities of that series.
"Dollar" and the sign "$" mean the coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of European Communities.
"Event of Default" means any event or condition specified as
such in Section 5.1.
"Foreign Currency" means a currency issued by the government
of a country other than the United States.
"Holder", "Holder of Securities", "Securityholder" or other
similar terms mean (a) in the case of any Registered Security, the Person in
whose name such Security is registered in the security register kept by or on
behalf of the Issuer for that purpose in accordance with the terms hereof, and
(b) in the case of any Unregistered Security, the bearer of such Security, or
any Coupon appertaining thereto, as the case may be.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest
bearing Securities, interest payable after maturity.
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<PAGE> 11
"Issuer" means Source One Mortgage Services Corporation, a
Delaware corporation and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of
the Issuer signed in its name by (1) the Chairman of the Board, the President,
or a Vice President (any reference to a Vice President of the Issuer herein
shall be deemed to include any Vice President of the Issuer whether or not
designated by a number or a word or words added before or after the title "Vice
President") of the Issuer, and by the Secretary, an Assistant Secretary, the
Treasurer, an Assistant Treasurer, the Controller or an Assistant Controller of
the Issuer or (2) by any two Persons designated in an Issuer Order previously
delivered to the Trustee by any two of the foregoing officers and delivered to
the Trustee.
"Judgment Currency" shall have the meaning set forth in
Section 11.12.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Controller, an Assistant Controller, Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Issuer and delivered to the Trustee.
Each such certificate shall include the statements provided for in Section
11.5, if applicable.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel who may be an employee of or counsel to the Issuer and who shall
be satisfactory to the Trustee. Each such opinion shall include the statements
provided for in Section 11.5, if applicable.
"original issue date" of any Security (or portion thereof)
means the earlier of (a) the date of such Security or (b) the date of any
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that
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 5.1.
"Outstanding", when used with reference to Securities, shall,
subject to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore canceled by the
Trustee for such securities or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the
payment or redemption of which moneys or U.S. Government Obligations (as
provided for in Section 10.1) in the necessary
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<PAGE> 12
amount shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated and held
in trust by the Issuer for the Holders of such Securities (if the Issuer shall
act as its own paying agent), provided that if such Securities, or portions
thereof, are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as herein provided, or provision satisfactory
to the Trustee shall have been made for giving such notice; and
(c) Securities which shall have been paid or in
substitution for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that such
Security is held by a Person in whose hands such Security is a legal, valid and
binding obligation of the Issuer);
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
a declaration of acceleration of the maturity thereof pursuant to Section 5.1.
"Periodic Offering" means an offering of Securities of a
series from time to time, the specific terms of which Securities, including,
without limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or
any Security or any portion thereof, shall be deemed to include "and premium,
if any".
"record date" shall have the meaning set forth in Section 2.7.
"Registered Global Security", means a Security evidencing all
or a part of a series of Registered Securities, issued to the Depositary for
such series in accordance with Section 2.4, and bearing the legend prescribed
in Section 2.4.
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<PAGE> 13
"Registered Security" means any Security registered on the
Security register of the Issuer.
"Required Currency" shall have the meaning set forth in
Section 11.12.
"Responsible Officer" when used with respect to the Trustee
for any series of Securities means the chairman of the board of directors, any
vice chairman of the board of directors, the chairman of the trust committee,
the chairman of the executive committee, any vice chairman of the executive
committee, the president, any vice president, (whether or not designated by
numbers or words added before or after the title "vice president") the cashier,
the secretary, the treasurer, any trust officer, any assistant trust officer,
any assistant vice president, any assistant cashier, any assistant secretary,
any assistant treasurer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture, or, as the case may be, Securities that have been
authenticated and delivered under this Indenture.
"Senior Indebtedness" means obligations (other than
non-recourse obligations, the Securities or any other obligations specifically
designated as being subordinate in right of payment to Senior Indebtedness) of,
or guaranteed or assumed by, the Issuer for borrowed money or evidenced by
bonds, debentures, notes, credit agreements or other similar instruments, and
amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligation (including, without limitation, all interest
(including post-bankruptcy-petition interest whether or not allowed as a claim
in bankruptcy), fees, expenses, indemnification obligations, costs of
enforcement, and costs of preservation of collateral which may at any time
accrue with respect to such obligations or which would accrue but for the
operation of any provision or doctrine under bankruptcy or analogous laws).
"Trustee" means the Person identified as "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Six, shall
also include any successor trustee. "Trustee" shall also 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 the Securities of such series.
"Trust Indenture Act of 1939" means the Trust Indenture Act of
1939, as amended.
"Unregistered Security" means any Security other than a
Registered Security.
"U.S. Government Obligations" shall have the meaning set forth
in Section 10.1(A).
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such
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<PAGE> 14
series, or, if applicable, at the most recent redetermination of interest on
such series, and calculated in accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series and the
Coupons, if any, to be attached thereto shall be substantially in such form
(not inconsistent with this Indenture) 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 set forth in a Board Resolution, an
Officers' Certificate detailing such establishment) or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have imprinted or otherwise reproduced thereon such
letters, numbers or other marks of identification and such legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and
Coupons.
The definitive Securities and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and
Coupons, if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities referred to in the
within-mentioned Subordinated Indenture.
________________________,
as Trustee
By ________________________
Authorized Signatory"
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series may
have endorsed thereon, in addition to or in lieu of the Trustee's certificate
of authentication to be
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borne by the Securities of each such series, an alternative certificate of
authentication substantially as follows:
"This is one of the Securities referred to in the
within-mentioned Subordinated Indenture.
__________________________,
as Authenticating Agent
By_________________________
Authorized Signatory"
SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered and
Outstanding under this Indenture is unlimited.
The Securities may be issued in one or more series, and the Securities
of each such series shall rank equally and pari passu with the Securities of
each other series, but all Securities issued hereunder shall be subordinate and
junior in right of payment, to the extent and in the manner set forth in
Article Thirteen, to all Senior Indebtedness of the Issuer. There shall be
established in or pursuant to one or more Board Resolutions (and, to the extent
established pursuant to rather than 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 initial issuance of
Securities of any series,
(1) the designation of the Securities of the series,
which shall distinguish the Securities of the series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that 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 2.8, 2.9, 2.11, 8.5 or 12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited to, any
Foreign Currency or ECU);
(4) the date or dates (or manner of determining the same)
on which the principal of the Securities of that series is payable (which, if
so provided in such Board Resolution or Officers' Certificate may be determined
by the Issuer from time to time and set forth in the Securities of the series
issued from time to time);
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(5) the rate or rates (or manner of calculation thereof)
at which the Securities of that series shall bear interest (if any), the date
or dates from which such interest shall accrue (which, in either case or both,
if so provided in such Board Resolution or Officers' Certificate, may be
determined by the Issuer from time to time and set forth in the Securities of
the series issued from time to time), the date or dates on which such interest
shall be payable (or manner of determining the same) and the right, if any, of
the Issuer to extend the interest payment periods of the Securities of the
series, the maximum duration, if any, of any such extension or extensions, the
additional interest, if any, payable on such Securities if any interest
payment period is extended and any notice (which in every case shall include
notice to the Trustee) which must be given upon the exercise of such rights;
(6) the place or places where the principal of and any
interest on Securities of the series shall be payable (if other than as
provided in Section 3.2) any Registered Securities of that series may be
surrendered for registration of transfer, any Securities of that series may be
surrendered for exchange, and notices and demands to or upon the Issuer in
respect of the Securities of that series and this Indenture may be served;
(7) the right, if any, of the Issuer to redeem
Securities, in whole or in part, at its option and the period or periods within
which, the price or prices at which and any terms and conditions upon which
Securities of the series may be so redeemed, pursuant to any sinking fund or
otherwise;
(8) the obligation, if any, of the Issuer to redeem,
repurchase or repay Securities of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a Holder
thereof and the price or prices at which and the period or periods within which
and any terms and conditions upon which Securities of the series shall be
redeemed, repurchased or repaid, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any
integral multiple thereof in the case of Registered Securities, or $1,000 and
$5,000 in the case of Unregistered Securities, the denominations in which
Securities of the series shall be issuable;
(10) if other than the 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;
(11) if other than the coin or currency in which the
Securities of that series are denominated, the coin or currency in which
payment of the principal of or interest on the Securities of such series shall
be payable;
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(12) if the principal of or interest on the Securities of
such series are to be payable, at the election of the Issuer or a Holder
thereof, in a coin or currency other than that in which the Securities are
denominated, the period or periods within which, and the terms and conditions
upon which, such election may be made;
(13) if the amount of payments of principal of and
interest on the Securities of the series may be determined with reference to an
index based on a coin or currency other than that in which the Securities of
the series are denominated, the manner in which such amounts shall be
determined;
(14) whether the Securities of the series will be issuable
as Registered Securities (and if so, whether such Securities will be issuable
as Registered Global Securities) or Unregistered Securities (with or without
Coupons), or any combination of the foregoing, any restrictions applicable to
the offer, sale or delivery of Unregistered Securities or the payment of
interest thereon and, if other than as provided in Section 2.8, the terms upon
which Unregistered Securities of any series may be exchanged for Registered
Securities of such series and vice versa;
(15) whether and under what circumstances the Issuer will
pay additional amounts on the Securities of the series in respect of any tax,
assessment or governmental charge withheld or deducted ("Additional Amounts")
and, if so, whether the Issuer will have the option to redeem such Securities
rather than pay such Additional Amounts;
(16) if the Securities of such series are to be issuable
in definitive form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, the form and terms of such
certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying
agents, transfer agents or registrars or any other agents with respect to the
Securities of such series;
(18) if the Securities of that series do not bear interest,
the applicable dates for purposes of Section 4.1;
(19) if other than as set forth in Section 10.1,
provisions for the satisfaction and discharge of this Indenture with respect to
the Securities of that series;
(20) the date as of which any Unregistered Securities of
that series and any Registered Global Securities representing Outstanding
Securities of that series shall be dated if other than the date of original
issuance of the first Security of that series to be issued;
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<PAGE> 18
(21) any Events of Default in addition to the Events of
Default described in Section 5.1 and any covenants of the Issuer with respect
to the Securities of that series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set forth
herein; and
(22) any other terms of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any, appertaining
thereto, shall be substantially identical, except in the case of Registered
Securities as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. The terms of such
Securities, as set forth above, may be determined by the Issuer from time to
time if so provided in or established pursuant to the authority granted in a
Board Resolution or Officers' Certificate. All Securities of any one series
need not be issued at the same time, and unless otherwise provided, a series
may be reopened for issuance of additional Securities of such series.
SECTION 2.4 Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series having attached thereto appropriate
Coupons, if any, executed by the Issuer to the Trustee for authentication
together with the applicable documents referred to below in this Section, and
the Trustee shall thereupon authenticate and deliver such Securities to or upon
the order of the Issuer (contained in the Issuer Order referred to below in
this Section) or pursuant to such procedures acceptable to the Trustee and to
such recipients as may be specified from time to time by an Issuer Order. The
maturity date, original issue date, interest rate and any other terms of the
Securities of such series and Coupons, if any, appertaining thereto shall be
specified in or pursuant to such Issuer Order and procedures. If provided for
in such procedures, such Issuer Order may authorize authentication and delivery
pursuant to oral instructions from the Issuer or its duly authorized agent,
which instructions shall be promptly confirmed in writing. In authenticating
such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive (in the case of subparagraphs 2, 3 and 4 below only at or before the
time of the first request of the Issuer to the Trustee to authenticate
Securities of such series) and (subject to Section 6.1) shall be fully
protected in relying upon, unless and until such documents have been superseded
or revoked:
(1) an Issuer Order requesting such authentication and
setting forth delivery instructions if the Securities and Coupons, if any, are
not to be delivered to the Issuer, provided that, with respect to Securities of
a series subject to a Periodic Offering, (a) such Issuer Order may be delivered
by the Issuer to the Trustee prior to the delivery to the Trustee of such
Securities for authentication and delivery, (b) the Trustee shall authenticate
and
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<PAGE> 19
deliver Securities of such series for original issue from time to time, in an
aggregate principal amount not exceeding the aggregate principal amount
established for such series, pursuant to an Issuer Order or pursuant to
procedures acceptable to the Trustee as may be specified from time to time by
an Issuer Order, (c) the maturity date or dates, original issue date or dates,
interest rate or rates and any other terms of Securities of such series shall
be determined by an Issuer Order or pursuant to such procedures and (d) if
provided for in such procedures, such Issuer Order may authorize authentication
and delivery pursuant to oral or electronic instructions from the Issuer or its
duly authorized agent or agents, which oral instructions shall be promptly
confirmed in writing;
(2) any Board Resolution, Officers' Certificate and/or
executed supplemental indenture referred to in Sections 2.1 and 2.3 by or
pursuant to which the forms and terms of the Securities and Coupons, if any,
were established;
(3) an Officers' Certificate setting forth the form or
forms and terms of the Securities and Coupons, if any, stating that the form or
forms and terms of the Securities and Coupons, if any, have been established
pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering
such other matters as the Trustee may reasonably request; and
(4) at the option of the Issuer, either an Opinion of
Counsel, or a letter addressed to the Trustee permitting it to rely on an
Opinion of Counsel, substantially to the effect that:
(a) the forms of the Securities and Coupons, if
any, have been duly authorized and established in conformity with the
provisions of this Indenture;
(b) in the case of an underwritten offering, the
terms of the Securities have been duly authorized and established in conformity
with the provisions of this Indenture, and, in the case of a Periodic Offering,
certain terms of the Securities have been established pursuant to a Board
Resolution, an Officers' Certificate or a supplemental indenture in accordance
with this Indenture, and when such other terms as are to be established
pursuant to procedures set forth in an Issuer Order shall have been
established, all such terms will have been duly authorized by the Issuer and
will have been established in conformity with the provisions of this Indenture;
(c) when the Securities and Coupons, if any, have
been executed by the Issuer and authenticated by the Trustee in accordance with
the provisions of this Indenture and delivered to and duly paid for by the
purchasers thereof, they will have been duly issued under this Indenture and
will be valid and legally binding obligations of the Issuer, enforceable in
accordance with their respective terms, and will be entitled to the benefits of
this Indenture; and
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<PAGE> 20
(d) the execution and delivery by the Issuer of,
and the performance by the Issuer of its obligations under, the Securities and
Coupons, if any, will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Issuer or any agreement or
other instrument binding upon the Issuer or any of its subsidiaries that is
material to the Issuer and its subsidiaries, considered as one enterprise, or,
to the best of such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Issuer or any
subsidiary, and no consent, approval or authorization of any governmental body
or agency is required for the performance by the Issuer of its obligations
under the Securities and Coupons, if any, except such as are specified and have
been obtained and such as may be required by the securities or blue sky laws of
the various states in connection with the offer and sale of the Securities.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
York and the federal law of the United States, upon opinions of other counsel
(copies of which shall be delivered to the Trustee), in which case the opinion
shall state that such counsel believes he and the Trustee are entitled so to
rely. Such counsel may also state that, insofar as such opinion involves
factual matters, he has relied, to the extent he deems proper, upon
certificates of officers of the Issuer and its subsidiaries and certificates of
public officials.
Notwithstanding any contrary provision herein, if all Securities of a
series are not to be originally issued at one time, it shall not be necessary
to deliver the Board Resolution, Officers' Certificate and Opinion of Counsel
otherwise required pursuant hereto at or prior to the time of authentication of
each Security of such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such series to
be issued.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees or
Responsible Officers shall determine that such action would expose the Trustee
to personal liability to existing Holders or would affect the Trustee's own
rights, duties or immunities under the Securities, this Indenture or otherwise.
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If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
canceled, (ii) shall be registered in the name of the Depositary for such
Registered Global Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive registered form, this Security may not be transferred
except as a whole by the Depositary to the nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary."
Each Depositary must, at the time of its designation and at all times
while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or regulation.
SECTION 2.5 Execution of Securities. The Securities and, if
applicable, each Coupon appertaining thereto shall be signed on behalf of the
Issuer by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal (except in the case of Coupons) which may,
but need not, be attested. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed of
by the Issuer, such Security or Coupon nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Security or
Coupon had not ceased to be such officer of the Issuer; and any Security or
Coupon may be signed on behalf of the Issuer by such persons as, at the actual
date of the execution of such Security or Coupon, shall be the proper officers
of the Issuer, although at the date of the execution and delivery of this
Indenture any such person was not such an officer.
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SECTION 2.6 Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized officers, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. No Coupon shall be entitled to the
benefits of this Indenture or shall be valid and obligatory for any purpose
until the certificate of authentication on the Security to which such Coupon
appertains shall have been duly executed by the Trustee. The execution of such
certificate by the Trustee upon any Security executed by the Issuer shall be
conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the Holder is entitled to the
benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable as Registered
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.3 or, with respect to the Registered Securities of
any series, if not so established, in denominations of $1,000 and any integral
multiple thereof. If denominations of Unregistered Securities of any series
are not so established, such Securities shall be issuable in denominations of
$1,000 and $5,000. The Securities of each series shall be numbered, lettered
or otherwise distinguished in such manner or in accordance with such plan as
the officers of the Issuer executing the same may determine with the approval
of the Trustee, as evidenced by the execution and authentication thereof.
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in or
pursuant to the Board Resolution referred to in Section 2.3. The Securities of
each series shall bear interest, if any, from the date, and such interest shall
be payable on the dates, established as contemplated by Section 2.3.
The Person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment date,
except if and to the extent the Issuer shall default in the payment of the
interest due on such interest payment date for such series, in which case such
defaulted interest shall be paid to the Persons in whose names Outstanding
Registered Securities for such series are registered at the close of business
on a subsequent record date (which shall be not less than five Business Days
prior to the date of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Issuer to the Holders of Registered
Securities not less than 15 days preceding such subsequent record date. The
term "record date" as used with respect to any interest payment date (except a
date
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<PAGE> 23
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Registered Securities of such
series established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register in which, subject to such
reasonable regulations as it may prescribe, it will provide for the
registration of Registered Securities of such series and the registration of
transfer of Registered Securities of such series. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times
such register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Registered
Security of any series at any such office or agency to be maintained for the
purpose as provided in Section 3.2, the Issuer shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Registered Security or Registered Securities of the same series and of like
terms and tenor, in authorized denominations for a like aggregate principal
amount.
Unregistered Securities (except for any temporary global Unregistered
Securities) and Coupons (except for Coupons attached to any temporary global
Unregistered Securities) shall be transferable by delivery. At the option
of the Holder thereof, Registered Securities of any series (other than a
Registered Global Security, except as set forth below) may be exchanged for a
Registered Security or Registered Securities of such series having authorized
denominations and an equal aggregate principal amount, upon surrender of such
Registered Securities to be exchanged at the agency of the Issuer that shall be
maintained for such purpose in accordance with Section 3.2 and upon payment, if
the Issuer shall so require, of the charges hereinafter provided. If the
Securities of any series are issued in both registered and unregistered form,
except as otherwise specified pursuant to Section 2.3, at the option of the
Holder thereof, Unregistered Securities of any series may be exchanged for
Registered Securities of such series having authorized denominations and an
equal aggregate principal amount and of like terms and tenor, upon surrender of
such Unregistered Securities to be exchanged at the agency of the Issuer that
shall be maintained for such purpose in accordance with Section 3.2, with, in
the case of Unregistered Securities that have Coupons attached, all unmatured
Coupons and all matured Coupons in default thereto appertaining, and upon
payment, if the Issuer shall so
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<PAGE> 24
require, of the charges hereinafter provided. At the option of the Holder
thereof, if Unregistered Securities of any series, maturity date, interest
rate and original issue date are issued in more than one authorized
denomination, except as otherwise specified pursuant to Section 2.3, such
Unregistered Securities may be exchanged for Unregistered Securities of such
series and of like terms and tenor having authorized denominations and an equal
aggregate principal amount, upon surrender of such Unregistered Securities to
be exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3,
with, in the case of Unregistered Securities that have Coupons attached, all
unmatured Coupons and all matured Coupons in default thereto appertaining, and
upon payment, if the Issuer shall so require, of the charges hereinafter
provided. Unless otherwise specified pursuant to Section 2.3, Registered
Securities of any series may not be exchanged for Unregistered Securities of
such series. Whenever any Securities are so surrendered for exchange, the
Issuer shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive. All
Securities and Coupons surrendered upon any exchange or transfer provided for
in this Indenture shall be promptly canceled and disposed of by the Trustee and
the Trustee will deliver a certificate of disposition thereof to the Issuer.
All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange
or registration of transfer of Securities. No service charge shall be made for
any such transaction.
The Issuer shall not be required to exchange or register a transfer of
(a) any Securities of any series for a period of 15 days next preceding the
first mailing of notice of redemption of Securities of such series to be
redeemed or (b) any Securities selected, called or being called for redemption,
in whole or in part, except, in the case of any Security to be redeemed in
part, the portion thereof not so to be redeemed.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion of
the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such
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Depositary or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of a
series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary with respect to such Registered Securities. If
a successor Depositary for such Registered Securities is not appointed by the
Issuer within 90 days after the Issuer receives such notice or becomes aware of
such ineligibility, the Issuer's election pursuant to Section 2.3 that such
Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without
Coupons and of like terms and tenor, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing such Registered Securities in
exchange for such Registered Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Registered Securities of any series issued in the form of one or more
Registered Global Securities shall no longer be represented by a Registered
Global Security or Securities. In such event the Issuer will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without
Coupons and of like terms and tenor, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing such Registered Securities, in
exchange for such Registered Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Registered Global Security, the Depositary for such
Registered Global Security may surrender such Registered Global Security in
exchange in whole or in part for Securities of the same series and of like
terms and tenor in definitive registered form on such terms as are acceptable
to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and
the Trustee shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new
Registered Security or Securities of the same series and of like terms and
tenor, of any authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in
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exchange for such Person's beneficial interest in the Registered Global
Security; and
(ii) to such Depositary a new Registered Global Security
in a denomination equal to the difference, if any, between the principal amount
of the surrendered Registered Global Security and the aggregate principal
amount of Registered Securities authenticated and delivered pursuant to clause
(i) above.
Upon the exchange of a Registered Global Security for Securities in
definitive registered form without Coupons, in authorized denominations, such
Registered Global Security shall be canceled by the Trustee or its agent.
Securities in definitive registered form without Coupons issued in exchange for
a Registered Global Security pursuant to this Section 2.8 shall be registered
in such names and in such authorized denominations as the Depositary for such
Registered Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee or an agent of
the Issuer or the Trustee. The Trustee or such agent shall deliver such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the terms of any series of
Securities to the contrary, none of the Issuer, the Trustee or any agent of the
Issuer or the Trustee (any of which, other than the Issuer, shall rely on an
Officers' Certificate and an Opinion of Counsel) shall be required to exchange
any Unregistered Security for a Registered Security if such exchange would
result in adverse Federal income tax consequences to the Issuer (such as, for
example, the inability of the Issuer to deduct from its income, as computed for
Federal income tax purposes, the interest payable on the Unregistered
Securities) under then applicable United States Federal income tax laws.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security or any Coupon
appertaining to any Security shall become mutilated, defaced or be destroyed,
lost or stolen, the Issuer in its discretion may execute, and upon the written
request of any officer of the Issuer, the Trustee shall authenticate and
deliver a new Security of like terms and tenor bearing a number or other
distinguishing symbol not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen with Coupons
corresponding to the Coupons appertaining to the Securities so mutilated,
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defaced, destroyed, lost or stolen, or in exchange or substitution for the
Security to which such mutilated, defaced, destroyed, lost or stolen Coupon
appertained, with Coupons appertaining thereto corresponding to the Coupons so
mutilated, defaced, destroyed, lost or stolen. In every case the applicant for
a substitute Security or Coupon shall furnish to the Issuer and to the Trustee
and any agent of the Issuer or the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless and,
in every case of destruction, loss or theft, evidence to their satisfaction of
the destruction, loss or theft of such Security or Coupon and of the ownership
thereof and in the case of mutilation or defacement shall surrender the
Security and related Coupons to the Trustee or such agent.
Upon the issuance of any substitute Security or Coupon, the Issuer 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 or its agent) connected
therewith. In case any Security or Coupon which has matured or is about to
mature or has been called for redemption in full shall become mutilated or
defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a
substitute Security, pay or authorize the payment of the same or the relevant
Coupon (without surrender thereof except in the case of a mutilated or defaced
Security or Coupon), if the applicant for such payment shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the destruction, loss or theft of
such Security or Coupon and of the ownership thereof.
Every substitute Security or Coupon of any series issued pursuant to
the provisions of this Section by virtue of the fact that any such Security or
Coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Security
or Coupon shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities or Coupons of such series duly authenticated and delivered
hereunder. All Securities and Coupons shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced or
destroyed, lost or stolen Securities and Coupons and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof. All
Securities and Coupons surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, if surrendered
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to the Issuer or any agent of the Issuer or the Trustee or any agent of the
Trustee, shall be delivered to the Trustee or its agent for cancellation or, if
surrendered to the Trustee, shall be canceled by it; and no Securities or
Coupons shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Indenture. The Trustee or its agent shall dispose of
canceled Securities and Coupons held by it and deliver a certificate of
disposition to the Issuer. If the Issuer or its agent shall acquire any of the
Securities or Coupons, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities or Coupons
unless and until the same are delivered to the Trustee or its agent for
cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable as Registered Securities without Coupons, or as Unregistered
Securities with or without Coupons attached thereto, of any authorized
denomination, and substantially in the form of the definitive Securities of
such series but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee as evidenced by the execution and
authentication thereof. Temporary Securities may contain such references to
any provisions of this Indenture as may be appropriate. Every temporary
Security shall be executed by the Issuer and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Securities. Without unreasonable delay the Issuer
shall execute and shall furnish definitive Securities of such series and
thereupon temporary Registered Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and, in the case of
Unregistered Securities, at any agency maintained by the Issuer for such
purpose as specified pursuant to Section 2.3, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the same
series and of like terms and tenor having authorized denominations and, in the
case of Unregistered Securities, having attached thereto any appropriate
Coupons. Until so exchanged, the temporary Securities of any series shall be
entitled to the same benefits under this Indenture as definitive Securities of
such series, unless otherwise established pursuant to Section 2.3. The
provisions of this Section are subject to any restrictions or limitations on
the issue and delivery of temporary Unregistered Securities of any series that
may be established pursuant to Section 2.3 (including any provision that
Unregistered Securities of such series initially be issued in the form of a
single global Unregistered Security to be delivered to a depositary or agency
located outside the United States and the procedures pursuant to
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which definitive or global Unregistered Securities of such series would be
issued in exchange for such temporary global Unregistered Security).
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest. The Issuer covenants
and agrees for the benefit of each series of Securities that it will duly and
punctually pay or cause to be paid the principal of, and interest on, each of
the Securities of such series (together with any Additional Amounts payable
pursuant to the terms of such Securities) at the place or places, at the
respective times and in the manner provided in such Securities and in the
Coupons, if any, appertaining thereto and in this Indenture. The interest on
Securities with Coupons attached (together with any Additional Amounts payable
pursuant to the terms of such Securities) shall be payable only upon
presentation and surrender of the several Coupons for such interest
installments as are evidenced thereby as they severally mature. If any
temporary Unregistered Security provides that interest thereon may be paid
while such Security is in temporary form, the interest on any such temporary
Unregistered Security (together with any Additional Amounts payable pursuant to
the terms of such Security) shall be paid, as to the installments of interest
evidenced by Coupons attached thereto, if any, only upon presentation and
surrender thereof, and, as to the other installments of interest, if any, only
upon presentation of such Securities for notation thereon of the payment of
such interest, in each case subject to any restrictions that may be established
pursuant to Section 2.3. The interest on Registered Securities (together with
any Additional Amounts payable pursuant to the terms of such Securities) shall
be payable only to or upon the written order of the Holders thereof and, at the
option of the Issuer, may be paid by wire transfer (subject to the procedures
of the paying agent) or by mailing checks for such interest payable to or upon
the written order of such Holders at their last addresses as they appear on the
registry books of the Issuer.
SECTION 3.2 Offices for Payments, etc. So long as any Registered
Securities are authorized for issuance pursuant to this Indenture or are
outstanding hereunder, the Issuer will maintain in the Borough of Manhattan,
The City of New York, an office or agency where the Registered Securities of
each series may be presented for payment, where the Securities of each series
may be presented for exchange as is provided in this Indenture and, if
applicable, pursuant to Section 2.3 and where the Registered Securities of each
series may be presented for registration of transfer as in this Indenture
provided.
The Issuer will maintain one or more offices or agencies in a city or
cities located outside the United States (including any
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city in which such an agency is required to be maintained under the rules of
any stock exchange on which the Securities of such series are listed) where the
Unregistered Securities, if any, of each series and Coupons, if any,
appertaining thereto may be presented for payment. No payment on any
Unregistered Security or Coupon will be made upon presentation of such
Unregistered Security or Coupon at an agency of the Issuer within the United
States nor will any payment be made by transfer to an account in, or by mail to
an address in, the United States unless pursuant to applicable United States
laws and regulations then in effect such payment can be made without adverse
tax consequences to the Issuer. Notwithstanding the foregoing, payments in
Dollars of Unregistered Securities of any series and Coupons appertaining
thereto which are payable in Dollars may be made at an agency of the Issuer
maintained in the Borough of Manhattan, The City of New York if such payment in
Dollars at each agency maintained by the Issuer outside the United States for
payment on such Unregistered Securities is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where notices and demands to or upon the Issuer in
respect of the Securities of any series, the Coupons appertaining thereto or
this Indenture may be served.
The Issuer will give to the Trustee written notice of the location of
each such office or agency and of any change of location thereof. In case the
Issuer shall fail to maintain any agency required by this Section to be located
in the Borough of Manhattan, The City of New York, or shall fail to give such
notice of the location or of any change in the location of any of the above
agencies, presentations and demands may be made and notices may be served at
the Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more additional
offices or agencies where the Securities of a series and any Coupons
appertaining thereto may be presented for payment, where the Securities of that
series may be presented for exchange as provided in this Indenture and pursuant
to Section 2.3 and where the Registered Securities of that series may be
presented for registration of transfer as in this Indenture provided, and the
Issuer may from time to time rescind any such designation, as the Issuer may
deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
the agencies provided for in this Section. The Issuer will give to the Trustee
prompt written notice of any such designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.10, a Trustee, so that there
shall at all times be a Trustee with respect to each series of Securities
hereunder.
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SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a
paying agent other than the Trustee with respect to the Securities of any
series, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section,
(a) that it will hold all sums received by it as such
agent for the payment of the principal of or interest on the Securities of
such series (whether such sums have been paid to it by the Issuer or by any
other obligor on the Securities of such series) in trust for the benefit of
the Holders of the Securities of such series, or Coupons appertaining thereto,
if any, or of the Trustee,
(b) that it will give the Trustee notice of any failure
by the Issuer (or by any other obligor on the Securities of such series) to
make any payment of the principal of or interest on the Securities of such
series when the same shall be due and payable, and
(c) that it will at any time during the continuance of
any such failure, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such paying agent.
The Issuer will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the paying agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
paying agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.
If the Issuer shall 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 interest on the Securities of such series, set aside, segregate and hold
in trust for the benefit of the Holders of the Securities of such series or the
Coupons appertaining thereto a sum sufficient to pay such principal or interest
so becoming due. The Issuer will promptly notify the Trustee of any failure to
take such action.
Anything in this Section to the contrary notwithstanding, but subject
to Section 10.1, the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Issuer or any paying
agent hereunder, as required by this Section, such sums to be held by the
Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.3 and 10.4.
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SECTION 3.5 Written Statement to Trustee. The Issuer will deliver to
the Trustee within 120 days after the end of each fiscal year an Officers'
Certificate (which need not comply with Section 11.5) as to whether or not to
the knowledge of the signers thereof the Issuer is in compliance with all
covenants and conditions of this Indenture (without regard to any period of
grace or requirements of notice provided hereunder) and, if the Issuer shall
not be in such compliance, specifying all defaults and the nature and status
thereof of which the signers may have knowledge. At least one signatory to
such Officers' Certificate shall be the principal executive officer, principal
financial officer or principal accounting officer of the Issuer.
SECTION 3.6 Luxembourg Publications. In the event of the publication
of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2, 10.4, 12.2 or 12.5
or Section 310(b) of the Trust Indenture Act of 1939, the party making such
publication in the Borough of Manhattan, The City of New York and London shall
also, to the extent that notice is required to be given to Holders of
Securities of any series by applicable Luxembourg law or stock exchange
regulation, as evidenced by an Officers' Certificate delivered to such party,
make a similar publication in Luxembourg.
SECTION 3.7 Additional Amounts. If the Securities of a series
provide for the payment of Additional Amounts to the Holders of such
Securities, then the Issuer shall pay to each Holder of such Securities or any
Coupon appertaining thereto the Additional Amounts as provided therein.
If the Securities of a series provide for the payment of Additional
Amounts, at least 10 days prior to the first interest payment date with respect
to such series of Securities (or if the Securities of such series shall not
bear interest, the first day on which a payment of principal is made) and at
least 10 days prior to each date of payment of principal or interest if there
has been a change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Issuer will furnish the Trustee and the principal
paying agent for such Securities, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such paying agent whether such payment
of principal or interest shall be made to Holders of Securities of such series
or related Coupons who are United States Aliens (as such term is defined with
respect to such Securities) without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of such
series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities or Coupons and the
Issuer will pay or cause to be paid to the Trustee or such paying agent the
Additional Amounts required by the terms of such Securities. The Issuer
covenants to indemnify the Trustee and any paying agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by
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any of them in reliance on any Officers' Certificate furnished pursuant to this
Section.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of or interest on, or in respect of, any Security,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided for in the terms of such Security to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to the provisions of such Securities and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those provisions hereof
where such express mention is not made.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of the
names and addresses of the Holders of the Registered Securities of each series:
(a) semiannually and not more than 15 days after each
record date for the payment of interest on such Registered Securities, as
hereinabove specified, as of such record date and on dates to be determined
pursuant to Section 2.3 for non-interest bearing Registered Securities in each
year, and
(b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request as of a
date not more than 15 days prior to the time such information is furnished,
provided that if and so long as the Trustee shall be the Security registrar for
such series and all of the Securities of any series are Registered Securities,
such list shall not be required to be furnished.
SECTION 4.2 Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
Holders of each series of Registered Securities (i) contained in the most
recent list furnished to it as provided in Section 4.1, (ii) received by it in
the capacity of Security registrar for such series, if so acting, and (iii)
filed with it within two preceding years pursuant to 4.2(b)(ii). The Trustee
may
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destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
(b) In case three or more Holders of Securities
(hereinafter 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 of Securities of a particular series (in which
case the applicants must all hold Securities of such series) or with Holders of
all Securities with respect to their rights under this Indenture or under such
Securities and such application is accompanied by a copy of the form 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 to such applicants access to the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section, or
(ii) inform such applicants as to the approximate
number of Holders of Registered Securities of such series or of all Registered
Securities, as the case may be, whose names and addresses appear in the
information preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section, and as to the approximate cost
of mailing to such Securityholders the form of proxy or other communication, if
any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Registered Securities, as the case may be, whose name and address appears in
the information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 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 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 interests of the Holders of
Registered Securities of such series or of all Registered Securities, as the
case may be, 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
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have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders 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.
(c) Each and every Holder of Securities and Coupons, by
receiving and holding the same, agrees with the Issuer and the Trustee that
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Holders of Securities in accordance with
the provisions of subsection (b) of this Section, 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
such subsection (b).
SECTION 4.3 Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 30 days after the
Issuer is required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Issuer may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or if the Issuer is not required to file information,
documents, or reports pursuant to either of such Sections, then to file with
the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents, and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a debt
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with respect to
compliance by the Issuer with the conditions and covenants provided for in this
Indenture as may be required from time to time by such rules and regulations;
and
(c) to transmit by mail to the Holders of Securities
within 30 days after the filing thereof with the Trustee, in the manner and to
the extent provided in Section 11.4(c), such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
subsections (a) and (b) of this Section as may be required to be transmitted to
such Holders by rules and regulations prescribed from time to time by the
Commission.
SECTION 4.4 Reports by the Trustee. The Trustee shall transmit to
the Securityholders such reports concerning the Trustee
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and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act of 1939 at the times and in the manner provided pursuant thereto.
A copy of each such report shall, at the time of such transmission to
Securityholders, be furnished to the Issuer and be filed by the Trustee with
each stock exchange upon which the Securities of any applicable series are
listed and also with the Commission. The Issuer agrees to notify the Trustee
with respect to any series when and as the Securities of such series become
admitted to trading on any national securities exchange.
Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar
year, commencing in 1996, and shall be dated as of a date no earlier than May
15.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default. "Event of Default" with respect to Securities of any series
wherever used herein, means each one of the following events which shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law, pursuant to Article Thirteen or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any installment of interest
upon any of the Securities of such series as and when the same shall become due
and payable, and continuance of such default for a period of 30 days; or
(b) default in the payment of all or any part of the
principal on any of the Securities of such series as and when the same shall
become due and payable either at maturity, upon any redemption, by declaration
or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Issuer in the Securities of such series (other than
a covenant or warranty in respect of the Securities of such series a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with) and continuance of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to the Issuer by
the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of all series affected
thereby, a written notice specifying such
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default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(d) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Issuer a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization arrangement,
adjustment or composition of or in respect of the Issuer under the Federal
bankruptcy law or any other applicable Federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Issuer or of any substantial part of its property, or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(e) the institution by the Issuer of proceedings to be
adjudicated a bankrupt or insolvent or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
Federal bankruptcy law or any other applicable Federal or state law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Issuer or of any substantial part of its property, or the
making by it of a general assignment for the benefit of creditors; or
(f) any other Event of Default provided in the
supplemental indenture under which such series of Securities is issued or in
the form of Security for such series;
provided, however, that the occurrence of any of the events described in the
foregoing clause (c) or (f) shall not constitute an Event of Default if such
occurrence is the result of changes in generally accepted accounting principles
as recognized by the American Institute of Certified Public Accountants at the
date as of which this Indenture is executed and a certificate to such effect is
delivered to the Trustee by the Issuer's independent public accountants.
