SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 18, 1997
DYNEX CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Virginia 1-9819 52-1549373
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
10900 Nuckols Road, Glen Allen, Virginia 23060
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 217-5800
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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This filing is made to effect the incorporation by reference of the
accompanying exhibits in the Registration Statement of Dynex Capital, Inc. (the
"Company") on Form S-3 (No. 333-10783) previously filed with the Securities and
Exchange Commission ("SEC") and declared effective on March 24, 1997, and to
supply information omitted from Item 14 of the above described Registration
Statement (attached as Annex A). The exhibits and Item 14 information filed
herewith relate specifically to the Company's proposed offering of Notes
described in the Company's Prospectus dated July 14, 1997 and Prospectus
Supplement dated July 14, 1997 which were filed with the SEC on July 16, 1997.
Item 7. Exhibits.
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(c). Exhibits.
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1.1 Underwriting Agreement by and between the Company and PaineWebber
Incorporated and Smith Barney, Inc. dated July 14, 1997.
4.1 Executed Indenture by and between Dynex Capital, Inc. and Texas Commerce
Bank National Association, as trustee, dated as of July 14, 1997.
4.2 Officers' Certificate relating to the resolution of the Board of Directors
of the Company establishing the series of Securities consisting of the
Notes.
4.3 Specimen of the Global Note representing the Senior Notes.
5.1 Legal Opinion of Venable, Baetjer and Howard, LLP.
8.1 Tax Opinion of Venable, Baetjer and Howard, LLP.
23.1 Consent of KPMG Peat Marwick, LLP.
23.2 Consent of Venable, Baetjer and Howard, LLP (contained in Exhibits 5.1 and
8.1 filed herewith).
99.1 Press release dated July 16, 1997.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: July 18, 1997 RESOURCE MORTGAGE CAPITAL, INC.
By: /s/ Thomas H. Potts
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Thomas H. Potts
President
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ANNEX A
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses, other than underwriting discounts and
commissions, in connection with the offering of the Notes are:
Registration Fee $37,879
Legal Fees and Expenses 100,000
Accounting Fees and Expenses 8,000
Blue Sky Qualification and Expenses including Counsel Fees 7,500
NASD Fee 0
Printing Expenses 13,500
Transfer and Registrar Fees 5,000
Miscellaneous 5,000
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TOTAL $176,879
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EXHIBIT INDEX
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Exhibit
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1.1 Underwriting Agreement by and between the Company and PaineWebber
Incorporated and Smith Barney, Inc. dated July 14, 1997.
4.1 Indenture by and between Dynex Capital, Inc. and Texas Commerce Bank
National Association, as trustee, dated as of July 14, 1997.
4.2 Officers' Certificate relating to the resolution of the Board of Directors
of the Company establishing the series of Securities consisting of the
Notes.
4.3 Specimen of the Global Note representing the Senior Notes.
5.1 Legal Opinion of Venable, Baetjer and Howard, LLP.
8.1 Tax Opinion of Venable, Baetjer and Howard, LLP.
23.1 Consent of KPMG Peat Marwick, LLP.
23.2 Consent of Venable, Baetjer and Howard, LLP (contained in Exhibits 5.1 and
8.1 filed herewith).
99.1 Press release dated July 16, 1997.
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$100,000,000
DYNEX CAPITAL, INC.
7.875% Senior Notes due July 15, 2002
UNDERWRITING AGREEMENT
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July 14, 1997
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Dynex Capital, Inc., a Virginia corporation (the "Company"), proposes
to issue and sell $100,000,000 principal amount of its 7.875% Senior Notes due
July 15, 2002 (the "Securities").
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The Securities are to be issued pursuant to an Indenture by and between the
Company and Texas Commerce Bank National Association, as trustee, dated as of
July 14, 1997 (the "Indenture"). This is to confirm the agreement concerning the
purchase of the Securities from the Company by the Underwriters named in
Schedule 1 hereto (the "Underwriters").
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 and any amendments
thereto with respect to the Securities have (i) been prepared by the
Company in conformity in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed
with the Commission under the Securities Act; (iii) become effective
under the Securities Act; and the Indenture shall have been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Copies of such registration statement and any amendments thereto
have been delivered by the Company to PaineWebber Incorporated
("PaineWebber") on behalf of the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of which
such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it became effective under the
Securities Act which omits certain information pursuant to Rule 430A
under the Rules and Regulations and any prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant
to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time,
including all documents incorporated by reference therein at such time
and all information contained in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 5(a) hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph
(b) of Rule 430A of the Rules and Regulations; and "Prospectus" means
such final prospectus and any amendment or supplement thereto, as first
filed with the Commission pursuant to paragraph (2) of Rule 424(b) of
the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
Reference made herein to any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Securities Act, as of the date of such Preliminary Prospectus or
the Prospectus, as the case may be, and any reference to any amendment
or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the date
of such Preliminary Prospectus or the Prospectus, as the case may be,
and incorporated by reference in such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference to any amendment to
the Registration Statement shall be deemed to include any annual report
of the Company filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the Effective Time that is incorporated
by reference in the Registration Statement. The Commission has not
issued any order preventing or suspending the use of any Preliminary
Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements thereto will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Securities
Act, and the Rules and Regulations, and do not
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and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that
no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus, including
any amendments or supplements thereto, in reliance upon and in
conformity with written information furnished to the Company through
PaineWebber by or on behalf of any Underwriter specifically for
inclusion therein; and the Indenture will conform in all material
respects with the requirements of the Trust Indenture Act, and the
applicable rules and regulations thereunder.
(c) The documents incorporated by reference in the Prospectus,
including any amendments or supplements thereto, when they became
effective or were filed, as the case may be, with the Commission
conformed in all material respects to the requirements of the
Securities Act or Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, including any
amendments or supplements thereto, when such documents became effective
or are filed, as the case may be, with the Commission will conform in
all material respects to the requirements of the Securities Act of
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Company and each of its subsidiaries and affiliates
(as those terms are defined in Section 15 hereof) have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification except where the failure to so qualify
would not have a material adverse effect on the consolidated financial
position, shareholders' equity, results of operations, business or
prospects of the Company and its subsidiaries and affiliates, taken as
a whole (hereinafter "Material Adverse Effect"), and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged.
(e) The Company has an authorized capitalization as set forth
in the Prospectus, including any amendments or supplements thereto, and
all of the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus,
including any amendments or supplements thereto; and all of the issued
shares of capital stock of each subsidiary and affiliate of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(f) The execution, delivery and performance of this Agreement
and the Indenture by the Company, the consummation of the transactions
contemplated hereby and thereby, the compliance by the Company with the
provisions of the
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4
Indenture and the Securities and the issuance and delivery of the
Securities by the Company will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries or affiliates is a party or by which the Company or any of
its subsidiaries or affiliates is bound or to which any of the property
or assets of the Company or any of its subsidiaries or affiliates is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or affiliates or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or affiliates
or any of their properties or assets, except, as to each case, where
such breach, violation or default would not have a Material Adverse
Effect; and except for the registration of the Securities under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Trust
Indenture Act or the Exchange Act, and applicable state or foreign
securities laws in connection with the purchase and distribution of the
Securities by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement and the Indenture by the Company and the
consummation of the transactions contemplated hereby and thereby.
(g) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities registered pursuant to the Registration Statement or in any
securities registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(h) The Indenture has been duly authorized and, when executed
by the proper officers of the Company (assuming the due execution and
delivery thereof by the trustee under the Indenture (the "Trustee"))
and delivered by the Company, will have been duly executed and
delivered by the Company and the Trustee and will constitute the valid
and legally binding obligation of the Company, enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing; the Securities have been duly authorized, and, upon payment
therefor as provided herein, will be validly issued and outstanding,
and will constitute the valid and legally binding obligations of the
Company, enforceable in accordance with their terms and entitled to the
benefits of the Indenture; and the Securities, the Indenture and the
capital stock of the Company will conform in all material respects to
the descriptions thereof contained in the Registration Statement and
the Prospectus, including any amendments or supplements thereto.
(i) Neither the Company nor any of its subsidiaries or
affiliates has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, including any amendments or supplements thereto, any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
which would have a Material Adverse Effect, otherwise than as set forth
or contemplated in the Prospectus, including any amendments or
supplements thereto; and, since such date, there has not been any
change in the capital stock or long-term debt of the
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5
Company or any of its subsidiaries or affiliates (otherwise than as set
forth or contemplated in the Prospectus, including any amendments or
supplements thereto) or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries or affiliates, which would have a
Material Adverse Effect, otherwise than as set forth or contemplated in
the Prospectus, including any amendments or supplements thereto.
(j) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus, including any
amendments or supplements thereto, present fairly the financial
condition, results of operations and cash flows of the entities
purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved, except as otherwise stated in the Registration
Statement.
(k) KPMG Peat Marwick LLP ("KPMG Peat Marwick"), who have
certified certain financial statements of the Company and whose report
appears in the Prospectus or is incorporated by reference therein, and
who delivered the initial letter referred to in Section 7(e) hereof,
were independent public accountants as required by the Securities Act
and the Rules and Regulations during the periods covered by the
financial statements on which they reported contained or incorporated
in the Prospectus.
(l) Except as described in the Prospectus, including any
amendments or supplements thereto, there are no legal or governmental
proceedings pending, or to the knowledge of the Company threatened, to
which the Company or any of its subsidiaries or affiliates is a party
or of which any property or assets of the Company or any of its
subsidiaries or affiliates is the subject which, if determined
adversely to the Company or any of its subsidiaries or affiliates,
would have a Material Adverse Effect.
(m) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(i) is in violation of its charter or by-laws, (ii) is in default, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject or
(iii) is in violation of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject or has failed
to obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, except, as to each case, where such violation
or default would not have a Material Adverse Effect.
(o) Neither the Company nor any subsidiary or affiliate is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations of the Commission thereunder.
(p) The Company has elected to be treated as a real estate
investment trust ("REIT") for federal income tax purposes. The Company
has complied, and intends
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6
to comply in the future, with the requirements for qualification as a
REIT under the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase of the Securities by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to each of the
Underwriters, severally and not jointly, and each of the Underwriters, severally
and not jointly, agrees to purchase the principal amount of Securities set
opposite that Underwriter's name in Schedule 1 hereto at a purchase price equal
to 98.775% of the principal amount thereof, plus accrued interest from July 15,
1997 to the Delivery Date (as defined in Section 4).
The Company shall not be obligated to deliver any Securities, except
upon payment for all the Securities to be purchased hereunder, as provided
herein.
3. Offering of Securities by the Underwriters. Upon authorization by
the Underwriters of the release of the Securities, the several Underwriters
propose to offer the Securities for sale upon the terms and conditions set forth
in the Prospectus or the amendment or supplement thereto.
4. Delivery of and Payment for the Securities. Delivery of and payment
for the Securities shall be made at the office of PaineWebber Incorporated, 1285
Avenue of the Americas, New York, New York 10019 at 10:00 A.M., New York City
time, on the fifth full business day following the date of this Agreement or at
such other date or place as shall be determined by agreement between the
Underwriters and the Company. This date and time are sometimes referred to as
the "Delivery Date." On the Delivery Date, the Company shall deliver the
Securities, through the facilities of The Depository Trust Company ("DTC") to
PaineWebber for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in federal funds
(immediately available funds). Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Securities
shall be in the form of a global certificate and registered in the name of Cede
& Co. or any other nominee of DTC, and beneficial interests therein shall be in
such names and in such denominations as PaineWebber shall request in writing not
less than two full business days prior to the Delivery Date. For the purpose of
expediting the checking of the global certificates, the Company shall make the
global certificates available for inspection by PaineWebber in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the Delivery Date.
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5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus, including any amendment or
supplement thereto, in a form approved by the Underwriters and to file
such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus prior to
the Delivery Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time
when the Registration Statement or any amendment thereto, has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Underwriters prior to the Delivery Date with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus, including any
amendments or supplements thereto, and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Securities; to advise the Underwriters, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, including any amendment or supplement
thereto, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) To furnish promptly to each of the Underwriters and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the Indenture), (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto); and, (A) if the delivery of a
prospectus is required at any time prior to the expiration of twelve
months after the Effective Time in connection with the offering or sale
of the Securities and if at such time any events shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Underwriters and, upon their
request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as the Underwriters may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance; and (B)
in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Securities at any time twelve
months or more after the Effective Time, upon the request of the
Underwriter but at
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8
the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as such Underwriter may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Securities Act;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Underwriters, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission prior to the Delivery
Date any (i) Preliminary Prospectus, (ii) amendment to the Registration
Statement or supplement to the Prospectus, any document incorporated by
reference in the Prospectus or (iii) any Prospectus pursuant to Rule
424 of the Rules and Regulations, to furnish a copy thereof to the
Underwriters and their counsel and not to file any such document to
which the Underwriters shall reasonably object after having been given
reasonable notice of the proposed filing thereof;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to
the Underwriters an earning statement of the Company and its
subsidiaries and affiliates (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Underwriters, copies of all materials furnished by
the Company to its shareholders and all public reports and all reports
and financial statements furnished by the Company to the principal
national securities exchange upon which the shares of the common stock,
par value $0.01 per share (the "Common Stock") of the Company may be
listed pursuant to requirements of or agreements with such exchange or
to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions as
the Underwriters may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Securities; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(i) From the date hereof until the Delivery Date, not to offer
or sell, or cause to be offered and sold, in the United States of
America, without the prior consent of the Representatives, any debt
securities which are substantially similar to the Securities;
(j) To apply the net proceeds from the sale of the Securities
being sold by the Company as set forth in the Prospectus; and
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary or affiliate shall become an
"investment company" within the meaning of such term under the 1940 Act
and rules and regulations of the Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Securities and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any pre-effective
or post-effective amendments thereto (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, or any document incorporated by reference
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9
therein, all as provided in this Agreement; (d) the costs of reproducing and
distributing this Agreement; (e) the costs of distributing the terms of the
agreement relating to the organization of the underwriting syndicate and selling
group to the members thereof by mail, telex or other means of communication; (f)
the fees and expenses of the Trustee and its counsel; (g) any applicable listing
or other fees; (h) the fees and expenses of filings, if any, with foreign
securities administrators and of qualifying the Securities under the securities
laws of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters); (i) the fees paid to rating agencies
in connection with the rating of the Securities; and (j) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Securities
which they may sell and the expenses of advertising any offering of the
Securities made by the Underwriters.
