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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DECEMBER 16, 1998
-----------------
Date of Report (Date of Earliest Event Reported)
DVI, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 0-16271 22-2722773
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
500 HYDE PARK, DOYLESTOWN, PENNSYLVANIA 18901
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(Address of Principal Executive Office)(Zip Code)
(215) 345-6600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. OTHER EVENT.
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On December 23, 1998, DVI, Inc. (the "Registrant") completed an
underwritten public offering (the "Debt Offering") under its existing shelf
registration statement (File No. 333-50895) of $55,000,000 aggregate principal
amount of 9 7/8% Senior Notes due 2004 (the "Notes"). Net proceeds from the
Debt Offering will be used to repay certain indebtedness of the Registrant, to
fund growth, including increasing the amount of equipment and medical
receivables loans the Registrant can fund, to develop international operations
and new financing services and for other working capital needs and general
corporate purposes.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Financial Statements.
None.
Pro Forma Financial Information.
None.
Exhibits.
1.1 Underwriting Agreement, dated December 16, 1998 by and among
Prudential Securities Incorporated, Piper Jaffray Inc., Libra
Investments, Inc. and Fleet Securities, Inc.
4.1 Indenture for Debt Securities, dated January 27, 1997 between the
Registrant and U.S. Bank Trust National Association, as successor to
First Trust National Association (incorporated by reference to the
Registrant's Registration Statement on Form S-3 (File No. 333-50895),
as filed with the Securities and Exchange Commission on April 24,
1998).
4.2 Supplemental Indenture, dated December 23, 1998 between the
Registrant and U.S. Bank Trust National Association, as successor to
First Trust National Association.
4.3 Global Note representing $55,000,000 of 9 7/8% Senior Notes due 2004.
5.1 Opinion of Rogers & Wells LLP.
23.1 Consent of Rogers & Wells LLP (included as part of Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DVI, INC.
By: /s/ John P. Boyle
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Name: John P. Boyle
Title: Vice President and
Chief Accounting Officer
Date: December 23, 1998
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EXHIBIT INDEX
Exhibit
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1.1 Underwriting Agreement dated December 16, 1998 by and among Prudential
Securities Incorporated, Piper Jaffray Inc., Libra Investments, Inc.
and Fleet Securities, Inc.
4.1 Indenture for Debt Securities, dated January 27, 1997 between the
Registrant and U.S. Bank Trust National Association, as successor to
First Trust National Association (incorporated by reference to the
Registrant's Registration Statement on Form S-3 (File No. 333-50895),
as filed with the Securities and Exchange Commission on April 24,
1998).
4.2 Supplemental Indenture dated December 23, 1998 between the Registrant
and U.S. Bank Trust National Association, as successor to First Trust
National Association.
4.3 Global Note representing $55,000,000 of 9 7/8% Senior Notes due 2004.
5.1 Opinion of Rogers & Wells LLP.
23.1 Consent of Rogers & Wells LLP (included as part of Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
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EXHIBIT 1.1
EXECUTION COPY
DVI, INC.
$55,000,000
9 7/8% Senior Notes due 2004
UNDERWRITING AGREEMENT
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December 16, 1998
PRUDENTIAL SECURITIES INCORPORATED
PIPER JAFFRAY INC.
LIBRA INVESTMENTS, INC.
FLEET SECURITIES, INC.
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Dear Sirs:
DVI, Inc., a Delaware corporation (the "Company"), hereby confirms its
agreement with the several underwriters named in Schedule 1 hereto (the
"Underwriters") for whom you have been authorized to act as representatives (in
such capacities, the "Representatives") as set forth below. If you are the only
Underwriters, all references herein to the Representatives shall be deemed to be
to the Underwriters.
1. Securities. Subject to the terms and conditions herein
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contained, the Company proposes to issue and sell to the several Underwriters
$55,000,000 aggregate principal amount of its 9 7/8% Senior Notes due 2004 (the
"Securities"), to be issued pursuant to an indenture dated as of January 27,
1997, (the "Indenture") between the Company and U.S. Bank Trust National
Association (formerly known as First Trust National Association), as trustee
(the "Trustee") as supplemented by a supplemental indenture (the "Supplemental
Indenture") to be dated as of December 23, 1998.
2. Registration Statement. The Company has filed with the
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Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (Registration
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No. 333-50895), including a prospectus, relating to certain of its securities
(including debt securities) and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended (the
"Act"). As provided in Section 6(a) hereof, a prospectus supplement reflecting
the terms of the Securities, the terms of the offering thereof and the other
matters set forth therein has been prepared and will be filed pursuant to Rule
424 under the Act. Such prospectus supplement, in the form first filed after the
date hereof pursuant to Rule 424, is herein referred to as the "Prospectus
Supplement." Such registration statement, as amended as of the date hereof,
including the exhibits thereto and the documents incorporated by reference
therein, is herein called the "Registration Statement," and the basic prospectus
included therein relating to all offerings of securities under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus," except that, if such basic Prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic Prospectus
as so amended or supplemented and as supplemented by the Prospectus Supplement,
in either case including the documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are incorporated by reference therein. The term "Preliminary
Prospectus" shall refer to each basic prospectus or prospectus supplement which
is subject to completion.
3. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) The Registration Statement has been declared effective by the
Commission and no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied with or
withdrawn. The Company meets the requirements for use of Form S-3 under
the Act and on the original effective date of the Registration Statement,
on the effective date of the most recent post-effective amendment thereto,
if any, and on the date of the filing by the Company of any annual report
on Form 10-K after the original filing of the Registration Statement, the
Registration Statement complied in all material respects with the
requirements of the Act and the rules and regulations of the Commission
thereunder (the "Regulations"), the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the
Commission under the Trust Indenture Act (the "Trust Indenture Act
Regulations") and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; on the date hereof and at the
Closing Date (as defined below), (A) the Registration Statement and any
amendments and supplements thereto, comply and will comply in all material
respects with the requirements of the Act, the Regulations, the Trust
Indenture Act and the Trust Indenture Act Regulations, (B) neither the
Registration Statement nor any amendment or supplement thereto includes or
will include an untrue statement of a
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material fact or omits or will omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading and (C) neither any Preliminary Prospectus nor the Prospectus
nor any amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the Company makes no representations or warranties as to
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statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter, directly or through you, expressly for use in the Registration
Statement or the Prospectus, or as to statements in the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the Trustee filed
as an exhibit to the Registration Statement. At the Closing Date, the
Indenture will comply in all material respects with the requirements of the
Trust Indenture Act and the Trust Indenture Act Regulations.
(b) The documents incorporated by reference in the Prospectus, at the
time they were filed with the Commission, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the Commission thereunder, and when read together with the other
information in the Prospectus, do not and will not, on the date hereof and
at the Closing Date, include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company and each of its subsidiaries have been duly organized
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation. The Company and each of
DVI Financial Services Inc., DVI Business Credit Corporation and MSF
Holding Ltd. are duly qualified to transact business as foreign
corporations and are in good standing under the laws of all other
jurisdictions where the ownership or leasing of their respective properties
or the conduct of their respective businesses requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the condition, financial or otherwise, business, net
worth or results of operations of the Company and its subsidiaries,
considered as a whole (a "Material Adverse Effect"). The subsidiaries
listed on Schedule 2 hereto constitute all of the active subsidiaries of
the Company. All of the other subsidiaries of the Company do not actively
conduct business, have not entered into any material existing agreements
and do not have any material liabilities of any kind, and the Company does
not currently intend for any of such subsidiaries to conduct business,
enter into agreements or incur material liabilities in the future.
(d) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus; and the
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Company has full power (corporate and other) to enter into this Agreement
and to carry out all the terms and provisions hereof to be carried out by
it.
(e) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and, except as set forth on Schedule 2 hereto, are,
directly or indirectly, owned of record and beneficially by the Company
free and clear of any security interests, liens, encumbrances, equities or
claims.
(f) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. No holder of
outstanding debt securities of the Company or any of its Subsidiaries is
entitled as such to any preemptive or other rights to subscribe for any of
the Securities, and no holder of debt securities of the Company has any
right which has not been fully exercised or waived to require the Company
to register the offer or sale of any debt securities owned by such holder
under the 1933 Act in connection with the public offering contemplated by
this Agreement. No holder of debt securities has the right to require the
Company to register such holder's debt securities under the Act in
connection with this Registration Statement.
(g) The Indenture has been qualified under the Trust Indenture Act
and, as of the Closing Date, the Indenture, as supplemented by the
Supplemental Indenture will be duly qualified under the Trust Indenture
Act. The Indenture has been duly authorized, executed and delivered by the
Company. The Supplemental Indenture has been duly authorized by the
Company and, as of the Closing Date, will have been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Trustee, will be a legal, valid, binding and enforceable
instrument of the Company.
(h) The issuance, execution and delivery of the Securities have been
duly authorized by the Company and, on and as of the Closing Date, the
Securities will have been duly executed by the Company and, assuming due
authentication by the Trustee, will be the legal, valid, binding and
enforceable obligations of the Company, entitled to the benefits of the
Indenture.
(i) The statements set forth under the headings "Description of the
Notes" and "Description of Debt Securities" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) are
complete and accurate in all material respects.
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(j) The consolidated financial statements and schedules of the Company
and its consolidated subsidiaries included or incorporated by reference in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) fairly present the
financial position of the Company and its consolidated subsidiaries and the
results of operations and cash flows as of the dates and periods therein
specified. Such financial statements and schedules have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption
"Selected Financial Information and Other Data" in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present, on the basis stated in the Prospectus (or such Preliminary
Prospectus), the information included therein and such financial data has
been compiled on a basis consistent with the audited consolidated financial
statements included or incorporated by reference in the Registration
Statement.
(k) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included or incorporated by reference in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), are independent public accountants
as required by the Act, the Exchange Act and the related published rules
and regulations thereunder.
(l) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(m) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of
the Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), and, to the knowledge of the Company, no
such proceedings have been threatened against the Company or any of its
subsidiaries or with respect to any of their respective properties; and no
contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or filed as
required.
(n) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement, the Securities,
the Indenture and the Supplemental
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Indenture and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained, such as may be required under state securities
or blue sky laws or (ii) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties
are bound, or the charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company or any of its subsidiaries.
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus, (i)
neither the Company nor any of its subsidiaries has sustained any material
loss or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding and (ii) there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), business, net worth or results of
operations of the Company or any of its subsidiaries, except in each case
as described in or contemplated by the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus.
(p) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(q) None of the Company, its subsidiaries or any employee of the
Company or its subsidiaries has made any payment of funds of the Company or
its subsidiaries prohibited by law and no funds of the Company or its
subsidiaries have been set aside to be used for any payment prohibited by
law.
(r) The Company believes that as of December 31, 1998, it will have
sufficient cash or borrowings available (other than cash or borrowings
available as a result of the receipt of the net proceeds from the issuance
of the Securities or the application of the proceeds therefrom) to repay in
full all amounts then outstanding under its warehouse facility with
Prudential Securities Credit Corporation expiring on such date.