If an Event of Default described in clauses (a), (b), (c) or (f) (if
the Event of Default under clause (c) or (f), as the case may be, is with
respect to less than all series of Securities then Outstanding) occurs and is
continuing, then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding
hereunder (voting as a single class) by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal (or,
if the Securities of any such affected series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all Securities of all such affected series, and the
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interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration, the same shall become immediately due and payable. If an
Event of Default described in clause (c) or (f) (if the Event of Default under
clause (c) or (f), as the case may be, is with respect to all series of
Securities then Outstanding), (d) or (e) occurs and is continuing, then and in
each and every such case, unless the principal of all the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of all the Securities then Outstanding
hereunder (treated as one class), by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal (or,
if any Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities then
Outstanding, and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series (or of all the Securities, as
the case may be) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained
or entered as hereinafter provided, the Issuer shall pay or shall deposit with
the Trustee a sum sufficient to pay all matured installments of interest upon
all the Securities of each such series (or of all the Securities, as the case
may be) and the principal of any and all Securities of each such series (or of
all the Securities, as the case may be) which shall have become due otherwise
than by acceleration (with interest upon such principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of each such series (or at the respective rates of interest or
Yields to Maturity of all the Securities, as the case may be) to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, its
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and if any and all Events of Default under
the Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein--then and in every such case the Holders
of a majority in aggregate principal amount of all the Securities of each such
series, or of all the Securities, as the case may be, in each case voting as a
single class, then Outstanding, by written notice to the Issuer and to the
Trustee, may waive all defaults with respect to each such series (or with
respect to all the Securities, as the case may be) and rescind and annul such
declaration and its consequences, but no
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such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal
of any Original Issue Discount Securities shall have been accelerated and
declared due and payable pursuant to the provisions hereof, then, from and
after such declaration, unless such declaration has been rescinded and
annulled, the principal amount of such Original Issue Discount Securities shall
be deemed, for all purposes hereunder, to be such portion of the principal
thereof as shall be due and payable as a result of such acceleration, and
payment of such portion of the principal thereof as shall be due and payable as
a result of such acceleration, together with interest, if any, thereon and all
other amounts owing thereunder, shall constitute payment in full of such
Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove
Debt. The Issuer covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Securities of any series
when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days or (b) in case default shall be made in
the payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether upon maturity
of the Securities of such series or upon any redemption or by declaration or
otherwise -- then upon demand of the Trustee, the Issuer will pay to the
Trustee for the benefit of the Holders of the Securities of such series the
whole amount that then shall have become due and payable on all Securities of
such series, and such Coupons, for principal or interest, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law,
on overdue installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in the Securities of such series); and in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and any expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities of any series to the registered
Holders, whether or not the Securities of such series be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the
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sums so due and unpaid, and may prosecute any such action or proceedings to
judgment or final decree, and may enforce any such judgment or final decree
against the Issuer or other obligor upon the Securities and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
the Securities, wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to
the Issuer or other obligor upon the Securities, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of the 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 pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such proceedings
or otherwise:
(a) to file and prove a claim or claims for the whole
amount of principal and interest (or, if the Securities of any series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series) owing and unpaid in respect of the
Securities of any series, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Securityholders allowed in any judicial proceedings
relative to the Issuer or other obligor upon the Securities, or to the
creditors or property of the Issuer or such other obligor,
(b) unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of the Securities of any series in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Securityholders and of the Trustee
on their behalf; and any trustee, receiver, or liquidator, custodian or other
similar official is hereby authorized by each of the Securityholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to
the
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making of payments directly to the Securityholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities of any series or Coupons appertaining to such
Securities, may be enforced by the Trustee without the possession of any of the
Securities of such series or Coupons appertaining to such Securities or the
production thereof on any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment, subject
to the payment of the expenses, disbursements and compensation of the Trustee,
each predecessor Trustee and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Securities or Coupons
appertaining to such Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Holders of the Securities or Coupons appertaining to such Securities in respect
to which such action was taken, and it shall not be necessary to make any
Holders of such Securities or Coupons appertaining to such Securities parties
to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected by the
Trustee pursuant to this Article in respect of any series shall, subject (in
the case of clauses SECOND, THIRD and FOURTH below) to the subordination
provisions hereof, be applied in the following order at the date or dates fixed
by the Trustee and, in case of the distribution of such moneys on account of
principal or interest, upon presentation of the several Securities and Coupons
appertaining to such Securities in respect of which monies have been collected
and stamping (or otherwise noting) thereon the payment, or issuing Securities
of such series in reduced principal amounts in exchange for the presented
Securities of like series if only partially paid, or upon surrender thereof if
fully paid:
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FIRST: To the payment of costs and expenses applicable to
such series in respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor Trustee and their
respective agents and attorneys and of all expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith, and all amounts owing to the Trustee under
Section 6.6;
SECOND: In case the principal of the Securities of such
series in respect of which moneys have been collected shall not have become and
be then due and payable, to the payment of interest on the Securities of such
series in default in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been collected by
the Trustee) upon the overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in such Securities, such payments to be made ratably to
the Persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series
in respect of which moneys have been collected shall have become and shall be
then due and payable, to the payment of the whole amount then owing and unpaid
upon all the Securities of such series for principal and interest, with
interest upon the overdue principal, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest at the
same rate as the rate of interest or Yield to Maturity (in the case of Original
Issue Discount Securities) specified in the Securities of such series; and in
case such moneys shall be insufficient to pay in full the whole amount so due
and unpaid upon the Securities of such series, then to the payment of such
principal and interest or Yield to Maturity, without preference or priority of
principal over interest or Yield to Maturity, or of interest or Yield to
Maturity over principal, or of any installment of interest over any other
installment of interest, or of any Security of such series over any other
Security of such series, ratably to the aggregate of such principal and accrued
and unpaid interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the
Issuer or any other Person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
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SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Trustee, then and in every such
case the Issuer and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Issuer, the Trustee and the Securityholders shall continue as though no such
proceedings had been taken.
SECTION 5.6 Limitations on Suits by Securityholders. No Holder of
any Security of any series or of any Coupon appertaining thereto shall have any
right by virtue or by availing of any provision of this Indenture to institute
any action or proceeding at law or in equity or in bankruptcy or otherwise upon
or under or with respect to this Indenture, or for the appointment of a
trustee, receiver, liquidator, custodian or other similar official or for any
other remedy hereunder, unless such Holder previously shall have given to the
Trustee written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of not less than 25% in
aggregate principal amount of the Securities of each affected series then
Outstanding (treated as a single class) shall have made written request upon
the Trustee to institute such action or proceedings in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such action
or proceeding and no direction inconsistent with such written request shall
have been given to the Trustee pursuant to Section 5.9; it being understood and
intended, and being expressly covenanted by the taker and Holder of every
Security or Coupon with every other taker and Holder and the Trustee, that no
one or more Holders of Securities of any series or Coupons appertaining to such
Securities shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights
of any other such Holder of Securities or Coupons appertaining to such
Securities, or to obtain or seek to obtain priority over or preference to any
other such Holder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Securities of the applicable series and Coupons appertaining to such
Securities. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 5.7 Unconditional Right of Securityholders to Institute
Certain Suits. Notwithstanding any other provision in this Indenture and any
provision of any Security, the right of any Holder of any Security or Coupon to
receive payment of the principal of and interest on such Security or Coupon on
or after the respective due dates expressed or provided for in such Security
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or Coupon, or to institute suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 5.6 and the last paragraph of
Section 2.9, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or Coupons 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.
No delay or omission of the Trustee or of any Holder of Securities or
Coupons to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.6, every power and remedy given
by this Indenture or by law to the Trustee or to the Holders of Securities or
Coupons may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders of Securities or Coupons.
SECTION 5.9 Control by Holders of Securities. The Holders of a
majority in aggregate principal amount of the Securities of each series
affected (with all such series voting as a single class) at the time
Outstanding 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 by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and provided further that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust committee
of directors or Responsible Officers of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions
or forebearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the Securities of all series so
affected not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
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Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the acceleration of the
maturity of any Securities as provided in Section 5.1, the Holders of a
majority in aggregate principal amount of the Securities of all series at the
time Outstanding with respect to which an Event of Default shall have occurred
and be continuing (voting as a single class) may on behalf of the Holders of
all such Securities waive any past default or Event of Default described in
Section 5.1 and its consequences, except a default in the payment of the
principal of or interest on any Security of such series or in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Security affected. In the case of any such
waiver, the Issuer, the Trustee and the Holders of all such Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed to have
been cured and not to have occurred, and any Event of Default arising therefrom
shall be deemed to have been cured, and not to have occurred for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances. The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities of any series, give notice of all
defaults with respect to that series known to the Trustee (i) if any
Unregistered Securities of that series are then Outstanding, to the Holders
thereof, by publication at least once in an Authorized Newspaper in the Borough
of Manhattan, The City of New York and at least once in an Authorized Newspaper
in London (and, if required by Section 3.6, at least once in an Authorized
Newspaper in Luxembourg) and (ii) to all Holders of Securities of such series
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act of 1939, unless in each case such defaults shall have been cured
before the mailing or publication of such notice (the term "defaults" for the
purpose of this Section being hereby defined to mean any event or condition
which is, or with notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in the payment of the
principal of or interest on any of the Securities of such series, or in the
payment of any sinking fund installment on 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 trust committee of directors or trustees and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders of such
series.
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SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Security or Coupon
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case of
any suit relating to or arising under clause (c) or (f) of Section 5.1 (if the
suit relates to Securities of more than one but less than all series), 10% in
aggregate principal amount of Securities then Outstanding and affected thereby,
or in the case of any suit relating to or arising under clause (c) or (f) (if
the suit under clause (c) or (f) relates to all the Securities then
Outstanding), (d) or (e) of Section 5.1, 10% in aggregate principal amount of
all Securities then Outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on any Security on or after the due date expressed in such Security or
any date fixed for redemption.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee; During Default;
Prior to Default. With respect to the Holders of any series of Securities
issued hereunder, the Trustee, prior to the occurrence of an Event of Default
with respect to the Securities of a particular series and after the curing or
waiving of all Events of Default which may have occurred with respect to such
series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities of a series has occurred (which has not been cured or
waived) the Trustee shall exercise with respect to such series of Securities
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own wilful misconduct, except that
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(a) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express provisions
of this Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
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;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders pursuant to Section 5.9 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur personal financial liability
in the performance of any of its duties or in the exercise of any of its rights
or powers, if there shall be reasonable ground for believing that the repayment
of such funds or adequate indemnity against such liability is not reasonably
assured to it.
SECTION 6.2 Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, Coupon, Security or other paper or document
believed by it to
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be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel and any written advice or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in reliance thereon in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Indenture at the request, order or direction of
any of the Securityholders pursuant to the provisions of this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) 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;
(f) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all Events of Default, 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, consent,
order, approval, appraisal, bond, debenture, note, Coupon, Security, or other
paper or document unless requested in writing so to do by the Holders of not
less than a majority in aggregate principal amount of the Securities of all
series affected then Outstanding; provided that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such investigation shall be paid by the Issuer or,
if paid by the Trustee or any predecessor Trustee, shall be repaid by the
Issuer upon demand; and
(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 not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence
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on the part of any such agent or attorney appointed with due care by it
hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities
or Application of Proceeds Thereof. The recitals contained herein and in the
Securities, except the Trustee's certificates of authentication, shall be taken
as the statements of the Issuer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities or Coupons. The
Trustee shall not be accountable for the use or application by the Issuer of
any of the Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities or Coupons
with the same rights it would have if it were not the Trustee or such agent
and, subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of Section
10.4 hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim.
The Issuer covenants and agrees to pay to the Trustee from time to time, and
the Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or 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 of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Issuer also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it 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 this Indenture or the trusts hereunder
and its duties hereunder, including the costs and expenses of defending itself
against or investigating any claim of liability in the premises. The
obligations of the Issuer under this Section to
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compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, disbursements
and advances shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Indenture. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities or Coupons,
and the Securities are hereby subordinated to such senior claim.
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc. Subject
to Sections 6.1 and 6.2, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under
the provisions of this Indenture upon the faith thereof.
SECTION 6.8 Qualification of Trustee; Conflicting Interests. If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act of 1939, 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 of 1939 and this Indenture. To the
extent permitted by such Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Securities of more than one series.
SECTION 6.9 Persons Eligible for Appointment as Trustee. The Trustee for
each series of Securities hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $5,000,000, and which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by Federal,
State or District of Columbia authority and which is otherwise eligible to act
as Trustee under Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 6.10.
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SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may at
any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer and (i) if any Unregistered
Securities of a series affected are then Outstanding, by giving notice of such
resignation to the Holders thereof, by publication at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York, and at
least once in an Authorized Newspaper in London (and, if required by Section
3.6, at least once in an Authorized Newspaper in Luxembourg), (ii) if any
Unregistered Securities of a series affected are then Outstanding, by mailing
notice of such resignation to the Holders thereof who have filed their names
and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act of 1939 at such addresses as were so furnished to the Trustee and
(iii) by mailing notice of such resignation to the Holders of then Outstanding
Registered Securities of each series affected at their addresses as they shall
appear on the registry books. Upon receiving such notice of resignation, the
Issuer shall promptly appoint a successor trustee or trustees with respect to
the applicable series by written instrument in duplicate, executed by authority
of the Board of Directors, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee or trustees. If no
successor trustee shall have been so appointed with respect to any series and
have accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Securityholder
who has been a bona fide Holder of a Security or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.12,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section 6.8
with respect to any series of Securities after written request therefor by the
Issuer or by any Securityholder who has been a bona fide Holder of a Security
or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to any
series of Securities, or shall be adjudged a
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bankrupt or insolvent, or a receiver or liquidator 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, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions of
Section 5.12, any Securityholder who has been a bona fide Holder of a Security
or Securities of such series for at least six months may on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee with
respect to such series. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series at the time Outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to any series
and any appointment of a successor trustee with respect to such series pursuant
to any of the provisions of this Section 6.10 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 6.11.
SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any successor
trustee appointed as provided in Section 6.10 shall execute and deliver to the
Issuer and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
with respect to all or any applicable series shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all rights, powers, duties and obligations with respect to such
series of its predecessor hereunder, with like effect as if originally named as
trustee for such series hereunder; but, nevertheless, on the written request of
the Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
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such rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities of one or
more (but not all) series, the Issuer, the predecessor trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor trustee with respect to
the Securities of any series as to which the predecessor trustee is not
retiring shall continue to be vested in the predecessor trustee, and 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 under
separate indentures.
No successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and Section 310(b) of the Trust Indenture Act of 1939 and eligible
under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided in this
Section 6.11, the Issuer shall give notice thereof (a) if any Unregistered
Securities of a series affected are then Outstanding, to the Holders thereof,
by publication of such notice at least once in an Authorized Newspaper in the
Borough of Manhattan, The City of New York and at least once in an Authorized
Newspaper in London (and, if required by Section 3.6, at least once in an
Authorized Newspaper in Luxembourg), (b) if any Unregistered Securities of a
series affected are then Outstanding, to the Holders thereof who have filed
their names and addresses with the Trustee pursuant to Section 313(c)(2) of the
Trust Indenture Act of 1939, by mailing such notice to such Holders at such
addresses as were so furnished to the Trustee (and the Trustee shall make such
information available to the Issuer for such purpose) and (c) to the Holders of
Registered Securities of each series affected, by mailing such notice to such
Holders at their addresses as they shall appear on the registry books. If the
acceptance of appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10. If the Issuer fails to
give such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be given at
the expense of the Issuer.
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SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of
Trustee. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of
Section 6.8 and Section 310(b) of the Trust Indenture Act of 1939 and eligible
under the provisions of Section 6.9, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the trusts
created by this Indenture any of the Securities of any series shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities of
any series shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities of such series
or in this Indenture provided that the certificate of the Trustee shall have;
provided, that the right to adopt the certificate of authentication of any
predecessor trustee or to authenticate Securities of any series in the name of
any predecessor trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13 Preferential Collection of Claims Against the Issuer. If and
when the Trustee shall be or become a creditor of the Issuer (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act of 1939 regarding the collection of claims against the
Issuer (or any such other obligor). For purposes of Section 311(b)(4) and (6)
of the Trust Indenture Act of 1939:
(a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance
or obligation which is made, drawn, negotiated or incurred by the Issuer (or
any such obligor) for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously
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constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Issuer
(or any such obligor) arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation.
SECTION 6.14 Appointment of Authenticating Agent. As long as any Securities
of a series remain Outstanding, the Trustee may, by an instrument in writing,
appoint with the approval of the Issuer an authenticating agent (the
"Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee. Whenever reference is made
in this Indenture to the authentication and delivery of Securities of any
series by the Trustee or to 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 for such series and a certificate of
authentication executed on behalf of the Trustee by such Authenticating Agent.
Such Authenticating Agent shall at all times be a corporation organized and
doing business under the laws of the United States of America or of any State,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $5,000,000 (determined as provided in
Section 6.9 with respect to the Trustee) and subject to supervision or
examination by Federal or State authority.
Any corporation into which any 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 any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business of any Authenticating Agent, shall continue to be the Authenticating
Agent with respect to all series of Securities for which it served as
Authenticating Agent without the execution or filing of any paper or any
further act on the part of the Trustee or such Authenticating Agent.
Any Authenticating Agent may at any time, and if it shall cease to be
eligible shall, resign by giving written notice of resignation to the Trustee
and to the Issuer. The Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14 with respect to one or more series of
Securities, the Trustee may upon receipt of an Issuer Order appoint a successor
Authenticating Agent and the Issuer shall provide notice of such appointment to
all Holders of Securities of such series in the
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manner and to the extent provided in Section 11.4. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent. The Issuer agrees
to pay to the Authenticating Agent for such series from time to time reasonable
compensation. The Authenticating Agent for the Securities of any series shall
have no responsibility or liability for any action taken by it as such at the
direction of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6, 6.9 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by a specified percentage in
principal amount of the Securityholders of any or all series may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such specified percentage of Securityholders 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. Proof of execution of any instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Article.
SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.
Subject to Sections 6.1 and 6.2, the execution of any instrument by a
Securityholder or his agent or proxy may be proved in the following manner:
(a) The fact and date of the execution by any Holder of any instrument may
be proved by the certificate of any notary public or other officer of any
jurisdiction authorized to take acknowledgments of deeds or administer oaths
that the Person executing such instruments acknowledged to him the execution
thereof, or by an affidavit of a witness to such execution sworn to before any
such notary or other such officer. Where such execution is by or on behalf of
any legal entity other than an individual, such certificate or affidavit shall
also constitute sufficient proof of the authority of the Person executing the
same. The fact of the holding by any Holder of an Unregistered Security of any
series, and the identifying number of such Security and the date of his holding
the same, may be proved by the production of such Security or by a certificate
executed by any trust company, bank, banker or recognized securities dealer
wherever situated satisfactory to the Trustee, if such certificate shall be
deemed by
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the Trustee to be satisfactory. Each such certificate shall be dated and shall
state that on the date thereof a Security of such series bearing a specified
identifying number was deposited with or exhibited to such trust company, bank,
banker or recognized securities dealer by the Person named in such certificate.
Any such certificate may be issued in respect of one or more Unregistered
Securities of one or more series specified therein. The holding by the Person
named in any such certificate of any Unregistered Securities of any series
specified therein shall be presumed to continue for a period of one year from
the date of such certificate unless at the time of any determination of such
holding (1) another certificate bearing a later date issued in respect of the
same Securities shall be produced, or (2) the Security of such series specified
in such certificate shall be produced by some other Person, or (3) the Security
of such series specified in such certificate shall have ceased to be
Outstanding. The fact and date of the execution of any such instrument and the
amount and numbers of Securities of any series held by the Person so executing
such instrument and the amount and numbers of any Security or Securities for
such series may also be proven in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee for such series or in any other
manner which the Trustee for such series may deem sufficient.
(b) In the case of Registered Securities, the ownership of such Securities
shall be proved by the Security register or by a certificate of the Security
registrar.
The Issuer may set a record date for purposes of determining the identify of
Holders of Registered Securities of any series entitled to vote or consent to
any action referred to in Section 7.1, which record date may be set at any time
or from time to time by notice to the Trustee, for any date or dates (in the
case of any adjournment or reconsideration) not more than 90 days nor less than
five days prior to the proposed date of such vote or consent, and thereafter,
notwithstanding any other provisions hereof, with respect to Registered
Securities of any series, only Holders of Registered Securities of such series
of record on such record date shall be entitled to so vote or give such consent
or revoke such vote or consent.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the Trustee and
any agent of the Issuer or the Trustee may deem and treat the Person in whose
name any Security shall be registered upon the Security register for such
series as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such Security
and for all other purposes; and neither the Issuer nor the Trustee nor any
agent of the Issuer or the Trustee shall be affected by any notice to the
contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the Holder of any Unregistered Security and the Holder of any
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Coupon as the absolute owner of such Unregistered Security or Coupon (whether
or not such Unregistered Security or Coupon shall be overdue) for the purpose
of receiving payment thereof or on account thereof and for all other purposes
and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary. All such payments so made to
any such Person, or upon his order, shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Unregistered Security or Coupon.
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or any other obligor on the Securities with respect to which such
determination is being made or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Issuer or
any other obligor on the Securities with respect to which such determination is
being made shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction,
consent or waiver only Securities which the Trustee knows are 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 Issuer or any other obligor upon the Securities or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in accordance
with such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above-described Persons; and, subject to Sections 6.1 and
6.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.
SECTION 7.5 Right of Revocation of Action Taken. At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 7.1, of the
taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities of any or all series, as the case may be, specified in
this Indenture in connection with such action, any Holder of a Security the
serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the
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Corporate Trust Office and upon proof of holding as provided in this Article,
revoke such action so far as concerns such Security. Except as aforesaid any
such action taken by the Holder of any Security shall be conclusive and binding
upon such Holder and upon all future Holders and owners of such Security and of
any Securities issued in exchange or substitution therefor or on registration
of transfer thereof, irrespective of whether or not any notation in regard
thereto is made upon any such Security. Any action taken by the Holders of the
percentage in aggregate principal amount of the Securities of any or all
series, as the case may be, specified in this Indenture in connection with such
action shall be conclusively binding upon the Issuer, the Trustee and the
Holders of all the Securities affected by such action.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors (which 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 from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of
1939 as in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another corporation to the Issuer, or
successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligations of the Issuer pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions as the Issuer and the Trustee shall
consider to be for the protection of the Holders of Securities or Coupons, and
to make the occurrence, or the occurrence and continuance, of a default in any
such additional covenants, restrictions, conditions or provisions an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, that in respect of
any such additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such an Event
of Default or may limit the remedies available to the Trustee upon such an
Event of Default or may limit the right of the Holders of
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a majority in aggregate principal amount of the Securities of such series to
waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make any other provisions as the Issuer may deem necessary or
desirable, provided that no such action shall adversely affect the interests of
the Holders of the Securities or Coupons;
(e) to establish the form or terms of Securities of any series or of the
Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3;
and
(f) 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, pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Securities at the
time Outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series affected by such supplemental
indenture (voting as one class), the Issuer, when authorized by a resolution of
its Board of Directors (which 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, from time to time and at any time, enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of execution thereof) for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Securities of each such series or of the Coupons appertaining to such
Securities; provided, that no such
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supplemental indenture shall (a) extend the final maturity of any Security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof, or make the principal thereof (including any amount in respect of
original issue discount) or interest thereon payable in any coin or currency
other than that provided in the Securities and Coupons or in accordance with
the terms thereof, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof pursuant to Section 5.1 or the amount thereof provable in
bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or
11.12 or impair or affect the right of any Securityholder to institute suit for
the payment thereof or, if the Securities provide therefor, any right of
repayment at the option of the Securityholder, or modify any provisions of this
Indenture relating to the subordination of the Securities in a manner adverse
to such Holder, in each case without the consent of the Holder of each Security
so affected, or (b) reduce the aforesaid percentage of Securities of any
series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected.
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 one or more particular series of Securities, or which modifies the
rights of Holders of Securities of such series, or of Coupons appertaining to
such Securities, with respect to such covenant or provision, shall be deemed
not to affect the rights under this Indenture of the Holders of Securities of
any other series or of the Coupons appertaining to such Securities.
Upon the request of the Issuer, accompanied by a copy of a resolution of the
Board of Directors (which 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) certified by the
secretary or an assistant secretary of the Issuer authorizing the execution of
any such supplemental indenture, and upon the filing with the Trustee of
evidence of the consent of the Holders of the Securities as aforesaid and other
documents, if any, required by Section 7.1, the Trustee shall join with the
Issuer in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
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Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof (i) to the Holders of then Outstanding Registered
Securities of each series affected thereby, by mailing a notice thereof by
first-class mail to such Holders at their addresses as they shall appear on the
Security register, (ii) if any Unregistered Securities of a series affected
thereby are then Outstanding, to the Holders thereof who have filed their names
and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act of 1939, by mailing a notice thereof by first-class mail to such
Holders at such addresses as were so furnished to the Trustee and (iii) if any
Unregistered Securities of a series affected thereby are then Outstanding, to
all Holders thereof, by publication of a notice thereof at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and at
least once in an Authorized Newspaper in London (and, if required by Section
3.6, at least once in an Authorized Newspaper in Luxembourg), and in each case
such notice shall set forth in general terms the substance of such
supplemental indenture. Any failure of the Issuer to give such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
of each series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 8.4 Documents to Be Given to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, may receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article Eight complies with the applicable provisions
of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture or as to any action taken by
Securityholders. If the Issuer or the Trustee shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Issuer,
authenticated by the
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Trustee and delivered in exchange for the Securities of such series then
Outstanding.
SECTION 8.6 Subordination Unimpaired. This Indenture may not be amended to
alter the subordination of any of the Outstanding Securities without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., only on Certain Terms.
The Issuer shall not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the Issuer
is merged or the Person which acquires by conveyance, transfer or lease the
properties and assets of the Issuer substantially as an entirety shall
expressly assume, by a supplemental indenture hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and interest on all the Securities and Coupons, if any,
according to their tenor, and the performance of every covenant of this
Indenture on the part of the Issuer to be performed or observed;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(c) the Issuer has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such transaction
have been complied with; and
(d) the Issuer has delivered to the Trustee such other documents as the
Trustee may, in its discretion, reasonably require.
SECTION 9.2 Successor Corporation Substituted. In case of any such
consolidation, merger, sale, lease or conveyance, and following such an
assumption by the successor Person, such successor Person shall succeed to and
be substituted for the Issuer, with the same effect as if it had been named
herein. Such successor Person may cause to be signed, and may issue either in
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its own name or in the name of the Issuer prior to such succession any or all
of the Securities issuable hereunder which together with any Coupons
appertaining thereto theretofore shall not have been signed by the Issuer and
delivered to the Trustee; and, upon the order of such successor Person, instead
of the Issuer, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities together with any Coupons appertaining thereto which previously
shall have been signed and delivered by the officers of the Issuer to the
Trustee for authentication, and any Securities which such successor Person
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All of the Securities so issued together with any Coupons appertaining
thereto shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance such
changes in phrasing and form (but not in substance) may be made in the
Securities and Coupons thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by way
of lease) the Issuer or any successor Person which shall theretofore have
become such in the manner described in this Article shall be discharged from
all obligations and covenants under this Indenture and the Securities and may
be liquidated and dissolved.
ARTICLE TEN
SATISFACTION AND DISCHARGE OF
INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture. (A) If at any time
(a) the Issuer shall have paid or caused to be paid the principal of and
interest on all the Securities of any series Outstanding hereunder and all
unmatured Coupons appertaining thereto (other than Securities of such series
and Coupons appertaining thereto which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.9) as and when the
same shall have become due and payable, or (b) the Issuer shall have delivered
to the Trustee for cancellation all Securities of any series theretofore
authenticated and all unmatured Coupons appertaining thereto (other than any
Securities of such series and Coupons appertaining thereto which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.9) or (c) in the case of any series of Securities where
the exact amount (including the currency of payment) of principal of and
interest due on which can be determined at the time of making the deposit
referred to in clause (ii) below, (i) all the Securities of such series and
all unmatured Coupons
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appertaining thereto not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Issuer shall have irrevocably deposited or caused to
be deposited with the Trustee as trust funds the entire amount in cash (other
than moneys repaid by the Trustee or any paying agent to the Issuer in
accordance with Section 10.4) or, in the case of any series of Securities the
payments on which may only be made in Dollars, direct obligations of the United
States of America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or a combination thereof,
sufficient in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Securities of such series
and Coupons appertaining thereto on each date that such principal or interest
is due and payable and (B) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series; and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer with respect to the Securities of such series, then this Indenture
with respect to the Securities of such series shall cease to be of further
effect (except as to (i) rights of registration of transfer and exchange of
Securities of such series and of Coupons appertaining thereto and the Issuer's
right of optional redemption, if any, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of
Securities and Coupons appertaining thereto to receive payments of principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), and remaining rights of the Holders to receive
mandatory sinking fund payments, if any, (iv) the rights, obligations, duties
and immunities of the Trustee hereunder, (v) the rights of the Holders of
Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them, (vi) the obligations of the Issuer under Section 3.2 and
(vii) any right to receive Additional Amounts as provided in Section 3.7) and
the Trustee, on demand of the Issuer accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Issuer, shall
execute proper instruments acknowledging such satisfaction of and discharging
this Indenture with respect to the Securities of such series; provided, that
the rights of Holders of the Securities and Coupons to receive amounts in
respect of principal of and interest on the Securities and Coupons held by them
shall not be delayed longer than required by then-applicable mandatory rules or
policies of any securities exchange upon which the Securities are listed. The
Issuer agrees to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the
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Trustee in connection with this Indenture or the Securities of such series.
(B) The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers'
Certificate or indenture supplemental hereto provided pursuant to Section
2.3.In addition to discharge of the Indenture pursuant to the next preceding
paragraph, in the case of any series of Securities the exact or maximum
amounts(including the currency of payment) of principal of and interest due on
which can be determined at the time of making the deposit referred to in clause
(a) below, the Issuer shall be deemed to have paid and discharged the entire
indebtedness on all the Securities of such a series and the Coupons
appertaining thereto on the 91st day after the date of the deposit referred to
in subparagraph (a) below, and the provisions of this Indenture with respect to
the Securities of such series and Coupons appertaining thereto shall no longer
be in effect (except as to (i) rights of registration of transfer and exchange
of Securities of such series and of Coupons appertaining thereto and the
Issuer's right of optional redemption, if any, (ii) substitution of mutilated,
defaced,destroyed, lost or stolen Securities or Coupons, (iii) rights of
Holders of Securities and Coupons appertaining thereto to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the Holders to
receive mandatory sinking fund payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of the Holders
of Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them, (vi) the obligations of the Issuer under Section 3.2 and
(vii) any right to receive Additional Amounts as provided in Section 3.7) and
the Trustee, at the expense of the Issuer, shall at the Issuer's request,
execute proper instruments acknowledging the same, if
(a) with reference to this provision the Issuer has irrevocably deposited
or caused to be irrevocably deposited with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of the Securities of such series and Coupons appertaining thereto
(i) cash in an amount, or (ii) in the case of any series of Securities the
payments on which may only be made in Dollars, U.S. Government Obligations,
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(A) the principal and interest on all Securities of such series and Coupons
appertaining thereto on each date that such principal or interest is due and
payable through final maturity or earlier redemption and (B) any mandatory
sinking fund payments on the dates on which such payments are due and payable
in accordance with the terms of the Indenture and the Securities of such
series;
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(b) such deposit will not result in a breach or violation of, or constitute
a default under, any agreement or instrument to which the Issuer is a party or
by which it is bound;
(c) the Issuer has delivered to the Trustee an Opinion of Counsel based on
the fact that (x) the Issuer has received from, or there has been published by,
the Internal Revenue Service a ruling or (y) since the date hereof, there has
been a change in the applicable Federal income tax law, in either case to the
effect that, and such opinion shall confirm that, the Holders of the Securities
of such series and Coupons appertaining thereto 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 Federal income tax on the same amounts, in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;
(d) the Issuer 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 contemplated by this provision have been complied
with;
(e) no event or condition shall exist that, pursuant to the provisions of
Section 13.1, would prevent the Issuer from making payments of the principal of
or interest on the Securities of such series and Coupons appertaining thereto
on the date of such deposit or at any time during the period ending on the 91st
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(f) the Issuer has delivered to the Trustee an Opinion of Counsel to the
effect that (x) the trust funds will not be subject to any rights of holders of
Senior Indebtedness, including without limitation those arising under Article
Thirteen of this Indenture, and (y) 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, except that if a court were to rule under any such law in any case
or proceeding that the trust funds remained property of the Issuer, no opinion
is given as to the effect of such laws on the trust funds except the following:
(A) assuming such trust funds remained in the Trustee's possession prior to
such court ruling to the extent not paid to Holders of Securities of such
series and Coupons appertaining thereto, the Trustee will hold, for the benefit
of such Holders, a valid and perfected security interest in such trust funds
that is not avoidable in bankruptcy or otherwise, (B) such Holders will be
entitled to receive adequate protection of their interests in such trust funds
if such trust funds are used, and (C) no property, rights in property or other
interests granted to the Trustee or such Holders in exchange for or with
respect to any of such funds will be subject to any prior rights of holders of
Senior
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Indebtedness, including without limitation those arising under Article Thirteen
of this Indenture; and
(g) if the Securities of such series are to be redeemed, either notice of
such redemption shall have been given or the Issuer shall have given the
Trustee irrevocable directions to give notice of such redemption in the name,
and at the expense of the Issuer, under arrangements satisfactory to the
Trustee.
(C) In the case of any series of Securities the exact or maximum amounts
(including the currency of payment) of principal of and interest due on which
can be determined at the time of making the deposit referred to in clause (a)
below, the Issuer shall be released from its obligations under Section 9.1 with
respect to the Securities of any series, and any Coupons appertaining thereto,
Outstanding on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities of any
series, the Issuer may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in such Section, whether
directly or indirectly by reason of any reference elsewhere herein to such
Section or by reason of any reference in such Section to any other provision
herein or in any other document and such omission to comply shall not
constitute an Event of Default under Section 5.1, but the remainder of this
Indenture and such Securities and Coupons shall be unaffected thereby. The
following shall be the conditions to application of this subsection C of this
Section 10.1:
(a) The Issuer has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of such series and Coupons
appertaining thereto, (i) cash in an amount, or (ii) in the case of any series
of Securities the payments on which may only be made in Dollars, U.S.
Government Obligations maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal and interest on all
Securities of such series and Coupons appertaining thereto on each date that
such principal or interest is due and payable through final maturity or earlier
redemption and (B) any mandatory sinking fund payments on the day on which such
payments are due and payable in accordance with the terms of the Indenture and
the Securities of such series.
(b) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit or, insofar as
subsections 5.1(d) and (e) are concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being understood that this
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condition shall not be deemed satisfied until the expiration of such period).
(c) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest as defined in Section 310(b) and for purposes of the Trust
Indenture Act of 1939 with respect to any securities of the Issuer.
(d) Such covenant defeasance shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound.
(e) Such covenant defeasance shall not cause any Securities then listed on
any registered national securities exchange under the Securities Exchange Act
of 1934, as amended, to be delisted.
(f) No event or condition shall exist that, pursuant to the provisions of
Section 13.1, would prevent the Issuer from making payments of the principal of
or interest on the Securities of such series and Coupons appertaining thereto
on the date of such deposit or at any time during the period ending on the 91st
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(g) The Issuer shall have delivered to the Trustee an Officers'
Certificate and Opinion of Counsel to the effect that the Holders of the
Securities of such series and Coupons appertaining thereto will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such covenant defeasance had not occurred.
(h) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the covenant defeasance contemplated by this
provision have been complied with.
(i) The Issuer has delivered to the Trustee an Opinion of Counsel to the
effect that (x) the trust funds will not be subject to any rights of holders of
Senior Indebtedness, including without limitation those arising under Article
Thirteen of this Indenture, and (y) 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, except that if a court were to rule under any such law in any case
or proceeding that the trust funds remained property of the Issuer, no opinion
is given as to the effect of such laws on the trust funds except the following:
(A) assuming such trust funds remained in the Trustee's possession prior to
such court ruling to the extent not paid to Holders of
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Securities of such series and Coupons appertaining thereto, the Trustee will
hold, for the benefit of such Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or otherwise, (B) such
Holders will be entitled to receive adequate protection of their interests in
such trust funds if such trust funds are used, and (C) no property, rights in
property or other interests granted to the Trustee or such Holders in exchange
for or with respect to any of such funds will be subject to any prior rights of
holders of Senior Indebtedness, including without limitation those arising
under Article Thirteen of this Indenture.
(j) If the Securities of such series are to be redeemed, either notice of
such redemption shall have been given or the Issuer shall have given the
Trustee irrevocable directions to give notice of such redemption in the name,
and at the expense of the Issuer, under arrangements satisfactory to the
Trustee.