7 . Conditions of Underwriters' Obligations. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on the
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Registration Statement shall have become effective and
the Indenture shall have been qualified under the Trust Indenture Act
and the Underwriters shall have received notice thereof, not later than
the first full business day following the date of this Agreement or
such later date as shall be consented to in writing by the
Underwriters; the Prospectus, including any amendment or supplement
thereto, shall have been timely filed with the Commission in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or
the Prospectus, including any amendment or supplement thereto, or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the Delivery Date that the Registration
Statement or the Prospectus, including any amendment or supplement
thereto, contains an untrue statement of a fact which, in the opinion
of Simpson Thacher & Bartlett, counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Indenture, the Securities, the Registration Statement, the Prospectus,
including any amendments or supplements thereto, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be satisfactory in all material respects to counsel for
the Underwriters, and the Company shall have furnished to such counsel
all documents and information that they may reasonably request to
enable them to pass upon such matters.
(d) Venable, Baetjer and Howard, LLP, as counsel to the
Company, shall have furnished to the Underwriters the following:
(i) their written opinion addressed to the
Underwriters, and dated the Delivery Date, in form and
substance reasonably satisfactory to the Underwriters to the
effect that:
(A) The Company and each of Multi-Family
Finance Corporation, Issuer Holding Corporation and
Merit Securities Corporation (individually, a
"Subsidiary" and, collectively, the "Subsidiaries"),
and each of MSC I, L.P.,
<PAGE>
10
Dynex Holding, Inc. and Multi-Family Capital Markets,
Inc. (individually, an "Affiliate" and, collectively,
the "Affiliates") has been duly incorporated or
organized and is validly existing as a corporation or
limited partnership, as applicable, in good standing
under the laws of its respective jurisdiction of
organization and is in good standing as a foreign
corporation or limited partnership, as applicable, in
each jurisdiction in which its respective ownership
or lease of property or the conduct of its respective
business requires such qualification (other than
those jurisdictions in which the failure to so
qualify would not have a Material Adverse Effect),
and has all corporate or partnership, as applicable,
power and authority necessary to own or hold its
respective properties and conduct the business in
which it is engaged, as described in the Prospectus,
or any amendment or supplement thereto;
(B) The Company has an authorized
capitalization as set forth in the Prospectus,
including any amendment or supplement thereto, and
all of the issued shares of capital stock of the
Company have been duly and validly authorized and
issued, are fully paid and non-assessable and conform
to the description thereof contained in the
Prospectus; and, to such counsel's knowledge, all of
the issued shares of capital stock or partnership
interests, as applicable, of each Subsidiary and each
Affiliate of the Company have been duly and validly
authorized and issued and are fully paid and
non-assessable. To such counsel's knowledge, all of
the issued shares of capital stock of each Subsidiary
are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or
claims;
(C) There are no preemptive or other rights
to subscribe for or purchase, nor any restriction
upon the voting or transfer of, any shares of the
Common Stock, pursuant to the Company's charter or
by-laws or any agreement or other instrument known to
such counsel, except as set forth in the Prospectus,
or any amendment or supplement thereto;
(D) The Registration Statement was declared
effective under the Securities Act, the Prospectus,
including any amendment or supplement thereto, was
filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission;
(E) The Registration Statement and the
Prospectus and any further amendments or supplements
thereto made by the Company prior to the Delivery
Date (other than the financial statements, schedules
and other financial data therein, as to which such
counsel need express no opinion) comply as to form in
all material respects with the requirements of the
Securities Act and the applicable rules and
regulations under said Act; and the documents
incorporated by reference in the Prospectus and any
further amendment or supplement to any such
incorporated documents made by the Company prior to
such Delivery Date (other than the financial
statements, schedules and other financial data
therein, as to which such counsel need express no
opinion), when they became effective or were filed,
as the case may be, with the Commission complied as
to form in all material respects with the
requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of
the Commission thereunder; and the Indenture conforms
in all material respects to the requirements under
the Trust Indenture Act and the applicable rules and
regulations thereunder;
<PAGE>
11
(F) The Securities, the Indenture and the
capital stock of the Company conform in all material
respects to the statements concerning them in the
Registration Statement and the Prospectus, or any
amendment or supplement thereto; and the provisions
of the contracts, agreements and instruments (as the
same may be in effect on the Delivery Date)
summarized under the caption "Description of the
Notes" conform in all material respects to the
descriptions thereof in the Prospectus, or any
amendment or supplement thereto;
(G) To such counsel's knowledge and other
than as described in the Prospectus or any amendment
or supplement thereto, there are no legal or
governmental proceedings pending to which the Company
or any of its subsidiaries or affiliates is a party
or of which any property of the Company or any of its
subsidiaries or affiliates is the subject which, if
determined adversely to the Company or any of its
subsidiaries or affiliates, would or could reasonably
be expected to have a Material Adverse Effect; and,
to such counsel's knowledge, no such proceedings are
threatened by governmental authorities or by others;
(H) The statements contained in the
Prospectus under the caption "Federal Income Tax
Considerations," insofar as they describe federal
statutes, rules and regulations, constitute a fair
summary thereof and the opinion of such counsel filed
as Exhibit 8.1 to the Registration Statement is
confirmed and the Underwriters may rely upon such
opinion as if it were addressed to them;
(I) To the best of such counsel's knowledge,
there are no contracts or other documents which are
required to be described in the Prospectus, including
any amendment or supplement thereto, or filed as
exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which
have not been described or filed as exhibits to the
Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations;
(J) This Agreement has been duly authorized,
executed and delivered by the Company;
(K) The Indenture has been duly authorized,
executed and delivered by the Company and (assuming
due execution and delivery by the Trustee)
constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance
with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or
affecting creditors' rights generally, general
equitable principles (whether considered in a
proceeding in equity or at law) or an implied
covenant of good faith and fair dealing;
(L) The Securities have been duly authorized
by the Company, and, when duly executed,
authenticated, issued and delivered as provided in
the Indenture, will be duly and validly issued and
outstanding, and will constitute valid and binding
obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with
their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or
affecting creditors' rights generally, general
equitable principles (whether considered
<PAGE>
12
in a proceeding in equity or at law) or an implied
covenant of good faith and fair dealing;
(M) The issue and sale of the Securities
being delivered on such Delivery Date by the Company,
the compliance by the Company with all of the
provisions of this Agreement and the Indenture and
the consummation of the transactions contemplated
hereby and thereby will not conflict with or result
in a breach or violation of any of the terms or
provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries or
affiliates is a party or by which the Company or any
of its Subsidiaries or Affiliates is bound or to
which any of the property or assets of the Company or
any of its Subsidiaries or Affiliates is subject,
except, where such breach, violation or default may
be disclosed in the Prospectus or, singly or in the
aggregate, would not or could not be reasonably be
expected to have a Material Adverse Effect or would
not prohibit or adversely affect the consummation of
the transactions contemplated by this Agreement and
the Indenture; nor will such actions result in any
violation of the provisions of the charter or by-laws
of the Company or any of its Subsidiaries or
Affiliates or any statute or any order, rule,
regulation or judgment known to such counsel of any
court or governmental agency or body having
jurisdiction over the Company or any of its
Subsidiaries or Affiliates or any of their properties
or assets; and, except for the registration of the
Securities under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange
Act or the Trust Indenture Act and applicable state
or foreign securities laws in connection with the
purchase and distribution of the Securities by the
Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such
court or governmental agency or body is required for
the execution, delivery and performance of this
Agreement and the Indenture by the Company and the
consummation of the transactions contemplated hereby
and thereby;
(N) Neither the Company nor any subsidiary
or affiliate is an "investment company" within the
meaning of such term under the 1940 Act and the rules
and regulations of the Commission thereunder; and
(O) The issuance or sale of the Securities
and the application by the Company of the net
proceeds thereof as set forth in the Prospectus will
not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(ii) a letter addressed to the Underwriters and dated
such Delivery Date authorizing the Underwriters to rely on the
opinions expressed in the opinion letter filed as Exhibit 5.1
to the Registration Statement, subject to all of the
assumptions, qualifications, limitations and exceptions set
forth therein.
In rendering such opinion, such counsel may (i) state that the
opinion is limited to matters governed by the federal laws of the
United States of America, the laws of the State of Maryland and the
laws of the Commonwealth of Virginia. Such counsel shall also have
furnished to the Underwriters a written statement, addressed to the
Underwriters and dated such Delivery Date, in customary form and
substance satisfactory to the Underwriters, to the effect that (x) such
counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement, and (y) based on the
foregoing, but without independent verification and subject to the
information contained in the Prospectus, no facts have come to the
attention of such counsel which lead them to believe that (I) the
<PAGE>
13
Registration Statement, as of the Effective Date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus, as of its
date and as of the Delivery Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading or (II) any document incorporated by reference in
the Prospectus or any further amendment or supplement to any such
incorporated document made by the Company prior to such Delivery Date,
when they became effective or were filed with the Commission, as the
case may be, contained, in the case of a registration statement which
became effective under the Securities Act, any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or in the case of other documents which were filed under
the Exchange Act with the Commission, any untrue statement of any
material fact or omitted to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing opinion and
statement may be qualified by statements to the effect that no opinion
is expressed as to financial statements, schedules or other financial
data and that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of any statements, financial or
otherwise, contained in the Registration Statement or the Prospectus
except as expressly provided in Sections 7(d)(i)(H) and 7(d)(i)(F)
herein.
(e) With respect to the letter of KPMG Peat Marwick delivered
to the Underwriters concurrently with the execution of this Agreement
(the "initial letter"), the Company shall have furnished to the
Underwriters a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated the Delivery Date, (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes
or developments since the respective dates as of which specified
financial information is given in the Prospectus, including any
amendment or supplement thereto, as of a date not more than three days
prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and
other matters covered by the initial letter delivered and (iii)
confirming in all material respects the conclusions and findings set
forth in the initial letter.
(f) The Company shall have furnished to the Underwriters a
certificate, dated the Delivery Date, of its Chairman of the Board, its
President or a Vice President and chief financial officers stating
that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery
Date; the Company has complied with all its agreements
contained herein; and the conditions set forth in Sections
7(a), 7(g) and 7(i) have been fulfilled;
(ii) No stop order suspending the effectiveness of the
Registration Statement, as amended, and no proceedings for
that purpose have been initiated or, to the knowledge of the
undersigned, threatened by the Commission as of the date
hereof; and
(iii) They have carefully examined the Registration Statement
and the Prospectus, including any amendments or supplements
thereto, and, in their opinion (A) as of the Effective Date,
the Registration Statement and Prospectus, including any
amendments or supplements thereto, and the documents
incorporated by reference therein, did not include any untrue
statement of a material fact and did not
<PAGE>
14
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
(B) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or Prospectus, and the documents
incorporated by reference therein, which has not been set
forth in the Prospectus, as amended or supplemented.
(g) (i) Neither the Company nor any of its subsidiaries or
affiliates shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, or any amendment or supplement thereto, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, or any amendment
or supplement thereto, or (ii) since such date there shall not have
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or affiliates or any change, in or affecting
the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries and
affiliates otherwise than as set forth or contemplated in the
Prospectus, or any amendment or supplement thereto, the effect of
which, in any such case described in clause (i) or (ii), is, in the
judgment of the Underwriters, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered on the Delivery Date on the
terms and in the manner contemplated herein or in the Prospectus, or
any amendment or supplement thereto.
(h) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, Inc. (the "NYSE"),
the American Stock Exchange or the over-the-counter market shall have
been suspended or minimum prices shall have been established on either
of such exchanges or such market by the Commission, by such exchange or
by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by
federal or state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in interest
of the several Underwriters, impracticable or inadvisable to proceed
with the public offering or delivery of the Securities being delivered
on such Delivery Date on the terms and in the manner contemplated by
the Prospectus or any amendment or supplement thereto.
(i) Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any nationally recognized
statistical rating organization" as that term is defined by the
Commission for purposes of Rule 436(g)(2) of the Rules and Regulations,
and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to Simpson Thacher & Bartlett, counsel for the Underwriters.