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(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
(i) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent, nor entered into
any material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock; (iii) there has not been any material change in the
capital stock of the Company and its consolidated subsidiaries; and (iv)
there has not been any change in the short-term debt or long-term debt of
the Company or any of its consolidated subsidiaries other than in the
ordinary course of business consistent with past practice as described in
the Prospectus, except in each case described in clauses (i) through (iv)
as described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(t) Except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), (i) the Company and each of its subsidiaries have good and
marketable title in fee simple to all material real property and marketable
title to all material personal property owned by each of them, in each case
free and clear of any security interests, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely
affect the value of such property and do not interfere with the use made or
proposed to be made of such property by the Company or such subsidiary, and
(ii) any real property and buildings held under lease by the Company or any
such subsidiary are held under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the Company
or such subsidiary.
(u) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company's knowledge, is threatened or
imminent that could result in a Material Adverse Effect, except as
described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(v) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent applications, trademarks, service
marks, trade names, licenses, copyrights and proprietary or other
confidential information currently employed by them in connection with
their respective businesses, or necessary in order to conduct their
respective businesses, as presently conducted, and neither the Company nor
any such subsidiary has received, or has reason to believe that it may
receive, any notice of infringement of or conflict with asserted rights of
any third party or otherwise with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect,
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except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(w) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged. Neither the Company nor any of the subsidiaries have been
refused any insurance coverage sought or applied for, which refusal has
had, or could have in the future, a Material Adverse Effect. Neither the
Company nor any subsidiary has reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not result in a Material Adverse
Effect, except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(x) DVI Financial Services Inc. is not currently prohibited, directly
or indirectly, from repaying to the Company any indebtedness pursuant to
the Intercompany Note (as defined in the Prospectus), except as described
in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(y) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local
or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(z) The Company and each of its subsidiaries conduct their respective
operations in a manner that does not subject it or them to registration as
an investment company under the Investment Company Act of 1940, as amended,
and the transactions contemplated hereby will not cause the Company or any
of its subsidiaries to become an investment company subject to registration
thereunder.
(aa) The Company and each of its subsidiaries have filed all foreign,
federal, state and local tax returns that are required to be filed or have
requested extensions thereof (except in any case in which the failure so to
file would not have a Material Adverse Effect) and have paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
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contested in good faith or as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(bb) Neither the Company nor any of its subsidiaries is in violation
of any federal, state or foreign law or regulation relating to occupational
safety and health or to the storage, handling or transportation of
hazardous or toxic materials and the Company and its subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal, state and foreign occupational safety and health and
environmental laws and regulations to conduct their respective businesses,
and the Company and each of its subsidiaries is in compliance with all
terms and conditions of any such permit, license or approval, except any
such violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not, singly
or in the aggregate, result in a Material Adverse Effect, except as
described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(cc) Except for the shares of capital stock of the subsidiaries owned
by either the Company or another subsidiary and the equity interests set
forth on Schedule 2, neither the Company nor any such subsidiary owns any
shares of stock or other equity securities of any corporation or any equity
interest in any firm, partnership, association or other entity, except as
described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(dd) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ee) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default, in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound or may be affected in any respect that could have a Materially
Adverse Effect.
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(ff) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, or if the
Prospectus is not in existence, the most recent Preliminary Prospectus,
there has not been any downgrading in the ratings of any of the Company's
debt securities or preferred stock or any of the debt securities of any of
its subsidiaries or affiliates, including, without limitation any of the
Company's securitized debt securities or any action threatening such a
downgrading or placing the Company or any of its subsidiaries or affiliates
under special surveillance by any "nationally recognized rating agency" (as
defined in Rule 436 (g) under the Act); nor does the Company have any
knowledge of any facts or circumstances that are likely to cause such
downgrading, threatened downgrading or the placing of the Company or any of
its subsidiaries or affiliates under such surveillance.
(gg) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty as of the date of such
certificate by the Company to each Underwriter as to the matters covered
thereby.
4. Purchase, Sale and Delivery of the Securities. (a) On the basis
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of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
1 hereto at an aggregate purchase price of $51,144,113, plus accrued interest,
if any, from December 23, 1998 to the date of delivery of the Securities. One
or more certificates in definitive form for the Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Underwriters request
upon notice to the Company at least 48 hours prior to the Closing Date, shall be
delivered by or on behalf of the Company to the Underwriters, against payment by
or on behalf of the Underwriters of the purchase price therefor by wire
transfer. Such delivery of and payment for the Securities shall be made at the
offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022
at 9:30 a.m., New York time, on December 23, 1998, or at such other place, time
or date as the Underwriters and the Company may agree upon or as the
Underwriters may determine pursuant to Section 9 hereof, such time and date of
delivery against payment being herein referred to as the "Closing Date." The
Company will make such certificate or certificates for the Securities available
for checking and packaging by the Underwriters at the offices in New York, New
York of the Trustee or of Prudential Securities Incorporated at least 24 hours
prior to the Closing Date.
(b) It is understood that you, individually and not as one of the
Underwriters, may (but shall not be obligated to) make payment on behalf of any
Underwriter or Underwriters for any of the Securities to be purchased by such
Underwriter or Underwriters. No such payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
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5. Offering by the Underwriters. Upon your authorization of the
----------------------------
release of the Securities, the several Underwriters shall offer the Securities
for sale to the public upon the terms set forth in the Prospectus.
6. Covenants of the Company. The Company covenants and agrees with
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each of the Underwriters that:
(a) Immediately following the execution of this Agreement, the Company
will prepare a Prospectus Supplement that complies with the Act and the
Regulations and that sets forth the principal amount of the Securities and
their material terms, the name of each Underwriter participating in the
offering and the principal amount of the Securities that each severally has
agreed to purchase, the price at which the Securities are to be purchased
by the Underwriters from the Company, any initial public offering price,
any selling concession and reallowance and any delayed delivery
arrangements, and such other information as you and the Company deem
appropriate in connection with the offering of the Securities. The Company
will promptly transmit copies of the Prospectus Supplement to the
Commission for filing pursuant to Rule 424 under the Act and will furnish
to the Underwriters as many copies of any Preliminary Prospectus and the
Prospectus as you shall reasonably request. The copies of any Preliminary
Prospectus and Prospectus Supplement furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(b) During the period when the Prospectus is required by the Act to
be delivered in connection with the sale of the Securities, the Company
will, subject to Section 6(c) hereof, file promptly all documents required
to be filed with the Commission pursuant to Section 13 or 14 of the
Exchange Act.
(c) During the period when the Prospectus is required by the Act to
be delivered in connection with the sale of the Securities, the Company
will inform you of its intention to file any amendment to the Registration
Statement, any supplement to the Prospectus or any document that would as a
result thereof be incorporated by reference in the Prospectus; will furnish
you with copies of any such amendment, supplement or other document a
reasonable time in advance of filing and will not file any such amendment,
supplement or other document in a form to which you shall reasonably
object.
(d) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration
Statement or the Prospectus or any amendment or supplement thereto or any
order preventing or suspending the use of any Preliminary Prospectus or the
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Prospectus or any amendment or supplement thereto, (ii) the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission
for amending the Registration Statement, for amending or supplementing any
Preliminary Prospectus or the Prospectus or for additional information.
The Company will use commercially reasonable efforts to prevent the
issuance of any such stop order and, if any such stop order is issued, to
obtain the withdrawal thereof as promptly as possible.
(e) The Company will use its best efforts to arrange for the
qualification of the Securities for offering and sale under the securities
or blue sky laws of such jurisdictions as the Underwriters may designate
and to continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities, provided,
--------
however, that in connection therewith the Company shall not be required to
-------
qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction.
(f) If, at any time prior to the later of (i) the final date when a
Prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
is necessary at any time to amend or supplement the Prospectus to comply
with the Act, the Exchange Act or the Trust Indenture Act or the respective
rules or regulations of the Commission thereunder, the Company will
promptly notify the Underwriters thereof and, subject to Section 6(a)
hereof, will prepare and file with the Commission, at the Company's
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or
effects such compliance.
(g) The Company will, without charge, provide (i) to the Underwriters
and to counsel for the Underwriters a signed copy of the registration
statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto), (ii) to each
other Underwriter a conformed copy of such registration statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long
as a Prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as the Underwriters may
reasonably request; without limiting the application of clause (iii) of
this sentence, the Company, not later than 6:00 PM, New York City time, on
the business day following the date of determination of the public offering
price, will deliver to the Underwriters, without charge, as many copies of
the Prospectus and any amendment or supplement thereto as the Underwriters
12
<PAGE>
may reasonably request for purposes of confirming orders that are expected
to settle on the Closing Date.
(h) The Company, as soon as practicable, will make generally available
to its security holders and to the Underwriters a consolidated earnings
statement of the Company and its subsidiaries that satisfies the provisions
of Section 11(a) of the Act and Rule 158 thereunder.
(i) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, grant any
option to purchase or otherwise transfer or dispose (or announce any offer,
transfer, offer of sale, contract of sale, grant of any option to purchase
or other sale or disposition) of any debt securities of the Company that
are substantially similar to the Securities during the period commencing on
the date hereof and terminating on the earlier of (a) the Closing Date and
(b) the date of notice to the Company by the Underwriters of the
termination of trading restrictions with respect to the Securities, except
pursuant to this Agreement.
(k) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities or (ii) (A) sell (except pursuant to this Agreement), bid
for, purchase, or pay anyone any compensation for soliciting purchases of,
the Securities or (B) pay or agree to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
7. Expenses.
--------
The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 12 hereof, including all costs and expenses
incident to (a) the printing or other production of documents with respect
to the transactions, including any costs of printing the registration
statement originally filed with respect to the Securities and any amendment
thereto, any Preliminary Prospectus and the Prospectus and any amendment or
supplement thereto, the Indenture, the Supplemental Indenture, this
Agreement and any blue sky memoranda, (b) all arrangements relating to the
delivery to the Underwriters of copies of the foregoing documents, (c) the
fees and disbursements of the counsel, the accountants and any other
experts or advisors retained by the Company, (d) preparation, issuance and
delivery to the Underwriters of any certificates evidencing the
13
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Securities, including transfer agent's and registrar's fees, (e) the
qualification of the Securities under state securities and blue sky laws,
including filing fees and reasonable fees and disbursements of counsel for
the Underwriters relating thereto, (f) the fees and disbursements of the
Trustee, (g) the filing fees of the Commission and the National Association
of Securities Dealers, Inc. relating to the Securities, (h) any meetings
with prospective investors in the Securities (other than as shall have been
specifically approved by the Underwriters to be paid for by the
Underwriters), (i) any fees charged by investment rating agencies for the
rating of Securities and (j) the fees associated with any listing of the
Securities on any securities exchange. If the sale of the Securities
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 8 hereof is not
satisfied, because this Agreement is terminated pursuant to Section
12(a)(i) hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been incurred
by them in connection with the proposed purchase and sale of the
Securities. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
8. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the several Underwriters to purchase and pay for the Securities shall be
subject, in the Underwriters' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Closing Date, as if made on and as of the Closing Date, to
the accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto and no order directed at any
document incorporated by reference in the Registration Statement shall have been
issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Underwriters, shall be
contemplated by the Commission; and the Company shall have complied with any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise).