If subsequent to the date a discharge or covenant defeasance is effected
pursuant to this Section 10.1, Additional Amounts in excess of those
established as of the date such discharge or covenant defeasance is effected
become payable in respect of the series of Securities discharged or with
respect to which the Indenture is discharged or with respect to which a
covenant defeasance has been effected, in order to preserve the benefits of the
discharge or covenant defeasance established hereunder, the Issuer shall
irrevocably deposit or cause to be irrevocably deposited in accordance with the
provisions of this Section 10.1, within ten Business Days prior to the date the
first payment in respect of any portion of such excess Additional Amounts
becomes due, such additional funds as are necessary to satisfy the provisions
of this Section 10.1 as if a discharge or covenant defeasance were being
effected as of the date of such subsequent deposit. Failure to comply with the
requirements of this paragraph shall result in the termination of the benefits
of the discharge or covenant defeasance established by this Section 10.1.
SECTION 10.2 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 10.4, all moneys and U.S. Government
Obligations deposited with the Trustee pursuant to Section 10.1 and all moneys
received by the Trustee in respect of such U.S. Government Obligations shall be
held in trust and applied by it to the payment, either directly or through any
paying agent (including the Issuer acting as its own paying agent), to the
Holders of the particular Securities of such series and of Coupons appertaining
thereto for the payment or redemption of which such moneys and U.S. Government
Obligations have been deposited with or received by the Trustee, of all sums
due and to become due thereon for principal and interest; but such money and
U.S. Government Obligations need not be segregated from other funds except to
the extent required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture
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with respect to Securities of any series, all moneys then held by any paying
agent under the provisions of this Indenture with respect to such series of
Securities shall, upon demand of the Issuer, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for
Two Years. Any moneys deposited with or paid to the Trustee or any paying agent
for the payment of the principal of or interest on any Security of any series
or Coupons attached thereto and not applied but remaining unclaimed for two
years after the date upon which such principal or interest shall have become
due and payable, shall, upon the written request of the Issuer and unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property law, be repaid to the Issuer by the Trustee for such
series or such paying agent, and the Holder of the Securities of such series
and of any Coupons appertaining thereto shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Issuer for any payment which such Holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease; provided, however, that the
Trustee or such paying agent, before being required to make any such repayment
with respect to moneys deposited with it for any payment (a) in respect of
Registered Securities of any series, shall at the expense of the Issuer, mail
by first-class mail to Holders of such Securities at their addresses as they
shall appear on the Security register, and (b) in respect of Unregistered
Securities of any series, shall at the expense of the Issuer cause to be
published once, in an Authorized Newspaper in the Borough of Manhattan, The
City of New York and once in an Authorized Newspaper in London (and if required
by Section 3.6, once in an Authorized Newspaper in Luxembourg), notice, that
such moneys remain and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer.
SECTION 10.5 Indemnity for U.S. Government Obligations. The Issuer shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the U.S. Government Obligations deposited pursuant to
Section 10.1 or the principal or interest received in respect of such
obligations.
SECTION 10.6 Excess Funds. The Trustee shall deliver to the Issuer from
time to time upon Issuer Order any U.S. Government Obligations or money held by
it as provided in Section 10.1 which, as expressed in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may include the
applicable such opinion delivered to the Trustee pursuant to Section 10.1), are
then in excess of the amount thereof which then would have been
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required to be deposited for the purpose for which such obligations or money
were deposited or received.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer
Exempt from Individual Liability. No recourse under or upon any obligation,
covenant or agreement contained in this Indenture, or in any Security, or
because of any indebtedness evidenced thereby, shall be had against any
incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Issuer or of any successor, either
directly or through the Issuer or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities and the Coupons
appertaining thereto by the Holders thereof and as part of the consideration
for the issue of the Securities and the Coupons appertaining thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities and Coupons. Nothing in this Indenture, in
the Securities or in the Coupons appertaining thereto, expressed or implied,
shall give or be construed to give to any Person, other than the parties hereto
and their successors and the holders of Senior Indebtedness and the Holders of
the Securities or Coupons, if any, any legal or equitable right, remedy or
claim under this Indenture or under any covenant or provision herein contained,
all such covenants and provisions being for the sole benefit of the parties
hereto and their successors, the holders of the Senior Indebtedness and the
Holders of the Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture. All the
covenants, stipulations, promises and agreements in this Indenture contained by
or in behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 11.4 Notices and Demands on Issuer, Trustee and Holders of
Securities and Coupons. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Securities or Coupons to or on the Issuer may be given or served
by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Issuer is
filed by the Issuer with the Trustee) to Source One Mortgage Services
Corporation, 27555 Farmington Road, Farmington Hills, Michigan 48334,
Attention: ___________________. Any notice, direction, request or demand by
the Issuer or any Holder of Securities or Coupons to or upon the Trustee shall
be deemed to
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have been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to _____________, _______________________________, Attention: _________________.
Where this Indenture provides for notice to Holders of Registered Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
entitled thereto, at his last address as it appears in the Security register.
In any case where notice to such 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 or irregularities in regular mail
service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 11.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent have
been complied with, except that in the case of any such application or demand
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to
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enable him to express an opinion as to whether or not such covenant or
condition has been complied with and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters, information with respect to which is in the
possession of the Issuer, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with
respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with and directed to the Trustee shall contain a statement that such firm
is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays. If the date of
maturity of interest on or principal of the Securities of any series or any
Coupons appertaining thereto or the date fixed for redemption or repayment of
any such Security or Coupon shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date of maturity or the date fixed for redemption, and no interest shall accrue
for the period after such date.
SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act
of 1939. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act of 1939 which is required under such Act
to be a part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of
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the Trust Indenture Act of 1939 which may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
to be excluded, as the case may be.
SECTION 11.8 New York Law to Govern. This Indenture and each Security and
Coupon 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, except as may otherwise be required by mandatory provisions of law.
SECTION 11.9 Counterparts. This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.10 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.
SECTION 11.11 Securities in a Foreign Currency or in ECU. Unless otherwise
specified in an Officers' Certificate delivered pursuant to Section 2.3 of this
Indenture with respect to a particular series of Securities, whenever for
purposes of this Indenture any action may be taken by the Holders of a
specified percentage in aggregate principal amount of Securities of all series
or all series affected by a particular action at the time Outstanding and, at
such time, there are Outstanding Securities of any series which are denominated
in a coin or currency other than Dollars (including ECUs), then the principal
amount of Securities of such series which shall be deemed to be Outstanding for
the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate. For purposes of this
Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in
New York City for cable transfers of that currency as published by the Federal
Reserve Bank of New York; provided, however, in the case of ECUs, Market
Exchange Rate shall mean the rate of exchange determined by the Commission of
the European Communities (or any successor thereto) as published in the
Official Journal of the European Communities (such publication or any successor
publication, the "Journal"). If such Market Exchange Rate is not available for
any reason with respect to such currency, the Trustee shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York or, in the case of ECUs, the rate of exchange as
published in the Journal, as of the most recent available date, or quotations
or, in the case of ECUs, rates of exchange from one or more major banks in The
City of New York or in the country of issue of the currency in question, which
for purposes of the ECU shall be Brussels, Belgium, or such other quotations
or, in the case of ECU, rates of exchange as the Trustee shall deem
appropriate. The provisions of this paragraph shall apply in determining the
equivalent principal amount in respect of Securities of a series denominated in
a currency other than Dollars in connection with any action taken by Holders of
Securities pursuant to the terms of this Indenture.
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All decisions and determinations of the Trustee regarding the Market Exchange
Rate or any alternative determination provided for in the preceding paragraph
shall be in its sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and irrevocably
binding upon the Issuer and all Holders.
SECTION 11.12 Judgment Currency. The Issuer agrees, to the fullest extent
that it may effectively do so under applicable law, that (a) if for the purpose
of obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of or interest on the Securities of any series (the
"Required Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The
City of New York the Required Currency with the Judgment Currency on the day on
which final unappealable judgment is entered, unless such day is not a New York
Banking Day, then, to the extent permitted by applicable law, the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the New York Banking Day preceding the
day on which a final unappealable judgment is entered, and (b) its obligations
under this Indenture to make payments in the Required Currency (i) shall not be
discharged or satisfied by any tender, or any recovery pursuant to any judgment
(whether or not entered in accordance with subsection (a)), in any currency
other than the Required Currency, except to the extent that such tender or
recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required
Currency so expressed to be payable and (iii) shall not be affected by judgment
being obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or required by law or executive order to
close.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article. The provisions of this Article shall
be applicable to the Securities of any series which are redeemable before their
maturity or to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 2.3 for Securities of
such series.
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SECTION 12.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Registered Securities of any series to be redeemed
as a whole or in part at the option of the Issuer shall be given by mailing
notice of such redemption by first class mail, postage prepaid, at least 30
days and not more than 60 days prior to the date fixed for redemption to such
Holders of Securities of such series at their last addresses as they shall
appear upon the registry books. Notice of redemption to the Holders of
Unregistered Securities to be redeemed as a whole or in part, who have filed
their names and addresses with the Trustee pursuant to Section 313(c)(2) of the
Trust Indenture Act of 1939, shall be given by mailing notice of such
redemption, by first class mail, postage prepaid, at least 30 days and not more
than 60 prior to the date fixed for redemption, to such Holders at such
addresses as were so furnished to the Trustee (and, in the case of any such
notice given by the Issuer, the Trustee shall make such information available
to the Issuer for such purpose). Notice of redemption to all other Holders of
Unregistered Securities shall be published in an Authorized Newspaper in the
Borough of Manhattan, The City of New York and in an Authorized Newspaper in
London (and, if required by Section 3.6, in an Authorized Newspaper in
Luxembourg), in each case, once in each of three successive calendar weeks,
such publication to be not less than 30 nor more than 60 days prior to the date
fixed for redemption. Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the Holder of any Security of a series designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the principal
amount of each Security of such series held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the numbers of the certificate
for such Security being redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Securities and, in the
case of Securities with Coupons attached thereto, of all Coupons appertaining
thereto maturing after the date fixed for redemption, that such redemption is
pursuant to the mandatory or optional sinking fund, or both, if such be the
case, that interest accrued to the date fixed for redemption will be paid as
specified in such notice and that on and after said date interest thereon or on
the portions thereof to be redeemed will cease to accrue. In case any Security
of a series is to be redeemed in part only the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Security, a
new Security or Securities of such series in principal amount equal to the
unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed at the
option of the Issuer shall be given by the Issuer
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or, at the Issuer's request, by the Trustee in the name and at the expense of
the Issuer.
On or before the redemption date specified in the notice of redemption given
as provided in this Section, the Issuer will deposit with the Trustee or with
one or more paying agents (or, if the Issuer is acting as its own paying agent,
set aside, segregate and hold in trust as provided in Section 3.4) an amount of
money sufficient to redeem on the redemption date all the Securities of such
series so called for redemption at the appropriate redemption price, together
with accrued interest to the date fixed for redemption. The Issuer will deliver
to the Trustee at least 70 days prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Securities to
be redeemed. In case of a redemption at the election of the Issuer prior to the
expiration of any restriction on such redemption or which redemption is subject
to any condition, in each case as specified in the terms of the Securities to
be redeemed, the Issuer shall deliver to the Trustee, prior to the giving of
any notice of redemption to Holders pursuant to this Section, an Officers'
Certificate stating that such restriction or condition has been complied with.
If less than all the Securities of a series of like terms are to be redeemed,
the Trustee shall select, in such manner as it shall deem appropriate and fair,
Securities of such series to be redeemed in whole or in part. Securities may be
redeemed in part in multiples equal to the minimum authorized denomination for
Securities of such series or any multiple thereof. The Trustee shall promptly
notify the Issuer in writing of the Securities of such series selected for
redemption and, in the case of any Securities of such series 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 of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 12.3 Payment of Securities Called for Redemption. If notice of
redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date
and at the place stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption, and on and
after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said
date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue, and the unmatured Coupons, if any,
appertaining thereto shall be void, and, except as provided in Sections 6.5 and
10.4, such Securities shall cease from and after the date fixed for redemption
to be entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right
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to receive the redemption price thereof and unpaid interest to the date fixed
for redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, together with all Coupons, if any,
appertaining thereto maturing after the date fixed for redemption, said
Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest
becoming due on or prior to the date fixed for redemption shall be payable in
the case of Securities with Coupons attached thereto, to the Holders of the
Coupons for such interest upon surrender thereof, and in the case of Registered
Securities, to the Holders of such Registered Securities registered as such on
the relevant record date subject to the terms and provisions of Sections 2.3
and 2.7 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest or
Yield to Maturity (in the case of an Original Issue Discount Security) borne by
such Security.
If any Security with Coupons attached thereto is surrendered for redemption
and is not accompanied by all appurtenant Coupons maturing after the date fixed
for redemption, the surrender of such missing Coupon or Coupons may be waived
by the Issuer and the Trustee, if there be furnished to each of them such
security or indemnity as they may require to save each of them harmless.
Upon presentation of any Security redeemed in part only, the Issuer shall
execute and the Trustee shall authenticate and deliver to or on the order of
the Holder thereof, at the expense of the Issuer, a new Security or Securities
of such series, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection
for Redemption. Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in an
Officers' Certificate delivered to the Trustee at least 40 days prior to the
last date on which notice of redemption may be given as being owned of record
and beneficially by, and not pledged or hypothecated by either (a) the Issuer
or (b) an entity specifically identified in such written statement as directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Issuer.
SECTION 12.5 Mandatory and Optional Sinking Funds. The minimum amount of
any sinking fund payment provided for by the terms of the 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 the
Securities of any series is herein referred to as an "optional sinking fund
payment".
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The date on which a sinking fund payment is to be made is herein referred to as
the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment with
respect to any series of Securities in cash, the Issuer may at its option (a)
deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit
for Securities of such series (not previously so credited) redeemed by the
Issuer through any optional redemption provision contained in the terms of such
series. Securities so delivered or credited shall be received or credited by
the Trustee at the sinking fund redemption price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment date for
any series, the Issuer will deliver to the Trustee an Officers' Certificate
(which need not contain the statements required by Section 11.5) (a) specifying
the portion of the mandatory sinking fund payment to be satisfied by payment of
cash and the portion to be satisfied by credit of Securities of such series and
the basis for such credit, (b) stating that none of the Securities of such
series has theretofore been so credited, (c) stating that no defaults in the
payment of interest or Events of Default with respect to such series have
occurred (which have not been waived or cured) and are continuing and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for
cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities specified
in this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) that
the Issuer will make no optional
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sinking fund payment with respect to such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or both) to be
made in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed
$50,000 (or the equivalent thereof in any Foreign Currency or ECU) or a lesser
sum in Dollars (or the equivalent thereof in any Foreign Currency or ECU) if
the Issuer shall so request with respect to the Securities of any particular
series, such cash shall be applied on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $50,000 (or the equivalent thereof in any
Foreign Currency or ECU) or less and the Issuer makes no such request then it
shall be carried over until a sum in excess of $50,000 (or the equivalent
thereof in any Foreign Currency or ECU) is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. Securities shall be excluded from
eligibility for redemption under this Section if they are identified by
registration and certificate number in an Officers' Certificate delivered to
the Trustee at least 60 days prior to the sinking fund payment date as being
owned of record and beneficially by, and not pledged or hypothecated by either
(a) the Issuer or (b) an entity specifically identified in such Officers'
Certificate as directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer. The Trustee, in the name and
at the expense of the Issuer (or the Issuer, if it shall so request the Trustee
in writing) shall cause notice of redemption of the Securities of such series
to be given in substantially the manner provided in Section 12.2 (and with the
effect provided in Section 12.3) for the redemption of Securities of such
series in part at the option of the Issuer. The amount of any sinking fund
payments not so applied or allocated to the redemption of Securities of such
series shall be added to the next cash sinking fund payment for such series
and, together with such payment, shall be applied in accordance with the
provisions of this Section. Any and all sinking fund moneys held on the stated
maturity date of the Securities of any particular series (or earlier, if such
maturity is accelerated), which are not held for the payment or redemption of
particular Securities of such series shall be applied, together with other
moneys, if necessary, sufficient for the purpose, to the payment of the
principal of, and interest on, the Securities of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to the
Trustee in cash or shall otherwise provide for the payment of all interest
accrued to the date fixed for redemption on Securities to be redeemed on such
sinking fund payment date.
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The Trustee shall not redeem or cause to be redeemed any Securities of a
series with sinking fund moneys or give any notice of redemption of Securities
for such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
except that, where the giving of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Issuer a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default
shall occur, and any moneys thereafter paid into the sinking fund, shall,
during the continuance of such default or Event of Default, be deemed to have
been collected under Article Five and held for the payment of all such
Securities. In case such Event of Default shall have been waived as provided in
Section 5.10 or the default cured on or before the sixtieth day preceding the
sinking fund payment date in any year, such moneys shall thereafter be applied
on the next succeeding sinking fund payment date in accordance with this
Section to the redemption of such Securities.
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1 Securities and Coupons Subordinated to Senior
Indebtedness. The Issuer covenants and agrees, and each Holder of a Security
or Coupon, by his acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Securities and any Coupons and the payment of
the principal of and interest on each and all of the Securities and of any
Coupons is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
Senior Indebtedness.
In the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Issuer or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Issuer,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 13.2 that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, or (ii) there shall have occurred an event
of default (other than a default in the payment of principal or interest or
other monetary amounts due and payable) in respect of any Senior Indebtedness,
as defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such event of default shall have
continued beyond the period of grace, if any, in respect thereof, and, in the
cases of subclauses (i) and (ii) of this clause (b), such default or event of
default shall not have been
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cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Securities of any series shall have been declared
due and payable pursuant to Section 5.1 and such declaration shall not have
been rescinded and annulled as provided in Section 5.1, then:
(1) the holders of all Senior Indebtedness shall first be paid the full
amount of the Senior Indebtedness in cash, before the Holders of any of the
Securities or Coupons are entitled to receive a payment on account of the
principal of or interest on the indebtedness evidenced by the Securities or of
the Coupons, including, without limitation, any payments made pursuant to
Article Twelve;
(2) any payment by, or distribution of assets of, the Issuer of any kind
or character, whether in cash, property or securities, to which the Holders of
any of the Securities or Coupons or the Trustee would be entitled except for
the provisions of this Article shall be paid or delivered by the person making
such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of such Senior
Indebtedness or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness, before any
payment or distribution is made to the holders of the indebtedness evidenced by
the Securities or Coupons or to the Trustee under this instrument; and
(3) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Issuer of any kind or character, whether in
cash, property or securities, in respect of principal of or interest on the
Securities or in connection with any repurchase by the Issuer of the
Securities, shall be received by the Trustee or the Holders of any of the
Securities or Coupons before all Senior Indebtedness is paid in full in cash,
such payment or distribution in respect of principal of or interest on the
Securities or in connection with any repurchase by the Issuer of the Securities
shall be paid over to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the payment of
all Senior Indebtedness remaining unpaid until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness.
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<PAGE> 84
Notwithstanding the foregoing, at any time after the 91st day following
the date of deposit of cash or, in the case of Securities payable only in
Dollars, U.S. Government Obligations pursuant to Section 10.1(B) or (C)
(provided all other conditions set out in such Section shall have been
satisfied) the funds so deposited and any interest thereon will not be subject
to any rights of holders of Senior Indebtedness including, without limitation,
those arising under this Article Thirteen.
SECTION 13.2 Disputes with Holders of Certain Senior Indebtedness. Any
failure by the Issuer to make any payment on or perform any other obligation
under Senior Indebtedness, other than any indebtedness incurred by the Issuer
or assumed or guaranteed, directly or indirectly, by the Issuer for money
borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which the provisions of this Section shall
have been waived by the Issuer in the instrument or instruments by which the
Issuer incurred, assumed, guaranteed or otherwise created such indebtedness or
obligation, shall not be deemed a default or event of default under Section
13.1(b) if (i) the Issuer shall be disputing its obligation to make such
payment or perform such obligation and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Issuer which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, and (B) in the event of a
judgment that is subject to further review or appeal has been issued, the
Issuer shall in good faith be prosecuting an appeal or other proceeding for
review and a stay of execution shall have been obtained pending such appeal or
review.
SECTION 13.3 Subrogation. Subject to the payment in full of all Senior
Indebtedness, the Holders of the Securities and any Coupons shall be subrogated
(equally and ratably with the holders of all obligations of the Issuer which by
their express terms are subordinated to Senior Indebtedness of the Issuer to
the same extent as the Securities are subordinated and which are entitled to
like rights of subrogation) to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Issuer applicable to the Senior Indebtedness until all amounts owing on the
Securities and any Coupons shall be paid in full, and as between the Issuer,
its creditors other than holders of such Senior Indebtedness and the Holders,
no such payment or distribution made to the holders of Senior Indebtedness by
virtue of this Article that otherwise would have been made to the Holders shall
be deemed to be a payment by the Issuer on account of such Senior Indebtedness,
it being understood that the provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
SECTION 13.4 Obligation of Issuer Unconditional. Nothing contained in this
Article or elsewhere in this Indenture or in the
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<PAGE> 85
Securities or any Coupons is intended to or shall impair, as among the Issuer,
its creditors other than the holders of Senior Indebtedness and the Holders,
the obligation of the Issuer, which is absolute and unconditional, to pay to
the Holders the principal of and interest on the Securities and the amounts
owed pursuant to any Coupons as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Issuer other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee
or any Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article of the holders of Senior Indebtedness in respect of cash, property
or securities of the Issuer received upon the exercise of any such remedy.
Upon payment or distribution of assets of the Issuer referred to in this
Article, the Trustee and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which any such
dissolution, winding up, liquidation or reorganization proceeding affecting the
affairs of the Issuer is pending or upon a certificate of the trustee in
bankruptcy, receiver, assignee for the benefit of creditors, liquidating
trustee or agent or other person making any payment or distribution, delivered
to the Trustee or to the Holders, for the purpose of ascertaining the persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Issuer, the amount thereof or
payable thereon, the amount paid or distributed thereon and all other facts
pertinent thereto or to this Article.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Indebtedness
(or a trustee or representative on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness or a trustee or
representative on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Thirteen, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
Thirteen, and, if such evidence is not furnished, the Trustee may defer payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 13.5 Payments on Securities and Coupons Permitted. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
or Coupons shall affect the obligations of the Issuer to make, or prevent the
Issuer from making, payment of the
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<PAGE> 86
principal of or interest on the Securities and of any Coupons in accordance
with the provisions hereof and thereof, except as otherwise provided in this
Article.
SECTION 13.6 Effectuation of Subordination by Trustee. Each holder of
Securities or Coupons, by his acceptance thereof, authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 13.7 Knowledge of Trustee. (a) Notwithstanding the provisions of
this Article or any other provisions of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts (other than the fact
that the principal of and accrued interest on the Securities of any series shall
have been declared due and payable pursuant to Section 5.1 hereof) that would
prohibit the making of any payment of moneys to or by the Trustee, or the
taking of any other action by the Trustee, unless and until the Trustee shall
have received written notice thereof mailed or delivered to the Trustee at its
Corporate Trust Office from the Issuer, any Holder, any paying agent or the
holder or representative of any class of Senior Indebtedness; provided that if
at least three Business Days prior to the date upon which by the terms hereof
any such moneys may become payable for any purpose (including, without
limitation, the payment of the principal or interest on any Security or
interest on any Coupon) the Trustee shall not have received with respect to
such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such moneys and to apply the same to the purpose for
which they were received and shall not be affected by any notice to the
contrary that may be received by it within three Business Days prior to or on
or after such date.
(b) If any holder of Senior Indebtedness shall have notified the Trustee in
writing of such holder's desire to receive notice of any of the following
events and shall have provided the Trustee with an address for receipt of such
notices, the Trustee shall send notice of the following events to such holder
immediately upon the Trustee's acquisition of knowledge of any such events: (i)
the occurrence of an Event of Default hereunder, (ii) the acceleration of the
entire principal amount of any series of Securities, (iii) the execution of any
amendment or supplement to the Indenture, or (iv) the resignation or removal of
the Trustee or any change in the notice address of the Trustee.
SECTION 13.8 Trustee May Hold Senior Indebtedness. The Trustee shall be
entitled to all the rights set forth in this Article with respect to any Senior
Indebtedness at the time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 6.13 or elsewhere in this Indenture
shall deprive the Trustee of any of its rights as such holder.
SECTION 13.9 Rights of Holders of Senior Indebtedness Not Impaired. No
right of any present or future holder of any Senior Indebtedness to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Issuer or by any noncompliance
by the Issuer with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
With respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Indenture, (ii) the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture, (iii) no implied covenants or obligations shall be read into
this
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<PAGE> 87
Indenture against the Trustee and (iv) the Trustee shall not be deemed to be a
fiduciary as to such holders.
SECTION 13.10 Article Applicable to Paying Agents. In case at any time any
paying agent other than the Trustee shall have been appointed by the Issuer
and be then acting hereunder, the term "Trustee" as used in this Article shall
in such case (unless the context shall require otherwise) be construed as
extending to and including such paying agent within its meaning as fully for
all intents and purposes as if such paying agent were named in this Article in
addition to or in place of the Trustee, provided, however, that Sections 13.7
and 13.8 shall not apply to the Issuer if it acts as its own paying agent.
SECTION 13.11 Trustee; Compensation Not Prejudiced. Nothing in this Article
shall apply to claims of, or payments to, the Trustee pursuant to Section 6.6.
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 ____________, 1995.
SOURCE ONE MORTGAGE SERVICES CORPORATION
By ________________________________
Title: Chairman
[CORPORATE SEAL]
Attest:
By __________________________
Secretary
IBJ SCHRODER BANK AND TRUST COMPANY, TRUSTEE
By ________________________________
Title:
[CORPORATE SEAL]
Attest:
By _______________________
Title:
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<PAGE> 88
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of ________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides in Oakland County, Michigan; that he is the ___________ of Source One
Mortgage Services Corporation, one of the corporations described in and which
executed the above instrument; that he knows the corporate 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.
[NOTARIAL SEAL]
___________________________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of _________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides at _______________; that he is a ________________________ of
________________, one of the corporations described in and which executed the
above instrument; that he knows the corporate 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.
[NOTARIAL SEAL]
___________________________________
Notary Public
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<PAGE> 1
[Draft of September 18, 1995]
[FORM OF SUPPLEMENTAL INDENTURE FOR QUICS]
_______________________________________________________________________________
SOURCE ONE MORTGAGE SERVICES CORPORATION
AND
IBJ SCHRODER BANK & TRUST COMPANY,
AS TRUSTEE
_______________
First Supplemental Indenture
Dated as of , 1995
_______________
Supplementing the Trust Indenture
Dated as of ______________, 1995
to Provide for a
Series of Subordinated Debt Securities
_______________________________________________________________________________
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of the _____ day of _____, 1995,
between SOURCE ONE MORTGAGE SERVICES CORPORATION, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), and IBJ
SCHRODER BANK & TRUST COMPANY, a New York banking corporation, having its
principal office in The City of New York, New York, as trustee (the "Trustee");
WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture dated as of ________________, 1995 (the "Original Indenture"),
providing for the issuance by the Company from time to time of its subordinated
debt securities; and
WHEREAS, Sections 2.7 and 8.1 of the Original Indenture provide, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Original Indenture for, among other things, the purpose of setting forth
the terms of any series of Securities; and
WHEREAS, all action on the part of the Company necessary to authorize the
creation and issuance of, and to establish the form and terms of, a series of
Securities under the Original indenture consisting of $_______ principal amount
of _____% Quarterly Income Capital Securities (Subordinated Interest Deferrable
Debentures, Due 2025) (referred to herein as "QUICS") under the Original
Indenture and this First Supplemental Indenture (said Original Indenture as
supplemented by this First Supplemental Indenture being hereinafter called the
"Indenture") has been duly taken; and
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: That in order
to authorize the authentication and delivery of and to set forth the terms of
the QUICS and in consideration of the premises, of the purchase and acceptance
of the QUICS by the holders thereof, and of the sum of one dollar to it duly
paid by the Trustee at the execution of these presents, the receipt whereof is
hereby acknowledged, the Company covenants and agrees with the Trustee, for the
equal and proportionate benefit of the respective Holders from time to time of
such QUICS, as follows:
ARTICLE ONE
Definitions and Other
Provisions of General Application
SECTION 1.1 Original Definitions. Each capitalized term that is used herein
and is defined in the Original Indenture shall have the meaning specified in
the Original Indenture unless such term is otherwise defined herein.
SECTION 1.2 Additional Definitions. The following capitalized term when
used herein shall have the respective meaning hereinafter set forth.
<PAGE> 3
"Capital Stock" means any and all shares of the Company's preferred stock or
common stock or any other equity securities of the Company.
SECTION 1.3 Section References. Each reference to a particular section set
forth in this First Supplemental Indenture shall, unless the context otherwise
requires, refers to this First Supplemental Indenture.
ARTICLE TWO
Title and Terms of the QUICS
SECTION 2.1 Title of the QUICS. This First Supplemental Indenture hereby
establishes a series of Securities under the Original Indenture which shall be
known as the Company's ___% Quarterly Income Capital Securities (Subordinated
Interest Deferrable Debentures, Due 2025) (referred to herein as the "QUICS").
For purposes of the Original Indenture, the QUICS shall constitute a single
series of Securities, shall be subordinated as provided in the Indenture, and
shall be unsecured. The stated maturity of the QUICS will be __________, 2025.
SECTION 2.2 Amount and Denominations; DTC. The aggregate principal amount
of QUICS that may be issued under this First Supplemental Indenture is limited
to $100,000,000. The QUICS shall be issuable only in fully registered form
and, as permitted by Sections 2.7 and 8.1 of the Original Indenture, in
denominations of $25 and integral multiples thereof. The QUICS will initially
be issued under a book-entry system, registered in the name of The Depository
Trust Company, as depositary ("DTC"), or its nominee, which is hereby
designated as "Depository" under the Original Indenture.
SECTION 2.3 Interest Rate and Interest Payment Dates.
(a) The QUICS will bear interest at the rate of ____% per annum from November
1, 1995 until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum during such overdue period[. ; provided, however, that the QUICS will
bear interest at the rate of _____% per annum from and including
_______________, 1995 to but excluding [first day after Expiration Time] and
from and after [first day after Expiration Time] at the rate of ___% per
annum.] Interest on the QUICS will be payable quarterly (subject to deferral
as set forth herein) in arrears on March 31, June 30, September 30 and December
31 of each year (each an "Interest Payment Date"), commencing December 31, 1995
to the persons in whose names the QUICS are registered at the close of business
on the relevant record date for such interest installment, which will be the
fifteenth day of the calendar month immediately preceding the relevant Interest
Payment Date or, in the case of a Deferral Period (as described herein), the
fifteenth day
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<PAGE> 4
of the calendar month immediately preceding the Interest Payment Date for such
Deferral Period (each a "Record Date"); provided, however, that, in the event
that any Interest Payment Date shall not be a Business Day, then interest shall
be payable on the next day that is a Business Day (but without interest or
other payment in respect of any such delay), in each case with the same force
and effect as if made on such Interest Payment Date, subject to certain rights
of deferral described in Section 2.3(b) hereof. The amount of interest payable
any period will be computed on the basis of twelve 30-day months and a 360-day
year and, for any period shorter than a full quarterly interest period, will be
computed on the basis of the actual number of days elapsed in such period.
(b) The provisions of Section 2.3(a) notwithstanding, the Company shall have
the right at any time, on one or more occasions so long as an Event of Default
with respect to the QUICS has not occurred and is not continuing under the
Indenture with respect to the QUICS, to extend any payment period on the QUICS
for a period (a "Deferral Period") not to exceed 20 consecutive quarterly
interest payment periods; provided that the date on which such Deferral Period
ends must be an Interest Payment Date and must be no later than ______________,
2025 or any date on which any QUICS are fixed for redemption. On the Interest
Payment Date at the end of the Deferral Period, the Company shall pay all
interest then accrued and unpaid, which shall be compounded quarterly at the
rate of interest on the QUICS (except to the extent payment of such interest is
prohibited by law) to the date of payment, to the persons in whose names the
QUICS are registered on the Record Date for such Deferral Period. The Company
shall give the Holders of the QUICS notice of its election to defer interest
payments or to extend the Deferral period ten Business Days prior to the
earlier of (1) the next scheduled quarterly payment date and (2) the date the
Company is required to give notice of the record date of such related interest
payment to the New York Stock Exchange or other applicable self regulatory
organization or to the Holders of the QUICS, but in any event not less than two
Business Days prior to such record date. During the Deferral Period the
Company shall not declare or pay any dividend on or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its Capital Stock or make
any guaranty payment with respect to the foregoing, other than redemptions of
any series of Capital Stock of the Company pursuant to the terms of any sinking
fund provisions with respect thereto. During any Deferral period, the Company
may not (i) make any distributions, loans or guarantees for the benefit of,
(ii) purchase, defease, redeem or otherwise acquire or retire for value any
securities of or (iii) make any other investment in, any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, for the purpose of, or to enable the payment of,
directly or indirectly, dividends on any equity securities of Fund American
Enterprises, Inc. and its successors or assigns. During any Deferral Period,
the Company may continue to extend the interest payment period by extending the
Deferral Period, on one or more occasions, by notice given as aforesaid in this
paragraph (b), provided that such Deferral
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<PAGE> 5
Period, as extended, must end on an Interest Payment Date and in no event shall
the aggregate Deferral Period, as extended, exceed 20 consecutive quarterly
interest payment periods or extend beyond _______________, 2025 or any date on
which QUICS are fixed for redemption. No interest shall be due and payable
during a Deferral Period except at the end thereof.
SECTION 2.4 Redemption of QUICS. The QUICS shall not be redeemable prior to
April 30, 1999. On or after May 1, 1999, upon notice given by mailing the
same, postage prepaid, at least 30 days and not more than 60 days prior to the
date fixed for redemption, any or all of the QUICS may be redeemed by the
Company, at its option, at any time and from time to time, at a Redemption
Price equal to 100% of the principal amount of the QUICS to be redeemed plus
accrued and unpaid interest thereon to the date fixed for redemption.
SECTION 2.5 Form of QUICS. Attached hereto as Exhibit A is a form of the
definitive QUICS.
ARTICLE THREE
Additional Events of Default and Covenants
SECTION 3.1 Inapplicability of Certain Events of Default. The omission by
the Company to pay interest on the QUICS during a Deferral Period as permitted
by Section 2.1 hereof shall not constitute an Event of Default under Section
5.1 of the Original Indenture.
ARTICLE FOUR
Subordination of QUICS
SECTION 4.1 QUICS Subordinate to Senior Indebtedness. The Company for
itself, its successors and assigns, covenants and agrees, and each Holder of
QUICS issued, whether upon original issue or upon transfer or assignment
thereof, by its acceptance thereof likewise covenants and agrees, that the
payment of principal of and interest on each and all of the QUICS is hereby
expressly subordinated, to the extent and in the manner set forth in this
Article and in Article Thirteen of the Original Indenture, in right of payment
to the prior payment in full of all existing and future Senior Indebtedness of
the Company.
SECTION 4.2 Rights of Holders of Senior Indebtedness Not Impaired. No
rights of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Trustee or any Holder
of the QUICS then Outstanding, or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by any such holder, with the terms,
provisions or covenants of this First Supplemental
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<PAGE> 6
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Holders of the QUICS, without incurring
responsibility to the Holders of the QUICS and without impairing or releasing
the subordination provided in this Article or in the Original Indenture or the
obligations of the Holders of the QUICS to the holders of Senior Indebtedness,
do any one or more of the following: (i) change the manner, place or terms of
payment of, or increase the amount of, or interest rate(s) applicable to, renew
or alter, or waiver any provision of, Senior Indebtedness, or otherwise amend
or supplement in any manner Senior Indebtedness or any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
SECTION 4.3 Trustee Not Fiduciary for Holders of Senior Indebtedness. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to Holders of the QUICS of any series
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
ARTICLE FIVE
Miscellaneous Provisions
SECTION 5.1 Execution as Supplemental Indenture. This First Supplemental
Indenture is executed and shall be construed as an indenture supplemental to
the Original Indenture and, as provided in the Original Indenture, this First
Supplemental Indenture forms a part thereof. Except as herein expressly
otherwise defined, the use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture. Except as expressly amended hereby, the Original Indenture shall
continue in full force and effect in accordance with the provisions thereof and
the Original Indenture is in all respects hereby ratified and confirmed.
SECTION 5.2 Responsibility for Recitals, etc. The recitals herein and in
the QUICS (except in the Trustee's certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture or of the
-5-
<PAGE> 7
QUICS. The Trustee makes no undertaking or representations in respect of, and
shall not be responsible in any manner whatsoever for and in respect of, the
validity or sufficiency of this First Supplemental Indenture or the proper
authorization or the due execution hereof by the Company or for or in respect
of the recitals and statements contained herein, all of which recitals and
statements are made solely by the Company. The Trustee shall not be
accountable for the use or application by the Company of the QUICS or of the
proceeds thereof.
SECTION 5.3 Provisions Binding on Company's Successors. All of the
covenants, stipulations, promises and agreements made in this First
Supplemental Indenture by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 5.4 New York Contract. This First Supplemental Indenture and each
of the QUICS shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with the
laws of said State.
SECTION 5.5 Execution and Counterparts. This First Supplemental Indenture
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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 8
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.
SOURCE ONE MORTGAGE
SERVICES CORPORATION
By:
----------------------------------
Name:
Title:
ATTEST:
By:
---------------------------
(Corporate Seal)
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
----------------------------------
Name:
Title:
ATTEST:
By:
---------------------------
(Corporate Seal)
-7-
<PAGE> 9
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of ________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides in Oakland County, Michigan; that he is the ___________ of Source One
Mortgage Services Corporation, one of the corporations described in and which
executed the above instrument; that he knows the corporate 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.