<PAGE>
15
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
each of its directors, officers and employees, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Securities), to which
that Underwriter, or any such director, officer, employee or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each Underwriter and
each such director, officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by that Underwriter or such
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or in any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through PaineWebber by or on behalf
of any Underwriter specifically for inclusion therein; and provided further,
that such indemnity shall not inure to the benefit of any Underwriter or any
director, officer, employee or controlling person thereof on account of any
loss, claim, damage, liability or action asserted by a purchaser of Securities
from such Underwriter if such Underwriter failed to provide a copy of the
Prospectus, or any amendment or supplement, to such purchaser within the time
required by the Securities Act, and the untrue statement or alleged untrue
statement or any amendment or supplement thereto omission or alleged omission
shall have been corrected in the Prospectus, or such amendment or supplement
unless such failure resulted from non-compliance by the Company with Section
5(c) hereof. For purposes of the last proviso to the immediately preceding
sentence, the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and no Underwriter shall be obligated to send
or give any supplement or amendment to any document incorporated by reference in
any Preliminary Prospectus or the Prospectus to any person other than a person
to whom such Underwriter had delivered such incorporated document or documents
in response to a written request therefor. The foregoing indemnity agreement is
in addition to any liability which the Company may otherwise have to any
Underwriter or to any director, officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally and not jointly, shall 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 the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or any such director, officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the 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 through PaineWebber by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing
<PAGE>
16
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer or controlling
person.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Underwriters shall have the right to employ, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, a
separate single firm of counsel to represent jointly the Underwriters and their
respective controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if the Underwriters shall have
reasonably concluded that there may be defenses available to them which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to direct the defense of such action on
behalf of the Underwriters), and in that event the fees and expenses of such
separate counsel shall be paid by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the
<PAGE>
17
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action 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 with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Securities purchased under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 8(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8(d) shall be deemed to include, for purposes
of this Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter
shall be required to contribute any amount in excess of the amount of the
underwriting discounts and commissions received by such Underwriter; it being
understood that this Section 8(d) shall not apply to the extent that a court of
competent jurisdiction finds that such Underwriter has wilfully violated the
provisions of the Securities Act, the Exchange Act or the rules and regulations
promulgated thereunder in connection with the sale of the Securities as
contemplated by this Agreement and the Indenture. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint.
(e) The Underwriters severally confirm that the statements with respect
to the public offering of the Securities set forth in the Prospectus in the
first sentence of the last paragraph of text on the cover page, in the first
paragraph on page S-2, concerning stabilization by the Underwriters, and in the
third and last paragraphs of text under the caption "Underwriting" are correct
and constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Prospectus.
9. Defaulting Underwriters. If, on the Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall have the right, but shall not be
obligated to purchase the Securities which the defaulting Underwriter agreed but
failed to purchase on such Delivery Date. If the remaining Underwriters do not
elect to purchase the principal amount which the defaulting Underwriter or
Underwriters agreed but failed to purchase, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except that the Company will continue to be liable for the payment of expenses
to the extent set forth in Sections 6 and 11.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Securities of a defaulting
or withdrawing Underwriter, either the other Underwriters or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Underwriters by notice given to and received by the Company
prior to delivery of and payment for the Securities if, prior to that time, the
events described in any of Section 7(g), 7(h) or
<PAGE>
18
7(i) shall have occurred or if the Underwriters shall decline to purchase the
Securities for any reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company shall
fail to tender the Securities for delivery to the Underwriters for any reason
permitted under this Agreement or (b) the Underwriters shall decline to purchase
the Securities for any reason permitted under this Agreement (including the
termination of this Agreement pursuant to Section 10), the Company shall
reimburse the Underwriters for the fees and expenses of their counsel and for
such other out-of-pocket expenses as shall have been incurred by them in
connection with this Agreement and the proposed purchase of the Securities, and
upon demand the Company shall pay the full amount thereof to the Underwriters.
If this Agreement is terminated pursuant to Section 9 or otherwise by reason of
the default of one or more Underwriters, the Company shall not be obligated to
reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to PaineWebber Incorporated, 1285
Avenue of the Americas, New York, New York 10019, Attention: Corporate
Finance Department (facsimile number: 212-713-1054); and
(b) if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Lynn K. Geurin (facsimile
number: 804-217-5861);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to
PaineWebber at its address listed in this Section 12. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
PaineWebber.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters and the Company and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Underwriters contained in this Agreement
or made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any investigation made by or on behalf of any of
them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the NYSE
is open for trading and (b) "subsidiary" and "affiliate" have the respective
meanings set forth in Rule 405 of the Rules and Regulations.
<PAGE>
19
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
DYNEX CAPITAL, INC.
By: _________________________________
Name: ___________________________
Title: __________________________
Accepted:
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
By: PAINEWEBBER INCORPORATED
By: ________________________________
Authorized Representative
<PAGE>
SCHEDULE 1
Principal
Underwriters Amount
------------ ------
PaineWebber Incorporated..................... $60,000,000
Smith Barney Inc............................. 40,000,000
Total................................. $100,000,000
------------
--------------------------------
DYNEX CAPITAL, INC.
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
Trustee
-----------
Indenture
Dated as of July 14, 1997
-----------
Senior Debt Securities
--------------------------------
<PAGE>
TABLE OF CONTENTS
Page
PARTIES ........................................................ 1
RECITALS ........................................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101
Definitions ..................................................... 1
Act.............................................................. 3
Additional Amounts............................................... 3
Affiliate........................................................ 3
Authenticating Agent............................................. 3
Authorized Newspaper............................................. 3
Bankruptcy....................................................... 3
Bearer Security.................................................. 3
Board of Directors............................................... 3
Board Resolution................................................. 3
Business Day..................................................... 3
CEDEL............................................................ 4
Commission....................................................... 4
Common Shares.................................................... 4
Company.......................................................... 4
Company Request and Company Order................................ 4
Conversion Event................................................. 4
Corporate Trust Office............................................4
corporation...................................................... 4
coupon........................................................... 4
Custodian........................................................ 4
Defaulted Interest............................................... 5
Dollar or $...................................................... 5
ECU.............................................................. 5
Euroclear........................................................ 5
European Communities............................................. 5
European Monetary System......................................... 5
ii
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Event of Default................................................. 5
Foreign Currency................................................. 5
GAAP............................................................. 5
Government Obligations........................................... 5
Holder........................................................... 6
Indenture........................................................ 6
Indexed Security................................................. 6
interest......................................................... 6
Interest Payment Date............................................ 6
Maturity......................................................... 6
Officers' Certificate............................................ 7
Opinion of Counsel............................................... 7
Original Issue Discount Security................................. 7
Outstanding...................................................... 7
Paying Agent..................................................... 8
Person........................................................... 8
Place of Payment................................................. 8
Predecessor Security............................................. 8
Preferred Shares................................................. 9
Redemption Date.................................................. 9
Redemption Price................................................. 9
Registered Security.............................................. 9
Regular Record Date.............................................. 9
Repayment Date................................................... 9
Repayment Price.................................................. 9
Responsible Officer.............................................. 9
Security......................................................... 9
Security Register and Security Registrar.........................10
Significant Subsidiary...........................................10
Special Record Date..............................................10
Stated Maturity..................................................10
Subsidiary.......................................................10
Trust Indenture Act or TIA.......................................10
Trustee..........................................................10
United States....................................................10
United States person.............................................10
Yield to Maturity................................................11
SECTION 102. Compliance Certificates and Opinions...............11
SECTION 103. Form of Documents Delivered to
Trustee...............................11
SECTION 104. Acts of Holders....................................12
SECTION 105. Notices, etc., to Trustee and Company..............14
SECTION 106. Notice to Holders; Waiver..........................14
SECTION 107. Effect of Headings and Table of
Contents..............................15
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SECTION 108. Successors and Assigns.............................15
SECTION 109. Separability Clause................................16
SECTION 110. Benefits of Indenture..............................16
SECTION 111. Governing Law......................................16
SECTION 112. Legal Holidays.....................................16
SECTION 113. Personal Immunity from Liability for
Incorporators, Stockholders, Etc......16
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities................................17
SECTION 202. Form of Trustee's Certificate of
Authentication........................17
SECTION 203. Securities Issuable in Global Form.................17
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series...............18
SECTION 302. Denominations......................................22
SECTION 303. Execution, Authentication, Delivery
and Dating............................22
SECTION 304. Temporary Securities...............................24
SECTION 305. Registration, Registration of
Transfer and Exchange.................27
SECTION 306. Mutilated, Destroyed, Lost and
Stolen Securities.....................30
SECTION 307. Payment of Interest; Interest Rights
Preserved.............................31
SECTION 308. Persons Deemed Owners..............................33
SECTION 309. Cancellation.......................................34
SECTION 310. Computation of Interest............................34
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of
Indenture.............................35
SECTION 402. Application of Trust Funds.........................36
SECTION 403. Reinstatement......................................36
iv
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ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default..................................37
SECTION 502. Acceleration of Maturity; Rescission
and Annulment.........................38
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by Trustee......39
SECTION 504. Trustee May File Proofs of Claim...................40
SECTION 505. Trustee May Enforce Claims Without
Possession of Securities or Coupons...41
SECTION 506. Application of Money Collected.....................41
SECTION 507. Limitation on Suits................................41
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium, if any,
Interest and Additional Amounts.......42
SECTION 509. Restoration of Rights and Remedies.................42
SECTION 510. Rights and Remedies Cumulative.....................42
SECTION 511. Delay or Omission Not Waiver.......................43
SECTION 512. Control by Holders of Securities...................43
SECTION 513. Waiver of Past Defaults............................44
SECTION 514. Waiver of Usury, Stay or Extension
Laws..................................44
SECTION 515. Undertaking for Costs..............................44
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.................................44
SECTION 602. Certain Rights of Trustee..........................45
SECTION 603. Not Responsible for Recitals or
Issuance of Securities................46
SECTION 604. May Hold Securities................................46
SECTION 605. Money Held in Trust................................47
SECTION 606. Compensation and Reimbursement.....................47
SECTION 607. Corporate Trustee Required;
Eligibility; Conflicting Interests....47
SECTION 608. Resignation and Removal;
Appointment of Successor..............48
SECTION 609. Acceptance of Appointment by Successor.............49
SECTION 610. Merger, Conversion, Consolidation or
Succession to Business................50
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SECTION 611. Appointment of Authenticating Agent................51
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses
of Holders............................52
SECTION 702. Reports by Trustee.................................52
SECTION 703. Reports by Company.................................53
SECTION 704. Company to Furnish Trustee Names and
Addresses of Holders..................53
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company
and Sales, Leases and Conveyances
Permitted Subject to Certain
Conditions............................54
SECTION 802. Rights and Duties of Successor
Corporation...........................54
SECTION 803. Officers' Certificate and Opinion of
Counsel...............................55
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without
Consent of Holders....................55
SECTION 902. Supplemental Indentures with Consent
of Holders............................56
SECTION 903. Execution of Supplemental Indentures ..............58
SECTION 904. Effect of Supplemental Indentures . ...............58
SECTION 905. Conformity with Trust Indenture Act ...............58
SECTION 906. Reference in Securities to
Supplemental Indentures...............58
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if
any, Interest and Additional Amounts..58
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SECTION 1002. Maintenance of Office or Agency...................59
SECTION 1003. Money for Securities Payments to Be
Held in Trust.........................60
SECTION 1004. Existence.........................................62
SECTION 1005. Maintenance of Properties.........................62
SECTION 1006. Payment of Taxes and Other
Claims................................62
SECTION 1007. Statement as to Compliance........................62
SECTION 1008. Additional Amounts................................62
SECTION 1009. Waiver of Certain Covenants.......................63
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article..........................64
SECTION 1102. Election to Redeem; Notice to
Trustee...............................64
SECTION 1103. Selection by Trustee of Securities
to Be Redeemed........................64
SECTION 1104. Notice of Redemption..............................65
SECTION 1105. Deposit of Redemption Price.......................66
SECTION 1106. Securities Payable on Redemption
Date..................................66
SECTION 1107. Securities Redeemed in Part.......................67
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article..........................68
SECTION 1202. Satisfaction of Sinking Fund
Payments with Securities..............68
SECTION 1203. Redemption of Securities for
Sinking Fund..........................68
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article..........................69
SECTION 1302. Repayment of Securities...........................69
SECTION 1303. Exercise of Option................................69
SECTION 1304. When Securities Presented for
Repayment Become Due and Payable......70
vii
<PAGE>
SECTION 1305. Securities Repaid in Part.........................71
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's
Option to Effect Defeasance or
Covenant Defeasance...................71
SECTION 1402. Defeasance and Discharge . . . . . ...............71
SECTION 1403. Covenant Defeasance...............................72
SECTION 1404. Conditions to Defeasance or Covenant
Defeasance............................72
SECTION 1405. Deposited Money and Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions........74
SECTION 1406. Reinstatement.....................................75
SECTION 1407. Currency Exchange.................................76
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION
viii
<PAGE>
DYNEX CAPITAL, INC.
Reconciliation and tie between Trust Indenture Act of 1939 (the "1939
Act") and Indenture, dated as of July 14, 1997
Trust Indenture Act Section Indenture Section
ss.310(a)(1) .............................. 607
(a)(2) ........................... 607
(b) ............................... 607, 608
ss.312(a) .................................. 704
ss.312(c) .................................. 701
ss.313(a) .................................. 702
(c) ............................... 702
ss.314(a) .................................. 703
(a)(4) ........................... 1009
(c)(1) ........................... 102
(c)(2) ........................... 102
(e) ............................... 102
ss.315(b) .................................. 601
ss.316(a) (last sentence) ................. 101 ("Outstanding")
(a)(1)(A) ........................ 512
(a)(1)(B) ........................ 513
(b) .............................. 508
ss.317(a)(1) .............................. 503
(a)(2) ........................... 504
318 (a) ................................. 111
(c) .............................. 111
- ----------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939
Act, which provides that the provisions of Sections 310 to and including 317 of
the 1939 Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
<PAGE>
INDENTURE, dated as of July 14, 1997, between DYNEX CAPITAL,
INC., a corporation organized under the laws of Virginia (hereinafter called the
"Company"), having its principal office at 10900 Nuckols Road, Glen Allen,
Virginia 23060 and Texas Commerce Bank National Association , a national banking
association organized under the laws of the United States of America, as Trustee
hereunder (hereinafter called the "Trustee"), having its Corporate Trust Office
at 600 Travis Street, 8th Floor, Houston, Texas 77002.