(b) The Underwriters shall have received an opinion, dated the Closing
Date, of Rogers & Wells, counsel for the Company, to the effect that:
(i) the Company and each of its subsidiaries (other than non-U.S.
subsidiaries) listed in Schedule 2 hereto (the "Subsidiaries") have been
duly
14
<PAGE>
incorporated and are validly existing in good standing under the laws of
their respective jurisdictions of incorporation;
(ii) the Company and each of DVI Financial Services Inc. and DVI
Business Credit Corporation are duly qualified to transact business as
foreign corporations and are in good standing under the laws of all other
jurisdictions where the ownership or leasing of their respective properties
or the conduct of their respective businesses requires such qualification,
except where the failure to be so qualified does not amount to a material
liability or disability to the Company and each of such subsidiaries, taken
as a whole;
(iii) the Company and each of DVI Financial Services Inc. and DVI
Business Credit Corporation have corporate power to own or lease their
respective properties and conduct their respective businesses as described
in the Registration Statement and the Prospectus, and the Company has
corporate power to enter into this Agreement, the Indenture and the
Supplemental Indenture and to carry out all the terms and provisions hereof
and thereof to be carried out by it;
(iv) the issued shares of capital stock of each of DVI Financial
Services Inc. and DVI Business Credit Corporation have been duly authorized
and validly issued, are fully paid and nonassessable and, to the best
knowledge of such counsel, are owned of record, directly or indirectly, by
the Company free and clear of any perfected security interests;
(v) the execution and delivery of the Indenture and the Supplemental
Indenture have been duly authorized by all necessary corporate action of
the Company, and the Indenture and the Supplemental Indenture have been
duly executed and delivered by the Company, and the Indenture, as
supplemented by the Supplemental Indenture, has been duly qualified under
the Trust Indenture Act, and, assuming due authorization, execution and
delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law);
(vi) the issuance, offering and sale of the Securities by the Company
to the Underwriters pursuant to this Agreement have been duly authorized by
all necessary corporate action of the Company and the Securities have been
duly issued, executed and delivered by the Company and, assuming due
authentication by the Trustee in the manner provided in the Indenture, when
paid for as provided in this Agreement, will be the valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, and entitled to the benefits of the Indenture, as
supplemented by the Supplemental Indenture, subject to applicable
bankruptcy,
15
<PAGE>
insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law);
(vii) as of the dates shown the Company has an authorized
capitalization as set forth under the heading "Capitalization" in the
Prospectus;
(viii) the statements set forth under the headings "Description of
the Notes" and "Description of Debt Securities" in the Prospectus, insofar
as such statements constitute a summary of certain provisions of the
Indenture, the Supplemental Indenture or the Securities, provide in all
material respects a fair summary of such provisions;
(ix) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company;
(x) to such counsel's best knowledge (A) no legal or governmental
proceedings are pending to which the Company or any of the Subsidiaries is
a party or to which the property of the Company or any of the Subsidiaries
is subject that are required to be described in the Registration Statement
or the Prospectus and are not described therein, and no such proceedings
have been threatened against the Company or any of the Subsidiaries or with
respect to any of their respective properties and (B) no contract or other
document is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that
is not described therein or filed as required;
(xi) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement, the Securities and
the Indenture and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state
securities or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other agreement or
instrument specifically described in the Registration Statement or any
material contract or agreement listed on a schedule to such opinion and to
which the Company or any of the Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Company or
any of the Subsidiaries, or to such counsel's best knowledge any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator specifically naming the Company or
any of the Subsidiaries or any rule or regulation of any governmental
authority and applicable to the Company or any of the Subsidiaries;
16
<PAGE>
(xii) the Registration Statement is effective under the Act; the
required filing of the Prospectus, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to such
counsel's best knowledge, no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to such
counsel's best knowledge, are contemplated by the Commission;
(xiii) the Registration Statement originally filed, Pre-Effective
Amendment No. 1 thereto and the Prospectus and each document incorporated
by reference therein (in each case, other than the financial statements,
schedules and any other financial, economic or statistical data contained
or incorporated by reference therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act and
the respective rules and regulations of the Commission thereunder;
(xiv) pursuant to Section 3 (c) (5) of the Investment Company Act of
1940, as amended (the "1940 Act"), and based on no-action letters issued by
the staff of the Commission with respect to Sections 3 (c) (5) (A) or (B)
of the 1940 Act, the Company is not, and the transactions contemplated by
this Agreement will not cause the Company to become an investment company
subject to registrations thereunder; and
(xv) to such counsel's best knowledge, DVI Financial Services Inc. is
not currently prohibited, directly or indirectly, from repaying to the
Company any indebtedness pursuant to the Intercompany Note (as defined in
the Prospectus), except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xvi) the statements made in the Prospectus under the caption
"Certain U.S. Federal Income Tax Consequences", to the extent that they
constitute a summary of the United States federal tax laws referred to
therein, are accurate in all material respects and fairly summarize in all
material respects the United States federal tax laws referred to therein.
Such counsel shall also state that they have no reason to believe that
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or the date of such opinion, included or
includes any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Counsel may state
that this belief is based upon its participation in the preparation of the
Registration Statement and the Prospectus and its review and discussion of the
contents thereof but is without independent investigation or verification.
17
<PAGE>
Such counsel need not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus, except to the limited extent stated in paragraphs
(viii) and (xvi) above. In addition, such counsel need not express any opinion
or belief as to the financial statements or schedules or any other financial,
economic or statistical data contained in the Registration Statement or the
Prospectus.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. Such counsel may state that as to
matters on which its opinion is expressed to its "best knowledge" such counsel
is responsible for knowledge of only those facts (i) set forth in certificates
of responsible officers of the Company, (ii) described in the Registration
Statement or (iii) within the actual knowledge of those attorneys in such
counsel's firm that have performed services for the Company in connection with
the transactions contemplated by this Agreement.
Such counsel may state that its opinions are limited to matters of
United States federal law, the laws of the state of New York and Delaware
corporate law and that its references in its opinions to governmental
authorities are to federal and New York authorities. References to the
Registration Statement and the Prospectus in this paragraph (b) shall include
any amendment or supplement thereto at the date of such opinion.
(c) The Underwriters shall have received an opinion, dated the Closing
Date, of Melvin C. Breaux, General Counsel of the Company and of DVI Financial
Services Inc., to the effect that:
(i) to such counsel's best knowledge (A) no legal or governmental
proceedings are pending to which the Company or any of its subsidiaries is
a party or to which the property of the Company or any of its subsidiaries
is subject that are required to be described in the Registration Statement
or the Prospectus and are not described therein, and no such proceedings
have been threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties and (B) no contract or other
document is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that
is not described therein or filed as required;
(ii) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement, the Securities and
the Indenture and the consummation of the other transactions herein
contemplated do not conflict with or result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or instrument,
known to such counsel, to which the Company or any of its subsidiaries is a
18
<PAGE>
party or by which the Company or any of its subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws of the
Company or any of its subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or
any arbitrator and specifically naming the Company or any of its
subsidiaries or any rule or regulation of any governmental authority and
applicable to the Company or any of its subsidiaries; and
(iii) to the best of such counsel's knowledge (A) no default exists,
and (B) no event has occurred which, with notice or lapse of time or both,
would constitute a default, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust,
lease or other agreement or instrument, known to such counsel, to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of their respective properties is bound or
may be affected which would have a Material Adverse Effect.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. Such counsel may also state that,
wherever such counsel's opinion with respect to the existence or absence of
facts is stated to be "to the best of such counsel's knowledge" or "known to
such counsel", such statements are intended to signify that, during the course
of such counsel's representation of the Company, no information has come to the
attention of such counsel which gives such counsel actual knowledge of facts
contrary to the existence or absence of the facts indicated.
Such counsel may state that his opinions are limited to matters of
United States federal law, the laws of the state of Pennsylvania and Delaware
corporate law and that its references in its opinions to governmental
authorities are to federal and Pennsylvania authorities. References to the
Registration Statement and the Prospectus in this paragraph (c) shall include
any amendment or supplement thereto at the date of such opinion.
(d) The Underwriters shall have received an opinion, dated the Closing
Date, of Shearman & Sterling, counsel for the Underwriters, with respect to the
issuance and sale of the Securities, the Registration Statement and the
Prospectus, and such other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters. In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials to the extent satisfactory in form
and scope to such counsel.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
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<PAGE>
(e) The Underwriters shall have received from Deloitte & Touche LLP a
letter or letters dated, respectively, the date hereof and the Closing Date, in
form and substance satisfactory to the Underwriters.
(f) The Underwriters shall have received a certificate, dated the
Closing Date, of the principal executive officer and the principal financial or
accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Closing Date,
the Registration Statement, as amended as of the Closing Date, does not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented as of the Closing Date, does not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings for
that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries have sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects, net
worth or results of operations of the Company or any of its subsidiaries,
except in each case as described in or contemplated by the Prospectus
(exclusive of any amendment or supplement thereto).
(g) On or before the Closing Date, the Underwriters and counsel for
the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriters and counsel
for the Underwriters. The Company shall furnish to the Underwriters such
conformed copies of such opinions, certificates, letters and
20
<PAGE>
documents in such quantities as the Underwriters and counsel for the
Underwriters shall reasonably request.
9. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application") or
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; provided, further,
that the Company will not be liable to any Underwriter or any person controlling
such Underwriter with respect to any such untrue statement or omission made in
any Preliminary Prospectus that is corrected in the Prospectus (or any amendment
or supplement thereof) if the person asserting any such loss, claim, damage or
liability purchased Securities from such Underwriter but was not sent or given a
copy of the Prospectus (as amended or
21
<PAGE>
supplemented), other than the documents incorporated by reference therein, at or
prior to the written confirmation of the sale of such Securities to such person
in any case where such delivery of the Prospectus (as amended or supplemented)
is required by the Act. This indemnity agreement will be in addition to any
liability which the Company may otherwise have. The Company will not, without
the prior written consent of the Underwriter or Underwriters purchasing, in the
aggregate, more than fifty percent (50%) of the Securities, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any such Underwriter or any person who controls any
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of all
of the Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company, any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or alleged omission to state therein a material
fact required to be stated in the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 9. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
22
<PAGE>
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
-------- -------
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Underwriters in the case of
paragraph (a) of this Section 9, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions), (ii) the indemnifying
party does not promptly retain counsel satisfactory to the indemnified party or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds
23
<PAGE>
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters, the parties' relative
intents, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of this Section 9, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 9
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the Act. The
parties are advised that federal or state policy, as interpreted by the courts
in certain jurisdictions, may be contrary to certain provisions of this Section
9, and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
9 and further agree not to attempt to assert any such defense.
10. Default of Underwriters. If one or more Underwriters default in
-----------------------
their obligations to purchase Securities hereunder and the aggregate principal
amount of such Securities that such defaulting Underwriter or Underwriters agree
but failed to purchase is ten
24
<PAGE>
percent or less of the aggregate principal amount of Securities to be purchased
by all of the Underwriters at such time hereunder, the other Underwriters may
make arrangements satisfactory to the Underwriters for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Underwriters), but if no such arrangements are made
by the Closing Date, the other Underwriters shall be obligated severally in
proportion to their respective commitments hereunder to purchase the Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase.