[NOTARIAL SEAL]
___________________________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ of _________, 1995 before me personally came _______________, to
me personally known, who, being by me duly sworn, did depose and say that he
resides at _______________; that he is a ________________________ of
________________, one of the corporations described in and which executed the
above instrument; that he knows the corporate 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.
[NOTARIAL SEAL]
___________________________________
Notary Public
-8-
<PAGE> 10
EXHIBIT A
DEFINITIVE FORM OF QUICS
<PAGE> 1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the Registration Statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any U.S. State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, dated September 20, 1995
PROSPECTUS
SOURCE ONE
MORTGAGE SERVICES CORPORATION
OFFER TO EXCHANGE
% QUARTERLY INCOME CAPITAL SECURITIES (QUICSSM)
(SUBORDINATED INTEREST DEFERRABLE DEBENTURES, DUE 2025)
FOR
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
---------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1995, UNLESS EXTENDED.
---------------------------
Source One Mortgage Services Corporation, a Delaware corporation (together
with its subsidiaries, the "Company"), hereby offers, upon the terms and subject
to the conditions set forth in this Prospectus (the "Prospectus") and in the
accompanying Letter of Transmittal (the "Letter of Transmittal", which together
with the Prospectus, constitute the "Exchange Offer"), to exchange up to
$100,000,000 aggregate principal amount of its % Quarterly Income Capital
Securities ("QUICS") for up to 4,000,000 shares of its 8.42% Cumulative
Preferred Stock, Series A (the "Preferred Stock"), which constitute all
outstanding shares of Preferred Stock as of the date of this Prospectus.
The QUICS are offered in minimum denominations of $25 and integral multiples
thereof and the shares of Preferred Stock have a liquidation preference of $25
per share. Consequently, the Exchange Offer will be effected on a basis of $25
principal amount of QUICS for each share of Preferred Stock validly tendered and
accepted for exchange.
THE EXCHANGE OFFER IS SUBJECT TO THE CONDITION THAT A MINIMUM OF 1,000,000
SHARES OF THE PREFERRED STOCK SHALL HAVE BEEN TENDERED AND NOT WITHDRAWN PRIOR
TO THE EXPIRATION OF THE EXCHANGE OFFER. THE EXCHANGE OFFER IS ALSO SUBJECT TO
CERTAIN ADDITIONAL CONDITIONS. SEE "THE EXCHANGE OFFER -- CONDITIONS OF THE
EXCHANGE OFFER".
Pursuant to the terms of the Exchange Offer, the Company will accept for
exchange any and all shares of Preferred Stock validly tendered and not properly
withdrawn prior to 5:00 p.m., New York City time, on , 1995, or if
the Exchange Offer is extended by the Company, in its sole discretion, the
latest time and date to which the Exchange Offer is extended (the "Expiration
Time"). Tenders of shares of Preferred Stock pursuant to the Exchange Offer are
irrevocable, except that shares of Preferred Stock tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Time and,
unless theretofore accepted for exchange pursuant to the Exchange Offer, may be
withdrawn at any time after 40 business days from the date of this Prospectus. A
holder of shares of Preferred Stock who desires to tender such shares and whose
certificates for such shares are not immediately available, or who cannot comply
in a timely manner with the procedure for book-entry transfer, may tender such
shares of Preferred Stock by following the procedures for guaranteed delivery
set forth in "The Exchange Offer -- Guaranteed Delivery Procedures".
For a description of the other terms of the Exchange Offer, see "The
Exchange Offer". The Company will pay to any Soliciting Dealer (as herein
defined) a solicitation fee of $.50 per share of the Preferred Stock tendered
and accepted for exchange pursuant to the Exchange Offer, subject to certain
conditions. See "The Exchange Offer -- Fees and Expenses; Transfer Taxes".
SEE "PROSPECTUS SUMMARY -- COMPARISON OF QUICS AND PREFERRED STOCK", "RISK
FACTORS" AT PAGE 9, AND "SPECIAL FACTORS" FOR A DESCRIPTION OF THE PRINCIPAL
TERMS OF AND CERTAIN SIGNIFICANT CONSIDERATIONS RELATING TO THE EXCHANGE OFFER,
THE PREFERRED STOCK AND THE QUICS.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY STOCKHOLDER SHOULD EXCHANGE ANY OR ALL OF SUCH
STOCKHOLDER'S SHARES OF THE PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER.
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO EXCHANGE THEIR SHARES OF
THE PREFERRED STOCK AND, IF SO, HOW MANY SHARES TO EXCHANGE.
NEITHER THIS TRANSACTION NOR THESE SECURITIES HAVE BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION
NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
- --------------- (Cover continued on following page)
SMLEHMAN BROTHERS HAS APPLIED FOR A SERVICE MARK FOR QUICS.
---------------------------
THE DEALER MANAGERS FOR THE EXCHANGE OFFER ARE:
LEHMAN BROTHERS
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
---------------------------
The date of this Prospectus is , 1995
<PAGE> 2
The QUICS will mature on , 2025 and will bear interest at
an annual rate of % from November 1, 1995 (the last regular dividend payment
date with respect to the Preferred Stock) until the principal thereof becomes
due and payable. Interest on the QUICS will be payable quarterly in arrears on
March 31, June 30, September 30 and December 31, commencing December 31, 1995
(each, an "Interest Payment Date"); provided that so long as an Event of Default
(as defined herein) has not occurred and is not continuing with respect to the
QUICS, the Company will have the right at any time, on one or more occasions, to
defer interest payments on the QUICS for a period of up to 20 consecutive
quarters each (each, a "Deferral Period"), except that no Deferral Period may
extend beyond the maturity of the QUICS. No interest shall be due and payable
during a Deferral Period, but at the end of each Deferral Period the Company
shall pay all interest then accrued and unpaid on the QUICS, together with
interest thereon, compounded quarterly. Prior to the termination of any Deferral
Period, the Company may further defer quarterly interest payments by extending
the Deferral Period; provided that any such extended Deferral Period, together
with all further extensions of such Deferral Period, may not exceed 20
consecutive quarters or extend beyond the maturity of the QUICS. In the event
that the Company exercises its right to defer interest payments, the Company
shall not declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Capital Stock (as defined
herein) or make any guarantee payments with respect to the foregoing (each, a
"Capital Stock Payment") during such Deferral Period. All series of the
Company's preferred stock, common stock and any other equity securities of the
Company are referred to herein as "Capital Stock".
The Company has no current intention of exercising its right to defer
interest payments.
The QUICS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness (as defined herein) of the
Company, but senior to all Capital Stock of the Company, including the Preferred
Stock. On June 30, 1995, approximately $630.7 million of such Senior
Indebtedness was outstanding. In addition, the QUICS will also be effectively
subordinate to all existing and future obligations of the Company's
subsidiaries. On June 30, 1995, approximately $9.0 million of indebtedness of
the Company's subsidiaries not included in Senior Indebtedness was outstanding.
See "Description of QUICS -- Subordination" and "Capitalization".
The QUICS will be redeemable at the option of the Company, in whole or in
part, at any time on or after May 1, 1999 (which is the same date after which
the shares of Preferred Stock are first redeemable at the option of the
Company), at a redemption price equal to 100% of the principal amount redeemed
($25 for each $25 principal amount of QUICS) plus accrued and unpaid interest to
the date fixed for redemption. See "Description of QUICS -- Optional
Redemption".
For federal income tax purposes, the exchange of the shares of the
Preferred Stock for QUICS will be a taxable transaction. For a discussion of
this and other United States federal income tax considerations relevant to the
Exchange Offer, see "Certain United States Federal Income Tax Consequences".
The shares of Preferred Stock are listed and principally traded on the New
York Stock Exchange (the "NYSE"). On September 19, 1995, the last day before the
initial filing of the Registration Statement (as defined herein) of which this
Prospectus is a part, the reported closing sales price on the NYSE for the
Preferred Stock was $25.00 per share. On , 1995, the last day prior to
the effectiveness of the Registration Statement of which this Prospectus is a
part, the reported closing sales price on the NYSE for the Preferred Stock was
$ per share. Holders of shares of Preferred Stock are urged to obtain current
market quotations.
The QUICS constitute a new issue of debt securities with no established
trading market. While the Company intends to apply for listing of the QUICS on
the NYSE, there can be no assurance that an active market for the QUICS will
develop or be sustained in the future on the NYSE. Moreover, to the extent that
shares of the Preferred Stock are tendered and accepted in the Exchange Offer,
the liquidity and trading market for the Preferred Stock could be adversely
affected.
Lehman Brothers, Merrill Lynch & Co., PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc. (the "Dealer Managers") are acting
as Dealer Managers for the Exchange Offer. The
i
<PAGE> 3
Dealer Managers have agreed to use their best efforts to solicit the exchange of
shares of Preferred Stock pursuant to the Exchange Offer. First Chicago Trust
Company of New York (the "Exchange Agent") is acting as Exchange Agent in
connection with the Exchange Offer and D.F. King & Co., Inc. (the "Information
Agent") is acting as Information Agent in connection with the Exchange Offer.
Questions and requests for assistance may be directed to the Dealer
Managers or the Information Agent, as set forth on the back cover of this
Prospectus. Requests for additional copies of this Prospectus, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING THE
SHARES OF THE PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER. NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
THE COMPANY IS NOT AWARE OF ANY JURISDICTION IN WHICH THE MAKING OF THE
EXCHANGE OFFER IS NOT IN COMPLIANCE WITH APPLICABLE LAW. IF THE COMPANY BECOMES
AWARE OF ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER WOULD NOT BE
IN COMPLIANCE WITH APPLICABLE LAW, THE COMPANY WILL MAKE A GOOD FAITH EFFORT TO
COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD FAITH EFFORT, THE COMPANY CANNOT
COMPLY WITH ANY SUCH LAW, THE EXCHANGE OFFER WILL NOT BE MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS RESIDING IN SUCH
JURISDICTIONS. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS
REQUIRE THE EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE
EXCHANGE OFFER WILL BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY THE DEALER
MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF
SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement", which term shall encompass all amendments, exhibits, annexes and
schedules thereto) pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). The Company has filed an Issuer Tender Offer Statement on
Schedule 13E-4 (the "Schedule 13E-4", which term shall encompass all amendments,
exhibits, annexes and schedules thereto) and a Transaction Statement on Schedule
13E-3 (the "Schedule 13E-3", which term shall encompass all amendments,
exhibits, annexes and schedules thereto) with the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which include
certain additional information relating to the Exchange Offer, and the rules and
regulations promulgated thereunder, covering the QUICS being offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, the Schedule 13E-4 and the Schedule 13E-3, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission, and to which reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
The Company is subject to the information and reporting requirements of the
Exchange Act, and in accordance therewith files periodic reports and other
information with the Commission. The Registration Statement, as well as such
reports and other information filed by the Company with the Commission, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at
ii
<PAGE> 4
the regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Certain of the securities of the
Company are listed on the NYSE. Reports and other information concerning the
Company can also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
1. the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, including the pages of the Company's Annual Report to
Shareholders that have been incorporated by reference in such Annual Report
on Form 10-K (the "1994 10-K");
2. the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995; and
3. the Company's Current Reports on Form 8-K dated January 25, 1995,
January 27, 1995, February 21, 1995, February 27, 1995, March 25, 1995,
March 28, 1995, April 25, 1995, April 28, 1995, May 25, 1995, May 26, 1995,
June 26, 1995, June 27, 1995, July 21, 1995, July 25, 1995, August 21, 1995
and August 25, 1995. (All of the foregoing Current Reports on Form 8-K
contain reports with respect to distributions of certain mortgage-backed
securities issued by the Company.)
Each document filed by the Company pursuant to Section 13, 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the Exchange Offer pursuant hereto shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the date of filing of such document. Any statement contained in this
Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of the Registration Statement and this Prospectus to the extent that a
statement contained in this Prospectus, or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this Prospectus,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE INCORPORATED BY REFERENCE THEREIN) WILL BE
FURNISHED, WITHOUT CHARGE, TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED,
ON WRITTEN OR ORAL REQUEST, TO SOURCE ONE MORTGAGE SERVICES CORPORATION, 27555
FARMINGTON ROAD, FARMINGTON HILLS, MICHIGAN, 48334-3357, ATTENTION: SECRETARY
(TELEPHONE (810) 488-7000). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION TIME.
iii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................................. ii
Incorporation of Certain Documents by Reference....................................... iii
Prospectus Summary.................................................................... 1
Comparison of QUICS and Preferred Stock............................................... 7
Risk Factors.......................................................................... 10
Special Factors....................................................................... 12
The Company........................................................................... 14
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend
Requirements........................................................................ 15
Capitalization........................................................................ 15
The Exchange Offer.................................................................... 16
Market and Trading Information........................................................ 25
Transactions and Arrangements Concerning the Shares of Preferred Stock................ 26
Certain United States Federal Income Tax Consequences................................. 26
Description of QUICS.................................................................. 29
Description of the Preferred Stock.................................................... 35
Legal Opinions........................................................................ 37
Experts............................................................................... 37
</TABLE>
iv
<PAGE> 6
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information appearing elsewhere in this Prospectus
or by documents incorporated by reference into this Prospectus. Capitalized
terms used herein have the respective meanings ascribed to them elsewhere in
this Prospectus.
THE COMPANY
Source One Mortgage Services Corporation, a Delaware corporation, is a
mortgage banking firm and one of the largest mortgage servicers in the United
States based on the size of its mortgage loan servicing portfolio. At June 30,
1995, December 31, 1994 and December 31, 1993, the Company's mortgage loan
servicing portfolio totalled $28.7 billion, $39.6 billion, and $38.4 billion,
respectively. The servicing portfolio is serviced on behalf of approximately 360
institutional investors and numerous other security holders. At June 30, 1995,
the Company had 126 retail branch offices in 27 states.
The Company was incorporated on November 15, 1972. It is the successor to
Citizens Mortgage Corporation which was organized in 1946. The Company is now an
indirect wholly owned subsidiary of Fund American Enterprises Holdings, Inc., a
Delaware corporation organized in 1980, which was formerly known as "The Fund
American Companies, Inc." and "Fireman's Fund Corporation" ("Fund American").
The Company conducts the principal operating business of Fund American.
The Company's principal executive offices are located at 27555 Farmington
Road, Farmington Hills, Michigan 48334-3357; its telephone number is (810)
488-7000.
Prospective investors should carefully review the information contained
elsewhere in this Prospectus prior to making a decision regarding the Exchange
Offer and should particularly consider the following matters:
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
- The annual interest rate on the QUICS will be %, as compared with the
indicated annual dividend rate of 8.42% on the Preferred Stock. See
"Comparison of QUICS and Preferred Stock".
- The QUICS will rank senior to the shares of the Preferred Stock as to
payment in respect thereof and as to the distribution of assets upon
liquidation. However, the QUICS are unsecured obligations of the Company
and will be, and the shares of the Preferred Stock are, subordinate in
right to payment to all existing and future Senior Indebtedness of the
Company and effectively subordinated to all obligations of the Company's
subsidiaries. See "Risk Factors -- Subordination of QUICS".
- While dividends on the shares of the Preferred Stock may be deferred
indefinitely, interest payments on the QUICS can only be extended for a
maximum of 20 consecutive quarters. Failure to make an interest payment
for 20 consecutive quarters will constitute an Event of Default. In each
case, however, the Company has no current intention of exercising its
right to defer such payments. See "Risk Factors -- Right of Company to
Defer Payment of Interest" and "-- Potential Market Volatility in the
Event of a Deferred Payment of Interest".
- In order to benefit from the higher annual interest rate on the QUICS,
holders of the shares of the Preferred Stock need not pay any additional
cash. Holders of shares of the Preferred Stock wishing to participate in
the Exchange Offer must tender their shares of the Preferred Stock in
accordance with the instructions contained in "The Exchange Offer --
Procedure for Tendering Preferred Stock" and in the Letter of Transmittal
prior to the Expiration Time.
POTENTIAL RISKS TO EXCHANGING HOLDERS
- Participation in the Exchange Offer will be a taxable event. See "Certain
United States Federal Income Tax Consequences".
1
<PAGE> 7
- While dividends on the shares of the Preferred Stock are eligible for the
dividends received deduction for corporate holders, interest on the QUICS
will not be eligible for the dividends received deduction for corporate
holders. The dividends received deduction is not applicable for
individual, non-corporate holders. See "Comparison of QUICS and Preferred
Stock".
- There has not been any public market for QUICS. While the Company intends
to make an application for listing of the QUICS on the NYSE, there can be
no assurance that an active market for the QUICS will develop or be
sustained in the future on such exchange. See "Risk Factors -- Listing
and Trading of QUICS and Preferred Stock".
OTHER CONSIDERATIONS
- Depending upon the number of shares of the Preferred Stock exchanged
pursuant to the Exchange Offer, the Preferred Stock may no longer meet
the requirements of the NYSE for continued listing and may no longer
continue to be registered under the Exchange Act. As a result the
liquidity and trading market for the Preferred Stock could be adversely
affected. See "Special Factors -- Certain Effects of the Exchange Offer,
Plans of the Company after the Exchange Offer" and "Risk Factors --
Listing and Trading of QUICS and Preferred Stock".
- Tendering holders will not be obligated to pay brokerage commissions or
fees to the Dealer Managers, the Exchange Agent, the Information Agent or
the Company or, subject to the instructions in the Letter of Transmittal
with respect to special issuance instructions, transfer taxes with
respect to the exchange of shares of the Preferred Stock pursuant to the
Exchange Offer. Tendering holders whose shares are held by a broker,
dealer, bank or trust company may, however, be charged a fee for services
rendered in connection with the Exchange Offer.
2
<PAGE> 8
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing shares of Preferred Stock with the QUICS. The
potential cash flow benefit to the Company arises because interest payable on
the QUICS will be deductible by the Company (as it accrues) for United States
federal income tax purposes, while dividends payable with respect to the shares
of the Preferred Stock are not deductible. See "The Exchange Offer -- Purpose of
the Exchange Offer".
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, the
Company is offering to exchange up to $100,000,000 aggregate principal amount of
its QUICS for up to 4,000,000 shares of Preferred Stock, which constitute all
outstanding shares of the Preferred Stock as of the date of this Prospectus.
Exchanges will be made on the basis of $25 principal amount of QUICS for each
share of Preferred Stock validly tendered and accepted for exchange. See "The
Exchange Offer -- General".
Pursuant to the terms and subject to the conditions of the Exchange Offer,
the Company will accept for exchange any and all shares of Preferred Stock
validly tendered and not properly withdrawn prior to the Expiration Time.
The Exchange Offer is subject to the condition that a minimum of 1,000,000
shares of the Preferred Stock shall have been tendered and not withdrawn prior
to the Expiration Time (the "Minimum Condition") and that the QUICS shall have
been accepted for listing on the NYSE. The Exchange Offer is also subject to
certain additional conditions. See "The Exchange Offer -- Conditions of the
Exchange Offer".
SECURITIES OFFERED
The QUICS will mature on , 2025 and will bear interest at an
annual rate of % from November 1, 1995 (the last regular dividend payment date
with respect to the Preferred Stock) until the principal thereof becomes due and
payable. Interest on the QUICS will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31, commencing December 31, 1995; provided
that so long as an Event of Default has not occurred and is not continuing with
respect to the QUICS, the Company will have the right at any time, on one or
more occasions, to defer interest payments on the QUICS for periods of up to 20
consecutive quarters each, except that no Deferral Period may extend beyond the
maturity of the QUICS. No interest shall be due and payable during a Deferral
Period, but at the end of each Deferral Period the Company shall pay all
interest then accrued and unpaid on the QUICS, together with interest thereon,
compounded quarterly. Prior to the termination of any Deferral Period, the
Company may further defer quarterly interest payments by extending the Deferral
Period; provided that any such extended Deferral Period, together with all
further extensions of such Deferral Period, may not exceed 20 consecutive
quarters or extend beyond the maturity of the QUICS. In the event that the
Company exercises its right to defer interest payments, the Company shall not
make any Capital Stock Payments during such Deferral Period.
The Company has no current intention of exercising its right to defer
interest payments. However, if the Company were to exercise this right, the
market price of the QUICS would likely be adversely affected. A failure by the
Company to make an interest payment for 20 consecutive quarters shall constitute
an Event of Default as of the last day of such 20th consecutive quarter.
If the Company expects that interest will not be paid on any Interest
Payment Date, the Company shall give the holders of the QUICS and the Trustee
(as defined herein) written notice prior to the earlier of (i) such Interest
Payment Date and (ii) the date the Company is required to give notice of the
record date of such interest payment to the NYSE or other applicable
self-regulatory organization or the holders of the QUICS, but in any event such
notice shall be given not less than two Business Days prior to the record date.
See "Description of QUICS -- Quarterly Payments" and "-- Payment Deferral".
3
<PAGE> 9
The QUICS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness of the Company, but senior to all
Capital Stock of the Company, including the Preferred Stock. On June 30, 1995,
approximately $630.7 million of such Senior Indebtedness was outstanding. As the
QUICS will be issued by the Company, the QUICS will also be effectively
subordinate to all obligations of the Company's subsidiaries. On June 30, 1995,
approximately $9.0 million in indebtedness of the Company's subsidiaries not
included in Senior Indebtedness was outstanding. See "Description of QUICS --
Subordination".
The QUICS will be redeemable at the option of the Company, in whole or in
part, at any time on or after May 1, 1999, at a redemption price equal to 100%
of the principal amount redeemed ($25 for each $25 principal amount of QUICS)
plus accrued and unpaid interest to the date fixed for redemption. If fewer than
all the QUICS are redeemed, the Trustee shall select an appropriate and fair
manner pursuant to which the QUICS shall be redeemed. See "Description of QUICS
- -- Optional Redemption".
No appraisal rights are available to holders of shares of Preferred Stock
in connection with the Exchange Offer. See "Risk Factors -- Certain Legal
Matters; Regulatory and Foreign Approvals; No Appraisal Rights".
For federal income tax purposes, the exchange of shares of the Preferred
Stock for QUICS will be a taxable transaction. For a discussion of this and
other United States federal income tax considerations relevant to the Exchange
Offer, see "Certain United States Federal Income Tax Consequences".
EXPIRATION; EXTENSION; TERMINATION; AMENDMENT; WITHDRAWAL RIGHTS AND CONDITIONS
The Exchange Offer will expire at the Expiration Time unless the Company,
in its sole discretion, shall have extended the period during which the Exchange
Offer is open, in which event the Exchange Offer will expire at the latest time
and date as so extended by the Company. See "The Exchange Offer -- Expiration;
Extension; Termination; Amendment". Tenders of shares of Preferred Stock
pursuant to the Exchange Offer are irrevocable, except that shares of Preferred
Stock tendered pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Time and, unless theretofore accepted for exchange pursuant to
the Exchange Offer, may also be withdrawn at any time after 40 business days
from the date of this Prospectus. See "The Exchange Offer -- Withdrawal Rights".
The Exchange Offer is subject to certain conditions, including the Minimum
Condition. See "The Exchange Offer -- Conditions of the Exchange Offer".
PROCEDURES FOR TENDERING
For shares of the Preferred Stock to be validly tendered pursuant to the
Exchange Offer, (i) the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) properly completed and duly executed in accordance
with the instructions contained herein and therein, together with any required
signature guarantees, or an Agent's Message (as defined herein) in connection
with a book-entry transfer of shares of the Preferred Stock, must be received by
the Exchange Agent, at either of its addresses set forth on the back cover page
of this Prospectus and either (a) certificates for the shares of the Preferred
Stock must be received by the Exchange Agent at either address or (b) such
shares of the Preferred Stock must be transferred pursuant to the procedures for
book-entry transfer described herein and a confirmation of such book-entry
transfer must be received by the Exchange Agent, in each case prior to the
Expiration Time, or (ii) the guaranteed delivery procedures described herein
must be complied with. See "The Exchange Offer -- General" and "-- Procedure for
Tendering Preferred Stock".
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING SHARES OF THE
PREFERRED STOCK SHOULD BE SENT TO THE COMPANY, THE DEALER MANAGERS OR THE
INFORMATION AGENT. SUCH DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
4
<PAGE> 10
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose shares of Preferred Stock are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing a Letter of Transmittal and delivering its shares of
Preferred Stock, either make appropriate arrangements to register ownership of
the Preferred Stock in such owner's name or obtain a properly completed stock
power from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Time. See "The Exchange Offer -- Procedures for Tendering Preferred Stock".
GUARANTEED DELIVERY PROCEDURES
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or shares of Preferred Stock to reach the Exchange Agent
before the Expiration Time or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Exchange Offer -- Procedures
for Tendering Preferred Stock"; "-- Guaranteed Delivery Procedures".
ACCRUED DIVIDENDS
Holders of shares of Preferred Stock accepted for exchange pursuant to the
Exchange Offer will receive dividends accrued from August 1, 1995 to November 1,
1995 (the last regular dividend payment period with respect to the Preferred
Stock) on such shares of Preferred Stock. Thereafter, holders whose shares of
Preferred Stock are accepted for exchange will receive interest on the QUICS
accruing at a rate of % per annum from November 1, 1995 until the principal
thereof becomes due and payable, payable as described in "Description of QUICS
- -- Quarterly Payments".
Dividends on shares of Preferred Stock not exchanged in the Exchange Offer
will continue to accrue and be payable when, as and if declared in accordance
with their terms.
ACCEPTANCE OF SHARES AND DELIVERY OF QUICS
Subject to the terms and conditions of the Exchange Offer, including the
reservation by the Company of the right to withdraw, amend or terminate the
Exchange Offer in certain circumstances and certain other rights, the Company
will accept for exchange shares of Preferred Stock that are properly tendered in
the Exchange Offer and not withdrawn prior to the Expiration Time. Subject to
such terms and conditions, the QUICS issued pursuant to the Exchange Offer will
be issued as of November 1, 1995 and will be delivered as promptly as
practicable following the Expiration Time. See "The Exchange Offer -- General";
"-- Expiration; Extension; Termination; Amendment"; and "-- Conditions of the
Exchange Offer".
UNTENDERED SHARES OF THE PREFERRED STOCK
Holders of shares of the Preferred Stock who do not tender their shares in
the Exchange Offer will continue to hold such shares and will be entitled to all
of the rights and preferences, and will be subject to all of the limitations,
applicable thereto. Depending upon the number of shares of the Preferred Stock
exchanged pursuant to the Exchange Offer, the Preferred Stock may no longer meet
the requirements of the NYSE for continued listing and may no longer continue to
be registered under the Exchange Act. If, as a result of the exchange of shares
of the Preferred Stock pursuant to the Exchange Offer or otherwise, the shares
of the Preferred Stock no longer meet the requirements of the NYSE for continued
listing and the listing of the shares of the Preferred Stock is discontinued, or
if the shares no longer are registered under the Exchange Act, the market for
the Preferred Stock could be adversely affected. See "Special Factors -- Certain
Effects of the Exchange Offer, Plans of the Company after the Exchange Offer".
5
<PAGE> 11
DEALER MANAGERS MARKET ACTIVITY
The Dealer Managers currently plan to make a market in the QUICS following
the completion of the Exchange Offer and may buy and sell the QUICS on a "when
and if issued" basis prior to the completion of the Exchange Offer. However,
there can be no assurance that the Dealer Managers will engage in such
activities or that any active market in the QUICS will develop or be maintained.
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange
Agent in connection with the Exchange Offer. D.F. King & Co., Inc. has been
appointed as Information Agent for the Exchange Offer. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent at its addresses and telephone number set forth
on the back cover page of this Prospectus. The address and telephone number of
the Information Agent are also set forth on the back cover page of this
Prospectus.
DEALER MANAGERS
Lehman Brothers, Merrill Lynch & Co., PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc. have been retained as Dealer
Managers to solicit exchanges of Preferred Stock for QUICS. Questions with
respect to the Exchange Offer may be directed to the Dealer Managers at their
respective addresses and telephone numbers set forth on the back cover page of
this Prospectus.
FEES AND EXPENSES
The expense of soliciting tenders of shares of the Preferred Stock will be
borne by the Company. Subject to certain conditions, the Company will pay to any
Soliciting Dealer (as defined herein) a solicitation fee of $.50 per share of
the Preferred Stock tendered and accepted for exchange pursuant to the Exchange
Offer. The Company will pay all transfer taxes, if any, applicable to the
exchange of shares of the Preferred Stock pursuant to the Exchange Offer. See
"The Exchange Offer -- Fees and Expenses; Transfer Taxes".
6
<PAGE> 12
COMPARISON OF QUICS AND PREFERRED STOCK
The following is a brief summary comparison of certain of the principal
terms of the QUICS and the Preferred Stock.
<TABLE>
<CAPTION>
QUICS PREFERRED STOCK
-------------------------------- --------------------------------
<S> <C> <C>
Interest/Dividend Rate... % annual interest payable 8.42% annual dividend, payable
quarterly in arrears on March quarterly out of funds legally
31, June 30, September 30 and available therefor on February
December 31 of each year, 1, May 1, August 1 and November
commencing December 31, 1995, 1 of each year, when, as and if
subject to the Company's right declared by the Company's Board
to defer interest payments on of Directors.
the QUICS for periods of up to
20 consecutive quarters each,
except that no Deferral Period
may extend beyond the maturity
of the QUICS. No interest shall
be due and payable during a
Deferral Period, but at the end
of each Deferral Period the
Company shall pay all interest
then accrued and unpaid on the
QUICS, together with interest
thereon, compounded quarterly.
During any Deferral Period the
Company shall not make any
Capital Stock Payments. However,
the Company believes that the
exercise of its right to defer
interest payments on the QUICS
is unlikely.
Maturity................. , 2025 Not applicable. There is no
mandatory redemption or sinking
fund for the Preferred Stock.
Optional Redemption...... Redeemable at the option of the Redeemable at the option of the
Company at any time on or after Company at any time on or after
May 1, 1999, in whole or in May 1, 1999, in whole or in
part, at a redemption price part, at a redemption price
equal to 100% of the principal equal to $25 per share of
amount redeemed ($25 for each Preferred Stock plus accrued and
$25 principal amount of QUICS) unpaid dividends to the date
plus accrued and unpaid interest fixed for redemption.
to the date fixed for
redemption.
Subordination............ Unsecured obligations of the Subordinate to claims of
Company and subordinated to all creditors, including holders of
existing and future Senior the Company's outstanding debt
Indebtedness of the Company, but securities, including the QUICS,
senior to Capital Stock of the but senior to the common stock
Company, including the Preferred of the Company. Effectively
Stock. Effectively subordinated subordinated to all obligations
to all liabilities of the of the Company's subsidiaries.
Company's subsidiaries.
</TABLE>
7
<PAGE> 13
<TABLE>
<CAPTION>
QUICS PREFERRED STOCK
-------------------------------- --------------------------------
<S> <C> <C>
Voting Rights............ None Non-voting, except that if
dividends are in arrears on any
series of preferred stock of the
Company for six quarters, the
holders of all series of the
Company's preferred stock,
voting separately as a class,
are entitled to elect two
additional members of the Board
of Directors of the Company.
New York Stock Exchange Application will be made to list The shares of Preferred Stock
Listing................ the QUICS on the NYSE. are listed on the NYSE.
Original Issue The QUICS will be treated as The shares of Preferred Stock
Discount............... having been issued with original were not issued with original
issue discount. issue discount.
Dividends Received Interest on the QUICS will not Dividends on the Preferred Stock
Deduction.............. be eligible for the dividends are eligible for the dividends
received deduction for corporate received deduction for corporate
holders. The dividends received holders. The dividends received
deduction is not applicable to deduction is not applicable to
individual, non-corporate individual, non-corporate
holders. holders.
</TABLE>
8
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------------
1995(A) 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Total revenue(b)........................ $ 85,806 $ 142,493 $ 173,564 $ 118,072 $ 132,900 $ 110,150
Total expenses.......................... 53,928 137,215 111,387 100,747 90,967 83,385
--------- ---------- ---------- ---------- ---------- ----------
Income before income taxes,
extraordinary loss and cumulative
effect of accounting changes.......... 31,878 5,278 62,177 17,325 41,933 26,765
Income tax expense...................... 11,692 4,474 22,056 7,378 19,706 12,231
--------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary loss and
cumulative effect of accounting
charges............................... 20,186 804 40,121 9,947 22,227 14,534
Extraordinary loss on retirement of debt
(net of income tax benefit)........... (902) -- -- -- -- --
Cumulative effect of accounting
changes(c)............................ -- (44,296) -- (25,769) -- --
--------- ---------- ---------- ---------- ---------- ----------
Net income (loss)....................... $ 19,284 $ (43,492) $ 40,121 $ (15,822) $ 22,227 $ 14,534
========= ========== ========== ========== ========== ==========
Net income (loss) per common share:
Before extraordinary loss and
cumulative effect of accounting
changes............................. $ 5.64 $ (1.65) $ 9.48 $ 2.34 $ 7.88 $ 5.59
Net income (loss) per share............. $ 5.32 $ (14.21) $ 9.48 $ (3.73) $ 7.88 $ 5.59
Cash dividends per common share......... $ -- $ -- $ 6.39 $ 2.40 $ 2.00 $ --
OPERATING DATA
Servicing portfolio at end of period(d):
Balance (in millions)(e).............. $ 28,746 $ 39,568 $ 38,403 $ 37,312 $ 41,014 $ 35,585
Number of loans serviced(f)........... 442,352 543,428 518,972 578,883 611,253 563,503
Weighted average interest rate(f)..... 8.29% 8.14% 8.53% 9.34% 9.79% 9.90%
Percent delinquent.................... 4.90% 4.07% 4.44% 4.39% 4.58% 4.32%
Percent in process of foreclosure..... 0.79% 0.77% 0.92% 0.77% 0.74% 0.70%
Total mortgage loan production
(in millions)......................... $ 939 $ 4,586 $ 11,452 $ 7,591 $ 4,027 $ 3,194
Servicing rights acquisitions (in
millions)............................. $ -- $ 3,707 $ 6,368 $ 2,323 $ 6,756 $ 5,905
Number of employees at end of period.... 1,624 2,055 3,060 2,145 1,700 1,400
BALANCE SHEET DATA (IN THOUSANDS)
Mortgage loans receivable............... $ 354,117 $ 210,472 $1,298,506 $1,116,113 $ 797,363 $ 370,903
Loans held for investment............... 21,866 19,775 27,063 30,455 32,419 34,515
Capitalized servicing (net)(g).......... 363,756 530,450 666,666 624,657 605,396 544,939
Total assets............................ 1,135,376 1,210,012 2,647,153 2,456,898 1,962,588 1,342,101
Debt.................................... 639,664 647,251 1,959,643 1,835,909 1,337,001 1,011,257
Total liabilities....................... 751,642 733,925 2,095,153 1,924,773 1,417,728 1,077,272
Total stockholders' equity.............. 383,734 476,087 552,000 512,906 525,778 252,033
</TABLE>
- ---------------
(a) The operating results for the six month period ended June 30, 1995 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1995.
(b) Reflects a $38.2 million pretax charge in 1992 relating to the capitalized
mortgage servicing asset.
(c) The 1994 amount reflects the cumulative effect, as of January 1, 1994, of a
change in the methodology used to measure impairment of the purchased
mortgage servicing asset. The 1992 amount reflects the cumulative effect, as
of January 1, 1992, of adopting Statement of Financing Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes", and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions".
(d) Includes loans subserviced for others having a principal balance of $4,190
million and $4,294 million at June 30, 1995 and December 31, 1994,
respectively.
(e) Balance as of June 30, 1995 reflects the sale of $9.9 billion of servicing
to a third party in the first quarter of 1995.
(f) Excludes interim servicing of loans having a principal balance of $1,651
million, $4,190 million, $75 million, $1,675 million and $857 million as of
December 31, 1994, 1993, 1992, 1991 and 1990, respectively.
(g) Reflects a $68.1 million cumulative effect adjustment to the purchased
mortgage servicing rights asset as of January 1, 1994 relating to a change
in the methodology used to measure its impairment.
9
<PAGE> 15
RISK FACTORS
Prospective exchanging stockholders should carefully consider, in addition
to the other information set forth elsewhere in this Prospectus, the following
risk factors:
SUBORDINATION OF QUICS
The QUICS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness (as defined herein) of the
Company, but senior to all Capital Stock of the Company, including the Preferred
Stock. On June 30, 1995, approximately $630.7 million of such Senior
Indebtedness was outstanding. There are no terms in the QUICS that limit the
Company's ability to incur additional indebtedness, including indebtedness that
would rank senior to the QUICS. With respect to the QUICS, the Indenture (as
defined herein) does not contain any cross-defaults to any other indebtedness of
the Company, and therefore, a default with respect to, or the acceleration of,
any such indebtedness will not constitute an "Event of Default" with respect to
the QUICS. An "Event of Default" with respect to the QUICS would constitute an
"Event of Default" under certain outstanding debt agreements of the Company,
although the deferral of interest payments by the Company will constitute an
Event of Default only when and if the Company has failed to make an interest
payment with respect to 20 consecutive quarters. As the QUICS will be issued by
the Company, the QUICS will also be effectively subordinate to all obligations
of the Company's subsidiaries. On June 30, 1995, approximately $9.0 million of
indebtedness of the Company's subsidiaries not included in Senior Indebtedness
was outstanding. See "Description of QUICS" and "Capitalization".