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for
its lawful purposes senior debt securities (hereinafter called the "Securities")
evidencing its unsecured and unsubordinated indebtedness, and has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, unlimited as to principal amount,
to bear interest at the rates or formulas, to mature at such times and to have
such other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended ("TIA"), that are deemed to be incorporated
into this Indenture and shall, to the extent applicable, be governed by such
provisions.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the holders thereof ("Holders"), it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined
in the TIA, either directly or by reference therein, have the meanings assigned
to them therein, and the terms "cash transaction" and "self-liquidating paper",
as used in TIA Section 311, shall have the meanings assigned to them in the
rules of the Commission adopted under the TIA;
2
<PAGE>
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP; and
(4) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" means any additional amounts which are
required by a Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Company in respect of certain
taxes imposed on certain Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any authenticating agent appointed
by the Trustee pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 501.
"Bearer Security" means any Security established pursuant to
Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the
Company, the executive committee or any committee of that board duly authorized
to act hereunder.
3
<PAGE>
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment
or any other particular location referred to in this Indenture or in the
Securities, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in that Place of
Payment or particular location, or in Houston, Texas, are authorized or required
by law, regulation or executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A.,
or its successor.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Common Depositary" shall have the meaning specified in
Section 304(b).
"Common Shares" means, with respect to any Person, capital stock
issued by such Person other than Preferred Stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a
written request or order signed in the name of the Company by an executive
officer of the Company, and delivered to the Trustee.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any currency
unit (or composite currency) other than the ECU for the purposes for which it
was established.
"Corporate Trust Office" means the office of the Trustee at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at the date hereof is
located at 600 Travis Street, 8th Floor, Houston, Texas 77002 except that with
respect to the presentation of Certificates for payment or for registration of
transfer and exchange, such term shall also mean the office of the Trustee in
The
4
<PAGE>
City of New York, which on the date hereof is Texas Commerce Trust Company, 55
Water Street, North Building, Room 234, Window 20, New York, New York 10041.
"corporation" includes corporations, associations, partnerships
companies and business trusts.
"coupon" means any interest coupon appertaining to a Bearer
Security.
"Custodian" has the meaning specified in Section 501.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Article Five.
"Exchange Rate" shall have the meaning specified in Section
1407.
"Foreign Currency" means any currency, currency unit or
composite currency, including, without limitation, the ECU issued by the
government of one or more countries other than the United States of America or
by any recognized confederation or association of such governments.
"GAAP" means generally accepted accounting principles, as in
effect from time to time, as used in the United States applied on a consistent
basis.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
5
<PAGE>
currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
"Holder" means, in the case of a Registered Security, the Person
in whose name a Security is registered in the Security Register and, in the case
of a Bearer Security, the bearer thereof and, when used with respect to any
coupon, shall mean the bearer thereof.
"Independent", when used with respect to any specified Person,
means such a Person who is in fact independent of the Company and any other
obligor upon the Securities, does not have any direct financial interest or any
material indirect financial interest in the Company or in any such other obligor
or in an Affiliate of the Company or such other obligor and is not connected
with the Company or any such other obligor as an officer, employee, promotor,
underwriter, trustee, partner, director or Person performing similar functions.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of particular series of Securities established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
the particular series of Securities for which such Person is Trustee established
as contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and,
6
<PAGE>
when used with respect to a Security which provides for the payment of
Additional Amounts pursuant to Section 1008, includes such Additional Amounts.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or who may be an employee of or other counsel for the
Company and who shall be satisfactory to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the necessary
amount has been therefore deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Securities and any coupons appertaining thereto, provided that, if such
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities, except to the extent provided in Sections 1402
and 1403, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fourteen;
(iv) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to
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the Trustee or Authenticating Agent satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and
(v) Securities converted into Common Shares or Preferred Shares
pursuant to or in accordance with this Indenture if the terms of such Securities
provide for convertibility pursuant to Section 301; provided, however, that in
determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or are present at a meeting of Holders for
quorum purposes, and for the purpose of making the calculations required by TIA
Section 313, (i) the principal amount of an Original Issue Discount Security
that may be counted in making such determination or calculation and that shall
be deemed to be Outstanding for such purpose shall be equal to the amount of
principal thereof that would be (or shall have been declared to be) due and
payable, at the time of such determination, upon a declaration of acceleration
of the maturity thereof pursuant to Section 502, (ii) the principal amount of
any Security denominated in a Foreign Currency that may be counted in making
such determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the Dollar equivalent, determined pursuant to Section
301 as of the date such Security is originally issued by the Company, of the
principal amount (or, in the case of an Original Issue Discount Security, the
Dollar equivalent as of such date of original issuance of the amount determined
as provided in clause (i) above) of such Security, (which determination shall be
set out in reasonable detail in the Company Order delivered to the Trustee in
connection therewith), (iii) the principal amount of any Indexed Security that
may be counted in making such determination or calculation and that shall be
deemed outstanding for such purpose shall be equal to the principal face amount
of such Indexed Security at original issuance, unless otherwise provided with
respect to such Security pursuant to Section 301, and (iv) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Overdue Rate" means, unless otherwise specified in the
Securities of any series the same rate as the rate of interest specified in the
Securities of such series or, in the case of a series of Original Issue Discount
Securities, the Yield to Maturity of such series of Securities.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities or coupons
on behalf of the Company.
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"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of
or within any series, means the place or places where the principal of (and
premium, if any) and interest and Additional Amounts, if any, on such Securities
are payable as specified as contemplated by Sections 301 and 1002.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
"Preferred Shares" means, with respect to any Person, capital
shares issued by such Person that are entitled to a preference or priority over
any other capital shares issued by such Person upon any distribution of such
Person's assets, whether by dividend or upon liquidation.
"Redemption Date", when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" shall mean any Security which is
registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"Repayment Date" means, when used with respect to any Security
to be repaid at the option of the Holder, the date fixed for such repayment by
or pursuant to this Indenture.
"Repayment Price" means, when used with respect to any Security
to be repaid at the option of the Holder, the price at which it is to be repaid
by or pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president") the
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secretary, any assistant secretary, the treasurer, any assistant treasurer, any
corporate trust officer, the controller, in each case, assigned to and working
in the Trustee's corporate trust department, or any other officer of the
Trustee, in each case, assigned to and working in the Trustee's corporate trust
department, customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge and familiarity with the particular subject.
"Security" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided, however, that, if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated under the Securities Act of 1933) of the Company.
"Special Record Date" for the payment of any Defaulted Interest
on the Registered Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
"Subsidiary" means a corporation a majority of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries of the Company. For the purposes of this definition,
"voting stock" means stock having voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is
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then a Trustee hereunder; provided, however, that if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall mean only the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source.
"Yield to Maturity" means the yield to maturity, computed at the
time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security
in accordance with generally accepted United States bond yield computation
principles.
SECTION 102. Compliance Certificates and Opinions. Upon any
application or request by the Company (i) to the Trustee to take any action
under any provision of this Indenture, or, (ii) to any Authenticating Agent to
authenticate Securities of any series upon original issuance, the Company shall
furnish to the Trustee or such Authenticating Agent (with a copy of the Trustee)
an Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, and, in the case of
conditions precedent compliance with which is subject to verification by
Accountants or other experts, a certificate or opinion of an accountant or such
other expert (which accountant or other expert shall be Independent if required
by the Trust Indenture Act,) except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
delivered pursuant to Section 1008) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
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(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion as to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in the Indenture it is provided that the absence of the
occurrence and continuation of an Event of Default is a condition precedent to
the taking of any action by the Trustee at the request or direction of the
Company, then, notwithstanding that the satisfaction of such condition is a
condition precedent to the Company's right to make such request or direction,
the Trustee shall be protected in acting in accordance with such request or
direction if it does not have knowledge of the occurrence and continuation of
such Event of Default as provided in Section 501 or Section 601.
SECTION 104. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of the Outstanding Securities of
all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing. If Securities of
a series are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of
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Holders of Securities of such series voting in favor thereof, either in person
or by proxies duly appointed in writing, at any meeting of Holders of Securities
of such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and (subject to Section 601) conclusive in favor of the
Trustee, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The principal amount, serial numbers and ownership of
Registered Securities shall be proved by the Security Register.
(d) The principal amount, serial numbers and ownership of Bearer
Securities may be proved by the production of such Bearer Securities or by a
certificate executed, as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Security continues until
(1) another certificate or affidavit bearing a later date issued in respect of
the same Bearer Security is produced, or (2) such Bearer Security is produced to
the Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The principal amount, serial numbers and ownership of Bearer
Securities may also be proved in any other manner which the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, in or pursuant to a Board
Resolution, fix in advance a record date for the
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determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. Notwithstanding TIA Section 316(c), such record date shall
be the record date specified in or pursuant to such Board Resolution, which
shall be a date not earlier than the date 30 days prior to the first
solicitation of Holders generally in connection therewith and not later than the
date such solicitation is commenced. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
In the absence of any such record date fixed by the Company,
regardless as to whether a solicitation of the Holders is occurring on behalf of
the Company or any Holder, the Trustee may, at its option, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Trustee shall have no obligation to do so. Any such record date shall be a date
not more than 30 days prior to the first solicitation of Holders generally in
connection therewith, and no later than the date of commencement of such
solicitation.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee, any
Security Registrar, any Paying Agent, any Authenticating Agent or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. Notices, etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at 600 Travis Street, 8th Floor, Houston,
Texas 77002; Attention: Global Trust Services - Dynex Capital, Inc.; Facsimile:
(713) 216-4880.
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first
paragraph of this Indenture or at any other address previously furnished in
writing to the Trustee by the Company.
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SECTION 106. Notice to Holders; Waiver. Where this Indenture
provides for notice of any event to Holders of Registered Securities by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder of Registered Securities affected by such
event, at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders of Registered Securities is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders of Registered Securities or the sufficiency
of any notice to Holders of Bearer Securities given as provided herein. Any
notice mailed to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such Holder actually
receives such notice.
If by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered Securities
as shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event, such
notice shall be at the expense of the Company, and shall be sufficiently given
if published in an Authorized Newspaper in New York City and in such other city
or cities as may be specified in such Securities on a Business Day, such
publication to be not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Any such notice shall
be deemed to have been given on the date of such publication or, if published
more than once, on the date of the first such publication.
If by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be
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filed with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 109. Separability Clause. In case any provision in this
Indenture or in any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 110. Benefits of Indenture. Nothing in this Indenture or
in the Securities or coupons, express or implied, shall give to any Person,
other than the parties hereto, any Security Registrar, any Paying Agent, any
Authenticating Agent and their successors hereunder and the Holders any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law. This Indenture and the Securities
and coupons shall be governed by and construed in accordance with the law of the
State of New York. This Indenture is subject to the provisions of the TIA that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions. If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.
SECTION 112. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or coupon other than a provision in the Securities of any series which
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Repayment Date or
sinking fund payment date, or at the Stated Maturity or Maturity, provided that
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.