If one or more Underwriters so default with respect to an aggregate principal
amount of Securities that is more than ten percent of the aggregate principal
amount of Securities to be purchased by all of the Underwriters at such time
hereunder, and if arrangements satisfactory to the Underwriters are not made
within 36 hours after such default for the purchase by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Underwriters), of the Securities with respect to which such default occurs, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company other than as provided in Section 11 hereof. In the
event of any default by one or more Underwriters as described in this Section
10, the Underwriters shall have the right to postpone the Closing Date
established as provided in Section 4 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Securities. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
11. Survival. The respective representations, warranties,
--------
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6 and 9 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
12. Termination. (a) This agreement may be terminated with respect
-----------
to the securities in the sole discretion of the Representatives by notice to the
Company given prior to the Closing Date, in the event that the Company shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date,
(i) the Company or any of its subsidiaries shall have, in the sole
judgment of the Underwriters, sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding or there shall
have been any material adverse change, or any development
25
<PAGE>
involving a prospective material adverse change (including without
limitation a change in management or control of the Company), in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, except in each
case as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto) which makes it impracticable or
inadvisable to proceed with the completion of the offering of the
Securities;
(ii) trading in the Company's Common Stock shall have been suspended
by the Commission or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange or Nasdaq National Market shall
have been suspended or minimum or maximum prices shall have been
established on either such exchange or market system;
(iii) a banking moratorium shall have been declared by New York or
United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or material
adverse change in general economic, political or financial conditions
having an effect on the financial markets or the market for the Securities
that, in the sole judgment of the Underwriters, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as of
the date hereof.
(b) Termination of this Agreement pursuant to this Section 12 shall be
without liability of any party to any other party except as provided in Section
11 hereof.
13. Information Supplied by Underwriters. The statements under the
------------------------------------
heading "Underwriting" in the Preliminary Prospectus or the Prospectus (to the
extent such statements relate to the Underwriters) constitute the only
information furnished by any Underwriter to the Company for the purposes of
Sections 3(a) and 9 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
14. Notices. All communications hereunder shall be in writing and,
-------
if sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: High
Yield Securities Department; and if sent to the Company, shall be delivered or
sent by mail, telex or facsimile transmission and confirmed in writing to the
Company at DVI, Inc., 500 Hyde Park, Doylestown, PA 18901, Attention: Chief
Financial Officer (facsimile number (215) 345-4428), with a copy to Rogers &
Wells LLP, 200 Park Avenue, New York, NY 10166-0153, Attention: John A. Healy
(facsimile number (212) 878-8375).
26
<PAGE>
15. Successors. This Agreement shall inure to the benefit of and
----------
shall be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 9 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 9 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
16. Applicable Law. The validity and interpretation of this
--------------
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
17. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
DVI, INC.
/s/ Steven R. Garfinkel
By: ___________________________________
Name:
Title: Executive Vice President and
Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
PIPER JAFFRAY INC.
LIBRA INVESTMENTS, INC.
FLEET SECURITIES, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
/s/ Steven Benfield
By: ___________________________________
Name: Steven Benfield
Title: Managing Director
For itself and on behalf of the
Underwriters
<PAGE>
SCHEDULE 1
UNDERWRITERS
Underwriter Principal Amount
- ----------- ----------------
Prudential Securities Incorporated.............. $46,750,000
Piper Jaffray Inc............................... 2,750,000
Libra Investments, Inc.......................... 2,750,000
Fleet Securities, Inc........................... 2,750,000
-----------
Total........................................... $55,000.000
===========
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
DVI, INC.,
ISSUER
TO
U.S. BANK TRUST NATIONAL ASSOCIATION,
TRUSTEE
_________________________________
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 23, 1998
TO
DEBT SECURITIES INDENTURE
DATED AS OF JANUARY 27, 1997.
_________________________________
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of December 23, 1998, between
DVI, Inc., a Delaware corporation, and U.S. Bank Trust National Association
(formerly known as First Trust National Association), a national banking
association, trustee (the "Trustee") under the Debt Securities Indenture dated
as of January 27, 1997 (the "Indenture").
RECITALS
Section 902(7) of the Indenture permits supplements thereto to
establish the form or terms of Securities of any series as permitted by Sections
201 and 301; and
The Company wishes to establish the form and terms of the 9 7/8%
Senior Notes due 2004 (the "Notes") originally issued on December 23, 1998.
NOW THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE ONE
THE NOTES
SECTION 1.01. Creation of the Debt Securities. In accordance with Section
-------------------------------
301 of the Indenture, the Company hereby creates the Notes as a series of its
Securities issued pursuant to the Indenture. The Notes shall be issued in an
aggregate principal amount initially limited to $55,000,000.
The Company may, subject to Article Three of this Second Supplemental
Indenture, issue Additional Notes having identical terms and conditions to the
Notes offered hereby. The Notes issued on the Closing Date and any Additional
Notes subsequently issued shall be treated as a single class for all purposes
under the Indenture.
SECTION 1.02. Form of the Debt Securities. The Notes shall be represented
---------------------------
by a single fully-registered global note in book-entry form (the "Global Note")
which shall be deposited with, or on behalf of, The Depository Trust Company,
New York, New York ("DTC") and registered in the name of the nominee of DTC.
The Notes shall be in the form of Exhibit A attached hereto. So long as DTC, or
its nominee, is the registered owner of a Global Note, DTC or its nominee, as
the case may be, shall be considered the sole owner or Holder of the Notes
represented by such Global Note for all purposes under the Indenture. Ownership
of beneficial interests in the Global Notes shall be shown on, and transfers
thereof shall be effected only through, records maintained by DTC (with respect
to beneficial interests of participants or persons that hold interests through
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners).
<PAGE>
2
Except as provided in this Section, owners of beneficial interests in
the Global Note will not have Notes registered in their names, will not receive
physical delivery of Notes in certificated form and will not be considered the
registered owner or Holder thereof under the Indenture for any purpose.
Notes in certificated form shall be transferred to beneficial owners
in exchange for their beneficial interests in the Global Note if (i) the DTC (A)
notifies the Company that it is no longer willing or able to continue to act as
depositary for the Global Note and the Company thereupon fails to appoint a
successor depository or (B) has ceased to be a clearing agency registered under
the Exchange Act, and, in each case, the Company fails to locate a qualified
successor within 90 days; (ii) there shall have occurred and be continuing an
Event of Default with respect to the Notes; or (iii) the Company, at its option,
notifies the Trustee in writing that it elects to cause issuance of the Notes in
certificated form.
SECTION 1.03. Terms and Conditions of the Debt Securities. The Notes
-------------------------------------------
shall be governed by all the terms and conditions of the Indenture, as
supplemented by this Second Supplemental Indenture, and in particular, the
following provisions shall be terms of the Notes:
(a) Redemption. The Notes shall be redeemable at the election of the
----------
Company, as a whole or from time to time in part, at any time on or after
February 1, 2002, on not less than 30 nor more than 60 days' prior notice
at the Redemption Prices (expressed as percentages of principal amount) set
forth below, together with accrued interest, if any, to the Redemption
Date, if redeemed during the 12-month period beginning on February 1 of the
years indicated below (subject to the right if Holders of record on the
relevant record date to receive interest due on an Interest Payment Date):
Year Redemption Price
---- ----------------
2002 102.821
2003 101.411
and thereafter at 100% of the principal amount, together with accrued
interest, if any, to the Redemption Date.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee by such method as the Trustee deems fair and
appropriate.
(b) Payment of Principal and Interest. Settlement for the Notes shall
---------------------------------
be made in immediately available funds. Payment of the principal of (and
premium, if any) and interest on this Security shall be made by check
mailed to
<PAGE>
3
the address of the Person entitled thereto as such address shall appear on
the Security Register; provided that all payments with respect to
Securities represented in either global or certificated form, the Holders
of which have given wire transfer instructions at least five business days
prior to the applicable record date to the Company, will be made by wire
transfer of immediately available funds to the accounts of the holders
thereof. The Notes shall trade in the Same-Day Funds Settlement System of
the DTC until Maturity, and secondary market trading activity for the Notes
shall settle in immediately available funds.
(c) Applicability of Defeasance or Covenant Defeasance. The
--------------------------------------------------
provisions of Article 14 of the Indenture shall apply to the Notes.
(d) Authentication of Additional Notes. At any time and from time to
----------------------------------
time after the execution and delivery of this Supplemental Indenture, the
Company may deliver Additional Notes executed by the Company to the Trustee
for authentication together with a Company Order for the authentication and
delivery of such Additional Notes directing the Trustee to authenticate the
Additional Notes and certifying that the issuance of such additional Notes
is in compliance with the Article Ten hereof and that all other conditions
precedent to the issuance of Notes contained herein have been fully
complied with, and the Trustee in accordance with such company Order shall
authenticate and deliver such Additional Notes.
ARTICLE TWO
DEFINITIONS
SECTION 201. For purposes of this Second Supplemental Indenture, all terms
used herein, unless otherwise defined herein, shall have the meanings assigned
to them in the Indenture.
SECTION 202.
"Acquired Debt" means Debt of a Person (a) existing at the time such
Person is merged with or into the Company or becomes a Subsidiary or (b)
assumed in connection with the acquisition of assets from such Person.
"Additional Notes" means the 9 7/8% Senior Notes due 2004 of the
Company originally issued at any time after the Closing Date under this
Second Supplemental Indenture (other than other Notes issued in exchange
for Outstanding Notes pursuant to the Indenture).
<PAGE>
4
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger or
consolidation) (collectively, a "transfer") by the Company or a Restricted
Subsidiary, directly or indirectly, in one or a series of related
transactions, to any Person other than the Company or a Restricted
Subsidiary of (a) any Capital Stock of any Restricted Subsidiary, (b) all
or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries representing a division or line of business, (c)
any other properties or assets of the Company or any Restricted Subsidiary,
other than transactions in the ordinary course of business or (d) any
Excess Spread Receivables. For the purposes of this definition, the term
"Asset Sale" does not include any transfer of properties or assets (i) that
is governed by the provisions of Article Eight of the Indenture, (ii)
between or among the Company and its Restricted Subsidiaries pursuant to
transactions that do not violate any other provision of the Indenture or
this Second Supplemental Indenture, (iii) to an Unrestricted Subsidiary, if
permitted under Section 302 hereof, or (iv) the gross proceeds of which do
not exceed $1 million for any particular item. For purposes of this
definition, the term "ordinary course of business" shall include, without
limitation, (x) dispositions of collateral acquired by the Company through
foreclosure or otherwise and (y) disposals of Receivables through
securitization, whole loan sales or other similar transactions.
"Average Life" means, as of the date of determination with respect to
any Debt or Disqualified Stock, the quotient obtained by dividing (a) the
sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal
or liquidation value payment of such Debt or Disqualified Stock,
respectively, multiplied by (ii) the amount of each such principal or
liquidation value payment by (b) the sum of all such principal or
liquidation value payments.
"Change of Control" means the occurrence of any of the following
events:
(a) any Person or "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the Voting Stock of the
Company;
(b) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election to such Board
of Directors, or whose nomination for election by the stockholders of
the Company, was approved
<PAGE>
5
by a vote of 66 2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Company then in office; or
(c) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Closing Date" means December 23, 1998.
"Consolidated Adjusted Net Income" means, for any period, the net
income (or net loss) of the Company and its Restricted Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP,
adjusted to the extent included in calculating such net income or loss by
excluding (a) any net after-tax extraordinary gains or losses (less all
fees and expenses relating thereto), (b) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to Asset Sales,
(c) the portion of net income (or loss) of any Person (other than the
Company or a Restricted Subsidiary), including Unrestricted Subsidiaries,
in which the Company or any Restricted Subsidiary has an ownership
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any Restricted Subsidiary in
cash during such period, (d) the net income (or loss) of any Person
combined with the Company or any Restricted Subsidiary on a "pooling of
interests" basis attributable to any period prior to the date of
combination and (e) the net income (but not the net loss) of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that
such net income could be paid to the Company or a Restricted Subsidiary
thereof by loans, advances, intercompany transfers, principal repayments or
otherwise.