RIGHT OF COMPANY TO DEFER PAYMENT OF INTEREST
So long as no Event of Default with respect to the QUICS has occurred and
is continuing, the Company will have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time, to defer interest
payments on the QUICS, at any time, on one or more occasions, for periods of up
to 20 consecutive quarters each, except that no Deferral Period may extend
beyond the maturity of the QUICS. No interest shall be due and payable during a
Deferral Period, but on the interest payment date at the end of each Deferral
Period the Company shall pay to the holders of record on the record date for
such interest payment date (regardless of who the holders of record may have
been on other dates during the Deferral Period) all accrued and unpaid interest
on the QUICS, together with interest thereon, compounded quarterly. In the event
that the Company exercises its right to defer interest payments, the Company may
not make any Capital Stock Payments during such Deferral Period.
Upon the termination of any Deferral Period and the payment of all interest
then due, the Company may commence a new Deferral Period. Consequently, there
could be multiple Deferral Periods of varying lengths throughout the term of the
QUICS. See "Description of QUICS -- Payment Deferral".
In the event a Deferral Period occurs, holders of the QUICS would continue,
under the original issue discount rules, to accrue income on the QUICS for
United States federal income tax purposes. As a result, a holder ordinarily
would include such amounts in gross income in advance of the receipt of cash. A
holder that disposes of its QUICS prior to the record date for payment of
interest at the end of a Deferral Period will not receive cash from the Company
related to such interest because such interest will be paid to the holder of
record on such record date, regardless of who the holders of record may have
been on other dates during the Deferral Period. The extent to which such a
holder will receive a return on the QUICS for the period it held such QUICS will
depend on the market for the QUICS at the time of such disposition. See "Certain
United States Federal Income Tax Consequences -- Original Issue Discount, Market
Discount and Acquisition Premium".
The Company has no current intention of exercising its right to defer
interest payments on the QUICS.
POTENTIAL MARKET VOLATILITY IN THE EVENT OF A DEFERRED PAYMENT OF INTEREST
As described above, the Company has the right to defer interest payments on
the QUICS, at any time, on one or more occasions, for periods of up to 20
consecutive quarters each, except that no Deferral Period may
10
<PAGE> 16
extend beyond the maturity of the QUICS. In the event the Company determines to
defer such interest payments, or in the event the Company thereafter extends a
Deferral Period, the market price of the QUICS is likely to be adversely
affected. In addition, as a result of such rights, the market price of the QUICS
may be more volatile than other debt instruments that do not have such rights. A
holder that disposes of its QUICS during a Deferral Period, therefore, may not
receive the same return on its investment as a holder that continues to hold its
QUICS. A failure by the Company to make an interest payment for 20 consecutive
quarters shall constitute an Event of Default as of the last day of such 20th
consecutive quarter.
CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO APPRAISAL RIGHTS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its exchange
of shares of the Preferred Stock for QUICS as contemplated in the Exchange Offer
or of any approval or other action by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the Company's exchange for or ownership of shares of the
Preferred Stock pursuant to the Exchange Offer. Should any such approval or
other action be required, the Company currently contemplates that it will seek
such approval or other action. The Company cannot predict whether it may
determine that it is required to delay the acceptance for exchange of, or
exchange for, shares of the Preferred Stock tendered pursuant to the Exchange
Offer pending the outcome of any such matter. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company intends to make all required filings under the Exchange
Act and state securities laws.
There is no stockholder vote required in connection with the Exchange Offer
and proxies are not being solicited.
No appraisal rights are available to holders of shares of the Preferred
Stock in connection with the Exchange Offer.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the exchange of the shares of the
Preferred Stock for QUICS will be a taxable transaction. While dividends on the
shares of the Preferred Stock are eligible for the dividends received deduction
for corporate holders, interest on the QUICS will not be eligible for the
dividends received deduction for corporate holders. The dividends received
deduction is not applicable to individual, non-corporate holders. For a
discussion of these and other United States federal income tax considerations
relevant to the Exchange Offer, see "Certain United States Federal Income Tax
Consequences".
LISTING AND TRADING OF QUICS AND PREFERRED STOCK
The exchange of shares of the Preferred Stock pursuant to the Exchange
Offer will reduce the number of shares of the Preferred Stock that might
otherwise trade publicly and the number of holders of such shares, and depending
on the number of shares exchanged, could adversely affect the liquidity and
market value of the remaining shares held by the public.
Depending upon the number of shares of the Preferred Stock exchanged
pursuant to the Exchange Offer, the Preferred Stock may no longer meet the
requirements of the NYSE for continued listing. As of the date of this
Prospectus, there were 4,000,000 issued and outstanding shares of the Preferred
Stock, record holders of the Preferred Stock and approximately
beneficial holders of the Preferred Stock. According to the NYSE's published
guidelines, the NYSE would consider delisting the Preferred Stock if, among
other things, the number of publicly held shares of the Preferred Stock should
fall below 100,000 or the aggregate market value of publicly held shares of the
Preferred Stock should fall below $2,000,000. If, as a result of the exchange of
shares of the Preferred Stock pursuant to the Exchange Offer or otherwise, the
shares of the Preferred Stock no longer meet the requirements of the NYSE for
continued listing and the listing of the shares of the Preferred Stock is
discontinued, the market for the Preferred Stock could be adversely affected.
11
<PAGE> 17
In the event of the delisting of the Preferred Stock by the NYSE, it is
possible the Preferred Stock would continue to trade on another securities
exchange or in the over-the-counter market and that price quotations would be
reported by such exchange, by the NASD through the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or by other sources.
The extent of the public market for such Preferred Stock and the availability of
such quotations would, however, depend upon such factors as the number of
stockholders remaining at such time, the interest in maintaining a market in the
Preferred Stock on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
There has not been any public market for the QUICS. While the Company
intends to list the QUICS on the NYSE, there can be no assurance that an active
market for the QUICS will develop or be sustained in the future on such
exchange. Listing will depend upon the satisfaction of the NYSE's listing
requirements with respect to the QUICS, which requires a minimum of 400
beneficial holders and 1,000,000 outstanding securities. The Dealer Managers
currently plan to make a market in the QUICS following the completion of the
Exchange Offer and may buy and sell the QUICS on a "when and if issued" basis
prior to the completion of the Exchange Offer. However, there can be no
assurance that the Dealer Managers will engage in such activities or that any
active market in the QUICS will develop or be maintained. Accordingly, no
assurance can be given as to the liquidity of, or trading for, the QUICS.
SPECIAL FACTORS
PURPOSE OF THE EXCHANGE OFFER
The Company is making the Exchange Offer because it believes that the
Exchange Offer will improve the Company's after-tax cash flow by replacing
shares of the Preferred Stock with QUICS. The potential cash flow benefit to the
Company arises because interest payable on the QUICS will be deductible by the
Company (as it accrues) for United States federal income tax purposes, while
dividends payable on the shares of the Preferred Stock are not deductible.
Because of the current interest rate environment and the tax deductible nature
of the QUICS, the Company has decided to pursue the exchange at this time. The
Company's Board of Directors (the "Board of Directors") has authorized the
Exchange Offer by a unanimous vote.
FAIRNESS OF THE EXCHANGE OFFER
The Company believes the Exchange Offer is fair to holders of shares of the
Preferred Stock. In particular, the Exchange Offer will result in the holders
obtaining a security that is senior to the Preferred Stock, that provides for a
higher interest rate than the equivalent dividend on the Preferred Stock and
that provides for a definitive maturity date. The Exchange Offer does not
require that a majority of unaffiliated security holders approve the Exchange
Offer and such approval is not being sought.
In considering the fairness of the Exchange Offer, the Company considered
the following factors: (i) claims in respect of the QUICS will rank senior to
claims in respect of the Preferred Stock in the event of the Company's
bankruptcy; (ii) holders of shares of the Preferred Stock have no conversion,
preemption or other similar equity-related rights that they will give up in the
Exchange Offer; (iii) the QUICS are expected to bear an interest rate which will
be somewhat greater than the current dividend yield on the Preferred Stock; and
(iv) the holders of the Preferred Stock are already investors in the Company and
the Exchange Offer is voluntary. Finally, the Company has had publicly-traded
securities outstanding for approximately nine years and has at all times made
interest and dividend payments when those payments were due. The Company did not
assign any particular weight to any specific foregoing factor in relation to the
other factors. Based on the foregoing, the Company's management recommended the
Exchange Offer to the Board of Directors and the Board of Directors authorized
the Exchange Offer by a unanimous vote. The Board of Directors did not
independently undertake any further analysis of any of the foregoing factors or
adopt any specific resolution to the effect that the Exchange Offer is fair to
holders of the shares of the Preferred Stock in light of management's
recommendation and the fact that the Preferred Stock has non-equity economic
characteristics. Neither the Company nor the Board of Directors received any
report, opinion (other than certain opinions of counsel relating to the validity
of the QUICS and the corporate authority to make the Exchange Offer) or
12
<PAGE> 18
appraisal which is materially related to the Exchange Offer, including, but not
limited to, any such report, opinion or appraisal relating to the consideration
or the fairness of the consideration to be offered to the holders of the shares
of the Preferred Stock or the fairness of such transaction to the Company.
A majority of the directors who are not employees of the Company have
approved the Exchange Offer, although they have not retained any unaffiliated
representative to act solely on behalf of unaffiliated stockholders for the
purposes of negotiating or preparing a report reviewing the terms of the
Exchange Offer. Neither the Company nor the Board of Directors considered other
procedural safeguards in determining the fairness of the Exchange Offer.
The determination of the interest rate paid on the QUICS was based on the
fact that the QUICS would have a structurally senior position to the Preferred
Stock and on current market conditions, in light of the dividend rate on the
shares of the Preferred Stock and dividend rates for debt issued by similarly
rated companies.
CERTAIN EFFECTS OF THE EXCHANGE OFFER, PLANS OF THE COMPANY AFTER THE EXCHANGE
OFFER
Following the consummation of the Exchange Offer, the business and
operations of the Company will be continued by the Company substantially as they
are currently being conducted. Except as disclosed in this Prospectus, the
Company has no present plans or proposals that would result in (i) the
acquisition by any person of any material amount of additional securities of the
Company, or the disposition of any material amount of securities of the Company,
(ii) an extraordinary corporate transaction, such as a merger, reorganization,
liquidation or sale or transfer of a material amount of assets involving the
Company or any of its subsidiaries, (iii) any change in the present Board of
Directors or management of the Company, including, but not limited to, a plan or
proposal to change the number or term of the directors, to fill any existing
vacancy on the Board of Directors or to change any material term of the
employment contract of any executive officer, (iv) any material change in the
present dividend ratio or policy or indebtedness or capitalization of the
Company (except that it is anticipated that the Company and its subsidiaries may
incur additional obligations to which the QUICS will be subordinate or
effectively subordinated), (v) any other material change in the Company's
corporate structure or business or (vi) any changes in the Company's charter,
bylaws or instruments corresponding thereto or any other actions which may
impede the acquisition or control of the Company by any person.
Following the expiration of the Exchange Offer, the Company may, in its
sole discretion, determine to purchase any remaining shares of the Preferred
Stock or of QUICS through privately negotiated transactions, open market
purchases or another exchange or tender offer or otherwise, on such terms and at
such prices as the Company may determine from time to time, the terms of which
purchases or offers could differ from those of the Exchange Offer, except that
the Company will not make any such purchases of shares of the Preferred Stock or
of QUICS until the expiration of ten business days after the termination of the
Exchange Offer. Any possible future purchases of shares of the Preferred Stock
or of QUICS by the Company will depend on many factors, including the market
prices of the shares of Preferred Stock and QUICS, the Company's business and
financial position, alternative investment opportunities available to the
Company, the results of the Exchange Offer and general economic and market
conditions.
Holders of shares of the Preferred Stock who do not tender their shares in
the Exchange Offer will continue to hold such shares and will be entitled to all
of the rights and preferences, and will be subject to all of the limitations,
applicable thereto.
Depending upon the number of shares of the Preferred Stock exchanged
pursuant to the Exchange Offer, the Preferred Stock may no longer meet the
requirements of the NYSE for continued listing, which could adversely affect the
liquidity and market value of the Preferred Stock. See "Risk Factors -- Listing
and Trading of QUICS and Preferred Stock".
The Preferred Stock is currently registered under the Exchange Act.
Registration of the Preferred Stock may be terminated upon application of the
Company to the Commission pursuant to Section 12(g)(4) of the Exchange Act if
the shares of the Preferred Stock are neither held by 300 or more holders of
record nor listed
13
<PAGE> 19
on a national securities exchange. Termination of registration of the Preferred
Stock under the Exchange Act would substantially reduce the information required
to be furnished by the Company to the holders of shares of Preferred Stock
(although the Company would, among other things, remain subject to the reporting
obligations under the Exchange Act as a result of its issuance of the QUICS) and
would make certain provisions of the Exchange Act, such as the requirements of
Rule 13e-3 thereunder with respect to "going private" transactions, no longer
applicable in respect of the Preferred Stock.
All shares of the Preferred Stock exchanged by the Company pursuant to the
Exchange Offer will be retired, canceled and thereafter returned to the status
of authorized but unissued shares of the Company's preferred stock. Any shares
of the Preferred Stock remaining outstanding after the Exchange Offer will
continue to be redeemable at the option of the Company after May 1, 1999. See
"Description of the Preferred Stock -- Optional Redemption". Upon liquidation or
dissolution of the Company, holders of shares of the Preferred Stock are
entitled to receive a liquidation preference in the amount of $25 per share plus
dividends accrued and accumulated but unpaid to the redemption date, on a parity
with holders of other Company preferred stock and prior to payment of any
amounts to the holders of the Company's common stock.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY STOCKHOLDER SHOULD EXCHANGE ANY OR ALL OF SUCH
STOCKHOLDER'S SHARES OF THE PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER.
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO EXCHANGE THEIR SHARES OF
THE PREFERRED STOCK AND, IF SO, HOW MANY SHARES TO EXCHANGE.
THE COMPANY
Source One Mortgage Services Corporation, a Delaware corporation, is a
mortgage banking firm and one of the largest mortgage servicers in the United
States based on the size of its mortgage loan servicing portfolio. At June 30,
1995, December 31, 1994 and December 31, 1993, the Company's mortgage loan
servicing portfolio totalled $28.7 billion, $39.6 billion, and $38.4 billion,
respectively. The servicing portfolio is serviced on behalf of approximately 360
institutional investors and numerous other security holders. At June 30, 1995,
the Company had 126 retail branch offices in 27 states.
The Company was incorporated on November 15, 1972. It is the successor to
Citizens Mortgage Corporation which was organized in 1946. The Company is now an
indirect wholly owned subsidiary of Fund American Enterprises Holdings, Inc., a
Delaware corporation organized in 1980, which was formerly known as "The Fund
American Companies, Inc." and "Fireman's Fund Corporation". The Company conducts
the principal operating business of Fund American.
The Company's principal executive offices are located at 27555 Farmington
Road, Farmington Hills, Michigan 48334-3357; its telephone number is (810)
488-7000.
14
<PAGE> 20
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
The Company's consolidated ratios of earnings to combined fixed charges and
preferred stock dividend requirements* were as follows for the respective
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
----------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
2.49 1.07 1.64 1.22 1.79 1.39
</TABLE>
- ---------------
* For purposes of computing these ratios, earnings represent net income before
deducting income taxes and fixed charges. Fixed charges represent total
interest charges, interest factor of rents and amortization of debt discount,
premium and deferred costs, plus the pretax effect of preferred stock dividend
requirements.
CAPITALIZATION
The following table sets forth the consolidated debt and stockholders'
equity of the Company at June 30, 1995 and as adjusted to give effect to the
issuance of QUICS in exchange for shares of the Preferred Stock. The "As
Adjusted" column below assumes that holders of 4,000,000 shares of the Preferred
Stock (which constitute all outstanding shares of the Preferred Stock) elect to
participate in the Exchange Offer. The financial data at June 30, 1995 in the
following table are derived from the Company's financial statements included in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995,
which is incorporated herein by reference. See "Incorporation of Certain
Documents by Reference".
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------------------- --------------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Commercial paper and credit
agreements............................ $ 299,167 29.23% $ 299,167 29.23%
Term debt............................... 340,497 33.27% 340,497 33.27%
Subordinated interest deferrable
debentures............................ -- -- 100,000 9.78%
---------- ------- ---------- -------
Total debt.............................. 639,664 62.50% 739,664 72.28%
---------- ------- ---------- -------
Preferred stock......................... 100,000 9.78% -- 0.00%
Common stockholders' equity............. 283,734 27.72% 283,734 27.72%
---------- ------- ---------- -------
Total stockholders' equity.............. 383,734 37.50% 283,734 27.72%
---------- ------- ---------- -------
Total capitalization............. $1,023,398 100.00% $1,023,398 100.00%
========== ======= ========== =======
</TABLE>
15
<PAGE> 21
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate principal amount of its QUICS for up to
4,000,000 shares of Preferred Stock, which constitute all outstanding shares of
Preferred Stock as of the date of this Prospectus. Pursuant to the terms and
subject to the conditions of the Exchange Offer, the Company will accept for
exchange any and all shares of Preferred Stock validly tendered and not properly
withdrawn prior to the Expiration Time.
The Exchange Offer is subject to the Minimum Condition, which requires that
a minimum of 1,000,000 shares of the Preferred Stock shall have been tendered
and not withdrawn prior to the Expiration Time and that the QUICS shall have
been accepted for listing on the NYSE. The Exchange Offer is also subject to
certain additional conditions. See "-- Conditions of the Exchange Offer".
Tendering holders will not be obligated to pay brokerage commissions or
fees to the Dealer Managers, the Exchange Agent or the Information Agent or the
Company or, subject to the instructions in the Letter of Transmittal with
respect to special issuance instructions, transfer taxes with respect to the
exchange of shares of Preferred Stock pursuant to the Exchange Offer. The
Company will pay all charges and expenses in connection with the Exchange Offer,
other than any applicable income taxes or any charges that individual brokerage
firms charge their clients for other services rendered in connection with
tendering their shares.
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing shares of Preferred Stock with the QUICS. The
potential cash flow benefit to the Company arises because interest payable on
the QUICS will be deductible by the Company (as it accrues) for United States
federal income tax purposes, while dividends payable with respect to the shares
of the Preferred Stock are not deductible.
EXPIRATION; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at the Expiration Time, unless the Company,
in its sole discretion, shall have extended the period during which the Exchange
Offer is open, in which case the term "Expiration Time" means the latest time
and date at which the Exchange Offer, as so extended by the Company, shall
expire.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to the
Exchange Agent and making a public announcement thereof. There can be no
assurance that the Company will exercise its right to extend the Exchange Offer.
During any extension of the Exchange Offer, all shares of Preferred Stock
previously tendered pursuant thereto and not exchanged or withdrawn will remain
subject to the Exchange Offer and may be accepted for exchange by the Company at
the expiration of the Exchange Offer subject to the right of a tendering holder
to withdraw its shares of Preferred Stock. See "-- Withdrawal Rights".
The Company also expressly reserves the right, subject to applicable law,
(i) to delay acceptance for exchange of any shares of Preferred Stock or
terminate the Exchange Offer and not accept for exchange any shares of Preferred
Stock and promptly return all such shares to the tendering holders thereof in
the event that the Minimum Condition or any of the conditions specified in "--
Conditions of the Exchange Offer" below are not satisfied or waived by the
Company or to comply in whole or in part with applicable law, by giving oral or
written notice of such delay or termination to the Exchange Agent, (ii) to waive
any condition to the Exchange Offer and accept all shares of Preferred Stock
previously tendered pursuant thereto, (iii) to extend the Expiration Time and
retain all shares of Preferred Stock tendered pursuant thereto until the
expiration of the Exchange Offer as extended, (iv) to amend the Exchange Offer
in any respect or (v) to modify the form or amount of the consideration to be
paid pursuant to the Exchange Offer. If the Exchange Offer is so amended, the
term "Exchange Offer" shall mean the Exchange Offer as so amended. The
reservation by the
16
<PAGE> 22
Company of the right to delay acceptance for exchange of shares of Preferred
Stock is subject to the provisions of Rule 13e-4 and Rule 14e-1(c) under the
Exchange Act, which require that the Company pay the consideration offered or
return the shares of Preferred Stock deposited by or on behalf of holders
thereof promptly after the termination or withdrawal of the Exchange Offer.
Any extension, delay, termination or amendment of the Exchange Offer will
be followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which the Company may choose to make a public
announcement of any extension, delay, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service, except in the case of an announcement of an extension of
the Exchange Offer, in which case the Company shall have no obligation to
publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled expiration
time of the Exchange Offer.
If the Company shall decide, in its sole discretion, to decrease the number
of shares of Preferred Stock being sought in the Exchange Offer or to increase
or decrease the consideration offered to holders of shares of Preferred Stock to
be paid in the Exchange Offer and if, at the time that notice of such increase
or decrease is first published, sent or given to holders of shares of Preferred
Stock in the manner specified above, the Exchange Offer is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth business
day from and including the date that such notice is first so published, sent or
given, the Exchange Offer will be extended until the expiration of such period
of ten business days. As used in this paragraph, "business day" has the meaning
set forth in Rule 14d-1 (and applicable to Regulation 14E) under the Exchange
Act.
If the Company makes a material change in the terms of the Exchange Offer
or the information concerning the Exchange Offer, or waives any condition of the
Exchange Offer that results in a material change to the circumstances of the
Exchange Offer, the Company will disseminate additional exchange offer materials
to the extent required under the Exchange Act, and will extend the Exchange
Offer to the extent required in order to permit holders of shares of Preferred
Stock adequate time to consider such materials. The minimum period during which
the Exchange Offer must remain open following material changes in the terms of
the Exchange Offer or information concerning the Exchange Offer, other than a
change in price or percentage of securities sought, will depend upon the facts
and circumstances, including the relative materiality of the terms or
information.
PROCEDURE FOR TENDERING PREFERRED STOCK
The acceptance by a holder of shares of Preferred Stock of the Exchange
Offer pursuant to one of the procedures set forth below will constitute an
agreement between the holder of such shares and the Company in accordance with
the terms and subject to the conditions set forth in this Prospectus and in the
Letter of Transmittal.
For shares of Preferred Stock to be validly tendered pursuant to the
Exchange Offer, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined herein) in connection with a book-entry transfer of
Preferred Stock, and any other required documents, must be received by the
Exchange Agent at one of its addresses set forth on the back cover page of this
Prospectus prior to the Expiration Time. In addition, either (i) the
certificates representing tendered shares of Preferred Stock must be received by
the Exchange Agent or such shares of Preferred Stock must be tendered pursuant
to the procedure for book-entry transfer described below and a confirmation of
receipt of such tendered shares of Preferred Stock must be received by the
Exchange Agent, in each case prior to the Expiration Time, or (ii) the tendering
holder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARES OF PREFERRED STOCK AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER
TENDERING SUCH SHARES AND, EXCEPT AS OTHERWISE PROVIDED HEREIN,
17
<PAGE> 23
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF SENT BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE PROPERLY INSURED
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION TIME TO PERMIT DELIVERY TO THE
EXCHANGE AGENT ON OR BEFORE THE EXPIRATION TIME.
If a holder desires to tender shares of Preferred Stock pursuant to the
Exchange Offer but is unable to locate the certificates representing such shares
to be tendered, such holder should write to or telephone the transfer agent for
the Preferred Stock, First Chicago Trust Company of New York, telephone (201)
324-0498, about procedures for obtaining replacement certificates for shares of
Preferred Stock and arranging for indemnification.
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING SHARES OF
PREFERRED STOCK SHOULD BE SENT TO THE COMPANY, THE DEALER MANAGERS OR THE
INFORMATION AGENT. SUCH DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
Any beneficial owner whose shares of Preferred Stock are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing a Letter of Transmittal and delivering its shares of
Preferred Stock, either make appropriate arrangements to register ownership of
the Preferred Stock in such owner's name or obtain a properly completed stock
power from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Time.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Preferred Stock at The Depository Trust Company, Midwest
Securities Trust Company and Philadelphia Depository Trust Company (together,
the "Depository Institutions") for the purpose of facilitating the Exchange
Offer, and, subject to the establishment thereof, any financial institution that
is a participant in a Depository Institution system may make book-entry delivery
of shares of Preferred Stock by causing such Depository Institution to transfer
such shares into the Exchange Agent's account with respect to the Preferred
Stock in accordance with such Depository Institution's procedures for such
transfer. Although delivery of shares of Preferred Stock may be effected through
book-entry transfer into the Exchange Agent's accounts at a Depository
Institution pursuant to such Depository Institution's procedures, a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and other required documents, must in each case be received
by the Exchange Agent at one of its addresses set forth on the back cover page
of this Prospectus on or prior to the Expiration Time, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. DELIVERY OF DOCUMENTS TO A DEPOSITORY
INSTITUTION IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE EXCHANGE AGENT.
The term "Agent's Message" means a message, transmitted by a Depository
Institution to, and received by, the Exchange Agent and forming a part of a
book-entry confirmation, which states that such Depository Institution has
received an express acknowledgment from the participant in such Depository
Institution tendering the Preferred Stock which are the subject of such
book-entry confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
Signature Guarantees. All signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution, unless the shares of Preferred Stock
which are the subject of such Letter of Transmittal are tendered or executed,
respectively, (i) by a registered holder (which term, for the purposes described
above, shall include any participant in a Depository Institution whose name
appears on a security position listing as the owner of Preferred Stock) of such
shares who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an
18
<PAGE> 24
Eligible Institution. If shares of Preferred Stock are registered in the name of
a person other than the signer of a Letter of Transmittal or if certificates for
QUICS and/or certificates for shares of untendered or unexchanged Preferred
Stock are to be issued or returned to a person other than the registered holder,
then the shares of Preferred Stock must be endorsed by the registered holder or
be accompanied by a stock power in form satisfactory to the Company duly
executed by the registered holder with such signatures guaranteed by an Eligible
Institution. If signatures on a Letter of Transmittal are required to be
guaranteed, such guarantees must be by a member firm of a registered national
securities exchange, a member of the NASD or by a commercial bank or trust
company having an office in the United States that is a participant in the
Security Transfer Agents Medallion Program or the Stock Exchange Medallion
Program (each of the foregoing being referred to as an "Eligible Institution").
Miscellaneous. Issuance of QUICS in exchange for shares of Preferred Stock
will be made only against deposit of the tendered shares of Preferred Stock. If
less than the total number of shares of any Preferred Stock evidenced by a
submitted certificate is tendered, the tendering holder of shares of Preferred
Stock should fill in the number of shares tendered in the appropriate boxes on
the Letter of Transmittal. The Exchange Agent will then reissue and return to
the tendering holder (unless otherwise requested by the holder under "Special
Issuance Instructions" and "Special Delivery Instructions" in the Letter of
Transmittal), as promptly as practicable following the Expiration Time, shares
of Preferred Stock equal to the number of such delivered shares of Preferred
Stock not tendered, together with any tendered shares of Preferred Stock that
were not accepted for exchange for any reason. The total number of shares of
Preferred Stock deposited with the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
All questions as to the form of all documents and the validity (including
the time of receipt), eligibility, acceptance and withdrawal of tendered shares
of Preferred Stock will be determined by the Company, in its sole discretion,
which determination shall be final and binding. The Company expressly reserves
the absolute right to reject any and all tenders not in proper form and to
determine whether the acceptance of or exchange by it for such tenders would be
unlawful. The Company also reserves the absolute right, subject to applicable
law, to waive or amend any of the conditions of the Exchange Offer or to waive
any defect or irregularity in the tender of any particular shares of Preferred
Stock. None of the Company, the Exchange Agent, the Information Agent, the
Dealer Managers or any other person will be under any duty to give notification
of any defects or irregularities in tenders or will incur any liability for
failure to give any such notification. No tender of shares of Preferred Stock
will be deemed to have been validly made until all defects and irregularities
with respect to such shares have been cured or waived. Any shares of Preferred
Stock received by the Exchange Agent that are not properly tendered and as to
which irregularities have not been cured or waived will be returned by the
Exchange Agent to the appropriate tendering holder as soon as practicable. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties.
GUARANTEED DELIVERY PROCEDURES
If a holder desires to tender shares of Preferred Stock and the holder's
shares of Preferred Stock are not immediately available or time will not permit
the holder's shares of Preferred Stock, the Letter of Transmittal or other
required documents to reach the Exchange Agent prior to the Expiration Time or
the procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
(a) the tender is made by or through an Eligible Institution; and
(b) prior to the Expiration Time, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
substantially in the form provided by the Company which contains a
signature guaranteed by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery (unless such tender is for the account
of an Eligible Institution) which sets forth the name and address of the
holder of the shares of Preferred Stock and the number of shares of
Preferred Stock tendered, states that the tender is being made thereby and
guarantees that within three NYSE trading days after the Expiration Time,
the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required
19
<PAGE> 25
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of shares of Preferred Stock, and any other documents required by
the Letter of Transmittal, together with the shares of Preferred Stock,
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) all tendered shares of Preferred Stock (or a confirmation of
book-entry transfer of such shares into the Exchange Agent's account at a
Depository Institution) as well as the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer
of shares of Preferred Stock, and any other documents required by the
Letter of Transmittal, are received by the Exchange Agent within three NYSE
trading days after the Expiration Time.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Exchange Agent and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, in all cases QUICS will only be
issued in exchange for shares of Preferred Stock accepted for exchange pursuant
to the Exchange Offer after timely receipt by the Exchange Agent of certificates
for such shares of Preferred Stock (or a confirmation of book-entry transfer of
such shares into the Exchange Agent's account at a Depository Institution as
described above), the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other required
documents.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Preferred Stock for exchange (the "Transferor")
exchanges, assigns and transfers the Preferred Stock to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Preferred Stock to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
the full power and authority to tender, exchange, assign and transfer the
Preferred Stock and to acquire QUICS issuable upon the exchange of such tendered
Preferred Stock, and that, when the same are accepted for exchange, the Company
will acquire good and unencumbered title to the tendered Preferred Stock, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Preferred Stock or transfer ownership of such Preferred Stock on the
account books maintained by a Depository Institution. All authority conferred by
the Transferor will survive the death, bankruptcy or incapacity of the
Transferor and every obligation of the Transferor shall be binding upon the
heirs, legal representatives, successors, assigns, executors and administrators
of such Transferor.
WITHDRAWAL RIGHTS
Tenders of shares of Preferred Stock pursuant to the Exchange Offer are
irrevocable, except that shares of Preferred Stock tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Time and,
unless theretofore accepted for exchange pursuant to the Exchange Offer, may
also be withdrawn at any time after 40 business days from the date of this
Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the address set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the holder. Any such notice of
withdrawal must specify (i) the holder named in the Letter of Transmittal as
having tendered Preferred Stock to be withdrawn, (ii) if the Preferred Stock is
held in certificated form, the certificate numbers of the Preferred Stock to be
withdrawn, (iii) that such holder is withdrawing its election to have such
Preferred Stock exchanged, and the name of the registered holder of such
Preferred Stock, and must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be
20
<PAGE> 26
accompanied by evidence satisfactory to the Company that the person withdrawing
the tender has succeeded to the beneficial ownership of the Preferred Stock
being withdrawn.
The Exchange Agent will return the properly withdrawn Preferred Stock
promptly following receipt of notice of withdrawal. If Preferred Stock has been
tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at the Depository
Institution to be credited with the withdrawn Preferred Stock and otherwise
comply with such Depository Institution's procedures. All questions as to the
validity of a notice of withdrawal, including the time of receipt, will be
determined by the Company, and such determination will be final and binding on
all parties. Withdrawal of tenders of Preferred Stock may not be rescinded and
any Preferred Stock withdrawn will not thereafter be deemed to be validly
tendered for the purposes of the Exchange Offer. Properly withdrawn Preferred
Stock, however, may be retendered by following the procedures therefor described
elsewhere herein at any time prior to the Expiration Time. See "-- Procedure for
Tendering Preferred Stock".
ACCEPTANCE OF PREFERRED STOCK; DELIVERY OF QUICS
The acceptance for exchange of shares of Preferred Stock validly tendered
and not properly withdrawn will be made as promptly as practicable after the
Expiration Time. The Company expressly reserves the right to terminate the
Exchange Offer and not accept for exchange any shares of Preferred Stock and
promptly return all such shares to the tendering holders thereof if the Minimum
Condition or any of the conditions specified in "-- Conditions of the Exchange
Offer" below shall not have been satisfied or waived by the Company or to comply
in whole or in part with applicable law. In addition, subject to the rules
promulgated pursuant to the Exchange Act, however, the Company expressly
reserves the right to delay acceptance of any of the shares of Preferred Stock
for exchange, to comply, in whole or in part, with any applicable law. For
purposes of the Exchange Offer, the Company will be deemed to have accepted for
exchange validly tendered and not properly withdrawn shares of Preferred Stock
if, as and when the Company gives oral or written notice thereof to the Exchange
Agent. Subject to the terms and conditions of the Exchange Offer, delivery of
QUICS for shares of Preferred Stock accepted pursuant to the Exchange Offer will
be made by the Exchange Agent as soon as practicable after receipt of such
notice. The Exchange Agent will act as agent for the tendering holders of shares
of Preferred Stock for the purposes of receiving QUICS from the Company and
transmitting the QUICS to the tendering holders. Tendered shares of Preferred
Stock not accepted for exchange by the Company, if any, will be returned without
expense to the tendering holder of such shares of Preferred Stock (or, in the
case of shares of Preferred Stock tendered by book-entry transfer into the
Exchange Agent's account at a Depository Institution, such shares will be
credited to an account maintained at such Depository Institution) as promptly as
practicable following the Expiration Time.
If the Company extends the Exchange Offer, or for any reason whatsoever,
acceptance for exchange or issuance of QUICS in exchange for any shares of
Preferred Stock tendered pursuant to the Exchange Offer is delayed, or the
Company is unable to accept for exchange or exchange shares of Preferred Stock
tendered pursuant to the Exchange Offer, then, without prejudice to the Company'
rights set forth herein, the Exchange Agent may nevertheless, on behalf of the
Company and subject to rules promulgated pursuant to the Exchange Act, retain
tendered shares of Preferred Stock and such shares may not be withdrawn except
to the extent that the tendering holder of such shares of Preferred Stock is
entitled to withdrawal rights as described above.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of a Letter of Transmittal, waive any right to
receive notice of acceptance of their shares of Preferred Stock for exchange.
ACCRUED DIVIDENDS
Holders of shares of Preferred Stock accepted for exchange pursuant to the
Exchange Offer will receive dividends accrued from August 1, 1995 to November 1,
1995 (the last regular dividend payment period with respect to the Preferred
Stock) on such shares of Preferred Stock. Thereafter, holders whose shares of
Preferred Stock are accepted for exchange will receive interest on the QUICS
accruing at a rate of % per
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<PAGE> 27
annum from November 1, 1995 until the principal thereof becomes due and payable,
payable as described in "Description of QUICS -- Quarterly Payments".
Dividends on shares of Preferred Stock not exchanged in the Exchange Offer
will continue to accrue and be payable when, as and if declared in accordance
with their terms.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or, subject to any applicable
rules and regulations of the Commission, including Rule 14e-1(c) (relating to
the Company' obligation to exchange and issue QUICS for or return tendered
shares of Preferred Stock promptly after termination of the Exchange Offer),
exchange and issue QUICS for any shares of Preferred Stock tendered and may
postpone the acceptance for exchange of or, subject to the restriction set forth
above, the exchange and issuance of, QUICS for shares of Preferred Stock
tendered and to be exchanged and may terminate or amend the Exchange Offer, if
at any time prior to the time of acceptance for exchange of, or exchange and
issuance of shares of QUICS for, any such shares of Preferred Stock (whether or
not any other shares of Preferred Stock have theretofore been accepted for
exchange or QUICS have been issued in respect thereof pursuant to the Exchange
Offer), any of the following events shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
financial condition, operations, results of operations or prospects of the
Company or any of its subsidiaries, or in the general economic or financial
market conditions in the United States or abroad, which is or may be
materially adverse to the Company and its subsidiaries or its stockholders
or to the value of the Preferred Stock or there shall have been a
significant decrease in the market prices of or trading in the Preferred
Stock, or the Company shall have become aware of any fact or occurrence
which is or may be materially adverse with respect to the value of the
Preferred Stock or the Exchange Offer's contemplated benefits to the
Company; or
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or the over-the-counter market, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (3) declaration of a national emergency or a commencement of a war,
armed hostilities or other national or international calamity directly or
indirectly involving the United States, (4) any limitation (whether or not
mandatory) by any governmental or regulatory authority on, or any other
event which might affect, the nature or extension of credit by banks or
other financial institutions, (5) any significant adverse change in the
United States securities or financial markets, or (6) in the case of any of
the foregoing existing at the time of the commencement of the Exchange
Offer a material acceleration, escalation or worsening thereof; or
(c) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, order or injunction proposed, sought,
promulgated, enacted, entered, enforced or deemed applicable to the
Exchange Offer by any local, state, federal or foreign government or
governmental authority or by any court, domestic or foreign, that might,
directly or indirectly, (1) make the acceptance for exchange or issuance of
QUICS for some or all of the shares of Preferred Stock illegal or otherwise
restrict or prohibit consummation of the Exchange Offer, (2) result in a
delay in, or restrict the ability of the Company, or render the Company
unable, to accept for exchange some or all of the shares of Preferred Stock
or to issue some or all of the QUICS in exchange therefor, (3) otherwise
adversely affect the Company or (4) result in a material limitation in the
benefits expected to be derived by the Company as a result of the
transactions contemplated by the Exchange Offer; or
(d) there shall be threatened, instituted or pending any action,
proceeding or claim by or before any court or governmental, administrative
or regulatory agency or authority or any other person or tribunal, domestic
or foreign, challenging the making of the Exchange Offer, the acquisition
by the Company of any shares of Preferred Stock, or seeking to obtain any
material damages as a result thereof, or otherwise adversely affecting the
Company or the value of the Preferred Stock; or
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<PAGE> 28
(e) the QUICS fail to meet the requirements of the NYSE for listing
thereon;
which makes it inadvisable to proceed with the Exchange Offer or such acceptance
for exchange of shares of Preferred Stock or the issuance of the QUICS in
exchange therefor.