SECTION 113. Personal Immunity from Liability for Incorporators,
Stockholders, Etc. No recourse shall be had, directly or indirectly, for the
payment of the principal of or premium, if any, or interest, if any, on any
Security, or for any claim based thereon, or otherwise in respect of any
Security, or based on or in respect of this Indenture or
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any indenture supplemental hereto, against any incorporator, or against any
past, present or future stockholder, director of officers, as such, of the
Company or the Trustee, or of any successor of the Company or the Trustee,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being
expressly waived and released as a condition of, and as consideration for, the
execution of this Indenture and the issue of Securities.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities. The Registered Securities, if
any, of each series and the Bearer Securities, if any, of each series and
related coupons shall be in substantially the forms as shall be established in
one or more indentures supplemental hereto or approved from time to time by or
pursuant to a Board Resolution in accordance with Section 301, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301,
Bearer Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities or coupons,
as evidenced by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
__________________________
as Trustee
By _______________________
Authorized Signatory
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SECTION 203. Securities Issuable in Global Form. If Securities
of or within a series are issuable in global form, as specified as contemplated
by Section 301, then, notwithstanding clause (8) of Section 301 and the
provisions of Section 302, any such Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of Outstanding Securities
of such series from time to time endorsed thereon and that the aggregate amount
of Outstanding Securities of such series represented thereby may from time to
time be increased or decreased to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount, or any increase or decrease in
the amount, of Outstanding Securities represented thereby shall be made by the
Trustee in such manner and upon instructions given by such Person or Persons as
shall be specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 303 or 304. Subject to the provisions of Section 303
and, if applicable, Section 304, the Trustee or Authenticating Agent shall
deliver and redeliver any Security in permanent global form in the manner and
upon instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel) (a
copy of which instructions shall be delivered to the Trustee) with regard to the
reduction in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Holder thereof.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company or the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
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SECTION 301. Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall
be established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (15) below) if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series when issued from time to time):
(1) the title of the Securities of the series (which shal
distinguish the Securities of such series from all other series of Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906, 1107 or 1305);
(3) the date or dates, or the method by which such date or dates
will be determined, on which the principal (and premium if any) of the
Securities of the series shall be payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
(including the Overdue Rate) shall be determined, the date or dates from which
such interest shall accrue or the method by which such date or dates shall be
determined, the Interest Payment Dates on which such interest will be payable
and the Regular Record Date, if any, for the interest payable on any Registered
Security on any Interest Payment Date, or the method by which such date shall be
determined, and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to
the Borough of Manhattan, New York City, where the principal of (and premium, if
any), interest, if any, on, and Additional Amounts, if any, payable in respect
of, Securities of the series shall be payable, any Registered Securities of the
series may be surrendered for registration of transfer, exchange or conversion
and notices or demands to or upon the Company in respect of the Securities of
the series and this Indenture may be served;
(6) the period or periods within which, the price or prices at
which, the currency or currencies, currency unit or units or composite currency
or currencies in which, and other terms and conditions upon which Securities of
the series may be redeemed, in whole or in part, at the option of the Company,
if the Company is to have the option;
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(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods within
which or the date or dates on which, the price or prices at which, the currency
or currencies, currency unit or units or composite currency or currencies in
which, and other terms and conditions upon which Securities of the series shall
be redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities of the
series shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Securities of the series shall
be issuable;
(9) if other than the Trustee, the identity of each
Security Registrar and/or Paying Agent;
(10) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series that shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or,
if applicable, the portion of the principal amount of Securities of the series
that is convertible in accordance with the provisions of this Indenture, or the
method by which such portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Currencies
in which payment of the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series shall be payable or
in which the Securities of the series shall be denominated;
(12) whether the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of the series may be
determined with reference to an index, formula or other method (which index,
formula or method may be based, without limitation, on one or more currencies,
currency units, composite currencies, commodities, equity indices or other
indices), and the manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if any) or interest
or Additional Amounts, if any, on the Securities of the series are to be
payable, at the election of the Company or a Holder thereof, in a currency or
currencies, currency unit or units or composite currency or currencies other
than that in which such Securities are denominated or stated to be payable, the
period or periods within which, and the terms and conditions upon which, such
election may be made, and, subject to Section 1407 hereof, the time and manner
of, and identity of the exchange rate agent with responsibility for, determining
the exchange rate between the currency or currencies, currency unit or units or
composite currency or currencies in which such Securities are denominated or
stated to be payable and the currency or currencies, currency unit or units or
composite currency or currencies in which such Securities are to be so payable;
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(14) provisions, if any, granting special rights to the Holders
of Securities of the series upon the occurrence of such events as may be
specified;
(15) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to Securities of the
series, whether or not such Events of Default or covenants are consistent with
the Events of Default or covenants set forth herein;
(16) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of Bearer Securities and
the terms upon which Bearer Securities of the series may be exchanged for
Registered Securities of the series and vice versa (if permitted by applicable
laws and regulations), whether any Securities of the series are to be issuable
initially in temporary global form and whether any Securities of the series are
to be issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent global Security may
exchange such interests for Securities of such series and of like tenor of any
authorized form and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in Section 305, and,
if Registered Securities of the series are to be issuable as a global Security,
the identity of the depositary for such series;
(17) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities of the
series shall be dated if other than the date of original issuance of the first
Security of the series to be issued;
(18) the Person to whom any interest on any Registered Security
of the series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, the manner in which, or
the Person to whom, any interest on any Bearer Security of the series shall be
payable, if otherwise than upon presentation and surrender of the coupons
appertaining thereto as they severally mature, and the extent to which, or the
manner in which, any interest payable on a temporary global Security on an
Interest Payment Date will be paid if other than in the manner provided in
Section 304;
(19) the applicability, if any, of Section 1402 and/or 1403 to
the Securities of the series and any provisions in modification of, in addition
to or in lieu of any of the provisions of Article Fourteen;
(20) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms of
such certificates, documents or conditions;
(21) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to be
authenticated and delivered;
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(22) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1008 on the Securities of the
series to any Holder who is not a United States person (including any
modification to the definition of such term) in respect of any tax, assessment
or governmental charge and, if so, whether the Company will have the option to
redeem such Securities rather than pay such Additional Amounts (and the terms of
any such option);
(23) the obligation, if any, of the Company to permit the
conversion of the Securities of such series into the Company's Common Shares or
Preferred Shares, as the case may be, and the terms and conditions upon which
such conversion shall be effected (including, without limitation, the initial
conversion price or rate, the conversion period, any adjustment of the
applicable conversion price and any requirements relative to the reservation of
such shares for purposes of conversion; and
(24) the applicable Overdue Rate, if any; and
(25) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining to
any Bearer Securities of such series shall be substantially identical except, in
the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
If the form of Securities or coupons, and any of the terms of
the Securities of any series are established by action taken pursuant to one or
more Board Resolutions, a copy of an appropriate record of such action(s) shall
be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the Securities of such series.
SECTION 302. Denominations. The Securities of each series shall
be issuable in such denominations as shall be specified as contemplated by
Section 301. With respect to Securities of any series denominated in Dollars, in
the absence of any such provisions with respect to the Securities of any series,
the Registered Securities of such series, other than Registered Securities
issued in global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in a denomination of
$5,000.
SECTION 303. Execution, Authentication, Delivery and Dating. The
Securities and any coupons appertaining thereto shall be executed on behalf of
the Company by a trustee and an executive officer of the Company and attested by
its Secretary or one of its Assistant
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Secretaries. The signature of any of these individuals on the Securities and
coupons may be manual or facsimile signatures of the present or any future such
authorized officer and trustee and may be imprinted or otherwise reproduced on
the Securities.
Securities or coupons bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities or
coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any coupon appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided further
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
its original issuance only if CEDEL or Euro-clear, as the case may be, shall
have furnished to the Trustee a certificate substantially to the effect that the
Person entitled to receive such Bearer Security shall have furnished a
certificate to Euroclear or CEDEL, as the case may be, in the form set forth in
Exhibit A-1 to this Indenture or such other certificate as shall contain
information then required by federal income tax as may be specified with respect
to any series of Securities pursuant to Section 301, dated no earlier than 15
days prior to the earlier of the date on which such Bearer Security is delivered
and the date on which any temporary Security first becomes exchangeable for such
Bearer Security in accordance with the terms of such temporary Security and this
Indenture. If any Security shall be represented by a permanent global Bearer
Security, then, for purposes of this Section and Section 304, the notation of a
beneficial owner's interest therein upon original issuance of such Security or
upon exchange of a portion of a temporary global Security shall be deemed to be
delivery in connection with its original issuance of such beneficial owner's
interest in such permanent global Security. Except as permitted by Section 306,
the Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached and cancelled.
If all the Securities of any series are not to be issued at one
time and if the Board Resolution or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or formula, maturity
date, date of issuance and date from which interest shall accrue. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be
fully protected in relying upon,
(i) an Opinion of Counsel stating that
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(a) the form or forms of such Securities and any
coupons have been established in conformity with the provisions of this
Indenture;
(b) the terms of such Securities and any coupons
have been established in conformity with the provisions of this Indenture; and
(c) such Securities, together with any coupons
appertaining thereto, when completed byappropriate insertions and executed and
delivered by the Company to the Trustee for authentication in accordance with
this Indenture, authenticated and delivered by the Trustee in accordance with
this Indenture and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute legal, valid
and binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights generally and to general equitable principles; and
(ii) an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the issuance of the
Securities have been complied with and that, to the best of the knowledge of the
signers of such certificate, no Event of Default with respect to any of the
Securities shall have occurred and be continuing.
The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties, obligations or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate
otherwise required pursuant to Section 301 or a Company Order, or an Opinion of
Counsel or an Officers' Certificate otherwise required pursuant to the preceding
paragraph at the time of issuance of each Security of such series, but such
order, opinion and certificates, with appropriate modifications to cover such
future issuances, shall be delivered at or before the time of issuance of the
first Security of such series.
Each Registered Security shall be dated the date of its
authentication and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee or any Authenticating Agent by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall
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have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. Temporary Securities. (a) Pending the preparation
of definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee or an Authenticating Agent shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.
Except in the case of temporary Securities in global form (which
shall be exchanged in accordance with Section 304(b) or as otherwise provided in
or pursuant to a Board Resolution) if temporary Securities of any series are
issued, the Company will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company in a
Place of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities of any series
(accompanied by any non-matured coupons appertaining thereto) the Company shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
the same series of authorized denominations; provided, however, that no
definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security; and provided further that a definitive Bearer Security
shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 303. Until so exchanged, the
temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board
Resolution, this Section 304(b) shall govern the exchange of temporary
Securities issued in global form other than through the facilities of The
Depository Trust Company. If any such temporary Security is issued in global
form, then such temporary global Security shall, unless otherwise provided
therein, be delivered to the London office of a depositary or common depositary
(the "Common Depositary"), for the benefit of Euroclear and CEDEL, for credit to
the respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
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Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date, such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee or any Authenticating Agent shall authenticate
and deliver, in exchange for each portion of such temporary global Security, an
equal aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such temporary
global Security to be exchanged. The definitive Securities to be delivered in
exchange for any such temporary global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global registered
form, or any combination thereof, as specified as contemplated by Section 301,
and, if any combination thereof is so specified, as requested by the beneficial
owner thereof; provided, however, that, unless otherwise specified in such
temporary global Security, upon such presentation by the Common Depositary, such
temporary global Security is accompanied by a certificate dated the Exchange
Date or a subsequent date and signed by Euroclear as to the portion of such
temporary global Security held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and signed by CEDEL as
to the portion of such temporary global Security held for its account then to be
exchanged, each in the form set forth in Exhibit A-2 to this Indenture or in
such other form as may be established pursuant to Section 301; and provided
further that definitive Securities or a permanent global security shall be
delivered in exchange for a portion of a temporary global Security only in
compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security,
the interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL, as the case may be, to request such exchange on his behalf
and delivers to Euroclear or CEDEL, as the case may be, a certificate in the
form set forth in Exhibit A-1 to this Indenture (or in such other form as shall
contain information then required by federal income tax laws, as may be
established pursuant to Section 301), dated no earlier than 15 days prior to the
Exchange Date, copies of which certificate shall be available from the offices
of Euroclear and CEDEL, the Trustee, any Authenticating Agent appointed for such
series of Securities and each Paying Agent. Unless otherwise specified in such
temporary global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Securities in person at the offices of Euroclear or CEDEL. Definitive Securities
in bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except
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that, unless otherwise specified as contemplated by Section 301, interest
payable on a temporary global Security on an Interest Payment Date for
Securities of such series occurring prior to the applicable Exchange Date shall
be payable to Euroclear and CEDEL on such Interest Payment Date upon delivery by
Euroclear and CEDEL to the Trustee of a certificate or certificates in the form
set forth in Exhibit A-2 to this Indenture (or in such other forms as may be
established pursuant to Section 301), for credit without further interest on or
after such Interest Payment Date to the respective accounts of Persons who are
the beneficial owners of such temporary global Security on such Interest Payment
Date and who have each delivered to Euroclear or CEDEL, as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth as Exhibit A-1 to
this Indenture (or in such other forms as may be established pursuant to Section
301). Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section 304(b) and of the
third paragraph of Section 303 of this Indenture and the interests of the
Persons who are the beneficial owners of the temporary global Security with
respect to which such certification was made will be exchanged for definitive
Securities of the same series and of like tenor on the Exchange Date or the date
of certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and until
such interest in such temporary global Security shall have been exchanged for an
interest in a definitive Security. Any interest so received by Euroclear and
CEDEL and not paid as herein provided shall be returned to the Trustee prior to
the expiration of two years after such Interest Payment Date in order to be
repaid to the Company.
SECTION 305. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee or in any office or agency of the Company in a Place of Payment a
register for each series of Securities (the registers maintained in such office
or in any such office or agency of the Company in a Place of Payment being
herein sometimes referred to collectively as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Registered Securities and of transfers of
Registered Securities. The Security Register shall be in written form or any
other form capable of being converted into written form within a reasonable
time. The Trustee, at its Corporate Trust Office, is hereby appointed "Security
Registrar" for the purpose of registering Registered Securities and transfers of
Registered Securities on such Security Register as herein provided. In the event
that the Trustee shall cease to be Security Registrar, it shall have the right
to examine the Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender
for registration of transfer of any Registered Security of any series at any
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee or an Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized
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denominations and of a like aggregate principal amount, bearing a number not
contemporaneously outstanding, and containing identical terms and provisions.
Subject to the provisions of this Section 305, at the option of
the Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such Registered Securities
are so surrendered for exchange, the Company shall execute, and the Trustee or
Authenticating Agent shall authenticate and deliver, the Registered Securities
which the Holder making the exchange is entitled to receive. Unless otherwise
specified with respect to any series of Securities as contemplated by Section
301, Bearer Securities may not be issued in exchange for Registered Securities.