"Consolidated Leverage Ratio" means, at any date of determination, the
ratio of (i) the aggregate amount of all Debt of the Company and its
Restricted Subsidiaries at such date on a consolidated basis, excluding (A)
Permitted Warehouse Debt and (B) Hedging Obligations permitted to be
incurred pursuant to clause (v) of Section 301 to (ii) the Consolidated Net
Worth of the Company at such date.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person,
(d) every
<PAGE>
6
obligation of such Person issued or assumed as the deferred purchase price
of property or services, (e) Capitalized Lease Obligations, (f) all
Disqualified Stock of such Person valued at its maximum fixed repurchase
price, plus accrued and unpaid dividends, (g) all obligations of such
Person under or in respect of Hedging Obligations, and (h) every obligation
(to the extent guaranteed by such Person) of the type referred to in
clauses (a) through (g) of another Person and all dividends of another
Person the payment of which, in either case, such Person has guaranteed.
For purposes of this definition, the "maximum fixed repurchase price" of
any Disqualified Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if
such Disqualified Stock were repurchased on any date on which Debt is
required to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified
Stock, such fair market value shall be determined in good faith by the
board of directors of the issuer of such Disqualified Stock.
Notwithstanding the foregoing, trade accounts payable and accrued
liabilities arising in the ordinary course of business and any liability
for federal, state or local taxes or other taxes owed by such Person shall
not be treated as Debt for purposes of this definition. Furthermore, any
securities issued in a securitization by a special purpose owner trust or
other entity formed by or on behalf of a Person and to which Receivables
have been sold or otherwise transferred by or on behalf of such Person or
its Subsidiaries shall not be treated as Debt of such Person or its
Subsidiaries for purposes of this definition, regardless of whether such
securities are treated as indebtedness for tax or accounting purposes;
provided, however, that any guarantee by the Company or a Restricted
Subsidiary (other than such special purpose owner trust or similar entity)
of indebtedness arising in connection with such securitization shall be
treated as Debt for purposes of this definition.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors is
required to deliver a resolution of the Board of Directors under the
Indenture, a member of the Board of Directors who does not have any
material direct or indirect financial interest in or with respect to such
transaction or series of transactions (other than by ownership of
securities issued by the Company).
"Excess Spread" means, over the life of a "pool" of Receivables that
have been sold by the Company or a Restricted Subsidiary to a trust or
other Person in a securitization or sale, the rights retained by the
Company or its Restricted Subsidiaries at or subsequent to the closing of
such securitization or sale with respect to such "pool", including any
rights to receive cash flows attributable to such pool and any servicing
rights retained.
<PAGE>
7
"Excess Spread Receivables" of the Company or a Restricted Subsidiary
means the right to Excess Spread capitalized on the Company's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP).
"guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (b) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any
way the payment or performance (or payment of damages in the event of non-
performance) of all or any part of such obligation, including, without
limitation, the payment of amounts drawn down under letters of credit. For
purposes of this definition, the following actions, taken by any Person in
connection with a disposition or permanent funding of Receivables through a
securitization, whole loan sale or other similar transaction, shall not
constitute a guarantee by that Person: (i) the furnishing of collateral or
credit enhancement, whether in the form of cash, marketable securities,
Excess Spread Receivables or otherwise; (ii) the acquisition and ownership
of a subordinated or junior class of equity or debt securities issued in a
securitization; or (iii) the provision of customary representations and
warranties regarding the documentation of and credit underwriting practices
followed with respect to, the Receivables being disposed of or funded.
"Hedging Obligations" means the obligations of any Person under (i)
interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (ii) other agreements or arrangements designed
to protect such Person against fluctuations in interest rates or the value
of foreign currencies.
"Investment" means, (i) directly or indirectly, any advance, loan or
other extension of credit (including, without limitation, by way of
guarantee or similar arrangement) or capital contribution to, the purchase
of any stock, bonds, notes, debentures or other securities of, or the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or stock or other evidence of beneficial ownership of,
any Person or the making of any investment in any Person, (ii) the
designation of any Restricted Subsidiary as an Unrestricted Subsidiary and
(iii) the transfer of any assets or properties from the Company or a
Restricted Subsidiary to any Unrestricted Subsidiary, other than the
transfer of assets or properties made in the ordinary course of business.
Investments exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or in the
Indenture provided, whether at
<PAGE>
8
the Stated Maturity with respect to such principal or by declaration of
acceleration, call for redemption, purchase or otherwise.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations when received in the
form of, or stock or other assets when disposed for, cash or cash
equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary), net of (a)
brokerage commissions and other fees and expenses (including fees and
expenses of legal counsel and investment banks) related to such Asset Sale,
(b) provisions for all taxes payable as a result of such Asset Sale, (c)
payments made to retire Debt where payment of such Debt is secured by the
assets that are the subject of such Asset Sale, (d) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary)
owning a beneficial interest in the assets that are subject to the Asset
Sale and (e) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve required in
accordance with GAAP against any liabilities associated with such Asset
Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of 180 days or
less issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support
thereof); (ii) certificates of deposit or acceptances with a maturity
of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus of not
less than $500 million; and (iii) commercial paper with a maturity of
180 days or less issued by a corporation that is not an Affiliate of
the Company and is organized under the laws of any state of the United
States or the District of Columbia and having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services;
(b) the application, directly or indirectly of up to $5 million
of the net proceeds from the sale of the Notes to an Investment in a
Permitted Joint Venture doing business in Latin America;
(c) Investments by the Company or any Restricted Subsidiary in
another Person, if as a result of such Investment (i) such other
Person becomes a Restricted Subsidiary or (ii) such other Person is
merged or consolidated with or
<PAGE>
9
into, or transfers or conveys all or substantially all of its assets
to, the Company or a Restricted Subsidiary;
(d) Investments by the Company or any of the Restricted
Subsidiaries in any of the other of them;
(e) Investments in Receivables or assets owned or used in the
ordinary course of business;
(f) Investments in existence on the Closing Date and any
renewals, extensions, substitutions, refinancing or replacements of
any such Investments to the extent they do not require an increase in
the amount of such Investment;
(g) promissory notes received as a result of Asset Sales
permitted under Section 304;
(h) Excess Spread Receivables arising from the securitization or
sale of Receivables by the Company or any of its Restricted
Subsidiaries;
(i) Investments comprised of promissory notes, stock, obligations
or securities received in the ordinary course of business in
settlement of debts owing to the Company or any of its Restricted
Subsidiaries, or on sales of assets acquired through foreclosure or
similar transactions;
(j) other Investments in Permitted Joint Ventures that do not
exceed $20 million at any time outstanding; and
(k) Loans or other extensions of credit from the Company or a
Restricted Subsidiary to a Permitted Joint Venture for the purpose of
providing liquidity to such Permitted Joint Venture to allow it to
originate or acquire Receivables in the ordinary course, provided that
the Company or the Restricted Subsidiary has effective operational
control of such Permitted Joint Venture.
"Permitted Joint Venture" means any joint venture between the Company
or one of its Restricted Subsidiaries and any other Person, which is
primarily engaged in the business of originating, purchasing, brokering and
marketing, pooling, selling, securitizing or servicing medical equipment
loan receivables or medical receivables.
"Permitted Warehouse Debt" means all Warehouse Debt outstanding from
time to time; provided, however, that (i) the Warehouse Debt shall be
deemed to be Permitted Warehouse Debt only to the extent that the assets to
which such Warehouse Debt relates
<PAGE>
10
are expected by the Company to be permanently funded through a
securitization or sale transaction and (ii) such Warehouse Debt shall be
deemed to be Permitted Warehouse Debt only to the extent of the realizable
value of the Receivables to which such Warehouse Debt relates and that were
not originated or acquired by the Company more than 364 days prior to the
date of determination (such realizable value to be determined in good faith
by the Board of Directors of the Company) if that value is less than the
amount of the Warehouse Debt.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the initial issuance of the Notes, and including, without
limitation, all classes and series of preferred or preference stock of such
Person.
"Qualified Equity Interest" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding
any debt security that is convertible into or exchangeable for Capital
Stock).
"Qualified Stock" of any Person means any and all Capital Stock of
such Person, other than Disqualified Stock.
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Company or any Restricted
Subsidiary in the ordinary course of business; provided, however, that, for
purposes of determining the amount of a Receivable at any time, such amount
shall be determined in accordance with GAAP, consistently applied, as of
the most recent practicable date.
"Subordinated Debt" means Debt of the Company that is subordinated in
right of payment to the Notes.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary in accordance with
Section 309 and (b) any Subsidiary of an Unrestricted Subsidiary.
"Warehouse Debt" means Debt incurred by the Company or a Restricted
Subsidiary under a Warehouse Facility. Warehouse Debt under any Warehouse
Facility shall be deemed to equal the principal amount of such Debt or, if
less, the book value of the Receivables pledged under such Warehouse
Facility to secure such Warehouse Debt.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser a principal purpose of which is to
finance the purchase or
<PAGE>
11
origination of Receivables by the Company or one or more of its Restricted
Subsidiaries for the purpose of pooling such Receivables prior to
securitization or sale in the ordinary course of business, including
purchase and sale facilities pursuant to which the Company or a Restricted
Subsidiary sells Receivables to a financial institution and retains a right
of first refusal upon the subsequent resale of such Receivables by such
financial institution.
<PAGE>
12
ARTICLE THREE
ADDITIONAL COVENANTS
The holders of all Notes shall have the benefits of the following
covenants, in addition to the covenants contained in Article Ten of the
Indenture. To the extent that the covenants contained in this Article Three are
inconsistent with the covenants contained in Article Ten of the Indenture, the
covenants contained in Article Ten of the Indenture shall be deemed to be
superseded for purposes of all Notes issued under this Supplemental Indenture.
SECTION 301. Limitation on Debt.
------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, create, issue, assume, guarantee or in any manner become directly or
indirectly liable for the payment of, or otherwise incur (collectively,
"incur"), any Debt (including Acquired Debt and the issuance of
Disqualified Stock), except that the Company may incur Debt or issue
Disqualified Stock if, on the date of such incurrence or issuance and after
giving effect thereto, the Consolidated Leverage Ratio does not exceed 2.0
to 1.0.