All the foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
such condition and may be waived by the Company, in whole or in part, at any
time and from time to time, in the sole discretion of the Company. The failure
by the Company at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by the Company concerning the foregoing conditions shall be final
and binding.
If any of the foregoing conditions shall not be satisfied (or, with respect
to the above enumerated events, shall have occurred), the Company may, subject
to applicable law, (i) terminate the Exchange Offer and return all shares of
Preferred Stock tendered pursuant to the Exchange Offer to tendering security
holders; (ii) extend the Exchange Offer and retain all tendered shares of
Preferred Stock until the Expiration Time for the extended Exchange Offer; or
(iii) waive the unsatisfied conditions with respect to the Exchange Offer and
accept all shares of Preferred Stock tendered pursuant to the Exchange Offer.
DEALER MANAGER
Lehman Brothers, Merrill Lynch & Co., PaineWebber Incorporated, Prudential
Securities Incorporated and Smith Barney Inc. are acting as Dealer Managers for
the Exchange Offer under a Dealer Managers Agreement dated ,
1995 (the "Dealer Managers Agreement"). Pursuant to the Dealer Managers
Agreement, the Company has agreed to pay the Dealer Managers predetermined
compensation for their services in connection with the Exchange Offer and to
reimburse the Dealer Managers for all of their reasonable out-of-pocket
expenses, including the reasonable fees and expenses of their legal counsel.
The Dealer Managers have agreed to use their best efforts to solicit the
exchange of shares of Preferred Stock pursuant to the Exchange Offer.
The Company has agreed to indemnify the Dealer Managers against certain
liabilities, including certain liabilities under the federal securities laws.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the shares of the Preferred Stock
will be borne by the Company. For compensation to be paid to the Dealer
Managers, see "The Exchange Offer -- Dealer Manager".
The Company will pay to a Soliciting Dealer (as defined herein) a
solicitation fee of $.50 per share of the Preferred Stock for any share of the
Preferred Stock validly tendered and accepted for exchange pursuant to the
Exchange Offer. "Soliciting Dealer" includes (i) any broker or dealer in
securities, including any Dealer Manager in its capacity as a broker or dealer,
which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member or (iii) any bank or trust
company. In order for a Soliciting Dealer to receive a solicitation fee with
respect to the tender of shares of the Preferred Stock, the Exchange Agent must
either have received a Letter of Transmittal with the portion thereof entitled
"Notice of Solicited Tenders" properly completed and duly executed prior to the
Expiration Time or, if shares of Preferred Stock are being tendered by
book-entry transfer made to an account maintained by the Exchange Agent with a
Depository Institution, the Soliciting Dealer must return a properly completed
and duly executed Notice of Solicited Tenders (included in the materials
provided to brokers and dealers) to the Exchange Agent within three days after
the Expiration Time.
No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
tendering holder (other than itself). Soliciting Dealers are not entitled to a
solicitation fee with respect to shares of the Preferred Stock beneficially
owned by such Soliciting Dealer or
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<PAGE> 29
with respect to any shares which are registered in the name of a Soliciting
Dealer unless such shares are held by such Soliciting Dealer as nominee and are
tendered for the benefit of beneficial holders identified in the Letter of
Transmittal. The Dealer Managers may not, until the Expiration Time, buy, sell,
deal or trade in the shares of the Preferred Stock for their own account. No
broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent
of the Company, the Exchange Agent, the Dealer Managers or the Information Agent
for purposes of the Exchange Offer.
The Company will pay any transfer taxes with respect to transfer and
exchange of shares pursuant to the Exchange Offer. If, however, the Debentures
due in respect of the shares of the Preferred Stock accepted for exchange are to
be issued to, or (in the circumstances permitted hereby) if certificates for
shares of the Preferred Stock not tendered or not exchanged and paid for are to
be registered in the name of, any person other than the person signing the
Letter of Transmittal, the amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to such
person will be deducted from the Debentures due in respect of the shares of the
Preferred Stock accepted for exchange if satisfactory evidence of the payment of
such taxes, or exemption therefrom, is not submitted.
Assuming all outstanding shares of the Preferred Stock are exchanged
pursuant to the Exchange Offer, it is estimated that the expenses incurred by
the Company in connection with the Exchange Offer (other than the solicitation
fee of $.50 per share of the Preferred Stock described above) will aggregate
approximately $ . The Company will be responsible for paying all such
expenses and anticipates that they will be paid from available cash of the
Company.
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York will act as Exchange Agent for the
Exchange Offer. All correspondence in connection with the Exchange Offer, the
Letter of Transmittal and the Notice of Guaranteed Delivery should be addressed
to the Exchange Agent as follows:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
(For Eligible Institutions Only)
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or Suite 4680-SOM
Suite 4660-SOM (201) 222-4721 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
Stockholder Inquiries
Regarding Lost Securities:
(201) 324-0498
</TABLE>
The Exchange Agent is also the transfer agent and dividend paying agent for
the Preferred Stock. An affiliate of the Exchange Agent, namely The First
National Bank of Chicago, is a lender under the Amended and Restated Revolving
Credit Agreement dated as of March 24, 1995 by and among the Company, a
subsidiary of the Company, and the banks named therein, and provides cash
management services to the Company and its subsidiaries.
D.F. King & Co., Inc. will act as Information Agent for the Exchange Offer.
In such capacity, the Information Agent will assist with the mailing of the
Prospectus and related materials to holders of shares of Preferred Stock,
respond to inquiries of and provide information to holders of Preferred Stock in
connection with the Exchange Offer and provide other similar advisory services
as the Company may request from time to time. All inquiries relating to the
Exchange Offer should be directed to the Information Agent as follows:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(800) 669-5550 (Toll-Free)
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<PAGE> 30
The Company will pay the Information Agent and the Exchange Agent their
reasonable and customary compensation for their services in connection with the
Exchange Offer. In addition, the Company will reimburse the Exchange Agent and
the Information Agent for their reasonable out-of-pocket expenses, and will
indemnify the Exchange Agent and the Information Agent against certain
liabilities and expenses in connection with their services, including certain
liabilities under the federal securities laws. The Company also will pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to beneficial holders of shares of Preferred Stock, and in
handling or forwarding tenders or consents for their customers.
Directors, officers and regular employees of the Company, none of whom will
be specifically compensated for such services, may contact holders of shares of
Preferred Stock by mail, telephone, facsimile transmission, telex, telegraph and
personal interviews regarding the Exchange Offer, and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward this
Prospectus (and all related materials) to beneficial owners of shares of
Preferred Stock.
MARKET AND TRADING INFORMATION
The shares of Preferred Stock are listed and traded on the NYSE. The
following table sets forth for the calendar periods indicated the high and low
closing sales prices for the Preferred Stock per share as reported in published
financial sources:
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1994:
First Quarter (from March 17, 1994)...................... $24.375 $ 23.50
Second Quarter........................................... $ 23.25 $ 22.00
Third Quarter............................................ $24.375 $ 22.00
Fourth Quarter........................................... $ 24.00 $ 21.00
1995:
First Quarter............................................ $ 23.50 $21.875
Second Quarter........................................... $ 24.75 $ 22.50
Third Quarter (through September 12)..................... $25.156 $24.375
</TABLE>
Since the issuance of the Preferred Stock, the Company has paid quarterly
dividends of $.52625 per share on February 1, May 1, August 1 and November 1 of
each year, except that on May 1, 1994, the Company paid a dividend of
approximately $.25728 per share of Preferred Stock which represented dividends
accrued thereon from March 17, 1994 (the date of initial issuance) to April 30,
1994. On September 19, 1995, the last full day before the initial filing of the
Registration Statement of which this Prospectus is a part, the reported closing
sales price on the NYSE for the Preferred Stock was $25.00 per share. On
, 1995, the last full day prior to the effectiveness of the
Registration Statement of which this Prospectus is a part, the reported closing
sales price on the NYSE for the Preferred Stock was $ per share. There can
be no assurance concerning the prices at which the Preferred Stock might be
traded following the Exchange Offer.
HOLDERS OF SHARES OF PREFERRED STOCK ARE URGED TO OBTAIN CURRENT
INFORMATION WITH RESPECT TO THE SALES PRICES OF PREFERRED STOCK.
There has not been any public market for the QUICS. While the Company
intends to list the QUICS on the NYSE, there can be no assurance that an active
market for the QUICS will develop or be sustained in the future on such
exchange. Listing will depend upon the satisfaction of the NYSE's listing
requirements with respect to the QUICS, including requirements as to the
principal amount and distribution of the QUICS. Although the Dealer Managers
have indicated to the Company that they intend to make a market in the QUICS as
permitted by applicable laws and regulations, they are not obligated to do so
and may discontinue any such market-making at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading for,
the QUICS.
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<PAGE> 31
TRANSACTIONS AND ARRANGEMENTS CONCERNING
THE SHARES OF THE PREFERRED STOCK
The shares of the Preferred Stock were issued by the Company in an
underwritten public offering for cash which was registered under the Securities
Act. The offering, which closed on March 17, 1994, was for 4,000,000 shares of
the Preferred Stock at a price to the public of $25.00 per share and the Company
received aggregate proceeds of $96,850,000 after deducting the aggregate
underwriting discount of $3,150,000, but before expenses.
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any of
the directors or executive officers of the Company or any of its subsidiaries,
nor any associates of any of the foregoing, has effected any transactions in the
Preferred Stock since the issuance of the Preferred Stock in 1994, except that
Michael Allemang, the Chief Financial Officer and Executive Vice President of
the Company, purchased 1,200 shares of the Preferred Stock on the open market
between May 17, 1995 and May 19, 1995 (at a weighted average price of $23.9583
per share).
Except as set forth in this Prospectus, neither the Company nor, to the
best of the Company's knowledge, any of its affiliates, directors or executive
officers or any of the executive officers or directors of its subsidiaries, is a
party to any contract, arrangement, understanding or relationship with any other
person relating, directly or indirectly, to the Exchange Offer with respect to
any securities of the Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer of the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations). As of the date of this Prospectus,
neither the Company nor any subsidiary or affiliate nor, to the Company's
knowledge, any of their respective directors or executive officers, owns any of
the shares of the Preferred Stock, except for 1,200 shares of the Preferred
Stock owned by Michael Allemang, the Chief Financial Officer and Executive Vice
President of the Company.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of QUICS as of the date hereof and represents the
opinion of Simpson Thacher & Bartlett, special tax counsel to the Company,
insofar as it relates to matters of law or legal conclusions. Except where
noted, it deals only with QUICS held as capital assets and acquired pursuant to
the Exchange Offer and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, life insurance
companies, persons holding QUICS as a part of a hedging or conversion
transaction or a straddle, United States Holders (as defined below) whose
"functional currency" is not the U.S. dollar, or Non-United States Holders (as
defined below) who own (actively or constructively) ten percent or more of the
combined voting power of all classes of voting stock of the Company, who are
present in the United States or who have any other special status with respect
to the United States. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
federal income tax consequences different from those discussed below. PERSONS
CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF QUICS SHOULD CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF
THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS
OF ANY OTHER TAXING JURISDICTION.
UNITED STATES HOLDERS
As used herein, a "United States Holder" of QUICS means a holder that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source. A
"Non-United States Holder" is a holder that is not a United States Holder.
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<PAGE> 32
EXCHANGE OF PREFERRED STOCK FOR QUICS
The exchange of the Preferred Stock for QUICS pursuant to the Exchange
Offer will be a taxable transaction. In the case of a United States Holder who
owns (actually or constructively) solely Preferred Stock, or not more than one
percent of the Preferred Stock and not more than one percent of any other class
of the Company's stock, gain or loss will be recognized in an amount equal to
the difference between the fair market value of the QUICS at the time of the
exchange and the exchanging holder's tax basis in the Preferred Stock exchanged
therefor and will be long-term capital gain or loss if the Preferred Stock has
been held for more than one year as of such date. A United States Holder's
aggregate tax basis in the QUICS will be equal to their fair market value at the
time of exchange.
Holders of the Preferred Stock owning (actually or constructively) more
than one percent of any class of the Company's stock are advised to consult
their own tax advisers as to the income tax consequences of exchanging the
Preferred Stock for QUICS.
ORIGINAL ISSUE DISCOUNT, MARKET DISCOUNT AND ACQUISITION PREMIUM
Under the terms of the QUICS, the Company has the option to defer payments
of interest for up to 20 consecutive quarterly periods and to pay as a lump sum
at the end of such period all of the interest that has accrued during such
period. Because of this option to defer the payment of interest, all of the
stated interest payments on the QUICS will be treated as "original issue
discount" ("OID"). As a result, United States Holders will, in effect, be
required to accrue interest income even if the holders are on the cash method of
tax accounting. In addition, the amount of OID will be increased or decreased if
the "issue price" of the QUICS (fair market value at the time of exchange) is
less than or greater than their stated principal amount. Consequently, in the
event that the interest payment period is extended, a United States Holder would
be required to include OID in income on an economic accrual basis
notwithstanding that the Company will not make any interest payments on the
QUICS. The OID accrual rules may also accelerate the timing of a holder's
recognition of income.
To the extent a holder acquires a QUICS at a price that is less than their
adjusted issue price (the fair market value of the QUICS at the time of exchange
adjusted for the accrual of OID and interest payments), the holder will have
purchased such QUICS at a market discount. Under the market discount rules, a
United States Holder will be required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a QUICS as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such QUICS at the
time of such payment or disposition. Market discount accrues ratably, or, at the
election of the holder, under a constant yield method over the remaining term of
the QUICS. In addition, the United States Holder may be required to defer, until
the maturity of the QUICS or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such QUICS. In lieu of the foregoing,
a holder may elect to include market discount in income currently as it accrues
on all market discount instruments acquired by such holder in the taxable year
of the election or thereafter, in which case the interest deferral rule will not
apply. This election to include market discount in income currently may not be
revoked without the consent of the Internal Revenue Service ("IRS").
A United States Holder that purchases a QUICS for an amount that is greater
than its adjusted issue price will be able to offset a portion of such
acquisition premium properly allocable to a taxable year against the accrual of
income on such QUICS.
SALE, EXCHANGE AND RETIREMENT OF THE QUICS
Upon the sale, exchange or retirement of a QUICS, a United States Holder
will recognize gain or loss equal to the difference between the amount realized
upon the sale, exchange or retirement and the adjusted tax basis of the QUICS. A
United States Holder's adjusted tax basis in a QUICS will, in general, be the
United States Holder's initial basis therefor, increased by OID or market
discount previously included in income by the United States Holder and reduced
by any amortized premium and any cash payments on the QUICS. Except as described
above with respect to market discount, such gain or loss will be capital gain or
27
<PAGE> 33
loss and will be long-term capital gain or loss if at the time of sale, exchange
or retirement, the QUICS have been held for more than one year. Under current
law, net capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. The deductibility of capital losses
is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to a Non-United States Holder upon the exchange of
the Preferred Stock for QUICS pursuant to the Exchange Offer provided such
holder owns (actually or constructively) solely Preferred Stock, or not
more than one percent of the Preferred Stock and not more than one percent
of any other class of the Company's stock. If a Non-United States Holder
does not provide the certification described in the preceding sentence, the
Company will withhold federal income tax at a rate of 30% of the gross
proceeds paid to such holder pursuant to the Exchange Offer;
(b) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of this discussion includes OID)
on QUICS owned by a Non-United States Holder, provided (i) the beneficial
owner is not a controlled foreign corporation that is related to the
Company through stock ownership, (ii) the beneficial owner is not a bank
whose receipt of interest on the QUICS is described in section 881(c)(3)(A)
of the Code and (iii) either (y) the beneficial owner certifies to the
Company or its agent, under the penalties of perjury, that it is not a U.S.
person, citizen or resident and provides its name and address or (z) a
financial institution holding the QUICS on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been
received by it and furnishes the Company or its agent with a copy thereof;
(c) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a Non-United States
Holder upon the sale, exchange or retirement of a QUICS; and
(d) QUICS beneficially owned by an individual who at the time of death
is a Non-United States Holder will not be subject to United States federal
estate tax as a result of such individual's death, provided that the
interest payments with respect to such QUICS would not have been, if
received at the time of such individual's death, effectively connected with
the conduct of a trade or business by such individual in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to (i) certain
payments of principal, interest and OID paid on the QUICS, (ii) the exchange of
the Preferred Stock for the QUICS pursuant to the Exchange Offer and (iii) to
the proceeds of sale of the QUICS made to United States Holders other than
certain exempt recipients (such as corporations). A 31 percent backup
withholding tax will apply to such payments described in (i) and (iii) of the
preceding sentence if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (b)(iii) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
Payments of the proceeds from the sale by a Non-United States Holder of
QUICS and the exchange of the Preferred Stock for the QUICS pursuant to the
Exchange Offer made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is, for federal income tax purposes, a United States person, a controlled
foreign corporation or a foreign person that
28
<PAGE> 34
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, such payments will not be subject to
backup withholding but may be subject to information reporting. Such payments of
the proceeds of the sale of QUICS to or through the United States office of a
broker are subject to information reporting and backup withholding and the
exchange of the Preferred Stock for QUICS is subject to informational reporting
unless the Non-United States Holder or the beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
DESCRIPTION OF QUICS
The QUICS will constitute a series of notes issued under the Subordinated
Debt Indenture, dated as of , 1995, between the Company and IBJ
Schroeder Bank & Trust Company, as trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of , 1995 creating the
QUICS (as supplemented, the "Indenture"). The following statements with respect
to the QUICS are summaries and are subject to the detailed provisions of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Indenture, a copy of the form of which has been filed as an exhibit to the
Registration Statement. The following summarizes the material provisions of the
Indenture. The summaries do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all the provisions of the QUICS
and the Indenture. Wherever references are made to particular provisions of the
Indenture or terms defined therein, such provisions or definitions are
incorporated by reference as part of the statements made and such statements are
qualified in their entirety by such references.
The Indenture does not limit the amount of debt securities, debentures,
notes or other evidences of indebtedness that may be issued by the Company or
any of its subsidiaries.
The Indenture provides that additional debt securities may be issued from
time to time thereunder in one or more series without limitation as to aggregate
principal amount. The Indenture does not contain any covenant or other provision
which would afford holders of the QUICS protection in the event of a highly
leveraged transaction involving the Company or any of its subsidiary.
GENERAL
The QUICS will constitute a series of unsecured, subordinated debt
securities, will be subordinated to Senior Indebtedness of the Company, as
described herein, will be limited in aggregate principal amount to the aggregate
principal amount of QUICS issued in the Exchange Offer and will mature on
, 2025 (the "Stated Maturity"). The annual interest requirement on the
QUICS (assuming all shares of the Preferred Stock are exchanged) will be
$ .
QUARTERLY PAYMENTS
Interest on the QUICS will accrue from November 1, 1995 at a rate of %
per annum and will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year commencing December 31, 1995, to the
persons in whose names the QUICS are registered on March 15, June 15, September
15 and December 15 of each year (each a "Record Date").
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full quarterly interest period, will be computed on the basis of the actual
number of days elapsed in such period. In the event that any date on which
interest is payable on the QUICS is not a Business Day, then payment of the
amount payable on such date will be made on the next succeeding day which is a
Business Day (and without interest or other payment in respect of any such
delay) with the same force and effect as if made on such date, subject to
certain rights of deferral described below. A "Business Day" shall mean any day
other than a day on which banking institutions in the State of New York are
authorized or required by law or regulation to close.
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PAYMENT DEFERRAL
The Company shall have the right at any time, on one or more occasions, so
long as an Event of Default (as defined herein) has not occurred and is not
continuing under the Indenture with respect to the QUICS, to defer interest
payments on the QUICS for periods of up to 20 consecutive quarters each, except
that no Deferral Period may extend beyond the maturity of the QUICS. No interest
shall be due and payable during a Deferral Period, but at the end of each
Deferral Period the Company shall pay all interest then accrued and unpaid on
the QUICS, together with interest thereon, compounded quarterly. Prior to the
termination of any Deferral Period, the Company may further defer quarterly
interest payments by extending the Deferral Period; provided that any such
extended Deferral Period, together with all further extensions of such Deferral
Period, may not exceed 20 consecutive quarters or extend beyond the maturity of
the QUICS. In the event that the Company exercises its right to defer interest
payments, the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
Capital Stock or make any guarantee payments with respect to the foregoing
during such Deferral Period. All series of the Company's preferred stock, common
stock and any other equity securities of the Company are referred to herein as
"Capital Stock". In addition, during any Deferral Period, the Company may not
make any advance or loan to, or purchase any securities of, or make any other
investment in, any affiliate of the Company for the purpose of, or to enable the
payment of, directly or indirectly, dividends on any equity security of Fund
American Enterprises, Inc.
The Company has no current intention of exercising its right to defer
interest payments. However, if the Company were to exercise this right, the
market price of the QUICS would likely be adversely affected. A failure by the
Company to make an interest payment for 20 consecutive quarters shall constitute
an Event of Default as of the last day of such 20th consecutive quarter.
If the Company expects that interest will not be paid on any Interest
Payment Date, the Company shall give the holders of the QUICS and the Trustee
written notice prior to the earlier of (i) such Interest Payment Date and (ii)
the date the Company is required to give notice of the record date of such
interest payment to the NYSE or other applicable self-regulatory organization or
the holders of the QUICS, but in any event such notice shall be given not less
than two Business Days prior to such record date.
OPTIONAL REDEMPTION
The QUICS will be redeemable at the option of the Company, in whole or in
part, at any time on or after May 1, 1999 and prior to maturity, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to 100% of
the principal amount redeemed plus accrued and unpaid interest to the date fixed
for redemption. If fewer than all the QUICS are redeemed, the Trustee under the
Indenture shall select an appropriate and fair manner pursuant to which the
QUICS shall be redeemed.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or defease its obligations under the Indenture as
set forth below.
Upon satisfaction of certain terms of the Indenture, the Company may
discharge certain obligations to holders of the QUICS which have not already
been delivered to the Trustee for cancellation and which have either become due
and payable or are by their terms due and payable within one year (or scheduled
for redemption within one year) by irrevocably depositing with the Trustee cash
or U.S. Government Obligations (as defined in the Indenture) as trust funds in
an amount certified to be sufficient to pay at maturity (or upon redemption) the
principal of and interest on the QUICS.
The Company may also, upon satisfaction of the conditions listed below,
discharge certain obligations to holders of QUICS at any time ("defeasance").
Upon satisfaction of certain terms of the Indenture, the Company may instead be
released with respect to the QUICS from the obligations imposed by Section 9.1
of the Indenture (which contains the covenant described below limiting
consolidations, mergers and conveyances of assets), and omit compliance with
such Section without creating an Event of Default ("covenant defeasance").
Defeasance or covenant defeasance may be effected only if, among other things:
(i) the
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Company irrevocably deposits with the Trustee cash or U.S. Government
Obligations, as trust funds, in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on all outstanding
QUICS; (ii) the Company delivers to the Trustee an opinion of counsel to the
effect that the holders of the QUICS will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if defeasance or covenant defeasance had not occurred (in the case of a
defeasance, such opinion must be based on a ruling of the Internal Revenue
Service or a change in United States federal income tax law occurring after the
date of the Indenture, since such a result would not occur under current tax
law); and (iii) (a) no event or condition shall exist that, pursuant to certain
provisions described under "Subordination" below, would prevent the Company from
making payments of principal of or interest on the QUICS at the date of the
irrevocable deposit referred to above or at any time during the period ending on
the 91st day after such deposit date and (b) the Company delivers to the Trustee
an opinion of counsel to the effect (1) the trust funds will not be subject to
any rights of holders of Senior Indebtedness and (2) 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, except that if a court were to rule under any such
law in any case or proceeding that the trust funds remained property of the
Company, then the Trustee and the holders of the QUICS would be entitled to
certain rights as secured creditors in such trust funds.
EVENTS OF DEFAULT
An Event of Default is defined under the Indenture with respect to QUICS as
being: (a) default in payment of any principal of the QUICS, either at maturity,
upon any redemption, by declaration or otherwise; (b) default in payment of any
interest on the QUICS when due continued for a period of 30 days, provided that
a declaration of a valid Deferral Period by the Company shall not constitute a
default in the payment of interest for this purpose; (c) default for 90 days
after written notice in the observance or performance of any covenant or
warranty in the QUICS or the Indenture other than (i) a covenant or default in
the performance of which, or breach of which, is dealt with otherwise below or,
(ii) if the default described in this clause (c) is the result of changes in
generally accepted accounting principles; or (d) certain events of bankruptcy,
insolvency or reorganization of the Company.
The Indenture provides that, (a) if an Event of Default described in
clauses (a), (b) or (c) above (if the Event of Default under clause (c) is with
respect to less than a series of debt securities then outstanding under the
Indenture) occurs, the Trustee or the holders of not less than 25 percent in
principal amount of the outstanding debt securities of each series of debt
securities affected by such Event of Default (voting as a single class) may then
declare the entire principal of all such debt securities and interest accrued
thereon to be due and payable immediately and (b) if an Event of Default due to
a default described in clause (c) above which is applicable to all series of
debt securities then outstanding under the Indenture or due to certain events of
bankruptcy, insolvency and reorganization of the Company, shall have occurred
and be continuing, the Trustee or the holders of not less than 25 percent in
principal amount of all securities then outstanding under the Indenture (treated
as one class) may declare the entire principal of all outstanding debt
securities (including the QUICS) and interest accrued thereon to be due and
payable immediately, but upon certain conditions such past defaults or an Event
of Default may be waived (except a continuing default in payment of principal of
or interest on such debt securities) by the holders of a majority in aggregate
principal amount of the outstanding debt securities affected by such Event of
Default or by the holders of a majority in aggregate principal amount of all
securities then outstanding (treated as one class), as applicable.
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the holders of debt securities issued under the Indenture
before proceeding to exercise any right or power under the Indenture at the
request of such holders. Subject to such provisions in the Indenture for the
indemnification of the Trustee and certain other limitations, the holders of a
majority in aggregate principal amount of the outstanding debt securities issued
under the Indenture may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee.
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The Indenture provides that no holder of debt securities issued under the
Indenture may institute any action against the Company under the Indenture
(except actions for payment of overdue principal or interest) unless such holder
previously shall have given to the Trustee written notice of default and
continuance thereof and unless the holders of not less than 25 percent in
principal amount of the outstanding debt securities issued under the Indenture
shall have requested the Trustee to institute such action and shall have offered
the Trustee reasonable indemnity and the Trustee shall not have instituted such
action within 60 days of such request and the Trustee shall not have received
direction inconsistent with such written request by the holders of a majority in
principal amount of the outstanding debt securities issued under the Indenture.
The Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any default
that exists.
MODIFICATION AND WAIVER
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures (which conform to the provisions of the Trust Indenture
Act) without the consent of the holders to: (a) secure any debt securities
issued thereunder (including the QUICS); (b) evidence the assumption by a
successor of the obligations of the Company; (c) add further covenants for the
protection of the holders; (d) cure any ambiguity or correct any inconsistency
in the Indenture, so long as such action will not adversely affect the interests
of the holders; (e) establish the form or terms of debt securities of any
series; or (f) evidence the acceptance of appointment by a successor trustee.
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than the majority in
principal amount of debt securities of each series issued under the Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the provisions of, the Indenture or
modify in any manner the rights of the holders of the debt securities of each
series so affected; provided that such changes conform to provisions of the
Trust Indenture Act and provided that the Company and the Trustee may not,
without the consent of each holder of outstanding debt securities affected
thereby, (a) extend the final maturity or the principal of any debt securities,
or reduce the principal amount thereof or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof
or change the currency in which the principal thereof (including any amount in
respect of original issue discount) or interest thereon is payable, or reduce
the amount of any original issue discount security payable upon acceleration or
provable in bankruptcy or alter certain provisions of the Indenture relating to
debt securities not denominated in U.S. dollars or for which conversion to
another currency is required to satisfy the judgment of any court, or impair the
right to institute suit for the enforcement of any payment on any debt
securities when due or (b) reduce the aforesaid percentage in principal amount
of debt securities of any series issued under the Indenture, the consent of the
holders of which is required for any such modification.
The Indenture may not be amended to alter the subordination of any
outstanding subordinated debt securities issued thereunder (including the QUICS)
without the consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS
The Indenture provides that the Company will not consolidate with or merge
into any other corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any person, unless the corporation formed
by such consolidation or into which the Company is merged or the person which
acquires such assets shall expressly assume the Company's obligations under the
Indenture and the debt securities issued thereunder (including the QUICS) and
immediately after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing.
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SUBORDINATION
The QUICS will be expressly subordinate and junior in right of payment, to
the extent and in the manner set forth in the Indenture, to all "Senior
Indebtedness" of the Company. The Indenture defines "Senior Indebtedness" as
obligations (other than nonrecourse obligations, the debt securities issued
under the Indenture (including the QUICS) or any other obligations specifically
designated as being subordinate in right of payment to Senior Indebtedness) of,
or guaranteed or assumed by, the Company for borrowed money or evidenced by
bonds, debentures, notes, credit agreements or other similar instruments, and
amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligation (including without limitation, all interest
(including post-bankruptcy-petition interest whether or not allowed as a claim
in bankruptcy), fees, expenses, indemnification obligations, costs of
enforcement and costs of preservation of collateral which may at any time accrue
but for the operation of any provision or doctrine under bankruptcy or analogous
laws.
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property or (b) that (i) a
default shall have occurred with respect to the payment of principal, premium,
if any, or interest on or other monetary amounts due and payable on any Senior
Indebtedness or (ii) there shall have occurred an event of default (other than a
default in the payment of principal, premium, if any, or interest, or other
monetary amounts due and payable) with respect to any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such event of default shall have
continued beyond the period of grace, if any, in respect thereof, and such
default or event of default shall not have been cured or waived or shall not
have ceased to exist, or (c) that the principal of and accrued interest on the
subordinated debt securities (including the QUICS) shall have been declared due
and payable upon an Event of Default pursuant to Section 5.1 of the Indenture
and such declaration shall not have been rescinded and annulled as provided
therein, then the holders of all Senior Indebtedness shall first be entitled to
receive payment of the full amount unpaid thereon be paid the full amount of the
Senior Indebtedness in cash before the holders of any of the subordinated debt
securities (including the QUICS) are entitled to receive a payment on account of
the principal, premium, if any, or interest on the indebtedness evidenced by
such subordinated debt securities.
On June 30, 1995, approximately $630.7 million of Senior Indebtedness was
outstanding. The Indenture does not restrict the amount of Senior Indebtedness
that the Company may incur. In addition, the QUICS will also be effectively
subordinate to all existing and future obligations of the Company's
subsidiaries. On June 30, 1995, approximately $9.0 million of indebtedness of
the Company's subsidiaries not included in Senior Indebtedness was outstanding.
FORM OF QUICS
The QUICS will be issued in fully registered form. Investors may elect to
hold their QUICS directly or, subject to the rules and procedures of the
Depository Institutions described below, hold interests in a global certificate
(the "Global Certificate") registered in the name of a Depository Institution or
its nominee. However, tendering holders of shares of Preferred Stock held in
global form shall initially receive an interest in the Global Certificate and
tendering holders of shares held directly in certificated form shall initially
receive QUICS in certificated form, in each case unless otherwise specified in
the Letter of Transmittal. See "The Exchange Offer -- Procedures for Tendering
Preferred Stock".
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global QUICS.
A Depository Institution holds securities that its participants
("Participants") deposit with the Depository Institution. A Depository
Institution also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing
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corporations, and certain other organizations ("Direct Participants"). Access to
the Depository Institution's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to a Depository
Institution and its Participants are on file with the Commission.
Upon issuance of a Global Certificate, the Depository Institution will
credit on its book-entry registration and transfer system the number of QUICS
represented by such Global Certificate to the accounts of institutions that have
accounts with the Depository Institution. Ownership of beneficial interests in a
Global Certificate will be limited to Participants or persons that may hold
interests through Participants. The ownership interest of each actual purchaser
of each QUICS ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from a Depository Institution of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased QUICS.
Transfers of ownership interests in the QUICS are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
A Depository Institution has no knowledge of the actual Beneficial Owners
of the QUICS; a Depository Institution's records reflect only the identity of
the Direct Participants to whose accounts such QUICS are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers. So long as a
Depository Institution, or its nominee, is the owner of a Global Certificate, a
Depository Institution or such nominee, as the case may be, will be considered
the sole owner and holder of record of the QUICS represented by such Global
Certificate for all purposes.
Conveyance of notices and other communications by a Depository Institution
to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to the Depository Institution. If less
than all of the QUICS are being redeemed, the Depository Institution will reduce
pro rata (subject to adjustment to eliminate QUICS in unauthorized
denominations) the amount of interest of each Direct Participant in the QUICS to
be redeemed.
Although voting with respect to the QUICS is limited, in those instances in
which a vote is required, neither the Depository Institution nor the Depository
Institution's nominee itself will consent or vote with respect to QUICS. Under
its usual procedures, the Depository Institution would mail an Omnibus Proxy to
the Company as soon as possible after the record date. The Omnibus Proxy assigns
the Depository Institution's consenting or voting rights to those Direct
Participants to whose accounts the QUICS are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Distribution payments on the QUICS represented by a Global Certificate will
be made by the Company to the Depository Institution. The Depository
Institution's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on a
Depository Institution's records unless the Depository Institution has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility or such Participants and not
of a Depository Institution or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to a Depository Institution is the responsibility of the Company,
disbursement of such payments to Direct Participants is the responsibility of
the Depository Institution and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
A Depository Institution may discontinue providing its services as
securities depository with respect to the QUICS at any time by giving reasonable
notice to the Company. Under such circumstances, if a successor securities
depository is not obtained, QUICS certificates will be required to be printed
and delivered. Additionally, the Company may decide to discontinue use of the
system of book-entry transfers through the
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Depository Institution (or a successor depository). In that event, certificates
for the QUICS will be printed and delivered.
The information in this section concerning the Depository Institutions and
the Depository Institutions' book-entry system has been obtained from sources
that the Company believes to be reliable, but the Company takes no
responsibility for the accuracy thereof.
GOVERNING LAW
The Indenture and the QUICS are governed by and construed in accordance
with the laws of the State of New York.
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DESCRIPTION OF THE PREFERRED STOCK
GENERAL
The following description relating to the Preferred Stock set forth herein
does not purport to be complete and is subject to, and qualified in its entirety
by, the provisions of the Company's Certificate of Incorporation (including the
Certificate of Designation for Series A Preferred Stock of Source One Mortgage
Services Corporation) ("Certificate"). Copies of the Certificate are available
from the Company upon request.
The Preferred Stock ranks equally with all other series of preferred stock
of the Company and senior to the Company's common stock upon liquidation and as
to dividends and redemption. If dividends or amounts payable on liquidation are
not paid in full on the preferred stock of all series, then all series share
ratably in the amount available therefor.
DIVIDENDS
Holders of the shares of the Preferred Stock are entitled to receive, when
and if declared by the Board of Directors, cash dividends at the annual rate of
8.42% of $25 or $2.105 per share, payable in quarterly installments on February
1, May 1, August 1 and November 1. Dividends on the Preferred Stock are
cumulative. Dividends are payable to holders of record as they appear on the
stock books of the Company on such record dates not more than 30 days preceding
the payment dates as shall be fixed by the Board of Directors.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of the Preferred Stock are entitled to receive out of
assets of the Company available for distribution to stockholders, before any
distribution of assets is made to holders of common stock, liquidating
distributions in the amount of $25 per share plus dividends accrued and
accumulated but unpaid to the redemption date. If upon any liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Preferred Stock and any other Preferred Stock ranking as to any such
distribution on a parity with the Preferred Stock are not paid in full, the
holders of the Preferred Stock and of any other preferred stock of the Company
will share ratably in any such distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. After payment of the
full amount of the liquidating distribution to which they are entitled, the
holders of shares of the Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Company. Neither a
consolidation or merger of the Company with another corporation nor a sale or
transfer of all or part of the Company's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the Company.
OPTIONAL REDEMPTION
The Preferred Stock is not subject to any mandatory redemption or sinking
fund provision. The Preferred Stock is redeemable on at least 30 but not more
than 60 days' notice, at the option of the Company, as a whole or in part, at
any time on and after May 1, 1999 at a redemption price equal to $25 per share
plus dividends accrued and accumulated but unpaid to the redemption date.
VOTING RIGHTS
Except as indicated below or except as expressly required by applicable
law, the holders of the shares of Preferred Stock will not be entitled to vote.
In the event that dividends for six quarterly dividend periods (whether or
not consecutive), payable on any share or shares of preferred stock of the
Company shall be in arrears, then, unless all dividends in arrears have been
declared and paid in full, (i) the authorized number of directors of the Company
shall be increased by two additional directors, and (ii) the holders of
outstanding shares of Preferred Stock and of any one or more other series of
preferred stock of the Company upon which like voting rights have been conferred
and are exercisable, voting together as a single class, shall be entitled to
elect at a special meeting of stockholders (and
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at each subsequent annual or special meeting of stockholders thereafter until
all such dividends in arrears have been declared and paid in full) such two
additional directors. Except as otherwise provided in the Certificate, such
directors or their successors shall remain in office until all such dividends in
arrears have been declared and paid in full.