If (but only if) permitted by the applicable Board Resolution
and (subject to Section 303) set forth in the applicable Officers' Certificate,
or in any indenture supplemental hereto, delivered as contemplated by Section
301, at the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, any such permitted exchange
may be effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company in an amount equal to the face amount of such missing
coupon or coupons, or the surrender of such missing coupon or coupons may be
waived by the Company and the Trustee or an Authenticating Agent if there is
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to any Paying Agent any such missing coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. Whenever any Securities are so
surrendered for exchange, the Company shall
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execute, and the Trustee or an Authenticating Agent shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depositary for any permanent global
Security is The Depository Trust Company ("DTC"), then, unless the terms of such
global Security expressly permit such global Security to be exchanged in whole
or in part for definitive Securities, a global Security may be transferred, in
whole but not in part, only to a nominee of DTC, or by a nominee of DTC to DTC
or another nominee of DTC, or to a successor to DTC for such global Security
selected or approved by the Company or to a nominee of such successor to DTC. If
at any time DTC notifies the Company that it is unwilling or unable to continue
as depositary for the applicable global Security or Securities or if at any time
DTC ceases to be a clearing agency registered under the Securities Exchange Act
of 1934 if so required by applicable law or regulation, the Company shall
appoint a successor depositary with respect to such global Security or
Securities. If (x) a successor depositary for such global Security or Securities
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such unwillingness, inability or ineligibility, (y)
an Event of Default has occurred and is continuing and the beneficial owners
representing a majority in principal amount of the applicable series of
Securities represented by such global Security or Securities advise DTC to cease
acting as depositary for such global Security or Securities or (z) the Company,
in its sole discretion, notifies DTC in writing at any time that all Outstanding
Securities (but not less than all) of any series issued or issuable in the form
of one or more global Securities shall no longer be represented by such global
Security or Securities, then the Company shall execute, and the Trustee or an
Authenticating Agent shall authenticate and deliver definitive Securities of
like series, rank, tenor and terms in definitive form in an aggregate principal
amount equal to the principal amount of such global Security or Securities. If
any beneficial owner of an interest in a permanent global Security is otherwise
entitled to exchange such interest for Securities of such series and of like
tenor and principal amount of another authorized form and denomination, as
specified as contemplated by Section 301 and provided that any applicable notice
provided in the permanent global Security shall have been given, then without
unnecessary delay but in any event not later than the earliest date on which
such interest may be so exchanged, the Company shall execute, and the Trustee or
an Authenticating Agent shall authenticate and deliver definitive Securities in
aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Security. On or after the earliest
date on which such interests may be so exchanged, such permanent global Security
shall be surrendered for exchange by DTC or such other depositary as shall be
specified in the Company Order with respect thereto to the Trustee or an
Authenticating Agent, as the Company's agent for such purpose; provided,
however, that no such exchanges may occur during a period beginning at the
opening of business 15 days before any selection of Securities to be redeemed
and ending on the relevant Redemption Date if the Security for which exchange is
requested may be among those selected for redemption; and provided further that
no Bearer Security delivered in exchange for a portion of a permanent global
Security shall be mailed or otherwise delivered to any location in the United
States. If a Registered Security is issued in exchange for any portion of a
permanent global Security after the close of business at
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the office or agency where such exchange occurs on (i) any Regular Record Date
and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, interest or Defaulted Interest, as the case may be, will not
be payable on such Interest Payment Date or proposed date for payment, as the
case may be, in respect of such Registered Security, but will be payable on such
Interest Payment Date or proposed date for payment, as the case may be, only to
the Person to whom interest in respect of such portion of such permanent global
Security is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.
The Company or the Trustee, as applicable, shall not be required
(i) to issue, register the transfer of or exchange any Security if such Security
may be among those selected for redemption during a period beginning at the
opening of business 15 days before selection of the Securities to be redeemed
under Section 1103 and ending at the close of business on (A) if such Securities
are issuable only as Registered Securities, the day of the mailing of the
relevant notice of redemption and (B) if such Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Securities are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of that series
and like tenor, provided that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon appertaining to
it is surrendered to the Trustee, an Authenticating Agent or the Company,
together with, in proper cases, such security or indemnity as may be required by
the Company, an Authenticating Agent or the Trustee to save each of them or any
agent of either of them harmless, the Company shall execute and the Trustee or
Authenticating Agent shall authenticate and deliver in exchange therefor a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there shall be delivered to the Company and to the Trustee or
Authenticating Agent (i) evidence to their satisfaction of the destruction, loss
or theft of any Security or coupon, and (ii) such security or indemnity as may
be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee or such
Authenticating Agent that such Security or coupon has been acquired by a bona
fide purchaser, the Company shall execute and upon its request the Trustee or
such Authenticating Agent shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series and principal
amount, containing identical terms and provisions and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs,
in case any such mutilated, destroyed, lost or stolen Security or coupon has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium, if any),
any interest on and any Additional Amounts with respect to, Bearer Securities
shall, except as otherwise provided in Section 1002, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 301, any interest on Bearer Securities
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and its
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coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest on any Registered
Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; provided, however,
that each installment of interest on any Registered Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Security Register or (ii)
transfer to an account maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security, by transfer to an account maintained by the payee
with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, every
permanent global Security will provide that interest, if any, payable on any
Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case
may be, with respect to that portion of such permanent global Security held for
its account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture.
Except as otherwise specified with respect to a series of
Securities in accordance with the provisions of Section 301, any interest on any
Registered Security of any series that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted
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Interest may be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of such series
(or their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Registered Security of such series and the date of the proposed payment
(which shall not be less than 30 days after such notice is received by the
Trustee) and at the same time the Company shall deposit with the Trustee an
amount of money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Registered Securities of such
series at his address as it appears in the Security Register not less than 10
days prior to such Special Record Date. The Trustee may, in its discretion, in
the name and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in each place of payment, but
such publications shall not be a condition precedent to the establishment of
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose names the
Registered Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (2). In case a
Bearer Security of any series is surrendered at the office or agency in a Place
of Payment for such series in exchange for a Registered Security of such series
after the close of business at such office or agency on any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment and
Defaulted Interest will not be payable on such proposed date of payment in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may
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be required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section
305, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. Persons Deemed Owners. Prior to due presentment of
a Registered Security for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any), and (subject to
Sections 305 and 307) interest on, such Registered Security and for all other
purposes whatsoever, whether or not such Registered Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the Holder of any Bearer Security and the
Holder of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and owners
of beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.
SECTION 309. Cancellation. All Securities and coupons
surrendered for payment, redemption, repayment at the option of the Holder,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Securities and coupons and Securities and coupons
surrendered directly to the Trustee for any such purpose shall be
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promptly cancelled by it; provided, however, where the Place of Payment is
located outside of the United States, the Paying Agent at such Place of Payment
may cancel the Securities surrendered to it for such purposes prior to
delivering the Securities to the Trustee. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. If the Company shall so
acquire any of the Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. Cancelled Securities and coupons held by the Trustee shall be
destroyed by the Trustee unless by a Company Order received by the Trustee prior
to the taking of such action the Company directs their return to it.
SECTION 310. Computation of Interest. Except as otherwise
specified as contemplated by Section 301 with respect to Securities of any
series, interest on the Securities of each series shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect with respect
to any series of Securities specified in such Company Request (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and any right to receive Additional
Amounts), and the Trustee, upon receipt of a Company Order, and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture as to such series when
(1) either
(A) all Securities of such series theretofore
authenticated and delivered and all coupons, if any, appertaining thereto (other
than (i) coupons appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange, whose surrender is not
required or has been waived as provided in Section 305, (ii) Securities and
coupons of such series which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306, (iii) coupons appertaining to
Securities called for redemption and maturing after the relevant Redemption
Date, whose surrender has been waived as provided in Section 1106, and
(iv) Securities and coupons of such series for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company
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and thereafter repaid to the Company or discharged from such trust, as provided
in Section 1003) have been delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case
of (i) or (ii) below, any coupons appertaining thereto not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) if redeemable at the option of the
Company, are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose (A) an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable, (B) Government Obligations that through
the scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than on day before the due date of any
payment, money in an amount, or (C) a combination thereof, in any case, in an
amount, sufficient, without consideration of any reinvestment of such principal
and interest, and Additional Amounts, if any, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, sufficient to pay and discharge
the entire indebtedness on such Securities and such coupons not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if any)
and interest, and any Additional Amounts with respect thereto, to the date of
such deposit (in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be and all necessary and
proper fees, compensation and expenses of the Trustee pertaining to the
Securities with respect to which such deposit is made;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations, the rights, privileges and immunities of the
Trustee under Articles Six of the Company to any Authenticating Agent under
Section 611 and, if money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
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SECTION 402. Application of Trust Funds. Subject to the
provisions of the last paragraph of Section 1003, all amounts deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any), and any interest and Additional Amounts for whose payment such amounts
have been deposited with or received by the Trustee, but such amounts need not
be segregated from other funds except to the extent required by law.
SECTION 403. Reinstatement. If the Trustee is unable to apply
any money in accordance with Section 401 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities and coupons, if any, of such
series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 401 until such time as the Trustee is permitted to apply all
such money in accordance with Section 401; provided however, if the Company has
made any payment of interest on or principal of (and premium, if any, on) any
Securities and coupons, if any, of such series because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such series of Securities and coupons, if any, to receive such payment from the
money held by the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default. "Event of Default", wherever
used herein with respect to any particular series of Securities, means any one
of the following events (whatever the reason for such Event of Default and
whether or not it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body)
(1) default in the payment of any interest upon or any
Additional Amounts payable in respect of any Security of that series or of any
coupon appertaining thereto, when such interest, Additional Amounts or coupon
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series when it becomes due and payable at its
Maturity; or
(3) default in the deposit of any sinking fund payment, when and
as due by the terms of any Security of that series; or
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(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to any Security of that
series (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with) and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(5) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of
its creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for all or substantially all of either of its
property, or
(C) orders the liquidation of the Company or any
Significant Subsidiary,
and the order or decree remains unstayed and in effect for 90 days; or
(7) any other Event of Default provided with respect to
Securities of that series;
provided however, that no event described in clause (4), (5), (6) or (7) above
shall constitute an Event of Default hereunder until a Responsible Officer
assigned to and working in the Trustee's corporate trust department has actual
knowledge thereof or until a written notice of any such event is received by the
trustee at the Corporate Trust Office, and such notice refers to the Securities
generally, the Company or the Indenture.
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As used in this Section 501, the term "Bankruptcy Law" means title 11, U.S. Code
or any similar Federal or State law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal (or, if any Securities are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal and the accrued interest thereon, if any or specified
portion thereof shall become immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the currency or currency unit or composite currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series):
(A) all overdue installments of interest on and
any Additional Amounts payable in respect of all Outstanding Securities of that
series and any related coupons,
(B) the principal of (and premium, if any, on) any
Outstanding Securities of that series which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate or rates borne
by or provided for in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest and any Additional
Amounts at the Overdue Rate, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that
series, other than the nonpayment of the principal of (or premium, if any) or
interest on Securities of that series which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
513.
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No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if:
(1) default is made in the payment of any installment of
interest or Additional Amounts, if any, on any Security of any series and any
related coupon when such interest or Additional Amount becomes due and payable
and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities of such series and coupons, the whole
amount then due and payable on such Securities and coupons for principal (and
premium, if any) and interest and Additional Amounts, with interest upon any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of interest
or Additional Amounts, if any, at the Overdue Rate, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
of such series and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Securities of such series, wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series and any related coupons by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal,
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premium, if any, or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if any,
owing and unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and coupons to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel, and any other
amounts due the Trustee or any predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder of
a Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities or Coupons. All rights of action and claims under this Indenture or
any of the Securities or coupons may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected. Any money collected
by the Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest and any
Additional Amounts, upon presentation of the Securities or coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
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FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon
the Securities and coupons for principal (and premium, if any) and interest and
any Additional Amounts payable, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
kind, according to the aggregate amounts due and payable on such Securities and
coupons for principal (and premium, if any), interest and Additional Amounts,
respectively; and
THIRD: To the payment of the remainder, if any, to the
Company.
SECTION 507. Limitation on Suits. No Holder of any Security of
any series or any related coupon shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium, if any, Interest and Additional Amounts. Notwithstanding any
other provision in this Indenture, the Holder of any Security or coupon shall
have the right which is absolute and unconditional to receive payment of the
principal of (and premium, if any) and (subject to
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Sections 305 and 307) interest on, and any Additional Amounts in respect of,
such Security or payment of such coupon on the respective due dates expressed in
such Security or coupon (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies. If the Trustee
or any Holder of a Security or coupon has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, the Company, the
Trustee and the Holders of Securities and coupons shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or coupons in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Securities or coupons is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder of any Security or coupon to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders of Securities or coupons, as
the case may be.
SECTION 512. Control by Holders of Securities. The Holders of
not less than a majority in principal amount of the Outstanding Securities of
any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
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(3) the Trustee need not take any action which might involve it
in personal liability or be unduly prejudicial to the Holders of Securities of
such series not joining therein.
SECTION 513. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series and any
related coupons waive any past default hereunder with respect to such series and
its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Security of such
series or any related coupons, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Usury, Stay or Extension Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 515. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of any undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on or any Additional Amount in respect thereof any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit in the manner and to the extent provided in
TIA Section 313(c), notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest on or any Additional Amounts with respect to any Security of
such series, or in the payment of any sinking fund installment with respect to
the Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Securities and coupons of such series; and provided further
that in the case of any default or breach of the character specified in Section
501(4) with respect to the Securities and coupons of such series, no such notice
to Holders shall be given until at least 90 days after the occurrence thereof.
For the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Securities of such series.
SECTION 602. Certain Rights of Trustee. Subject to the
provisions of TIA Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon or other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order (other
than delivery of any Security, together with any coupons appertaining thereto,
to the Trustee for authentication and delivery pursuant to Section 303 which
shall be sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
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(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities of any series or any related coupons
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon or other evidence of indebtedness or paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to make reasonable examination of the books, records and premises of
the Company, personally or by agent or attorney following reasonable notice to
the Company;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
(9) without limiting the generality of the foregoing provisions
of this Section 602, the Trustee may rely, with no duty of inquiry, and shall be
protected in acting or refraining from acting upon Board Resolutions, Officer's
Certificates, Company Orders or Company Requests by the Company or an agent of
the Company; written statements or certificates required to be presented under
any provision of this Indenture by Euro-clear, CEDEL, the Common Depositary, the
Holder of Securities represented by a global Security, or the beneficial owners
of such Securities; written information as to the names and addresses of the
Holders of any Security furnished by the Company, the Security Registrar (if
other than the Trustee) or any Authenticating Agent; notices, statements or
certificate of the Paying Agent (if other than the Trustee) as to timely payment
of, default in payment of, aggregate amounts paid on and aggregrate amounts
remaining unpaid on, all Securities; any Opinions of Counsel; and any
certificates of opinions of Independent Accountants or other Independent
Persons, nor shall the Trustee have any liability to any Person for its
inability to perform its duties or obligations hereunder as a result of the
failure of any Person mentioned in this clause (9) to provide information
required by this Indenture and necessary for performance by the Trustee of such
duties and obligations.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise
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of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the
Trustee undertakes to perform only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities. The Trustee, any Paying Agent,
Security Registrar, Authenticating Agent or any other agent of the Company, in
its individual or any other capacity, may become the owner or pledgee of
Securities and coupons and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 605. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 606. Compensation and Reimbursement. The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
each of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel)
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee
for, and to hold it harmless against, any and all loss, claim, liability or
expense incurred without negligence or bad faith on its own part, arising out of
or in connection with the acceptance or
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administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6) or Section
501(7), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (or premium, if any)
or interest on particular Securities or any coupons.