Notwithstanding the foregoing, the Company may, and may permit its
Restricted Subsidiaries to, incur the following Debt ("Permitted Debt"):
(i) Permitted Warehouse Debt of the Company or any Restricted
Subsidiary;
(ii) Debt of the Company or any Restricted Subsidiary outstanding on
the Closing Date;
(iii) Debt owed by the Company to any Restricted Subsidiary or owed
by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary (provided that such Debt is held by the Company or such
Restricted Subsidiary);
(iv) Debt represented by the Notes (other than any Additional Notes)
and any guarantees thereof by Restricted Subsidiaries;
(v) Debt of the Company or any Restricted Subsidiary in respect of
Hedging Obligations incurred in the ordinary course of business;
(vi) either (A) Capitalized Lease Obligations of the Company or any
Restricted Subsidiary or (B) Debt under purchase money mortgages or secured
by purchase money security interests so long as (x) such Debt is not
secured by any property or assets of the
<PAGE>
13
Company or any Restricted Subsidiary other than the property and assets so
acquired and (y) such Debt is created within 60 days of the acquisition of
the related property; provided that the aggregate amount of Debt under
clauses (A) and (B) does not exceed in the aggregate $5 million at any one
time outstanding;
(vii) Debt of the Company or any Restricted Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock;
(viii) Acquired Debt of a Person, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or the acquisition of assets from such Person, as the case may
be, provided that the Company on a pro forma basis could incur $1.00 of
additional Debt (other than Permitted Debt) pursuant to the first paragraph
of this Section;
(ix) Debt of the Company, not permitted by any other clause of this
definition, in an aggregate principal amount not to exceed $20 million at
any one time outstanding;
(x) Debt incurred under one or more working capital facilities in an
amount not to exceed $10 million at any one time outstanding;
(xi) Debt of the Company or any Restricted Subsidiary, which Debt is
in the form of a guarantee and is incurred in connection with a
securitization or sale of Receivables; provided, that the Company has
concluded (as determined in good faith by the Board of Directors of the
Company) that the incurrence of such Debt is necessary to obtain an
investment grade rating for other Debt issued in connection with such
securitization or sale of Receivables; and
(xii) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
outstanding Debt, other than Debt incurred pursuant to clause (i), (vi),
(ix), (x) or (xi) of this definition, including any successive refinancings
thereof, so long as (A) any such new Debt is in a principal amount that
does not exceed the principal amount so refinanced, plus the amount of any
premium required to be paid in connection with such refinancing pursuant to
the terms of the Debt refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, plus
the amount of the expenses of the Company incurred in connection with such
refinancing, (B) in the case of any refinancing of Subordinated Debt, such
new Debt is made subordinate to the Notes at least to the same extent as
the Debt being refinanced and (C) such refinancing Debt does not have an
Average Life less than the Average Life of the Debt being refinanced and
<PAGE>
14
does not have a final scheduled maturity earlier than the final scheduled
maturity, or permit redemption at the option of the holder earlier than the
earliest date of redemption at the option of the holder, of the Debt being
refinanced.
SECTION 302. Limitation on Restricted Payments.
---------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, take any of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Capital Stock of the Company or any
Restricted Subsidiary (other than dividends or distributions payable solely
in Qualified Equity Interests and other than dividends or distributions by
a Restricted Subsidiary payable to the Company or another Restricted
Subsidiary);
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock of the Company or any
Restricted Subsidiary, or any options, warrants or other rights to acquire
such shares of Capital Stock (other than any such Capital Stock owned by
the Company or any of its Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Debt; and
(d) make any Investment (other than a Permitted Investment) in any
Person
(such payments or other actions described in (but not excluded from)
clauses (a) through (d) being referred to as "Restricted Payments"), unless
at the time of, and immediately after giving effect to, the proposed
Restricted Payment:
(i) no Default or Event of Default has occurred and is
continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of Section
301 and
(iii) the aggregate amount of all Restricted Payments made after
the Closing Date does not exceed the sum of:
(A) 25% of the aggregate Consolidated Adjusted Net Income of
the Company during the period (taken as one accounting period)
from the
<PAGE>
15
first day of the Company's fiscal quarter which includes January
30, 1997 to the last day of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such proposed Restricted Payment (or, if
such aggregate cumulative Consolidated Adjusted Net Income is a
loss, minus 100% of such amount), plus
(B) the aggregate net proceeds including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive),
received by the Company after the initial issuance of the Notes
from the issuance or sale (other than to a Subsidiary) of
Qualified Equity Interests of the Company; plus
(C) the aggregate net proceeds including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive),
received by the Company after January 30, 1997 from the issuance
or sale (other than to a Restricted Subsidiary) of debt
securities or Disqualified Stock that have been converted into or
exchanged for Qualified Stock of the Company, together with the
aggregate net cash proceeds received by the Company at the time
of such conversion or exchange.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may take the following actions, so long as (with respect to
clauses (e), (f) and (g) below) no Default or Event of Default has occurred
and is continuing or would occur:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision;
(b) the repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of Qualified Equity Interests of the
Company;
(c) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Debt in exchange for, or out of
the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Subsidiary) of Qualified Equity Interests of the Company;
<PAGE>
16
(d) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Debt in exchange for, or out of the
net cash proceeds of a substantially concurrent issuance or sale (other
than to a Subsidiary) of, Subordinated Debt, so long as the Company or a
Restricted Subsidiary would be permitted to refinance such original
Subordinated Debt with such new Subordinated Debt pursuant to clause (xii)
of the definition of Permitted Debt;
(e) the repurchase of any Subordinated Debt at a purchase price not
greater than 101% of the principal amount of such Subordinated Debt in the
event of a change of control in accordance with provisions similar to
Section 303, provided that, prior to or simultaneously with such
repurchase, the Company has made the Change of Control Offer as provided in
Section 303 with respect to the Notes and has repurchased all Notes validly
tendered for payment in connection with such Change of Control Offer;
(f) loans or advances to officers, directors and employees of the
Company or any of its Restricted Subsidiaries made in the ordinary course
of business after the Closing Date in an amount not to exceed $1 million in
the aggregate at any one time outstanding;
(g) Investments by the Company or a Restricted Subsidiary in another
Person made with, or out of the net cash proceeds of, a substantially
concurrent issuance and sale (other than to a Subsidiary) of Qualified
Stock of the Company; and
(h) the making of an Investment in a Permitted Joint Venture so long
as the aggregate amount of all such Investments pursuant to this clause (h)
made after January 30, 1997 does not exceed the difference between (A) 25%
of the aggregate Consolidated Adjusted Net Income (without giving effect to
clause (e) of the definition thereof) of the Company during the period
(taken as one accounting period) from the first day of the Company's fiscal
quarter which includes January 30, 1997 to the last day of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such proposed Investment, minus (B) the
aggregate amount of all Restricted Payments made after January 30, 1997 in
reliance on the foregoing clause (iii)(A); provided, that, at the time of,
and immediately after giving effect to, the proposed Investment in a
Permitted Joint Venture pursuant to this clause (h), the Company could
incur at least $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of Section 301.
The actions described in clauses (b), (c), (e), (f), (g) and (h) of
this paragraph shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph but shall reduce the amount that
would otherwise be available for Restricted Payments under clause (iii) of
the first paragraph of
<PAGE>
17
this Section and the actions described in clauses (a) and (d) of this
paragraph shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph and shall not reduce the amount that
would otherwise be available for Restricted Payments under clause (iii) of
the first paragraph of this Section.
For the purpose of making any calculations under this Supplemental
Indenture (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company shall be deemed to have made an Investment in an
amount equal to the fair market value of the net assets of such Restricted
Subsidiary at the time of such designation as determined by the Board of
Directors of the Company, whose good faith determination shall be
conclusive, (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at fair market value at the time of such
transfer, as determined by the Board of Directors of the Company, whose
good faith determination shall be conclusive and (iii) subject to the
foregoing, the amount of any Restricted Payment, if other than cash, shall
be determined by the Board of Directors of the Company, whose good faith
determination shall be conclusive.
If the aggregate amount of all Restricted Payments calculated under
the foregoing provision includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary,
the aggregate amount of all Restricted Payments calculated under the
foregoing provision shall be reduced by the lesser of (x) the net asset
value of such Subsidiary at the time it becomes a Restricted Subsidiary and
(y) the initial amount of such Investment.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision shall be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise), to the extent such net
reduction is not included in the Company's Consolidated Adjusted Net
Income; provided that the total amount by which the aggregate amount of all
Restricted Payments may be reduced may not exceed the lesser of (x) the
cash proceeds received by the Company and its Restricted Subsidiaries in
connection with such net reduction and (y) the initial amount of such
Investment.
In computing Consolidated Adjusted Net Income of the Company under the
foregoing clause (iii)(A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and
unaudited financial statements and other current financial data based on
the books and records of the
<PAGE>
18
Company for the remaining portion of such period and (ii) the Company shall
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the making of such Restricted Payment, would
in the good faith determination of the Company be permitted under the
requirements of this Supplemental Indenture, such Restricted Payment shall
be deemed to have been made in compliance with this Supplemental Indenture
notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Adjusted Net Income
of the Company for any period.
SECTION 303. Purchase of Notes upon a Change of Control.
------------------------------------------
If a Change of Control occurs at any time, then each holder of Notes
shall have the right to require that the Company purchase such holder's
Notes, in whole or in part in integral multiples of $1,000, at a purchase
price in cash equal to 101% of the principal amount of such Notes, plus
accrued and unpaid interest, if any, to the date of purchase, pursuant to
the offer described below (the "Change of Control Offer") and the other
procedures set forth in the Indenture.
Within 30 days following any Change of Control, the Company shall
notify the Trustee thereof and give written notice of such Change of
Control to each holder of Notes by first-class mail, postage prepaid, at
its address appearing in the Security Register, stating, among other
things, (i) the purchase price and the purchase date, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed or such later date as is necessary to comply with
requirements under the Exchange Act; (ii) that any Note not tendered shall
continue to accrue interest; (iii) that, unless the Company defaults in the
payment of the purchase price, any Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change
of Control purchase date; and (iv) certain other procedures that a holder
of Notes must follow to accept a Change of Control Offer or to withdraw
such acceptance.
The Company shall comply with the applicable tender offer rules
including Rule l4e-l under the Exchange Act, and any other applicable
securities laws and regulations in connection with a Change of Control
Offer.
The Company shall not, and shall not permit any Restricted Subsidiary
to, create any restriction (other than restrictions existing under Debt as
in effect on the Closing Date or in refinancings of such Debt) that would
materially impair the ability of the Company to make a Change of Control
Offer to purchase the Notes
<PAGE>
19
or, if such Change of Control Offer is made, to pay for the Notes tendered
for purchase.
SECTION 304. Limitation on Certain Asset Sales.
---------------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the consideration
received by the Company or such Restricted Subsidiary for such Asset Sale
is not less than the fair market value of the assets sold (as determined by
the Board of Directors of the Company, whose good faith determination shall
be conclusive) and (ii) the consideration received by the Company or the
relevant Restricted Subsidiary in respect of such Asset Sale consists of at
least 85% cash or cash equivalents.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of such Net Cash Proceeds to the repayment
of senior Debt of the Company or a Restricted Subsidiary or (ii) invest (or
enter into a legally binding agreement to invest) all or a portion of such
Net Cash Proceeds in properties and assets to replace the properties and
assets that were the subject of the Asset Sale or in properties and assets
that will be used in businesses of the Company or its Restricted
Subsidiaries, as the case may be, existing on the Closing Date, or in
Permitted Joint Ventures. If any such legally binding agreement to invest
such Net Cash Proceeds is terminated, the Company may, within 90 days of
such termination or within 12 months of such Asset Sale, whichever is
later, invest such Net Cash Proceeds as provided in clause (i) or (ii)
(without regard to the parenthetical contained in such clause (ii)) above.
The amount of such Net Cash Proceeds not so used as set forth above in this
paragraph (b) constitutes "Excess Proceeds".