In addition, without the consent of the holders of at least two-thirds of
the outstanding shares of Preferred Stock and of preferred stock of any one or
more other series upon which like voting rights have been conferred and are
exercisable, voting together as a single class, the Company may not (i) create,
authorize or issue shares of any class or series of stock ranking senior as to
dividends or upon liquidation to any series of preferred stock, other than a
series which shall have no right to object to such creation, authorization or
issuance, or (ii) create, authorize or issue any securities convertible into, or
warrants, options or similar rights to purchase, acquire or receive, shares of
stock ranking senior as to dividends or upon liquidation to any series of
preferred stock, other than a series which shall have no right to object to such
creations, authorization or issuance, or (iii) reclassify any authorized stock
of the Company into any such shares ranking senior as to dividends or upon
liquidation to any series of preferred stock, other than a series which shall
have no right to object to such reclassification; provided, however, that if
such creation, authorization, issuance or reclassification would adversely
affect the rights, preferences, privileges or voting powers of outstanding
shares of one or more but not all series of preferred stock upon which such
voting rights have been conferred and are exercisable, then the consent of the
holders of at least two thirds of the outstanding shares of each such series so
affected, each such series voting separately as a class, shall be required in
addition to the consent of the holders of at least two-thirds of the outstanding
shares of Preferred Stock and of preferred stock of any one or more other series
upon which like voting rights have been conferred and are exercisable.
In addition, without the consent of the holders of at least two-thirds of
the outstanding shares of Preferred Stock and of preferred stock of any one or
more other series upon which like voting rights have been conferred and are
exercisable, voting together as a single class, the Company may not amend, alter
or repeal the Company's Certificate or by-laws, whether pursuant to any merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of the shares of any series of preferred
stock or the holders thereof, provided, however, that any increase in the amount
of the authorized common stock or authorized preferred stock, or the issuance of
any common stock or preferred stock, or the creation and issuance of other
series of common stock or preferred stock ranking on a parity with or junior to
any series of preferred stock as to dividends and upon liquidation shall not be
deemed to materially and adversely affect any such right, preference, privilege
or voting power, provided, further, that if such amendment, alteration or repeal
would adversely affect the rights, preferences, privileges or voting powers of
outstanding shares of one or more but not all series of preferred stock upon
which such voting rights have been conferred and are exercisable, then the
consent of the holders of at least two-thirds of the outstanding shares of each
such series so affected, each such series voting separately as a class, shall be
required in addition to the consent of the holders of at least two-thirds of the
outstanding shares of Preferred Stock and of preferred stock of any one or more
other series upon which like voting rights have been conferred and are
exercisable.
In addition, without the consent of the holders of at least a majority of
the outstanding shares of Preferred Stock and of preferred stock of any one or
more other series upon which like voting rights have been conferred and are
exercisable, voting together as a single class, the Company may not increase the
authorized amount of Preferred Stock, or create, or increase the authorized
number of shares of, any other class of stock ranking on a parity as to
dividends or upon liquidation with any series of preferred stock, other than a
series which shall have no right to object to such increase or creation;
provided, however, that if such increase or creation would adversely affect the
rights, preferences, privileges or voting powers of outstanding shares of one or
more but not all series of preferred stock upon which such voting rights have
been conferred and are exercisable, then the consent of the holders of at least
a majority of the outstanding shares of each such series so affected, each such
series voting separately as a class, shall be required in addition to the
consent of the holders of a majority of the outstanding shares of Preferred
Stock and of preferred stock of any one or more other series upon which like
voting rights have been conferred and are exercisable; provided, further, that
no such consent shall be required to create or issue any additional series of
preferred stock of the Company out of any class of preferred stock of the
Company (including without limitation, the Preferred Stock) then authorized.
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On matters on which holders of Preferred Stock and holders of any other
series of preferred stock of the Company are entitled to vote as a single class,
each full share of Preferred Stock and of each other series shall be entitled to
one vote. Therefore, the voting power of each such series will depend on the
number of shares in such series and not on the liquidation preference or initial
offering price of such series.
MISCELLANEOUS
The Preferred Stock is not convertible into, or exchangeable for, shares of
common stock of the Company. The Preferred Stock has no preemptive rights. All
of the Preferred Stock is fully paid and nonassessable. The Preferred Stock may
not be called, retired or in any way redeemed, except pursuant to the redemption
provisions set out above.
The Company's secured credit agreements contain covenants which limit its
ability to pay dividends or make distributions on its capital stock in addition
to dividends on the Preferred Stock. These covenants also require the Company to
maintain a certain level of total tangible net worth and a certain ratio of debt
to total tangible net worth. The Company is currently in compliance with all
such covenants.
LEGAL OPINIONS
The validity of the QUICS will be passed upon for the Company by Miller,
Canfield, Paddock and Stone, P.L.C., and for the Dealer Managers by Simpson
Thacher & Bartlett (a partnership which includes professional corporations).
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), special tax counsel to the Company, has passed upon certain
United States federal income tax considerations with respect to the QUICS.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
auditing and accounting.
38
<PAGE> 44
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates representing shares of Preferred Stock, Notices of
Guaranteed Delivery and any other required documents should be sent by each
stockholder or his broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of the addresses as set forth below:
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
(For Eligible Institutions Only)
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or Suite 4680-SOM
Suite 4660-SOM (201) 222-4721 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
Stockholder Inquiries
Regarding Lost Securities:
(201) 324-0498
Any questions or requests for assistance or additional copies of this
Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Managers at their respective
telephone numbers and locations set forth below. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for assistance
concerning the Exchange Offer.
The Information Agent is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
1-800-669-5500 (toll-free)
The Dealer Managers for the Exchanger Offer are:
<TABLE>
<S> <C> <C> <C> <C>
Lehman Brothers
Liability
Management Group Merrill Lynch & Co.
Three World World Financial
Financial Center Center PaineWebber
200 Vesey Street North Tower Incorporated
New York, NY 10285 New York, NY 10281 1285 Avenue of Prudential
Contact: Roy (212) 236-4565 the Americas Securities
Henriksson (collect) New York, NY 10019 Incorporated Smith Barney Inc.
1-800-438-3242 (800) 324-0210 One New York Plaza 388 Greenwich
(toll-free) (toll-free) New York, NY Street
1-212-528-7581 10292 New York, NY 10013
(collect) (212) 778-4040 Contact: Paul
(collect) Galant
(800) 813-3754
(toll-free)
</TABLE>
39
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES
OF THE 8.42% CUMULATIVE PREFERRED STOCK, SERIES A, OF
SOURCE ONE MORTGAGE SERVICES CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1995
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
------------------
<TABLE>
<S> <C>
BY HAND/OVERNIGHT COURIER: BY MAIL:
Tenders and Exchanges Tenders and Exchanges
Suite 4680-SOM P.O. Box 2559
14 Wall Street, 8th Floor Mail Suite 4660-SOM
New York, NY 10005 Jersey City, NJ 07303-2559
</TABLE>
Shareholder Inquiries
Regarding Lost Securities:
(201) 324-0498
<PAGE> 2
List below the shares of the Preferred Stock to which this Letter of
Transmittal relates. If the space below is inadequate, the certificate numbers
and/or the number of shares of the Preferred Stock tendered should be listed on
a separate signed schedule attached hereto.
DESCRIPTION OF SHARES OF PREFERRED STOCK TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES OF PREFERRED STOCK TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, the holder will be deemed to have tendered the full number of
shares of Preferred Stock represented by the tendered certificates. See Instruction 4.
Shares of the Preferred Stock may be tendered and will be accepted for exchange only in
denominations of $25 principal amount and integral multiples thereof. See Instruction 1.
- ------------------------------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING SHARES OF THE
PREFERRED STOCK SHOULD BE SENT TO THE COMPANY, THE DEALER MANAGERS OR THE
INFORMATION AGENT. SUCH DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
2
<PAGE> 3
This Letter of Transmittal is to be used if certificates representing
shares of Source One Mortgage Services Corporation's 8.42% Cumulative Preferred
Stock, Series A, $.01 par value per share (the "Preferred Stock"), are to be
forwarded herewith or if delivery of shares of the Preferred Stock is to be made
by book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company, Midwest Securities Trust Company or Philadelphia
Depository Trust Company (together, the "Depository Institutions"), pursuant to
the procedures set forth in "The Exchange Offer -- Procedure for Tendering
Preferred Stock" in the Prospectus (as defined below). Although delivery of
shares of the Preferred Stock may be effected through book-entry transfer into
the Exchange Agent's account at a Depository Institution pursuant to such
Depository Institution's procedures, a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry transfer, and other required documents, must in each case be received
by the Exchange Agent at one of its addresses set forth above prior to the
Expiration Time, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under such procedures.
DELIVERY OF DOCUMENTS TO A DEPOSITORY INSTITUTION IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
3
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to Source One Mortgage Services Corporation,
a Delaware corporation (the "Company"), the above-described number of shares of
the Preferred Stock, in accordance with the Company's offer to exchange up to
$100,000,000 aggregate principal amount of its % Quarterly Income Capital
Securities (the "QUICS"(SM)) (Subordinated Interest Deferrable Debentures, Due
2025) for any and all of its 8.42% Cumulative Preferred Stock, Series A, $.01
par value per share (the "Preferred Stock"), upon the terms and subject to the
conditions set forth in the Prospectus dated , 1995 (the "Prospectus")
and in this Letter of Transmittal (which, together with the Prospectus,
constitute the "Exchange Offer"), receipt of which is hereby acknowledged.
On the terms and subject to the conditions of the Exchange Offer, subject
to, and effective upon, acceptance for exchange of the shares of the Preferred
Stock tendered herewith in accordance with the terms of the Exchange Offer, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to all such shares of the
Preferred Stock as are being tendered hereby and that are accepted for exchange
pursuant to the Exchange Offer, and irrevocably constitutes and appoints the
Exchange Agent as its agent and attorney-in-fact to cause the shares of the
Preferred Stock to be assigned, transferred and exchanged to the Company. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent as
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company) with
respect to the shares of the Preferred Stock tendered hereby and accepted for
exchange pursuant to the Exchange Offer, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver the shares of the Preferred Stock tendered hereby or
transfer ownership of such shares on the account books maintained by a
Depository Institution together, in either case, with all accompanying evidences
of transfer and authenticity to the Exchange Agent for the account of the
Company, (b) tender Preferred Stock in the Exchange Offer and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
shares of Preferred Stock, all in accordance with the terms and subject to the
conditions of the Exchange Offer.
The name(s) and address(es) of the registered holder(s) should be printed
above under "Description of Shares of the Preferred Stock Tendered", if not
already printed thereunder, exactly as they appear on the shares of the
Preferred Stock tendered hereby. The certificate number(s) and the number of
shares of the Preferred Stock to which this Letter of Transmittal relates,
together with the number of shares of the Preferred Stock that the undersigned
wishes to tender, should be indicated in the appropriate boxes above under
"Description of Shares of the Preferred Stock Tendered".
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the shares of
the Preferred Stock tendered hereby and to acquire the QUICS issuable upon
exchange of such tendered shares of the Preferred Stock in accordance with the
terms of the Exchange Offer, and that, when the same are accepted for exchange
by the Company, the Company will acquire good and marketable title thereto, free
and clear of all liens, restrictions, charges and encumbrances and that such
shares of the Preferred Stock are not subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of the shares of the Preferred
Stock.
All authority conferred, or agreed to be conferred, in this Letter of
Transmittal shall survive the death, bankruptcy or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, legal representatives, successors and
assigns of the undersigned. Except as stated in the Exchange Offer, this tender
is irrevocable.
- ---------------
(SM)Lehman Brothers has applied for a service mark for QUICS
4
<PAGE> 5
The undersigned understands that the tender of the shares of the Preferred
Stock and acceptance for exchange of such shares of the Preferred Stock pursuant
to one of the procedures described in the Prospectus under "The Exchange
Offer -- Procedure for Tendering the Preferred Stock" and in the instructions
hereto will constitute a binding agreement between the undersigned and the
Company, upon the terms and subject to the conditions of the Exchange Offer,
including the tendering holder's representation and warranty that (a) such
holder owns the shares of the Preferred Stock being tendered within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended,
and (b) the tender of such shares of the Preferred Stock complies with Rule
14e-4, only when either (i) a duly executed and properly completed copy of this
Letter of Transmittal accompanied by certificates or, in the case of a
book-entry transfer, an Agent's Message is received by the Exchange Agent, or
(ii)(A) a tender is made by or through an Eligible Institution (as defined in
the Prospectus); (B) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, is
received prior to the Expiration Time by the Exchange Agent; and (C) the
certificates for all tendered shares of the Preferred Stock, in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal, are received by the Exchange Agent within three New York Stock
Exchange trading days of the date of such Notice of Guaranteed Delivery, all as
provided under "The Exchange Offer -- Procedure for Tendering the Preferred
Stock" in the Prospectus.
Unless otherwise indicated herein under "Special Issuance Instructions"
below, please cause QUICS (and, if applicable, the certificate for any shares of
the Preferred Stock not exchanged) to be issued in the name of the undersigned
(and, in the case of shares of the Preferred Stock tendered by book-entry
transfer, by credit to the applicable account at a Depository Institution).
Similarly, unless otherwise indicated under "Special Delivery Instructions"
below, please send QUICS (and, if applicable, shares of the Preferred Stock not
exchanged) to the undersigned at the address shown below the signature of the
undersigned. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" to transfer any certificates for
the Preferred Shares from the name of the registered holder thereof if the
Company exchanges none of the shares of the Preferred Stock represented by such
certificates.
For tenders of shares of the Preferred Stock to be deemed to have been made
as of the time of delivery of the Notice of Guaranteed Delivery, the number of
shares of Preferred Stock specified as tendered in this Letter of Transmittal
must be identical to that number specified in the Notice of Guaranteed Delivery.
If no number is specified in this Letter of Transmittal or facsimile thereof,
specifications herein shall be deemed to be identical to specifications in the
Notice of Guaranteed Delivery. If specifications in the Notice of Guaranteed
Delivery and Letter of Transmittal are not identical, tenders shall be deemed to
have been made as of the date of delivery of the Letter of Transmittal (and any
other required documents) and specifications in the Letter of Transmittal shall
control.
5
<PAGE> 6
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES OF THE PREFERRED STOCK ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE EXCHANGE AGENT'S ACCOUNT AT A DEPOSITORY
INSTITUTION AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
----------------------------------------
Check the applicable box for the relevant Depository Institution:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
---------------------------------------------------
Transaction Code Number
------------------------------------------
/ / CHECK HERE IF TENDERED SHARES OF THE PREFERRED STOCK ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT PRIOR TO THE DATE HEREOF AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------------
Window Ticket Number (if any)
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------
Name of Eligible Institution that Guaranteed Delivery
----------------
Complete the Following If Delivered by Book-Entry Transfer:
Check the applicable box for the relevant Depository Institution:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
---------------------------------------------------
Transaction Code Number
------------------------------------------
6
<PAGE> 7
- ------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 2, 6, 7 AND 9)
To be completed ONLY if the QUICS to be issued in exchange for shares of the
Preferred Stock accepted for exchange, or certificates representing shares of
the Preferred Stock not tendered or not accepted for exchange, are to be
issued or reissued, in the name of someone other than the undersigned.
Issue to:
Name:
------------------------------------------------------------------------
(Please Type or Print)
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(ZIP Code)
---------------------------------------------------------------------
(Taxpayer Identification No.)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 6 AND 9)
To be completed ONLY if the QUICS to be issued in exchange for shares of the
Preferred Stock accepted for exchange, or certificates representing shares of
the Preferred Stock not tendered or not accepted for exchange, are to be sent
to someone other than the undersigned at an address other than that appearing
above under "Description of Shares of the Preferred Stock Tendered."
Issue to:
Name:
-------------------------------------------------------------------------
(Please Type or Print)
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(ZIP Code)
- ------------------------------------------------------
The term "Agent's Message" means a message, transmitted by a Depository
Institution to, and received by, the Exchange Agent, and forming a part of a
book-entry confirmation, which states that such Depository Institution has
received an express acknowledgment from the participant in such Depository
Institution tendering the shares of the Preferred Stock which are the subject of
such book-entry confirmation, that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that the Company may
enforce such agreement against such participant.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name shares of the
Preferred Stock are registered on the books of First Chicago Trust Company of
New York, or any other person who has obtained a properly completed stock power
from the registered holder or any person whose shares of the Preferred Stock are
held of record by a Depository Institution who desires to deliver such shares of
the Preferred Stock by book-entry transfer at such Depository Institution.
Holders who tender shares of the Preferred Stock by book-entry transfer are
referred to herein as "Book Entry Holders" and other holders are referred to
herein as "Certificate Holders". Holders of shares of the Preferred Stock whose
certificates are not immediately available or who cannot deliver their
certificates and all other documents required hereby to the Exchange Agent prior
to the Expiration Time or comply with book-entry transfer procedures on a timely
basis must tender their shares of the Preferred Stock according to the
guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures" in the Prospectus. See Instruction 1.
7
<PAGE> 8
SIGN HERE
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
certificate(s) of share(s) of the Preferred Stock or on a security position
listing or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
set forth the following information and see Instruction 6.)
PLEASE ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW.
FAILURE TO DO SO WILL RESULT IN BACKUP WITHHOLDING.
SEE "IMPORTANT TAX INFORMATION -- SUBSTITUTE FORM W-9" BELOW.
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: , 1995
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED. SEE INSTRUCTIONS 2 AND 6)
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
- --------------------------------------------------------------------------------
Dated: , 1995
8
<PAGE> 9
NOTICE OF SOLICITED TENDERS
The Company will pay to any Soliciting Dealer, as defined in the
Prospectus, a solicitation fee of $.50 per Share for each share of the Preferred
Stock tendered and exchanged pursuant to the Offer. No such fee shall be payable
to a Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a tendering holder (other than itself). The
Dealer Managers may not, until the Expiration Time, buy, sell, deal or trade in
the shares of the Preferred Stock for their own account. No broker, dealer,
bank, trust company or fiduciary shall be deemed to be the agent of the Company,
the Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Exchange Offer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm:
(Please Print)
Name of Individual Broker or Financial Consultant:
Identification Number (if known):
Address:
(Include Zip Code)
The following is to be completed ONLY if customer's Preferred Stock held in
nominee name are tendered.
<TABLE>
<S> <C>
BENEFICIAL OWNERS NUMBER OF SHARES OF PREFERRED STOCK TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
Beneficial Owner No. 1........................ ----------------------------------------------
Beneficial Owner No. 2........................ ----------------------------------------------
Beneficial Owner No. 3........................ ----------------------------------------------
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that: (i) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (ii) it is
entitled to such compensation for such solicitation under the terms and
conditions of the Prospectus; (iii) in soliciting tenders of shares of Preferred
Stock, it has used no soliciting materials other than those furnished by the
Company; and (iv) if it is a foreign broker or dealer not eligible for
membership in the National Association of Securities Dealers, Inc. (the "NASD"),
it has agreed to conform to the NASD's Rules of Fair Practice in making
solicitations.
SOLICITING DEALERS ARE NOT ENTITLED TO A FEE WITH RESPECT TO SHARES OF PREFERRED
STOCK BENEFICIALLY OWNED BY SUCH SOLICITING DEALER OR WITH RESPECT TO ANY SHARES
THAT ARE REGISTERED IN THE NAME OF A SOLICITING DEALER UNLESS SUCH SHARES ARE
HELD BY SUCH SOLICITING DEALER AS NOMINEE AND ARE TENDERED FOR THE BENEFIT OF
BENEFICIAL HOLDERS IDENTIFIED IN THE LETTER OF TRANSMITTAL.
9
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATE. This Letter of
Transmittal is to be used if certificates representing shares of the Preferred
Stock are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer, other than by Agent's Message,
set forth in the Prospectus under "The Exchange Offer -- Procedure for Tendering
Preferred Stock". Shares of the Preferred Stock may be tendered and will be
accepted for exchange only in denominations of $25 principal amount and integral
multiples thereof. Certificates for all physically delivered shares of the
Preferred Stock or confirmation of any book-entry transfer to the Exchange
Agent's account at a Depository Institution of shares of the Preferred Stock
tendered by book-entry transfer, as well as this Letter of Transmittal or
facsimile thereof, properly completed and duly executed, and any required
signature guarantee, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at one of its addresses set forth herein prior
to the Expiration Time. Holders of shares of the Preferred Stock whose
certificates are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange Agent before the
Expiration Time or comply with book-entry transfer procedures on a timely basis
may tender their shares of the Preferred Stock by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures". Pursuant to such procedures: (i) such tender must be made
by or through an Eligible Institution (as defined in the Prospectus); (ii) prior
to the Expiration Time, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) substantially in the form
provided by the Company which contains a signature guaranteed by an Eligible
Institution in the form set forth in such Notice of Guaranteed Delivery (unless
such tender is for the account of an Eligible Institution) which sets forth the
name and address of the holder of the shares of the Preferred Stock and the
number of shares of the Preferred Stock tendered, states that the tender is
being made thereby and guarantees that within three (3) New York Stock Exchange
trading days after the Expiration Time, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, and any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
shares of the Preferred Stock, and any other documents required by the Letter of
Transmittal, together with the shares of the Preferred Stock will be deposited
by the Eligible Institution with the Exchange Agent; and (iii) all tendered
shares of the Preferred Stock (or a confirmation of any book-entry transfer of
such shares of the Preferred Stock into the Exchange Agent's account at a
Depository Institution) as well as the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
shares of the Preferred Stock, and any other documents required by this Letter
of Transmittal, must be received by the Exchange Agent within three (3) New York
Stock Exchange trading days after the Expiration Time, all as provided in the
Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures".
THE METHOD OF DELIVERY OF SHARES OF THE PREFERRED STOCK AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER TENDERING SHARES OF THE PREFERRED STOCK AND, EXCEPT AS OTHERWISE PROVIDED
BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF SENT BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE PROPERLY
INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE
MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of this Letter of Transmittal, or facsimile
thereof, waive any right to receive any notice of the acceptance of their shares
of the Preferred Stock for exchange.
10
<PAGE> 11
2. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office in the United States that is a participant in the Security Transfer
Medallion Program or the Stock Exchange Medallion Program (each of the foregoing
being referred to as an "Eligible Institution"), unless the shares of the
Preferred Stock tendered hereby are tendered (i) by a registered holder (which
term, for purposes of this Letter of Transmittal, shall include any participant
in a Depository Institution whose name appears on a security position listing as
the owner of shares of the Preferred Stock) of such shares who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" herein or (ii) for the account of an Eligible Institution. See
Instruction 6. If the shares of the Preferred Stock are registered in the name
of a person other than the signer of this Letter of Transmittal, or if
certificates for QUICS and/or for unexchanged shares of the Preferred Stock are
to be issued or returned to a person other than the registered holder, then the
shares of the Preferred Stock must be endorsed by the registered holder or be
accompanied by a written instrument or instruments of transfer or exchange in a
form satisfactory to the Company duly executed by the registered holder with
such signatures guaranteed by an Eligible Institution. See Instruction 6.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers of the shares of the Preferred Stock should be listed on a
separate signed schedule attached hereto.
4. PARTIAL TENDERS. Issuance of QUICS in exchange for shares of the
Preferred Stock will be made only against deposit of tendered shares of the
Preferred Stock. If less than the entire number of shares of the Preferred Stock
evidenced by a submitted certificate is tendered, the tendering holder of shares
of the Preferred Stock should fill in the number of shares tendered in the
appropriate boxes above entitled "Number of Shares Tendered." The Exchange Agent
will then issue and send to the tendering holder (unless otherwise requested by
the holder under "Special Issuance Instructions" and "Special Delivery
Instructions" in this Letter of Transmittal), a newly issued certificate for
shares of the Preferred Stock submitted but not tendered, together with any
tendered shares of the Preferred Stock that were not accepted for exchange. The
entire number of all shares of the Preferred Stock deposited with the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
Tendered shares of the Preferred Stock not accepted for exchange by the
Company will be returned without expense to the tendering holder of such shares
of the Preferred Stock (or, in the case of the shares of the Preferred Stock
tendered by book-entry transfer into the Exchange Agent's account at a
Depository Institution, such shares of the Preferred Stock will be credited to
an account maintained at such Depository Institution as promptly as practicable
following the Expiration Time.
5. WITHDRAWAL RIGHTS. Tenders of shares of the Preferred Stock pursuant to
the Exchange Offer are irrevocable, except that shares of the Preferred Stock
tendered pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Time and, unless theretofore accepted for exchange pursuant to
the Exchange Offer, may also be withdrawn at any time after 40 business days
from the date of the Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at one of its addresses set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the holder. Any such notice of
withdrawal must specify (i) the holder named in the Letter of Transmittal as
having tendered shares of the Preferred Stock to be withdrawn, (ii) if the
shares of the Preferred Stock are held in certificated form, the certificate
numbers of such shares to be withdrawn, (iii) that such holder is withdrawing
its election to have such shares of the Preferred Stock exchanged, and the name
of the registered holder of such shares of the Preferred Stock, and such notice
of withdrawal must be signed by the holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
shares of the Preferred Stock being withdrawn. The Exchange Agent will return
the properly withdrawn shares of the Preferred Stock promptly following receipt
of notice of withdrawal. If shares of the Preferred Stock have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal must
specify the name and number of the account at a Depository Institution to be
credited with the withdrawn shares of
11
<PAGE> 12
the Preferred Stock and otherwise comply with such Depository Institution's
procedures. All questions as to the validity of a notice of withdrawal,
including the time of receipt, will be determined by the Company, and such
determination will be final and binding on all parties. Withdrawal of tenders of
shares of the Preferred Stock may not be rescinded and any shares of the
Preferred Stock withdrawn will not thereafter be deemed to be validly tendered
for the purposes of the Exchange Offer. Properly withdrawn shares of the
Preferred Stock, however, may be retendered by following the procedures therefor
described elsewhere herein at any time prior to the Expiration Time. See "The
Exchange Offer -- Procedure for Tendering Preferred Stock" in the Prospectus.
6. SIGNATURES ON LETTERS OF TRANSMITTAL, WRITTEN INSTRUMENTS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the shares of the Preferred Stock tendered hereby, the signatures
must correspond with the name(s) as written on the face of the certificates
without alteration, enlargement or any change whatsoever.
If any of the shares of the Preferred Stock tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any of the tendered shares of the Preferred Stock are registered in
different names on several certificates, it will be necessary to complete, sign,
and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal or any certificates or written instrument or
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and proper evidence satisfactory to the Company of their
authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the shares of the Preferred Stock listed and transmitted hereby, no endorsements
of certificates or separate written instruments of transfer or exchange are
required unless the QUICS due in respect of the shares of the Preferred Stock
accepted for exchange are to be issued to, or certificates representing shares
of the Preferred Stock not tendered or not exchanged and paid for are to be
issued in the name of, a person other than the registered holder(s). Signatures
on such certificates or written instruments of transfer or exchange must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the certificate(s) listed, the certificate(s) must be
endorsed by the registered holder, or be accompanied by a written instrument or
instruments of transfer or exchange in form satisfactory to the Company duly
executed by the registered holder. Signatures on such certificates or written
instrument or instruments of transfer or exchange must be guaranteed by an
Eligible Institution.
7. TRANSFER TAXES. The Company will pay any transfer taxes with respect to
the transfer and exchange of shares of the Preferred Stock to it or its order
pursuant to the Exchange Offer. If, however, the QUICS due in respect of the
shares of the Preferred Stock accepted for exchange are to be issued to, or (in
the circumstances permitted hereby) if certificates for shares of the Preferred
Stock not tendered or not exchanged are to be registered in the name of, any
person other than the person(s) signing this Letter of Transmittal, the amount
of any transfer taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person will be deducted from the
QUICS due in respect of the shares of the Preferred Stock accepted for exchange
if satisfactory evidence of the payment of such taxes, or exemption therefrom,
is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES REPRESENTING SHARES OF THE
PREFERRED STOCK LISTED IN THIS LETTER OF TRANSMITTAL.
8. WITHHOLDING ON GROSS PROCEEDS PAID PURSUANT TO THE EXCHANGE OFFER. No
withholding of United States federal income tax will be required with respect to
a foreign holder upon the exchange of the shares of the Preferred Stock for
QUICS pursuant to the Exchange Offer provided such holder certifies to the
12
<PAGE> 13
Company on the attached Certificate for No United States Federal Income Tax
Withholding on Exchange that such holder owns (actually or constructively)
solely shares of the Preferred Stock or not more than one percent of the shares
of the Preferred Stock and not more than one percent of any other class of the
Company's stock. If a foreign holder does not provide this Certification to the
Exchange Agent, the Company will withhold federal income tax at a rate of 30% of
the sum of (a) the fair market value of the QUICS issued to such holder pursuant
to the Exchange Offer and (b) the Payment in Lieu of Accumulated Dividends, as
defined in the Prospectus unless such holder is entitled to a reduced
withholding tax rate under the provisions of an income tax treaty, in which case
the tax will be withheld at the reduced rate.
No backup withholding at 31% will be required upon the exchange of the
shares of the Preferred Stock for QUICS pursuant to the Exchange Offer provided
that the holder submits a completed Substitute Form W-9 or, in the case of
certain foreign holders, a completed Form W-8, to the Exchange Agent.
For further information with respect to United States federal withholding
taxes, see "Important Tax Information."
9. SPECIAL ISSUANCE INSTRUCTIONS AND SPECIAL DELIVERY INSTRUCTIONS. If
certificates for QUICS and/or unexchanged shares of the Preferred Stock are to
be issued, reissued or returned to a person other than the signer of this Letter
of Transmittal or if such certificates are to be sent or returned to someone
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed.
10. SOLICITED TENDERS. The Company will pay to a Soliciting Dealer (as
herein defined) a solicitation fee of $.50 per share for any shares of the
Preferred Stock validly tendered and accepted for exchange pursuant to the
Exchange Offer. "Soliciting Dealer" includes (i) any broker or dealer in
securities, including any Dealer Manager in its capacity as a dealer or broker,
which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (iii) any bank or trust
company. In order for a Soliciting Dealer to receive a solicitation fee with
respect to the tender of shares of the Preferred Stock, the Exchange Agent must
either have received a Letter of Transmittal with the portion thereof entitled
"Notice of Solicited Tenders" properly completed and duly executed prior to the
Expiration Time or, if shares of Preferred Stock are being tendered by
book-entry transfer made to an account maintained by the Exchange Agent with a
Depository Institution, the Soliciting Dealer must return a properly completed
and duly executed Notice of Solicited Tenders (included in the materials
provided to brokers and dealers) to the Exchange Agent within three days after
the Expiration Time. Soliciting Dealers are not entitled to a fee with respect
to shares of Preferred Stock beneficially owned by such Soliciting Dealer or
with respect to any shares that are registered in the name of a Soliciting
Dealer unless such shares are held by such Soliciting Dealer as nominee and are
tendered for the benefit of beneficial holders identified in the Letter of
Transmittal. No such fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer the amount of such fee
to a tendering holder (other than itself). The Dealer Managers may not, until
the Expiration Time, buy, sell, deal or trade in the shares of the Preferred
Stock for their own account. No broker, dealer, bank, trust company or fiduciary
shall be deemed to be the agent of the Company, the Exchange Agent, the
Information Agent or the Dealer Managers for purposes of the Exchange Offer.
11. WAIVER OF CONDITIONS. Subject to the terms of the Exchange Offer, the
conditions of the Exchange Offer may be waived by the Company, in whole or in
part, at any time and from time to time, in the Company's sole discretion, in
the case of any shares of the Preferred Stock tendered.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Prospectus, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at its address set forth below.
13. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificates have been
lost, mutilated, destroyed or stolen, the holder should promptly notify First
Chicago Trust Company of New York at (201) 324-0498. The
13
<PAGE> 14
holder will then be instructed as to the steps that must be taken in order to
replace the certificate(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing certificate(s) have been
followed.
14. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
15. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of Letters of Transmittal or shares
of the Preferred Stock will be resolved by the Company in the exercise of its
absolute discretion, and such determination will be final and binding on all
parties. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the right to waive any irregularities or conditions of tender as to the
particular shares of the Preferred Stock covered by any Letter of Transmittal or
tendered pursuant to such letter. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding on all parties.
IMPORTANT: IN ORDER VALIDLY TO TENDER SHARES OF THE PREFERRED STOCK, THIS
LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH CERTIFICATES
REPRESENTING SHARES OF THE PREFERRED STOCK OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ANY REQUIRED SIGNATURE GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS)
OR AN AGENT'S MESSAGE MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION TIME OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
14
<PAGE> 15
IMPORTANT TAX INFORMATION
SUBSTITUTE FORM W-9
Under the federal income tax law, each tendering holder of shares of the
Preferred Stock is required to provide the Exchange Agent (as payer) with such
holder's correct taxpayer identification number on Substitute Form W-9 below. If
such holder is an individual, the taxpayer identification number is his/her
social security number. If the Exchange Agent is not provided with the correct
taxpayer identification number, the holder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such holder pursuant to the Exchange Offer and with respect to QUICS acquired
pursuant to the Exchange Offer may be subject to federal income tax backup
withholding.
Certain holders (including, among others, corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. A corporation must, however, complete the Substitute Form W-9,
providing its taxpayer identification number and indicating that it is exempt
from backup withholding to establish its exemption from backup withholding. In
order for a foreign individual to qualify as an exempt recipient, that holder
must submit a Form W-8 (available from the Information Agent), signed under
penalties of perjury, attesting to that individual's exempt status. See the
enclosed Guidelines for Certification of Taxpayer Identification Number for
additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any consideration payable to the holder. Backup withholding is not an
additional tax. Rather, the amount of tax withheld will be a credit against the
tax liability of persons subject to backup withholding. If withholding results
in an overpayment of taxes, a refund may be obtained.
What Number to give the Exchange Agent. The holder of shares of the
Preferred Stock is required to give the Exchange Agent the social security
number or employer identification number of the record owner of the shares of
the Preferred Stock. If the shares of the Preferred Stock are in more than one
name or are not in the name of the actual owner, consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
CERTIFICATION FOR NO UNITED STATES FEDERAL INCOME TAX
WITHHOLDING ON EXCHANGE
No withholding of United States federal income tax will be required with
respect to a foreign holder upon the exchange of Preferred Stock for QUICS
pursuant to the Exchange Offer provided such holder certifies to the Company on
the attached Certificate for No United States Federal Income Tax Withholding on
Exchange that such holder owns (actually or constructively) solely shares of the
Preferred Stock, or not more than one percent of the shares of the Preferred
Stock and not more than one percent of any other class of the Company's stock.
In determining whether it can make this certification, a foreign holder must
take into account not only the Preferred Stock and other stock of the Company
that such holder actually owns, but also Preferred Stock and other stock of the
Company that such holder constructively owns under applicable U.S. federal
income tax rules. Under these rules, a foreign holder may constructively own
Preferred Stock and other stock of the Company actually owned, and in some cases
constructively owned, by certain related individuals or entities, and Preferred
Stock and other stock of the Company that the holder has the right to acquire by
exercise of an option. Foreign holders should consult their own U.S. tax
advisors about the application of the constructive ownership rules to their
particular situations.
If a foreign holder does not provide this Certificate to the Exchange
Agent, the Company will withhold federal income tax at a rate of 30% of the sum
of (a) the fair market value of the QUICS issued to such holder pursuant to the
Exchange Offer and (b) the Payment in Lieu of Accumulated Dividends unless such
holder is entitled to a reduced withholding tax rate with respect to dividend
income under the provisions of an income tax treaty, in which case the tax will
be withheld at the reduced rate.
15
<PAGE> 16
FORM W-8
No withholding of United States federal income tax will be required with
respect to the payment by the Company or any paying agent of principal or
interest on QUICS beneficially owned by a foreign holder, provided that (i) the
beneficial owner does not own (actually or constructively) 10% or more of the
total combined voting power of all classes of the Company's stock entitled to
vote, (ii) the beneficial owner is not a controlled foreign corporation that is
related to the Company through stock ownership, (iii) the beneficial owner is
not a bank whose receipt of interest on the QUICS is described in section
881(c)(3)(A) of the Code and (iv) either (y) the beneficial owner certifies to
the Company or its agent on Form W-8, under the penalties of perjury, that it is
not a U.S. person, citizen or resident and provides its name and address or (z)
a financial institution holding the QUICS on behalf of the beneficial owner
certifies, under penalties of perjury, that Form W-8 has been received by it and
furnishes the Company or its agent with a copy thereof. CONTACT THE INFORMATION
AGENT AT D.F. KING & CO., INC., 77 WATER STREET, NEW YORK, NEW YORK 10005,
1-800-669-5500 (TOLL-FREE), IF YOU NEED A COPY OF FORM W-8.
16
<PAGE> 17
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------
Name(s) as shown above on certificate(s) for shares of Preferred Stock (if joint ownership,
list first and circle the name of the person or entity whose number you enter in Part I
below).
- ---------------------------------------------------------------------------------------------
Address (if holder does not complete, signature in Part III below will constitute a
certification that the address on the reverse hereof is correct).
- ---------------------------------------------------------------------------------------------
City, State, and Zip Code
- ---------------------------------------------------------------------------------------------
Social Security
SUBSTITUTE Number
FORM W-9 OR
Department of the
PART I -- PLEASE PROVIDE
Treasury Internal YOUR TIN IN THE BOX -----------------------------
Revenue Service AT RIGHT AND CERTIFY Employer
Payer's Request for BY SIGNING AND Identification
Taxpayer DATING BELOW Number
Identification TIN Applied for / /
Number (TIN)
and Certification --------------------------------------------------------------
PART II --
For Payees exempt from backup withholding, write "Exempt"
here.