The provisions of this Section shall survive the termination of
this Indenture.
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests. There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article. If the Trustee has or
shall acquire a conflicting interest within the meaning of the TIA, the Trustee
shall either eliminate such interest or resign to the extent and in the manner
provided by and subject to the provisions of the TIA and this Indenture.
SECTION 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 609.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
Jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee and to the
Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any Holder of
a Security who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Company or by any
Holder of a Security who has been a bona fide Holder of a Security for at least
six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), any Holder of a Security who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series).
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders of Securities and accepted appointment in the manner hereinafter
provided, any Holder of a Security who has been a bona fide Holder of a Security
of such series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor
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Trustee with respect to the Securities of any series in the manner provided for
notices to the Holders of Securities in Section 106. Each notice shall include
the name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor. (a) In case
of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental
hereto, pursuant to Article Nine hereof, wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor
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Trustee all such rights, powers and trusts referred to in paragraph (a) or (b)
of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities or coupons shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities or coupons. In case any Securities or coupons
shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Securities or coupons, in
either its own name or that of its predecessor Trustee, with the full force and
effect which this Indenture provides for the certificate of authentication of
the Trustee.
SECTION 611. Appointment of Authenticating Agent. At any time
when any of the Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon exchange, registration of transfer or
partial redemption or repayment thereof, and Securities so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder. Any such
appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, a copy of which instrument shall be promptly
furnished to the Company. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a bank or trust company or corporation
organized and doing business and in good standing under the laws of the United
States of America or of any State or the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and surplus
of not less than $50,000,000 and subject to supervision or examination by
Federal or State authorities. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of
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this Section, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any
time resign by giving written notice of resignation to the Trustee for such
series and to the Company. The Trustee for any series of Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time
to time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication substantially in the
following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
___________________________
as Trustee
By: _______________________,
as Authenticating Agent
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By: _______________________,
Authorized Signatory
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders. Every
Holder of Securities or coupons, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with TIA Section 312,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under TIA Section 312(b).
SECTION 702. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first May 15 after the first issuance of
Securities pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Securities as provided in TIA Section 313(c) a brief report dated as
of such May 15 if required by TIA Section 313(a). A copy of each such report
shall at the time of such transmission to Holders be filed by the Trustee with
each stock exchange, if any, upon which any Securities are listed with the
Commission and the Company. The Company will notify the Trustee when any
securities are listed on any stock exchange.
SECTION 703. Reports by Company. The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it will file with the
Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and
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covenants of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to the Holders of Securities, within 30
days after the filing thereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed from time
to time by the Commission.
SECTION 704. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular
Record Date for interest for each series of Securities, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders of
Registered Securities of such series as of such Regular Record Date, or if there
is no Regular Record Date for interest for such series of Securities,
semi-annually, upon such dates as are set forth in the Board Resolution or
indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request (or such
shorter period of time as the Trustee shall be required to act upon such
information under any provision of the Indenture or any Security), a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished (or if any provision of this Indenture or any Security
require the Trustee to interact with Holders of any Security as of a given date,
such list to provide the names and addresses of the Holders as of such date.),
provided, however, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales,
Leases and Conveyances Permitted Subject to Certain Conditions. The Company may
consolidate with, or sell, transfer, lease or convey or otherwise dispose of all
or substantially all of its assets to, or merge with or into any other
corporation, provided that in any such case, (1) either the Company shall be the
continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States or a State thereof
and such successor corporation shall expressly assume all of the Company's
obligations by supplemental indenture, complying with Article Nine hereof,
satisfactory to the Trustee, executed and delivered to the Trustee by such
corporation and (2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice
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or the lapse of time, or both, would become an Event of Default, shall have
occurred and be continuing.
SECTION 802. Rights and Duties of Successor Corporation. In case
of any such consolidation, merger, sale, lease or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part, and the predecessor
corporation, except in the event of a lease, shall be relieved of any further
obligation under this Indenture and the Securities. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of the Company, any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the written order of such successor corporation, instead of
the Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, lease or
conveyance, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
SECTION 803. Officers' Certificate and Opinion of Counsel. Any
consolidation, merger, sale, lease or conveyance permitted under Section 801 is
also subject to the condition that the Trustee receive an Officers' Certificate
and an Opinion of Counsel to the effect that any such consolidation, merger,
sale, lease or conveyance, and the assumption by any successor corporation,
complies with the provisions of this Article and if a Supplemental Indenture is
required in connection with such transaction, Article Nine, and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
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(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company herein
and in the Securities contained; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such series) or
to surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of Default
are to be for the benefit of less than all series of Securities, stating that
such Events of Default are expressly being included solely for the benefit of
such series); provided, however, that in respect of any such additional Events
of Default such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default or may limit the right of the Holders of a majority in aggregate
principal amount of that or those series of Securities to which such additional
Events of Default apply to waive such default; or
(4) to add to or change any of the provisions of this Indenture
to provide that Bearer Securities may be registrable as to principal, to change
or eliminate any restrictions on the payment of principal of or any premium or
interest on Bearer Securities, to permit Bearer Securities to be issued in
exchange for Registered Securities, to permit Bearer Securities to be issued in
exchange for Bearer Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form, provided that any
such action shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become effective
only when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series
and any related coupons as permitted by Sections 201 and 301, including the
provisions and procedures relating to Securities convertible into Common Shares
or Preferred Shares, as the case may be; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; or
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(9) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided such provisions shall not adversely affect the
interests of the Holders of Securities of any series or any related coupons in
any material respect; or
(10) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and 1403;
provided that any such action shall not adversely affect the interests of the
Holders of Securities of such series and any related coupons or any other series
of Securities in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium,
if any, on) or any installment of principal of or interest on, any Security; or
reduce the principal amount thereof or the rate or amount of interest thereon or
any Additional Amounts payable in respect thereof, or any premium payable upon
the redemption thereof, or change any obligation of the Company to pay
Additional Amounts pursuant to Section 1008 (except as contemplated by Section
801(1) and permitted by Section 901(1)), or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the amount thereof provable in bankruptcy pursuant to Section 504, or adversely
affect any right of repayment at the option of the Holder of any Security, or
change any Place of Payment where, or the currency or currencies, currency unit
or units or composite currency or currencies in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption or repayment at the option of the Holder,
on or after the Redemption Date or the Repayment Date, as the case may be), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver with respect to such series (or compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences)
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provided for in this Indenture, or reduce the requirements of Section 1504 for
quorum or voting, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase the required percentage to effect such action
or to provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
SECTION 903. Execution of Supplemental Indentures. In executing,
or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modification thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder and of any
coupon appertaining thereto shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee or an
Authenticating Agent in exchange for Outstanding Securities of such series.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, Interest
and Additional Amounts. The Company covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually pay the
principal of (and premium, if any) and interest on and any Additional Amounts
payable in respect of the Securities of that series in accordance with the terms
of such series of Securities, any coupons appertaining thereto and this
Indenture. Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, any interest due on and any Additional
Amounts payable in respect of Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 1008 in respect
of principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 301, at
the option of the Company, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security. All amounts required to be paid by the
Trustee in respect of the Securities shall be delivered to the Trustee on or
before 10:00 a.m. Houston, Texas time on the date on which payment is to be
made.
SECTION 1002. Maintenance of Office or Agency. If Securities of
a series are issuable only as Registered Securities, the Company shall maintain
in each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment or
conversion, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency. If Securities of a series
are issuable as Bearer Securities, the Company will maintain: (A) in the Borough
of Manhattan, The City of New York, an office or agency where any Registered
Securities of that series may be presented or surrendered for payment or
conversion, where any Registered Securities of that series may be surrendered
for registration of transfer, where Securities of that series may be surrendered
for exchange, where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served and where Bearer
Securities of that series and related coupons may be presented or surrendered
for payment or conversion in the circumstances described in the following
paragraph (and not otherwise); (B) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series which is located outside the
United States, an office or agency where Securities of that series and related
coupons may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Securities of that series pursuant to Section
1008) or conversion; provided, however, that if the Securities of that series
are listed on the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the Company
will maintain a Paying Agent for the Securities of that series in Luxembourg or
any other required city
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located outside the United States, as the case may be, so long as the Securities
of that series are listed on such exchange; and (C) subject to any laws or
regulations applicable thereto, in a Place of Payment for that series located
outside the United States an office or agency where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange and where notices and demand to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of each such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee (except that Bearer Securities of that
series and the related coupons may be presented and surrendered for payment,
including payment of any Additional Amounts payable on Bearer Securities of that
series pursuant to Section 1008, or conversion at the offices specified in the
Security, in London, England, and the Company hereby appoints the same as its
agent to receive such presentations, surrenders, notices and demands), and the
Company hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or interest on or
Additional Amounts in respect of Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; provided, however, that, if the Securities of a series are
payable in Dollars, payment of principal of and any premium and interest on any
Bearer Security (including any Additional Amounts payable on Securities of such
series pursuant to Section 1008) shall be made at the office of the Company's
Paying Agent in the Borough of Manhattan, The City of New York, if (but only if)
payment in Dollars of the full amount of such principal, premium, interest or
Additional Amounts, as the case may be, at all offices or agencies outside the
United States maintained for the purpose by the Company in accordance with this
Indenture, is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all of such purposes, and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified with
respect to any Securities pursuant to Section 301 with respect to a series of
Securities, the Company hereby designates as a Place of Payment for each series
of Securities the office or agency of the Company in the Borough of Manhattan,
The City of New York, and initially appoints the Trustee at its Corporate Trust
Office as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notice and demands.
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Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency,
or so long as it is required under any other provision of the Indenture, then
the Company will maintain with respect to each such series of Securities, or as
so required, at least one exchange rate agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to any
series of any Securities and any related coupons, it will, on or before each due
date of the principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any of the Securities of that series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum in the currency
or currencies, currency unit or units or composite currency or currencies in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities and any related coupons, it will, before each due date
of the principal of (and premium, if any), or interest on or Additional Amounts
in respect of, any Securities of that series, deposit with a Paying Agent a sum
(in the currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the principal
(and premium, if any) or interest or Additional Amounts, so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest or Additional Amounts and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Securities or Additional Amounts in trust
for the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any such payment of
principal and if so, the amount of such defaulted payment; (and premium, if any)
or interest or Additional Amounts; and
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(3) at any time during the continuance of any Event of Default
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Except as otherwise provided in the Securities of any series,
any money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of (and premium, if any) or
interest on, or any Additional Amounts in respect of, any Security of any series
and remaining unclaimed for two years after such principal (and premium, if
any), interest or Additional Amounts has become due and payable shall be paid to
the Company upon Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security or any coupon
appertaining thereto shall thereafter, as an unsecured general creditor, look
only to the Company for payment of such principal of (and premium, if any) or
interest on, or any Additional Amounts in respect of, any Security, or any
coupon appertaining thereto without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 1004. Existence. Subject to Article Eight, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve any right or franchise if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company.
SECTION 1005. Maintenance of Properties. The Company will cause
all of it properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
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SECTION 1006. Payment of Taxes and Other Claims. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1007. Statement as to Compliance. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture and, in the
event of any noncompliance, specifying such noncompliance and the nature and
status thereof. For purposes of this Section 1007, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 1008. Additional Amounts. If any Securities of a series
provide for the payment of Additional Amounts, the Company will pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context except in the case of
Section 502(1), the payment of the principal of or any premium or interest on,
or in respect of, any Security of any series or payment of any related coupon or
the net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established pursuant to Section 301
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
Except as otherwise specified as contemplated by Section 301, if
the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal and any premium
is made, and at least 10 days prior to each date of payment of principal and any
premium or interest if there has been any change with respect to the matters set
forth in the below-mentioned Officers' Certificate, the Company will furnish the
Trustee and the Company's principal Paying Agent or Paying Agents, if other than
the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of and any
premium or interest on the Securities of that series shall be made to Holders of
Securities of that series or any related coupons who are not United States
persons without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of the series. If any such
withholding shall be required, then
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such Officers' Certificate shall specify by country the amount, if any, required
to be withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. In the event that
the Trustee or any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled (i) to assume that no such withholding or deduction is required with
respect to any payment of principal or interest with respect to any Securities
of a series or related coupons until it shall have received a certificate
advising otherwise and (ii) to make all payments of principal and interest with
respect to the Securities of a series or related coupons without withholding or
deductions until otherwise advised. The Company covenants to indemnify the
Trustee and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by any
of them or in reliance on any Officers' Certificate furnished pursuant to this
Section or in reliance on the Company's not furnishing such an Officers'
Certificate.
SECTION 1009. Waiver of Certain Covenants. The Company may omit
in any particular instance to comply with any term, provision or condition set
forth in Sections 1004 to 1006, inclusive, if before or after the time for such
compliance the Holders of at least a majority in principal amount of all
outstanding Securities of such series, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of the
Company of less than all of the Securities of any series, the Company shall, at
least 60 days prior to the giving of the notice of redemption in Section 1104
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
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SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series issued on the same day with the
same terms 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, from
the Outstanding Securities of such series issued on such date with the same
terms not previously called for redemption, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption shall
be given in the manner provided in Section 106, not less than 30 days nor more
than 60 days prior to the Redemption Date, unless a shorter period is specified
by the terms of such series established pursuant to Section 301, to each Holder
of Securities to be redeemed, but failure to give such notice in the manner
herein provided to the Holder of any Security designated for redemption as a
whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other such
Security or portion thereof.