---------------
(c) When the aggregate amount of Excess Proceeds exceeds $5 million,
the Company shall, within 30 days thereafter, make an offer to purchase
from all holders of Notes, on a pro rata basis, in accordance with the
procedures set forth in the Indenture, the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased with the
Excess Proceeds, at a purchase price in cash equal to 100% of the principal
amount thereof, plus accrued interest, if any, to the date such offer to
purchase is consummated. To the extent that the aggregate principal amount
of Notes tendered pursuant to such offer to purchase is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes validly tendered and
not withdrawn by holders thereof exceeds the Excess Proceeds, the Notes to
be purchased shall be selected on a pro rata basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall be reset to zero.
<PAGE>
20
SECTION 305. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or suffer to exist any transaction
with, or for the benefit of, any Affiliate of the Company or any beneficial
owner of 5% or more of any class of the Capital Stock of the Company at any
time outstanding ("Interested Persons"), unless (a) such transaction is on
terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could have been obtained in
an arm's length transaction with third parties who are not Interested
Persons and (b) either (i) with respect to any transaction or series of
transactions involving aggregate payments in excess of $1 million, but less
than $5 million, the Company delivers an officers' certificate to the
Trustee certifying that such transaction or transactions comply with clause
(a) above or (ii) with respect to a transaction or series of transactions
involving aggregate payments equal to or greater than $5 million, such
transaction or transactions have been approved by the Board of Directors
(including a majority of the Disinterested Directors) of the Company or the
Company has obtained a written opinion from a nationally recognized
investment banking firm to the effect that such transaction or transactions
are fair to the Company or such Restricted Subsidiary from a financial
point of view.
The foregoing covenant shall not restrict
(A) transactions among the Company and/or its Restricted Subsidiaries;
(B) the Company from paying reasonable and customary regular
compensation and fees to directors of the Company or any Restricted
Subsidiary who are not employees of the Company or any Restricted
Subsidiary; and
(C) the application, directly or indirectly, of up to $5 million of
the net proceeds from the sale of the Notes to fund the Company's
Investment in a Permitted Joint Venture doing business in Latin America.
SECTION 306. Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Restricted Subsidiaries.
---------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on
the ability of any Restricted Subsidiary to (a) pay dividends, in cash or
otherwise, or make any
<PAGE>
21
other distributions on or in respect of its Capital Stock, (b) pay any Debt
owed to the Company or any other Restricted Subsidiary, (c) make loans or
advances to the Company or any other Restricted Subsidiary, (d) transfer
any of its properties or assets to the Company or any other Restricted
Subsidiary or (e) guarantee any Debt of the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or
by reason of:
(i) any agreement in effect on the Closing Date;
(ii) customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any Restricted Subsidiary;
(iii) the refinancing or successive refinancings of Debt incurred
under the agreements in effect on the Closing Date, so long as such
encumbrances or restrictions are no less favorable to the Company or any
Restricted Subsidiary than those contained in such original agreement;
(iv) Warehouse Facilities and other credit facilities, provided,
however, that the terms and conditions of any such encumbrances or
restrictions are not materially more restrictive in the aggregate than
those contained in the revolving credit agreement with a syndicate of banks
and Fleet Bank, National Association, as agent, dated March 28, 1995, in
effect on the Closing Date in the judgment of the Board of Directors of the
Company as evidenced by a resolution of the Board of Directors of the
Company and filed with the Trustee; or
(v) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired.
SECTION 307. Limitation on Issuances and Sales of Capital Stock of
-----------------------------------------------------
Restricted Subsidiaries.
-----------------------
The Company (a) shall not permit any Restricted Subsidiary to issue
any Capital Stock (other than to the Company or a Restricted Subsidiary)
and (b) shall not permit any Person (other than the Company or a Restricted
Subsidiary) to own any Capital Stock of any Restricted Subsidiary;
provided, however, that this Section shall not prohibit (i) the sale or
other disposition of all, but not less than all, of the issued and
outstanding Capital Stock of a Restricted Subsidiary owned by the Company
and its Restricted Subsidiaries in compliance with the other
<PAGE>
22
provisions of this Supplemental Indenture and the provisions of the
Indenture or (ii) the ownership by directors of director's qualifying
shares or the ownership by foreign nationals of Capital Stock of any
Restricted Subsidiary, to the extent mandated by applicable law.
SECTION 308. Limitation on Guarantees of Debt by Restricted
----------------------------------------------
Subsidiaries.
- ------------
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable for
the payment of any Debt of the Company or any Debt of any other Restricted
Subsidiary, unless (a) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture providing for a guarantee of payment
of the Notes by such Restricted Subsidiary and (b) with respect to any
guarantee of Subordinated Debt by a Restricted Subsidiary, any such
guarantee is subordinated to such Restricted Subsidiary's guarantee with
respect to the Notes at least to the same extent as such Subordinated Debt
is subordinated to the Notes, provided that the foregoing provision shall
not be applicable to any guarantee by any Restricted Subsidiary that
existed at the time such Person became a Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.
Any guarantee by a Restricted Subsidiary of the Notes pursuant to the
preceding paragraph shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon (i) any
sale, exchange or transfer to any Person not an Affiliate of the Company of
all of the Company's and the Restricted Subsidiaries' Capital Stock in, or
all or substantially all the assets of, such Restricted Subsidiary (which
sale, exchange or transfer is not prohibited by this Supplemental
Indenture) or (ii) the release or discharge of the guarantee that resulted
in the creation of such guarantee of the Notes, except a discharge or
release by or as a result of payment under such guarantee.
SECTION 309. Unrestricted Subsidiaries.
-------------------------
(a) The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither the Company nor any
Restricted Subsidiary is directly or indirectly liable for any Debt of such
Subsidiary, (ii) no default with respect to any Debt of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any
other Debt of the Company or any Restricted Subsidiary to declare a default
on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in such
Subsidiary made as a result of designating such
<PAGE>
23
Subsidiary an Unrestricted Subsidiary shall not violate the provisions of
Section 1008, (iv) neither the Company nor any Restricted Subsidiary has a
contract, agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than those that might
be obtained at the time from Persons who are not Affiliates of the Company
and (v) neither the Company nor any Restricted Subsidiary has any
obligation to subscribe for additional shares of Capital Stock or other
equity interest in such Subsidiary, or to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Notwithstanding the foregoing, the
Company may not designate DVI Business Credit Corporation or DVI Financial
Services Inc. as an Unrestricted Subsidiary and may not sell, transfer or
otherwise dispose of any properties or assets of DVI Business Credit
Corporation or DVI Financial Services Inc. to an Unrestricted Subsidiary,
other than in the ordinary course of business.
(b) The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Debt is permitted under
Section 301 and (ii) no Default or Event of Default shall have occurred and
be continuing following such designation.
SECTION 310. Limitation on Liens.
-------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any
Lien of any kind on or with respect to any of its property or assets,
including any shares of stock or indebtedness of any Restricted Subsidiary,
whether owned at the Closing Date or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereon, unless (a) in the case of any Lien securing
Subordinated Debt, the Notes are secured by a Lien on such property, assets
or proceeds that is senior in priority to such Lien and (b) in the case of
any other Lien, the Notes are equally and ratably secured with the
obligation or liability secured by such Lien.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, incur the following Liens ("Permitted Liens"):
(i) Liens on property or assets securing Permitted Warehouse Debt of
the Company or any Restricted Subsidiary, other than Liens on Excess Spread
Receivables related to such Permitted Warehouse Debt not created in favor
of the lenders under the related Warehouse Facility;
<PAGE>
24
(ii) Liens incurred in connection with a securitization or sale of
Receivables, other than Liens on Excess Spread Receivables related to such
securitization or sale transaction that were not created at the time of
such securitization or sale transaction;
(iii) Liens existing as of the Closing Date;
(iv) Liens on any property or assets of a Restricted Subsidiary
granted in favor of the Company or any Restricted Subsidiary;
(v) Liens securing the Notes;
(vi) Liens representing the interest or title of lessors under
Capitalized Lease Obligations or Liens securing purchase money mortgages or
purchase money security interests, so long as the aggregate amount secured
by such Liens does not exceed the amount permitted by clause (vi) of the
definition of "Permitted Debt";
(vii) Liens securing Acquired Debt created prior to (and not in
connection with or in contemplation of) the incurrence of such Debt by the
Company or any Restricted Subsidiary; provided that such Lien does not
extend to any property or assets of the Company or any Restricted
Subsidiary other than the property and assets acquired in connection with
the incurrence of such Acquired Debt;
(viii) Liens (other than on any Excess Spread Receivables) securing
obligations under Hedging Obligations permitted to be incurred pursuant to
clause (v) of the definition of "Permitted Debt";
(ix) statutory Liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business with respect to (A) amounts not
yet delinquent or (B) amounts being contested in good faith by appropriate
proceedings or (C) an aggregate amount at any one time not in excess of $1
million;
(x) Liens for taxes, assessments, government charges or claims that
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted;
(xi) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance bonds and other obligations of a like
nature incurred in the ordinary course of business (other than contracts
for the payment of money);
<PAGE>
25
(xii) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering in any material respect with the
business of the Company or any Restricted Subsidiary incurred in the
ordinary course of business;
(xiii) Liens arising by reason of any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings that may have been duly initiated for the review of such
judgment, decree or order have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(xiv) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to
such letters of credit and the products and proceeds thereof;
(xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(xvi) any extension, renewal or replacement, in whole or in part, of
any Lien described in the foregoing clauses (i) through (xv); provided that
any such extension, renewal or replacement is no more restrictive in any
material respect than the Lien so extended, renewed or replaced and does
not extend to any additional property or assets.
SECTION 311. Limitation on Investment Company Status.
---------------------------------------
The Company shall not take any action, or otherwise permit to exist any
circumstance, that would require the Company or any of its Subsidiaries to
register as an "investment company" under the Investment Company Act of
1940, as amended.
SECTION 312. Reports.
-------
The Company shall be required to file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents
that the Company would be required to file if it were subject to Section 13
or 15(d) of the Exchange Act. The Company shall also be required (a) to
file with the Trustee, and provide to each holder of Notes, without cost to
such holder, copies of such reports and documents within 15 days after the
date on which the Company files such reports and documents with the
Commission or the date on which the Company would be required to file such
reports and documents if the Company
<PAGE>
26
were so required and (b) if filing such reports and documents with the
Commission is not accepted by the Commission or is prohibited under the
Exchange Act, to supply at the Company's cost copies of such reports and
documents to any prospective holder of Notes promptly upon written request.
ARTICLE FOUR
FURTHER AMENDMENT
SECTION 401. For purposes of the Notes and any Additional Notes
issued hereunder, Section 1403 of the Indenture is deleted and replaced by the
following:
SECTION 1403. Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company
shall be released from its obligations under Sections 301 through 310 and
312 of the Second Supplemental Indenture on and after the date the
conditions set forth in Section 1404 are satisfied (hereinafter, "covenant
defeasance"), and such Securities shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Outstanding
Securities, the Company may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default
under Section 501(4) or Section 501(8) or otherwise, as the case may be,
but, except as specified above, the remainder of the Indenture and such
Securities shall be unaffected thereby.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
<PAGE>
27
SECTION 501. This Second Supplemental Indenture 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 the State of New York. The
terms and conditions of this Second Supplemental Indenture shall be, and be
deemed to be, part of the terms and conditions of the Indenture for any and all
purposes applicable to the Notes, in accordance with the terms and provisions of
Section 901 of the Indenture. Other than as amended and supplemented by this
Second Supplemental Indenture, the Indenture is in all respects ratified and
confirmed.