-------------------------------------
- ---------------------------------------------------------------------------------------------
PART III -- Certification. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup withholding,
(b) I have not been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
Certification Instructions. You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because of under reporting
interest or dividends on your tax return. However, if you have been notified by the IRS
that you are no longer subject to backup withholding, do not cross out item (2).
- ---------------------------------------------------------------------------------------------
SIGNATURE DATE
---------------------------- ------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART I OF SUBSTITUTE FORM W-9
17
<PAGE> 18
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within 60 days, thirty-one
(31) percent of all reportable payments made to me will be withheld until I
provide a properly-certified Taxpayer Identification Number to the Exchange
Agent.
- ------------------------------------ ---------------------------------
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
18
<PAGE> 19
CERTIFICATE FOR NO UNITED STATES FEDERAL INCOME TAX
WITHHOLDING ON EXCHANGE
HOLDERS OF SHARES OF THE PREFERRED STOCK WITH A MAILING ADDRESS OUTSIDE OF
THE UNITED STATES MUST CERTIFY TO ONE OF THE FOLLOWING STATEMENTS TO AVOID THE
WITHHOLDING OF UNITED STATES FEDERAL INCOME TAX AT A RATE OF 30% (OR LOWER
TREATY RATE IF APPLICABLE) OF THE GROSS PROCEEDS PAYABLE TO SUCH HOLDERS
PURSUANT TO THE EXCHANGE OFFER:
A. I certify under penalties of perjury that I own (actually or constructively
under the rules of Section 318 of the Internal Revenue Code of 1986, as
amended*) either (a) solely shares of the Preferred Stock or (b) not more
than one percent of the shares of the Preferred Stock and not more than one
percent of any other class of the Company's stock. I understand that if I
certify to either (a) or (b) of the preceding sentence, the Company will not
withhold United States federal income tax with respect to the gross proceeds
payable to me pursuant to the Exchange Offer.
- ---------------
* For purposes of making this certification, a holder must take into account
not only the Preferred Stock and other stock of the Company that such holder
actually owns, but also Preferred Stock and other stock of the Company that
such holder constructively owns under Section 318 of the Internal Revenue
Code of 1986, as amended. NON-UNITED STATES HOLDERS SHOULD CONSULT THEIR OWN
UNITED STATES TAX ADVISORS ABOUT THE APPLICATION OF THE CONSTRUCTIVE
OWNERSHIP RULES OF SECTION 318 TO THEIR PARTICULAR SITUATIONS.
SIGNATURE: DATE:
------------------------------------ ----------------------
B. Under penalties of perjury, I certify that I am a United States Holder.**
- ---------------
** A "United States Holder" means a beneficial owner of Preferred Stock that is
(i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
SIGNATURE: DATE:
------------------------------------ ----------------------
19
<PAGE> 20
THE INFORMATION AGENT IS:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
1-800-669-5500 (TOLL-FREE)
THE DEALER MANAGERS FOR THE EXCHANGE OFFER ARE:
<TABLE>
<S> <C> <C> <C> <C>
Lehman Brothers
Liability Management
Group
Three World
Financial Center
200 Vesey Street Merrill Lynch & Co.
New York, NY 10285 World Financial Center
Contact: Roy Henriksson North Tower
1-800-438-3242 New York, NY 10281
(toll-free) (212) 236-4565 PaineWebber Incorporated
1-212-528-7581 (collect) 1285 Avenue of
(collect) the Americas
New York, NY 10019
(800) 324-0210 Prudential Securities
(toll-free) Incorporated
One New York Plaza Smith Barney Inc.
New York, NY 10292 388 Greenwich Street
(212) 778-4040 New York, NY 10013
(collect) Contact: Paul Galant
(800) 813-3754
(toll-free)
</TABLE>
20
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF THE
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
OF
SOURCE ONE MORTGAGE SERVICES CORPORATION
As set forth in the Exchange Offer (as defined below), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer if
certificates representing shares of the 8.42% Cumulative Preferred Stock, Series
A, par value $.01 per share (the "Preferred Stock"), of Source One Mortgage
Services Corporation, a Delaware corporation (the "Company"), are not
immediately available or time will not permit a holder's shares of the Preferred
Stock, the Letter of Transmittal or other required documents to reach First
Chicago Trust Company of New York as Exchange Agent (the "Exchange Agent"),
prior to the Expiration Time (as defined in the Prospectus (as defined below)),
or the procedure for book-entry transfer cannot be completed on a timely basis.
Such form may be delivered by facsimile transmission, mail or hand delivery to
the Exchange Agent. See "The Exchange Offer -- Guaranteed Delivery Procedures"
in the Prospectus.
The Exchange Agent for the Exchange Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
(For Eligible Institutions Only)
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or Suite 4680-SOM
Mail Suite 4660-SOM (201) 222-4721 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005
</TABLE>
Confirm Receipt of Notice of Guaranteed
Delivery by Telephone:
(201) 222-4707
------------------
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY OR CONSENT.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, in accordance with the
Company's offer to exchange up to $100,000,000 aggregate principal amount of its
% Quarterly Income Capital Securities ("QUICS"(SM)) (Subordinated Interest
Deferrable Debentures, Due 2025) for any and all shares of its Preferred Stock,
upon the terms and subject to the conditions set forth in the Prospectus dated
, 1995 (the "Prospectus"), and in the related Letter of Transmittal
(which, together with the Prospectus, constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the shares of the Preferred Stock set forth
below pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus.
Number of Shares Tendered:
----------
SIGN AND DATE HERE
Pursuant to the Prospectus and the Exchange Offer, the undersigned hereby
tenders to the Company the shares of Preferred Stock set forth above.
<TABLE>
<S> <C>
Date: , 1995 Name(s)
------------------------------
X
------------------------------------------- --------------------------------------------
X
------------------------------------------- --------------------------------------------
(SIGNATURE(S) OF HOLDER(S)) (PLEASE TYPE OF PRINT)
Address
- -------------------------------------------- -------------------------------------
- -------------------------------------------- --------------------------------------------
(Certificate Nos. (if available)) (ZIP CODE)
Area Code and Tel. No.
---------------------
If shares of Preferred Stock will be
tendered by book-entry transfer:
Name of Tendering Institution:
--------------
</TABLE>
Check box of book-entry transfer facility:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
/ / Midwest Securities Trust Company
Account No.
--------------------------------
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED WITH
RESPECT TO THE TENDER OF SHARES
- ------------------------
(SM)Lehman Brothers has applied for a service mark for QUICS.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office in the United States,
guarantees (a) that the above named person(s) "own(s)" the shares of the
Preferred Stock tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) that such tender of such shares
of the Preferred Stock complies with Rule 14e-4, and (c) to deliver to the
Exchange Agent the shares of the Preferred Stock tendered hereby or confirmation
of book-entry transfer of such shares into the Exchange Agent's account at The
Depository Trust Company, Midwest Securities Trust Company or Philadelphia
Depository Trust Company, in proper form for transfer, together with the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined in the
Prospectus) in connection with a book-entry transfer of the Shares of the
Preferred Stock, and any other required documents, within three (3) New York
Stock Exchange trading days after the Expiration Time.
<TABLE>
<S> <C>
Name of Firm
---------------------------------- ---------------------------------------------
(AUTHORIZED SIGNATURE)
Address Title
---------------------------------------- ---------------------------------------
Name
- ----------------------------------------------- ----------------------------------------
(ZIP CODE) PLEASE TYPE OR PRINT
Area Code and Tel. No. Dated
------------------------- ---------------------------------- , 1995
</TABLE>
NOTE: DO NOT SEND CERTIFICATES REPRESENTING SHARES OF PREFERRED STOCK WITH THIS
FORM. SUCH CERTIFICATES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL.
3
<PAGE> 1
SOURCE ONE MORTGAGE SERVICES CORPORATION
OFFER TO EXCHANGE
% QUARTERLY INCOME CAPITAL SECURITIES (QUICS(SM))
(SUBORDINATED INTEREST DEFERRABLE DEBENTURES, DUE 2025)
FOR
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing the materials listed below relating to the offer of Source
One Mortgage Services Corporation, a Delaware corporation (the "Company"), to
exchange up to $100,000,000 in aggregate principal amount of its %
Quarterly Income Capital Securities (the "QUICS") (Subordinated Interest
Deferrable Debentures, Due 2025) for any and all shares of its 8.42% Cumulative
Preferred Stock, Series A, $.01 par value per share (the "Preferred Stock"),
upon the terms and subject to the conditions set forth in the Prospectus dated
, 1995 (the "Prospectus") and in the related Letter of Transmittal
(which, together with the Prospectus, constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. The Prospectus;
2. The Letter of Transmittal to be used by registered holders of
shares of the Preferred Stock in accepting the Exchange Offer;
3. A printed form of letter which may be sent to your clients for
whose account you hold shares of the Preferred Stock in your name or in the
name of your nominee, with space provided for obtaining such clients'
instructions with regard to the Exchange Offer;
4. The Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if shares of the Preferred Stock are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely
basis;
5. A Questions and Answers pamphlet which has been sent to holders and
which may be used by you in responding to inquiries from your clients;
6. A letter from the Chairman of the Company to the holders of the
Preferred Stock; and
7. A return envelope addressed to First Chicago Trust Company of New
York, the Exchange Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1995, UNLESS EXTENDED.
The Company will reimburse brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding the Prospectus and the related documents
- ---------------
(SM) Lehman Brothers has applied for a service mark for QUICS.
<PAGE> 2
to the beneficial owners of shares of the Preferred Stock held by them as
nominees or in a fiduciary capacity and in handling or forwarding tenders for
their customers.
The Company will pay to a Soliciting Dealer (as herein defined) a
solicitation fee of $.50 per share of the Preferred Stock for any share validly
tendered and accepted for exchange pursuant to the Exchange Offer. "Soliciting
Dealer" includes (i) any broker or dealer in securities, including any Dealer
Manager in its capacity as a broker or dealer, which is a member of any national
securities exchange or of the National Association of Securities Dealers, Inc.
(the "NASD"), (ii) any foreign broker or dealer not eligible for membership in
the NASD which agrees to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States to the same extent as though it
were an NASD member or (iii) any bank or trust company. In order for a
Soliciting Dealer to receive a solicitation fee with respect to the tender of
shares of the Preferred Stock, the Exchange Agent must either have received a
Letter of Transmittal with the portion thereof entitled "Notice of Solicited
Tenders" properly completed and duly executed prior to the Expiration Time or,
if shares of Preferred Stock are being tendered by book-entry transfer made to
an account maintained by the Exchange Agent with The Depository Trust Company,
Midwest Securities Trust Company or Philadelphia Depository Trust Company, the
Soliciting Dealer must return a properly completed and duly executed Notice of
Solicited Tenders (included as page four of this letter) to the Exchange Agent
within three New York Stock Exchange trading days after the Expiration Time.
No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
tendering holder (other than itself). Soliciting Dealers are not entitled to a
solicitation fee with respect to shares of the Preferred Stock beneficially
owned by such Soliciting Dealer or with respect to any shares which are
registered in the name of a Soliciting Dealer unless such shares are held by
such Soliciting Dealer as nominee and are tendered for the benefit of beneficial
holders identified in the Letter of Transmittal. The Dealer Managers may not,
until the Expiration Time, buy, sell, deal or trade in the shares of the
Preferred Stock for their account. No broker, dealer, bank, trust company or
fiduciary shall be deemed to be the agent of the Company, the Exchange Agent,
the Dealer Managers or the Information Agent for purposes of the Exchange Offer.
The Company expressly reserves the right, in its sole discretion, to (i)
extend, amend or modify the terms of the Exchange Offer in any manner and (ii)
withdraw or terminate the Exchange Offer and not accept for exchange any shares
of the Preferred Stock if the "Minimum Condition" (as defined in the Prospectus)
or additional conditions set forth in "The Exchange Offer -- Conditions of the
Exchange Offer" are not satisfied or waived by the Company. See "The Exchange
Offer -- Expiration; Extension; Termination; Amendment" in the Prospectus.
Additional copies of the enclosed materials may be obtained by contacting
D.F. King & Co., Inc., the Information Agent, at 77 Water Street, New York, New
York 10005, 1-800-669-5500 (toll-free).
Very truly yours,
LEHMAN BROTHERS
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF SOURCE ONE MORTGAGE SERVICES CORPORATION, THE DEALER MANAGERS, THE
EXCHANGE AGENT OR THE INFORMATION AGENT, OR AUTHORIZE YOU TO MAKE ANY STATEMENT
OR USE ANY DOCUMENT IN CONNECTION
2
<PAGE> 3
WITH THE EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
Enclosures
THE DEALER MANAGERS FOR THE EXCHANGE
OFFER ARE:
<TABLE>
<S> <C> <C> <C> <C>
LEHMAN BROTHERS
Liability
Management Group
Three World
Financial Center
200 Vesey Street
New York, NY 10285
Contact: Roy
Henriksson
1-800-438-3242
(toll free) MERRILL LYNCH & CO.
(212) 528-7581 World Financial Center
(collect) North Tower
New York, NY 10281
(212) 236-4565 PAINEWEBBER INCORPORATED
(collect) 1285 Avenue of
the Americas
New York, NY 10019
(800) 324-0210 PRUDENTIAL
(toll-free) SECURITIES
Incorporated
One New York Plaza
New York, NY 10292 SMITH BARNEY INC.
(212) 778-4040 388 Greenwich Street
(collect) New York, NY 10013
Contact: Paul Galant
(800) 813-3754
(toll-free)
</TABLE>
3
<PAGE> 4
NOTICE OF SOLICITED TENDERS
List below the number of shares of Preferred Stock whose tender you have
solicited. All shares of Preferred Stock beneficially owned by a beneficial
owner, whether in one account or several, and in however many capacities, must
be aggregated for purposes of completing the tables below. Any questions as to
what constitutes beneficial ownership should be directed to the Exchange Agent.
If the space below is inadequate, list the shares of Preferred Stock on a
separate signed schedule and affix the list to this Notice of Solicited Tenders.
PLEASE DO NOT COMPLETE THE SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY
EXCHANGE AGENT".
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE EXCHANGE AGENT
WITHIN THREE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER THE EXPIRATION DATE AT
THE ADDRESS SET FORTH IN THE BACK COVER OF THE PROSPECTUS. ALL QUESTIONS
CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THE
PROSPECTUS.
<TABLE>
<CAPTION>
TO BE TO BE TO BE
COMPLETED COMPLETED TO BE COMPLETED
BY THE BY THE COMPLETED ONLY BY
SOLICITING SOLICITING ONLY BY EXCHANGE
DEALER DEALER EXCHANGE AGENT AGENT
---------------- ---------- ---------------- ---------
NUMBER OF SHARES VOI TICKET NUMBER OF SHARES FEE $0.50
BENEFICIAL OWNERS TENDERED NUMBER* ACCEPTED PER SHARE
- ------------------------------------------ ---------------- ---------- ---------------- ---------
<S> <C> <C> <C> <C>
Beneficial Owner No. 1....................
------- ---------- ------- ---------
Beneficial Owner No. 2....................
------- ---------- ------- ---------
Beneficial Owner No. 3....................
------- ---------- ------- ---------
Beneficial Owner No. 4....................
------- ---------- ------- ---------
Beneficial Owner No. 5....................
------- ---------- ------- ---------
Total................................
------- ---------- ------- ---------
</TABLE>
- -------------------------
* Complete if shares of Preferred Stock are delivered by book-entry transfer.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited Tenders
or incur any liability for failure to give such notification.
The undersigned hereby confirms that; (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder. In connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Prospectus; (iii) in soliciting tenders of
shares of Preferred Stock, it has used no soliciting materials other than those
furnished by the Company; and (iv) if it is a foreign broker or dealer not
eligible for membership in the NASD, it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations outside the United States to the
same extent as though it were an NASD member.
- ------------------------------------------------------
Printed Firm Name
- ------------------------------------------------------
Authorized Signature
- ------------------------------------------------------
Area Code and Telephone Number
- ------------------------------------------------------
Address
- ------------------------------------------------------
Attention
- ------------------------------------------------------
City, State, Zip Code
4
<PAGE> 1
SOURCE ONE MORTGAGE SERVICES CORPORATION
OFFER TO EXCHANGE
% QUARTERLY INCOME CAPITAL SECURITIES (QUICS(SM))
(SUBORDINATED INTEREST DEFERRABLE DEBENTURES, DUE 2025)
FOR
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Prospectus dated , 1995 (the
"Prospectus") and the related Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer") whereby Source One Mortgage
Services Corporation, a Delaware corporation (the "Company"), is offering to
exchange up to $100,000,000 aggregate principal amount of its % Quarterly
Income Capital Securities ("QUICS") (Subordinated Interest Deferrable
Debentures, Due 2025) for up to 4,000,000 shares of its 8.42% Cumulative
Preferred Stock, Series A, $.01 par value per share (the "Preferred Stock"),
which constitute all outstanding shares of the Preferred Stock, upon the terms
and subject to the conditions set forth in the Exchange Offer.
The QUICS are offered in minimum denominations of $25 and integral
multiples thereof, and the shares of the Preferred Stock have a liquidation
preference of $25 per share. Consequently, the Exchange Offer will be effected
on a basis of $25 principal amount of QUICS for each share of the Preferred
Stock validly tendered and accepted for exchange. See "The Exchange
Offer -- General" in the Prospectus.
WE ARE THE REGISTERED HOLDER OF SHARES OF THE PREFERRED STOCK HELD BY US
FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES OF THE PREFERRED STOCK CAN BE MADE
ONLY BY US AS THE REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER SHARES OF THE PREFERRED STOCK HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender any or all
shares of the Preferred Stock held by us for your account, upon the terms and
subject to the conditions set forth in the Exchange Offer. We also request that
you designate, in the box captioned "Soliciting Tenders," any Soliciting Dealer
who solicited your tender of shares of Preferred Stock.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender shares of the Preferred Stock in accordance with
the provisions of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK TIME, ON , 1995, UNLESS EXTENDED.
WE URGE YOU TO READ THE ENCLOSED PROSPECTUS CAREFULLY BEFORE CONVEYING YOUR
INSTRUCTIONS TO US.
If you wish to have us tender any or all of your shares of the Preferred
Stock, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth in the next page of this letter. An
envelope to return your instructions to us is enclosed. If you authorize us to
tender your shares of the Preferred Stock, all such shares of the Preferred
Stock will be tendered, unless otherwise specified on the next page of this
letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN SUFFICIENT TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE EXCHANGE
OFFER.
- ---------------
(SM) Lehman Brothers has applied for a service mark for QUICS.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO
SOURCE ONE MORTGAGE SERVICES CORPORATION
OFFER TO EXCHANGE
% QUARTERLY INCOME CAPITAL SECURITIES (QUICSSM)
(SUBORDINATED INTEREST DEFERRABLE DEBENTURES, DUE 2025)
FOR
8.42% CUMULATIVE PREFERRED STOCK, SERIES A
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus dated , 1995 (the "Prospectus") and the related Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer") relating to the offer by Source One Mortgage Services Corporation, a
Delaware corporation (the "Company"), to exchange up to $100,000,000 aggregate
principal amount of its % Quarterly Income Capital Securities ("QUICS")
(Subordinated Interest Deferrable Debentures, Due 2025) for any and all of its
8.42% Cumulative Preferred Stock, Series A, $.01 par value per share (the
"Preferred Stock"), upon the terms and subject to the conditions set forth in
the Exchange Offer.
This will instruct you to tender the shares of the Preferred Stock
indicated below held by you for the account of the undersigned, pursuant to the
terms and subject to the conditions set forth in the Exchange Offer.
<TABLE>
<S> <C>
SIGN HERE
Shares of the Preferred Stock: Signature(s):
(1) --------------- Number of Shares -------------------------------------------------
(2) --------------- Number of Shares -------------------------------------------------
Tendered (only if different
amount from item (1))* Dated: ------------------------, 1995
Address:
-------------------------------------------------
Zip Code:
-------------------------------------------------
Area Code and Telephone No.
-------------------------------------------------
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all shares of the
Preferred Stock listed in item (1) are to be tendered.
SM Lehman Brothers has applied for a service mark for QUICS.
2
<PAGE> 3
[This form is included for the record-keeping purposes of brokers, dealers,
commercial banks, trust companies and other nominees only and should not be
transmitted to the Exchange Agent.]
Please designate in the box below any Soliciting Dealer who solicited your
tender.
- --------------------------------------------------------------------------------
SOLICITED TENDERS
The undersigned represents that the Soliciting Dealer who solicited and
obtained this tender is:
Name of Firm:...................................
(PLEASE PRINT)
Name of Individual Broker
or Financial Consultant: .......................
Identification Number (if known): ..............
Address: .......................................
................................................
(INCLUDE ZIP CODE)
SIGN HERE
X.................................. ...................................
X.................................. ...................................
SIGNATURE(S) PLEASE PRINT NAME(S) AND
ADDRESS(ES) HERE
Dated..............................
- --------------------------------------------------------------------------------
3
<PAGE> 1
[SOURCE ONE MORTGAGE SERVICES CORPORATION LETTERHEAD]
, 1995
To Holders of the 8.42%
Cumulative Preferred Stock, Series A:
Source One Mortgage Services Corporation, a Delaware corporation (the
"Company"), is offering to exchange (the "Exchange Offer") up to $100,000,000
aggregate principal amount of its % Quarterly Income Capital Securities
(the "QUICS"(SM)) (Subordinated Interest Deferrable Debentures, Due 2025) for
any and all shares of its 8.42% Cumulative Preferred Stock, Series A, $.01 par
value per share (the "Preferred Stock"), validly tendered and not withdrawn
pursuant to the Exchange Offer.
The principal purpose of the Exchange Offer, which is explained in detail
in the enclosed Prospectus and Letter of Transmittal, is to improve the
Company's after-tax cash flow by replacing shares of the Preferred Stock with
the QUICS. The potential cash flow benefit to the Company arises because
interest payable on the QUICS will be deductible by the Company for federal
income tax purposes, while dividends payable on the shares of the Preferred
Stock are not deductible. If you want to tender your shares and to participate
in the Offer, the instructions for tendering are also set forth in detail in the
enclosed materials. The Company encourages you to read these materials carefully
before making any decision with respect to the Exchange Offer. Neither the
Company nor its Board of Directors makes any recommendation to any stockholder
whether to tender or to refrain from tendering in the Exchange Offer.
Very truly yours,
LOGO
Robert W. Richards
Chairman
- ---------------
(SM) Lehman Brothers has applied for a service mark for QUICS.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF-- NUMBER OF--
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
1. An individual's The individual 9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identification
2. Two or more The actual owner of the number of the personal
individuals account or, if combined representative or trustee
(joint account) funds, any one of the unless the legal entity
individuals(1) itself is not designated
in the account title.)(5)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person1 10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
4. Custodian account of a The minor(2) organization account
minor (Uniform Gift to
Minors Act)
12. Partnership account The partnership
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor,
the minor(1) 13. Association, club or The organization
other tax-exempt
organization
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward, 14. A broker or registered The broker or nominee
minor or incompetent nominee
person 15. Account with the The public entity
Department of
7. a. The usual revocable The grantor-trustee(1) Agriculture in the name
savings trust of a public entity
account (grantor is (such as a State or
also trustee) local government,
school district, or
prison) that receives
b. So-called trust The actual owner(1) agricultural programs
account that is not payments
a legal or valid
trust under state
law
8. Sole proprietorship The owner(4)
account
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 3
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------
Name(s) as shown above on certificate(s) for shares of Preferred Stock (if joint ownership,
list first and circle the name of the person or entity whose number you enter in Part I
below).
- ---------------------------------------------------------------------------------------------
Address (if holder does not complete, signature in Part III below will constitute a
certification that the address on the reverse hereof is correct).
- ---------------------------------------------------------------------------------------------
City, State, and Zip Code
- ---------------------------------------------------------------------------------------------
Social Security
SUBSTITUTE Number
FORM W-9 OR
Department of the
PART I -- PLEASE PROVIDE
Treasury Internal YOUR TIN IN THE BOX -----------------------------
Revenue Service AT RIGHT AND CERTIFY Employer
Payer's Request for BY SIGNING AND Identification
Taxpayer DATING BELOW Number
Identification TIN Applied for / /
Number (TIN)
and Certification --------------------------------------------------------------
PART II --
For Payees exempt from backup withholding, write "Exempt"
here.
-------------------------------------
- ---------------------------------------------------------------------------------------------
PART III -- Certification. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup withholding,
(b) I have not been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
Certification Instructions. You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because of under reporting
interest or dividends on your tax return. However, if you have been notified by the IRS
that you are no longer subject to backup withholding, do not cross out item (2).
- ---------------------------------------------------------------------------------------------
SIGNATURE DATE
---------------------------- ------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART I OF SUBSTITUTE FORM W-9
17
<PAGE> 4
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within 60 days, thirty-one
(31) percent of all reportable payments made to me will be withheld until I
provide a properly-certified Taxpayer Identification Number to the Exchange
Agent.
- ------------------------------------ ---------------------------------
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
18
<PAGE> 1
SOURCE ONE MORTGAGE SERVICES CORPORATION
EXCHANGE OFFER
QUESTIONS AND ANSWERS
Q. WHY IS SOURCE ONE MORTGAGE SERVICES CORPORATION ("SOURCE ONE")
OFFERING TO EXCHANGE ITS % QUARTERLY INCOME CAPITAL SECURITIES
("QUICS"(SM)) (SUBORDINATED INTEREST DEFERRABLE DEBENTURES, DUE 2025) FOR
ITS 8.42% CUMULATIVE PREFERRED STOCK, SERIES A, $.01 PAR VALUE PER SHARE
(THE "PREFERRED STOCK") (WHICH CONSTITUTE ALL OUTSTANDING SHARES OF THE
PREFERRED STOCK)?
A. The principal purpose of the Exchange Offer is to improve Source One's
after-tax cash flow by replacing shares of the Preferred Stock with the
QUICS. The potential cash flow benefit to Source One arises because
interest payable on the QUICS will be deductible by Source One for federal
income tax purposes, while the dividends payable on the shares of the
Preferred Stock are not deductible.
Source One believes the Exchange Offer is fair to holders of shares of the
Preferred Stock, although Source One has not received any report, opinion
or appraisal relating to the fairness of Exchange Offer. The Exchange Offer
will result in the holders obtaining a security that is senior to the
Preferred Stock, that provides for a higher interest rate than the
equivalent dividend on the Preferred Stock and that provides for a definite
maturity date. SOURCE ONE, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE
OFFICERS MAKE NO RECOMMENDATION AS TO WHETHER ANY STOCKHOLDER SHOULD
EXCHANGE ANY OR ALL OF SUCH STOCKHOLDER'S SHARES OF THE PREFERRED STOCK
PURSUANT TO THE EXCHANGE OFFER. STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS
WHETHER TO EXCHANGE THEIR SHARES OF THE PREFERRED STOCK AND, IF SO, HOW
MANY SHARES TO EXCHANGE.
Q. WHAT DO THE TERMS "BENEFICIAL OWNER," "REGISTERED HOLDER," "NOMINEE"
AND "CUSTODIAN" MEAN?
A. BENEFICIAL OWNER. The beneficial owner is one whose shares of the
Preferred Stock are held by a broker, dealer, bank, trust company or other
institution and registered in the name of such institution. A beneficial
owner who wishes to tender such shares should contact such registered
holder promptly and instruct it whether or not to tender such shares on
behalf of such beneficial owner.
REGISTERED HOLDER. The registered holder of shares of the Preferred Stock
is the person or institution in whose name such shares are actually
registered on the register kept by Source One at its office or agency for
such purpose. If shares of the Preferred Stock are registered directly in
the name of the holder who is the beneficial owner of such shares, such
beneficial holder is also the registered holder. If shares of the Preferred
Stock are registered in the name of a broker, dealer, bank, trust company
or other institution, such institution is the registered holder of such
shares. Generally, the registered holder of shares of the Preferred Stock
completes the Letter of Transmittal in order to tender such shares.
However, if the registered holder or physical holder does not want to
complete the Letter of Transmittal itself, such holder may ask any broker,
dealer, bank or trust company to complete the Letter of Transmittal on its
behalf and effect the tender of such shares.
NOMINEES AND CUSTODIAN. These terms refer to the broker, dealer, bank,
trust company or other institution that holds shares of the Preferred Stock
on behalf of a beneficial owner of such shares. Although such shares belong
to such beneficial owner, such institution is the registered holder of such
shares and, accordingly, such shares are registered in the name of such
institution and such beneficial holder will need to contact such
institution and provide it with completed Instructions with Respect to the
Tender of shares of the Preferred Stock form in order to tender such
shares.
Q. WHAT ARE QUICS?
The QUICS are unsecured debt securities to be issued by Source One which
are subordinate in right to payment to its senior indebtedness and to all
obligations of its subsidiaries. However, the QUICS are
<PAGE> 2
senior to the claims of the holders of Source One's capital stock,
including the shares of the Preferred Stock. In addition, the QUICS will
have the following terms:
- - The QUICS will have a 30 year stated maturity, whereas the shares of the
Preferred Stock have no stated final maturity.
- - The QUICS will bear interest at % per annum and are payable quarterly
on March 31, June 30, September 30 and December 31, commencing on December
31, 1995.
- - The QUICS may be called for redemption by Source One at any time after May
1, 1999, at a redemption price equal to 100% of the principal amount
redeemed ($25 for each $25 principal amount of QUICS) plus accrued and
unpaid interest to the date fixed for redemption. The redemption provisions
for the QUICS are substantially similar to the Preferred Stock.
- - The QUICS quarterly interest payments may be deferred for a period (defined
in the Prospectus as the "Deferral Period") of up to 20 consecutive
quarters at the option of Source One. Although the quarterly dividend
payments for the Preferred Stock may also be suspended, such a suspension
period may be indefinite. Another distinction between the provision to
defer interest payments on the QUICS and suspension of dividend payments on
the Preferred Stock is that the deferred QUICS interest payments will
accumulate interest at a compounding rate equal to the stated interest rate
on the QUICS whereas the Preferred Stock's suspended dividend payments do
not have such a compounding feature. In addition, the interest received on
the QUICS will not be eligible for the dividends received deduction for
corporate holders, whereas dividends on the Preferred Stock are eligible
for the dividends received deduction for corporate holders. Lastly, the
covenants under which the QUICS are used do not provide any voting rights
to holders during the Deferral Period, while, under certain circumstances,
the holders of the Preferred Stock may have certain limited voting rights.
Q. HOW DOES THE INTEREST RATE ON THE QUICS COMPARE TO THE DIVIDEND RATE
ON THE SHARES OF THE PREFERRED STOCK?
A. The effective yield for the shares of the Preferred Stock, at its stated
liquidation preference of $25 per share, is 8.42% per annum. The interest
rate on the QUICS is %, or % higher than the shares of the Preferred
Stock.
Q. THE NEXT DIVIDEND PAYMENT DATE (SUBJECT TO BOARD DECLARATION) FOR
THE SHARES OF THE PREFERRED STOCK WILL BE NOVEMBER 1, 1995. WILL THE
HOLDERS THAT PARTICIPATE IN THE EXCHANGE OFFER BE ELIGIBLE FOR THAT
DIVIDEND?
A. Yes. In addition, holders of shares of Preferred Stock accepted for
exchange pursuant to the Exchange Offer will be entitled to interest on the
QUICS at a rate of % per annum from November 1, 1995 until the
principal thereof becomes due and payable.
Q. WILL THE QUICS BE LISTED?
A. Like the Preferred Stock, the QUICS are expected to be listed on the New
York Stock Exchange.
Q. WILL THE EXCHANGE CONSTITUTE A TAXABLE EVENT?
A. The Exchange Offer will be a taxable event to those holders that tender
their shares of the Preferred Stock in exchange for the QUICS. Source One
recommends that holders read the description on "Risk Factors" within the
Prospectus and/or consult their tax advisor to determine their specific
circumstances.
Q. WILL BACKUP WITHHOLDING APPLY TO PAYMENTS MADE PURSUANT TO THE
EXCHANGE OFFER OR WITH RESPECT TO THE QUICS?
A. Under federal income tax law, a 31% backup withholding tax will be imposed
on the amount of payments made pursuant to the Exchange Offer, payments
made with respect to the QUICS and payments of the proceeds of sale of
QUICS that are made to certain stockholders. In order to avoid such backup
withholding, each tendering stockholder must provide the Exchange Agent
with such stockholder's correct taxpayer identification number and certify
that such stockholder is not subject to backup
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<PAGE> 3
withholding by completing Substitute Form W-9. If the Exchange Agent is not
provided with the correct taxpayer identification number, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding
requirements. In order to satisfy the Exchange Agent that a foreign
individual qualifies as an exempt recipient, such stockholder must submit a
statement of Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. Form W-8 can be obtained from the Information
Agent. For further information concerning backup withholding and
instructions for completing the Substitute Form W-9, consult the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9.
Q. WHAT IS THE PROCESS FOR A HOLDER TO PARTICIPATE IN THE EXCHANGE OFFER?
A. Each holder of the shares of the Preferred Stock should receive a copy of
the Prospectus, a Letter of Transmittal, a Notice of Guaranteed Delivery, a
letter addressed to clients, a letter from the Chairman of Source One and
Guidelines for Certification of Taxpayer Identification Number on
Substitute Forms W-9 and W-8 along with this Question and Answer pamphlet.
Source One encourages each holder to review each document and to contact
their broker and tax advisor for assistance. In the event holders require
other sources of information, they should contact the Information Agent or
the Dealer Managers at the toll-free numbers listed in the Prospectus or
the Letter of Transmittal.
Registered (physical) holders must send the certificates representing
shares of the Preferred Stock to be tendered and a completed Letter of
Transmittal to the Exchange Agent or may ask any broker, dealer, bank or
trust company to do so on its behalf.
If the shares of the Preferred Stock are registered in the name of a
broker, dealer, bank, trust company or other nominee, the holder must
instruct such nominee to tender on its behalf such shares by completing the
Letter of Transmittal or by Agent's Message for book-entry transfer. Source
One recommends that holders contact the Information Agent before beginning
the process.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent and forming a
part of a book-entry confirmation, which states that such facility has
received an express acknowledgment from the participant in such facility
tendering the shares of the Preferred Stock which are the subject of such
book-entry confirmation, that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Source One may
enforce such agreement against such participant.
The Letter of Transmittal must be mailed in time to reach the Exchange
Agent by the Expiration Time of the Exchange Offer. In the event the holder
is unable to fulfill the requirements of the Letter of Transmittal, the
holder must submit the Notice of Guaranteed Delivery, received by the
Exchange Agent prior to the Expiration Time, and then, within three New
York Stock Exchange trading days, the Exchange Agent must receive the
certificates, in proper form for transfer, and the completed Letter of
Transmittal.
Q. ARE THERE ANY COSTS THAT A PARTICIPATING HOLDER WILL BEAR IN CONTEXT
OF THE EXCHANGE OFFER?
A. Source One will pay a fee of $.50 per share to brokers that successfully
solicit tenders on behalf of Source One. In addition, Source One will pay
the Dealer Managers, the Information Agent and the Exchange Agent fees for
assisting with this transaction. However, if a holder's shares are held by
a broker, dealer, bank or trust company, the holder may be charged a fee
for their services.
Q. WHEN WILL THE EXCHANGE OFFER EXPIRE?
A. The Exchange Offer is scheduled to expire at 5:00 p.m., New York City time,
on , 1995 or, if extended by Source One, in its sole
discretion, the latest date and time to which extended (the "Expiration
Time"). Source One may decide to amend or terminate the Exchange Offer
prior to the Expiration Time, and it may decide to extend or terminate the
Exchange Offer if fewer than 1,000,000 shares of the Preferred Stock have
been tendered and not withdrawn prior to the expiration of the
3
<PAGE> 4
Exchange Offer or if the QUICS have not been accepted for listing on the
New York Stock Exchange. The Exchange Offer is also subject to certain
additional conditions, as described further in the accompanying Prospectus.
Q. CAN A HOLDER OF SHARES OF THE PREFERRED STOCK REVOKE ITS EXCHANGE OF
SHARES?
A. Tenders of shares of the Preferred Stock pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Time and, unless
theretofore accepted for exchange pursuant to the Exchange Offer, may also
be withdrawn at any time after 40 business days from the date of the
Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at the address set forth in the Letter of Transmittal. Any such
notice of withdrawal must specify (i) the holder named in the Letter of
Transmittal as having tendered certificates with respect to the shares of
the Preferred Stock to be withdrawn, (ii) if the shares of the Preferred
Stock are held in certificated form, the certificate numbers of such shares
to be withdrawn, (iii) a statement that such holder is withdrawing its
election to have such shares of the Preferred Stock exchanged, and the name
of the registered holder of such shares of the Preferred Stock, and such
notice of withdrawal must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to Source
One that the person withdrawing the tender has succeeded to the beneficial
ownership of the shares of the Preferred Stock being withdrawn. The
Exchange Agent will return the properly withdrawn shares of the Preferred
Stock promptly following receipt of notice of withdrawal. If shares of the
Preferred Stock have been tendered pursuant to the procedure for book-entry
transfer, any notice of withdrawal must specify the name and number of the
account at a book-entry transfer facility to be credited with the withdrawn
shares of the Preferred Stock and otherwise comply with such book-entry
transfer facility's procedures.
Q. TO WHOM SHOULD ADDITIONAL QUESTIONS BE ADDRESSED?
A. Additional questions or requests for information should be addressed to the
Information Agent, D.F. King & Co., Inc., 77 Water Street, New York, New
York 10005, 1-800-669-5500 (toll-free).
THE ABOVE SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT IN ALL RESPECTS
TO THE PROVISIONS OF AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
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