SECTION 502. The Trustee hereby accepts this Second Supplemental
Indenture and agrees to perform the same upon the terms and conditions set forth
in the Indenture.
SECTION 503. This Second Supplemental 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.
<PAGE>
28
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed all as of the day and year first
above written.
DVI, INC.
/s/ Steven R. Garfinkel
By: _____________________________
Name: Steven R. Garfinkel
Title: Executive Vice President and
Chief Financial Officer
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ Eve Kaplan
By: _____________________________
Name: Eve Kaplan
Title: Vice President
<PAGE>
EXHIBIT A
---------
FORM OF NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
DVI, INC.
9 7/8% Senior Notes due 2004
CUSIP NO. 233343AD4
No. 1 $ 55,000,000
DVI, Inc., a Delaware corporation (herein called the "Company", which
term includes any successor entity under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Cede & Co. or registered assigns
the principal sum of FIFTY FIVE MILLION DOLLARS on February 1, 2004, at the
office or agency of the Company referred to below, and to pay interest thereon
on February 1, 1999 and semiannually thereafter, on February 1 and August 1 in
each year, from the most recent Interest Payment Date to which interest has been
paid or duly provided for or, if no interest has been paid, from December 23,
1998, at the rate of 9 7/8% per annum, until the principal hereof is paid or
duly provided for, and (to the extent lawful) to pay on demand interest on any
overdue interest at the rate borne by the Securities from the date of the
Interest Payment Date on which such overdue interest becomes payable to the date
payment of such interest has been made or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in such Indenture, be paid to the Person in whose name this
Security is registered at the close of business on the Regular Record Date for
such interest, which shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee,
<PAGE>
A-2
notice whereof shall be given to Holders of Securities not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any) and interest on this Security shall be made
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Security Register; provided that all payments with respect
to Securities represented in either global or certificated form, the Holders of
which have given wire transfer instructions at least five business days prior to
the applicable record date to the Company, will be made by wire transfer of
immediately available funds to the accounts of the holders thereof.
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
<PAGE>
A-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
DVI, INC.
By: _______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: ______________________________
Authorized Signatory
Dated: _____________
<PAGE>
A-4
[FORM OF REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company designated as its 9 7/8% Senior Notes due 2004 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $55,000,000 (herein called the
"Indenture") dated as of January 27, 1997, between the Company and U.S. Bank
National Association (formerly known as First Trust National Association),
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture with respect to the series of which this Security is a part)
as supplemented by the Second Supplemental Indenture dated as of December 23,
1998 between the Company and the Trustee (together the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities shall be redeemable at the election of the Company, as
a whole or from time to time in part, at any time on or after February 1, 2002,
on or not less than 30 nor more than 60 days' prior notice at the redemption
prices (expressed as percentages of principal amount) set forth below, together
with accrued interest, if any, to the Redemption Date, if redeemed during the
12-month period beginning on February 1 of the years indicated below (subject to
the right of Holders of record on the relevant record date to receive interest
due on an Interest Payment Date):
Redemption
Year Price
---- -----------
2002................................... 102.821
2003................................... 101.411
and thereafter at 100% of the principal amount, together with accrued interest,
if any, to the Redemption Date.
If less than all of the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee by such method as the Trustee deems fair and
appropriate.
<PAGE>
A-5
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of each series affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities of such
series at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding, on behalf of the Holders
of all the Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by or on behalf of
the Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, shall be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form, without coupons
in denominations of $1,000 and any integral multiple thereof. No service charge
shall be made for any registration of transfer or exchange or redemption of
Securities, but the Company may
<PAGE>
A-6
require payment in certain circumstances of a sum sufficient to cover any tax or
governmental charges that may be imposed in connection therewith.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ........Custodian ..............
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act ................................................
(State)
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
<PAGE>
A-7
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
______________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date: ______________ Signature: ______________________________________________
(sign exactly as name appears on the other
side of this Security)
Signature guaranteed by: ________________________
<PAGE>
EXHIBIT 4.3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
DVI, INC.
9 7/8% Senior Notes due 2004
CUSIP NO. 233343AD4
No. 1 $ 55,000,000
DVI, Inc., a Delaware corporation (herein called the "Company", which
term includes any successor entity under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Cede & Co. or registered assigns
the principal sum of FIFTY FIVE MILLION DOLLARS on February 1, 2004, at the
office or agency of the Company referred to below, and to pay interest thereon
on February 1, 1999 and semiannually thereafter, on February 1 and August 1 in
each year, from the most recent Interest Payment Date to which interest has been
paid or duly provided for or, if no interest has been paid, from December 23,
1998, at the rate of 9 7/8% per annum, until the principal hereof is paid or
duly provided for, and (to the extent lawful) to pay on demand interest on any
overdue interest at the rate borne by the Securities from the date of the
Interest Payment Date on which such overdue interest becomes payable to the date
payment of such interest has been made or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in such Indenture, be paid to the Person in whose name this
Security is registered at the close of business on the Regular Record Date for
such interest, which shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special
<PAGE>
Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Payment of the principal
of (and premium, if any) and interest on this Security shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Security Register; provided that all payments with respect to
Securities represented in either global or certificated form, the Holders of
which have given wire transfer instructions at least five business days prior to
the applicable record date to the Company, will be made by wire transfer of
immediately available funds to the accounts of the holders thereof.
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
DVI, INC.
/s/ Steven R. Garfinkel
By: _______________________________
Name: Steven R. Garfinkel
Title: Executive Vice President and
Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
/s/ Eve Kaplan
By: ______________________________
Authorized Signatory
December 23, 1998
Dated: ________________
<PAGE>
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company designated as its 9 7/8% Senior Notes due 2004 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $55,000,000 (herein called the
"Indenture") dated as of January 27, 1997, between the Company and U.S. Bank
Trust National Association (formerly known as First Trust National Association),
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture with respect to the series of which this Security is a part)
as supplemented by the Second Supplemental Indenture dated as of December 23,
1998 between the Company and the Trustee (together the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities shall be redeemable at the election of the Company, as
a whole or from time to time in part, at any time on or after February 1, 2002,
on or not less than 30 nor more than 60 days' prior notice at the redemption
prices (expressed as percentages of principal amount) set forth below, together
with accrued interest, if any, to the Redemption Date, if redeemed during the
12-month period beginning on February 1 of the years indicated below (subject to
the right of Holders of record on the relevant record date to receive interest
due on an Interest Payment Date):
Redemption
Year Price
---- ------------
2002 ..................................... 102.821
2003 ..................................... 101.411
and thereafter at 100% of the principal amount, together with accrued interest,
if any, to the Redemption Date.
If less than all of the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee by such method as the Trustee deems fair and
appropriate.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
<PAGE>
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of each series affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities of such
series at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding, on behalf of the Holders
of all the Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by or on behalf of
the Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, shall be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form, without coupons
in denominations of $1,000 and any integral multiple thereof. No service charge
shall be made for any registration of transfer or exchange or redemption of
Securities, but the Company may require payment in certain circumstances of a
sum sufficient to cover any tax or governmental charges that may be imposed in
connection therewith.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this
<PAGE>
Security be overdue, and neither the Company, the Trustee nor any agent shall be
affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ........Custodian ..............
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act ................................................
(State)
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
______________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date: ______________ Signature: ______________________________________________
(sign exactly as name appears on the other
side of this Security)
Signature guaranteed by: ________________________
<PAGE>
Exhibit 5.1
[LETTERHEAD OF ROGERS & WELLS LLP]
December 23, 1998
DVI, Inc.
500 Hyde Park
Suite 1201 East
Doylestown, Pennsylvania 18901
Re: DVI, Inc. -- Debt Securities Offered and Sold Pursuant to
Registration Statement on Form S-3 (File No. 333-50895)
---------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for DVI, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale by the Company to
Prudential Securities Incorporated, Piper Jaffray Inc., Libra Investments, Inc.
and Fleet Securities, Inc. (collectively, the "Underwriters") of $55,000,000
aggregate principal amount of the Company's 9 7/8% Senior Notes due 2004 (the
"Senior Notes"). The Senior Notes are being offered to the public pursuant to
the Company's Registration Statement on Form S-3 (as amended, and including a
prospectus supplement filed pursuant to Rule 424(b) of the Securities Act of
1933, as amended (the "Act"), the "Registration Statement") which relates to the
offer and sale by the Company from time to time of up to $500,000,000 aggregate
principal amount of common stock, par value $.005 per share, preferred stock,
par value $10.00, depositary shares, debt securities and warrants.
The Senior Notes are being sold by the Company to the Underwriters pursuant to
an Underwriting Agreement (the "Underwriting Agreement"), dated December 16,
1998, by and among, the Underwriters and the Company. It is contemplated that
the Senior Notes will be issued pursuant to an Indenture dated January 27, 1997
(as supplemented by a Supplemental Indenture dated December 23, 1998, the
"Indenture"), between the Company and U.S. Bank Trust National Association, as
successor to First Trust National Association.
The Company expects to file a Current Report on Form 8-K (the "Form 8-K") with
the Securities and Exchange Commission (the "Commission") on or about December
23, 1998, in which it will report the closing of the sale of the Senior Notes
pursuant to the Underwriting Agreement. The Form 8-K will be incorporated by
reference into the Registration Statement.
We have examined such documents, records, and matters of law as we have deemed
necessary for purposes of the opinion expressed below. In examining all such
documents, we have assumed the genuineness of all signatures, the authenticity
of all documents purporting to be originals, and the conformity to the
respective originals of all documents purported to be copies. In rendering the
opinion expressed below, we have relied as to certain factual matters upon
certificates of officers of the Company, and we have not independently verified
the accuracy of the statements contained in those certificates.
Based on such examination and subject to the limitations expressed in this
letter, we are of the opinion that the Senior Notes have been duly authorized by
the Company and, when executed, authenticated, issued and delivered in the
manner provided in the Indenture against payment of the consideration therefor
specified in the Underwriting Agreement, will be entitled to the benefits of the
Indenture, and will be valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, reorganization, moratorium, insolvency or similar laws
affecting creditors' rights generally, including without limitation, applicable
fraudulent transfer laws, and general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether the enforceability of such rights or the availability of
such remedies is considered in a proceeding in equity or at law).
The opinion set forth in this letter relates only to the federal laws of the
United States of America, the laws of the State of New York and the General
Corporation Law of the State of Delaware.
<PAGE>
We assume no obligation to advise you of any changes in the foregoing subsequent
to the delivery of this letter. This letter has been prepared solely for your
use in connection with the filing of the Form 8-K, and should not be quoted in
whole or in part or otherwise be referred to, nor otherwise be filed with or
furnished to any governmental agency or other person or entity, without our
express prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the Form 8-K
and to the use of our name in the Registration Statement under the caption
"Legal Matters." In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Rogers & Wells LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Prospectus Supplement (To Prospectus dated May 4,
1998) relating to $55,000,000 of 9 7/8% Senior Notes due 2004 of DVI, Inc., of
our report dated August 7, 1998 (September 15, 1998 as to Note 17), appearing
in the Prospectus Supplement, which is part of this Form 8-K.
We also consent to the reference to us under the heading "Experts" in such
Prospectus Supplement.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
December 23, 1998