Any notice that is mailed to the Holders of Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption
Date payable as provided in Section 1106, if any, and Additional Amounts, if
any,
(3) if less than all Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of
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such Security, the holder will receive, without a charge, a new Security or
Securities of authorized denominations for the principal amount thereof
remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 1106, if any,
will become due and payable upon each such Security, or the portion thereof, to
be redeemed and, if applicable, that interest thereon shall cease to accrue on
and after said date,
(6) the Place or Places of Payment where such Securities,
together in the case of Bearer Securities with all coupons appertaining thereto,
if any, maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price and accrued interest, if any, or for conversion,
(7) that the redemption is for a sinking fund, if such is the
case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be accompanied
by all coupons maturing subsequent to the date fixed for redemption or the
amount of any such missing coupon or coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the Company, the
Trustee for such series and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and
any Registered Securities of such series are not to be redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject to
redemption on this Redemption Date pursuant to Section 305 or otherwise, the
last date, as determined by the Company, on which such exchanges may be made,
(10) the CUSIP number of such Security, if any, and
(11) if applicable, that a Holder of Securities who desires to
convert Securities for redemption must satisfy the requirements for conversion
contained in such Securities, the then existing conversion price or rate, and
the date and time when the option to convert shall expire.
Notice of redemption of Securities to be redeemed shall be given
by the Company or, at the Company's request, by the Trustee in the name and at
the expense of the Company in which event, the Company shall provide the Trustee
with the information required by clauses (1) through (6) above.
If at the time notice of redemption shall be given the Company
shall not have deposited with the Trustee, or shall have irrevocably directed
the Trustee or a Paying Agent to apply, from money held by it available to be
used for the redemption of Securities which are to be redeemed, an amount in
cash sufficient to redeem all of the Securities called for redemption, including
accrued interest to the Redemption Date, such notice shall state that it is
subject to the receipt of the redemption monies by the Trustee or a Paying Agent
on or before the Redemption Date and such notice shall be of no effect unless
such monies are so received before such date.
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SECTION 1105. Deposit of Redemption Price. At least one Business
Day prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent, which
it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money in
the currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on, all
the Securities or portions thereof which are to be redeemed on that date. The
Paying Agent, if any, shall provide Notice to the Trustee of such deposit.
SECTION 1106. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 1002)
and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest; and provided further
that, except as otherwise provided with respect to Securities convertible into
Common Stock or Preferred Stock, installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to
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receive the amount so deducted; provided, however, that interest represented by
coupons shall be payable only at an office or agency located outside the United
States (except as otherwise provided in Section 1002) and, unless otherwise
specified as contemplated by Section 301, only upon presentation and surrender
of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 1107. Securities Redeemed in Part. Any Registered
Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall issue and execute and the Trustee or
Authenticating Agent shall authenticate and deliver to the Holder of such
Security without service charge a new Registered Security or Securities of the
same series, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities
of a series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of such Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of any Securities
of any series, the cash amount of any mandatory sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities. The Company may, in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Securities of a series, as provided for
by the terms of such Series, (1) deliver Outstanding Securities of such series
(other than any previously called for redemption) together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining thereto
and (2) apply as a credit Securities of such series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments pursuant
to the terms of such Securities, as
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provided for by the terms of such Securities, or which have otherwise been
acquired by the Company; provided that such Securities so delivered or applied
as a credit have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the applicable
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such mandatory sinking fund payment shall
be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund. Not
less than 60 days prior to each sinking fund payment date for Securities of any
series, the Company will deliver to the Trustee a Company Order specifying the
amount of the next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and will also deliver to the Trustee any
Securities to be so delivered and credited. If such Company Order shall specify
an optional amount to be added in cash to the next ensuing mandatory sinking
fund payment, the Company shall thereupon be obligated to pay the amount therein
specified. Not less than 30 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Repayment of Securities
of any series before their Stated Maturity at the option of Holders thereof
shall be made in accordance with the terms of such Securities, if any, and
(except as otherwise specified by the terms of such series established pursuant
to Section 301) in accordance with this Article.
SECTION 1302. Repayment of Securities. Securities of any series
subject to repayment in whole or in part at the option of the Holders thereof
will, unless otherwise provided in the terms of such Securities, be repaid at a
price equal to the principal amount thereof, together with interest, if any,
thereon accrued to the Repayment Date specified in or pursuant to the terms of
such Securities. The Company covenants that at least one Business Day prior to
the Repayment Date it will deposit with the Trustee or with a Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) sufficient to pay
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the principal (or, if so provided by the terms of the Securities of any series,
a percentage of the principal) of, and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date. The Paying Agent, if
any, shall provide Notice to the Trustee of such deposit.
SECTION 1303. Exercise of Option. Securities of any series
subject to repayment at the option of the Holders thereof will contain an
"Option to Elect Repayment" form on the reverse of such Securities. In order for
any Security to be repaid at the option of the Holder, the Trustee must receive
at the Place of Payment therefor specified in the terms of such Security (or at
such other place or places of which the Company shall from time to time notify
the Holders of such Securities) not earlier than 60 days nor later than 30 days
prior to the Repayment Date (1) the Security so providing for such repayment
and, in the case of Bearer Securities, coupons appertaining thereto, together
with the "Option to Elect Repayment" form on the reverse thereof duly completed
by the Holder (or by the Holder's attorney duly authorized in writing) or (2) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"), or a commercial bank or trust company in the United States setting
forth the name of the Holder of the Security, the principal amount of the
Security, the principal amount of the Security to be repaid, the CUSIP number,
if any, or a description of the tenor and terms of the Security, the Repayment
Date, a statement that the option to elect repayment is being exercised thereby
and a guarantee that the Security and, in the case of Bearer Securities, coupons
appertaining thereto, to be repaid, together with the duly completed form
entitled "Option to Elect Repayment" on the reverse of the Security, will be
received by the Trustee not later than the fifth Business Day after the date of
such telegram, telex, facsimile transmission or letter; provided, however, that
such telegram, telex, facsimile transmission or letter shall only be effective
if such Security and, in the case of Bearer Securities, coupons appertaining
thereto, and form duly completed are received by the Trustee by such fifth
Business Day. If less than the entire principal amount of such Security is to be
repaid in accordance with the terms of such Security, the principal amount of
such Security to be repaid, in increments of the minimum denomination for
Securities of such series, and the denomination or denominations of the Security
or Securities to be issued to the Holder for the portion of the principal amount
of such Security surrendered that is not to be repaid, must be specified. The
principal amount of any Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security to be
repaid is a part. Except as otherwise may be provided by the terms of any
Security providing for repayment at the option of the Holder thereof, exercise
of the repayment option by the Holder shall be irrevocable unless waived by the
Company.
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable. If Securities of any series providing for repayment at the option
of the Holders thereof shall have been surrendered as provided in this Article
and as provided by or pursuant to the terms of such Securities, and in the case
of Bearer Securities, coupons appertaining, thereto such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and
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after such Repayment Date (unless the Company shall default in the payment of
such Securities on such Repayment Date) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be repaid, except to the extent
provided below, shall be void. Upon surrender of any such Security for repayment
in accordance with such provisions, together with all coupons, if any,
appertaining thereto maturing after the Repayment Date, the principal amount of
such Security so to be repaid shall be paid by the Company, together with
accrued interest, and Additional Amounts, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons; and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon,
unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
by coupons shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date), and
Additional Amounts, if any, shall, until paid, bear interest from the Repayment
Date at the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) set forth in such Security.
SECTION 1305. Securities Repaid in Part. Upon surrender of any
Registered Security which is to be repaid in part only, the Company shall
execute and the Trustee or an Authenticating Agent shall authenticate and
deliver to the Holder of such Security, without service charge and at the
expense of the Company, a new Registered Security or Securities of the same
series, of any authorized denomination specified by the Holder, in an aggregate
principal amount equal to and in exchange for the portion of the principal of
such Security so surrendered which is not to be repaid.
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ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance. If, pursuant to Section 301, provision
is made for either or both of (a) defeasance of the Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Securities of or
within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to any Securities), shall be applicable to such Securities and any
coupons appertaining thereto, and the Company may at its option by Board
Resolution, at any time, with respect to such Securities and any coupons
appertaining thereto, elect to have Section 1402 (if applicable) or Section 1403
(if applicable) be applied to such Outstanding Securities and any coupons
appertaining thereto upon compliance with the conditions set forth below in this
Article.
SECTION 1402. Defeasance and Discharge. 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 deemed to have been
discharged from its obligations with respect to such Outstanding Securities and
any coupons appertaining thereto on the date the conditions set forth in Section
1404 are satisfied (hereinafter "defeasance"). For this purpose, such defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed to be "Outstanding" only
for the purposes of Section 1405 and the other Sections of this Indenture
referred to in clauses (A) and (B) below, and to have satisfied all of its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any) and interest, if any, on such Securities and any coupons appertaining
thereto when such payments are due, (B) the Company's obligations with respect
to such Securities under Sections 305, 306, 1002 and 1003 and with respect to
the payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1008, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article. Subject to compliance with this Article
Fourteen, the Company may exercise its option under this Section notwithstanding
the prior exercise of its option under Section 1403 with respect to such
Securities and any coupons appertaining thereto.
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
Section 1004 to 1006, inclusive, and, if specified pursuant to Section 301, its
obligations under any other covenant, with respect to such
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Outstanding Securities and any coupons appertaining thereto on and after the
date the conditions set forth in Section 1404 are satisfied (hereinafter,
"covenant defeasance"), and such Securities and any coupons appertaining thereto
shall thereafter be deemed to be not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with Sections 1004 to 1006,
inclusive, or such other covenant, 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 and any coupons
appertaining thereto, 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
Section or such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other 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 501(8) or
otherwise, as the case may be, but, except as specified above, the remainder of
this Indenture and such Securities and any coupons appertaining thereto shall be
unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section 1402 or Section
1403 to any Outstanding Securities of or within a series and any coupons
appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 607 who shall agree to comply with the provisions of this Article
Fourteen applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities and any coupons appertaining
thereto, (1) an amount in such currency, currencies or currency unit in which
such Securities and any coupons appertaining thereto are then specified as
payable at Stated Maturity, or (2) Government Obligations applicable to such
Securities and coupons appertaining thereto (determined on the basis of the
currency, currencies or currency unit in which such Securities and coupons
appertaining thereto are then specified as payable at Stated Maturity) which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment of principal of (and premium, if any) and interest, if any,
on such Securities and any coupons appertaining thereto, money in an amount, or
(3) a combination thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and interest, and Additional
Amounts, if any, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, and Additional Amounts, if any,
(i) the principal of (and premium, if any) and interest, if any, on such
Outstanding Securities and any coupons appertaining thereto on the Stated
Maturity of such principal or installment of principal or interest or Additional
Amounts, if any; and (ii) any mandatory sinking fund payments or analogous
payments applicable to such Outstanding Securities and any coupons appertaining
thereto on the day on which such payments are due and payable in accordance with
the terms of this Indenture and of such
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Securities and any coupons appertaining thereto; and (iii) all necessary and
proper fees, compensation and expenses of the Trustee pertaining to the
Securities with respect to which such deposit is made.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party or by
which it is bound.
(c) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to such Securities
and any coupons appertaining thereto shall have occurred and be continuing on
the date of such deposit or, insofar as Sections 501(6) and 501(7) are
concerned, at any time during the period ending on the 91st day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of execution of this Indenture, there
has been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the Holders
of such Outstanding Securities and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred.
(e) In the case of an election under Section 1403, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto will
not recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 1402 or the covenant defeasance under
Section 1403 (as the case may be) have been complied with and an Opinion of
Counsel to the effect that (A) either (i) as a result of a deposit pursuant to
subsection (a) above and the related exercise of the Company's option under
Section 1402 or Section 1403 (as the case may be), registration is not required
under the Investment Company Act of 1940, as amended, by the Company, with
respect to the trust funds representing such deposit or by the Trustee for such
trust funds or (ii) all necessary registrations under said Act have been
effected.
(g) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms,
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conditions or limitations which may be imposed on the Company in connection
therewith pursuant to Section 301.
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Securities of any series and any coupons appertaining
thereto shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and any coupons appertaining thereto and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant
to Section 301, if, after a deposit referred to in Section 1404(a) has been
made, (a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a currency or currency unit other than that in
which the deposit pursuant to Section 1404(a) has been made in respect of such
Security, or (b) a Conversion Event occurs in respect of the currency or
currency unit in which the deposit pursuant to Section 1404(a) has been made,
the indebtedness represented by such Security and any coupons appertaining
thereto shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any), and
interest, if any, on such Security as the same becomes due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the currency or currency unit in which such Security becomes
payable as a result of such election or Conversion Event, subject to Section
1407, based on the applicable market exchange rate for such currency or currency
unit in effect on the second Business Day prior to each payment date, except,
with respect to a Conversion Event, for such currency or currency unit in effect
(as nearly as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding,
subject to Section 606, the Trustee shall deliver or pay to the Company from
time to time upon Company Request any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent
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public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement. If the Trustee or any Paying Agent
is unable to apply any money and/or Government Obligations deposited in trust in
accordance with Section 1404 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application (including any such order
or judgment requiring the payment of such money and/or Government Obligations to
the Company or any other obligor on the Securities), the Company's (or such
obligor's) obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit has occurred pursuant to Section 1404, until
such time as the Trustee or Paying Agent is permitted to apply all such money
and/or Government Obligations in accordance with Section 1404; provided however,
that if the Company has made any payment of principal of (or premium, if any) or
interest, or Additional Amount, if any, on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities, or coupons appertaining thereto, to receive
such payment from the money and/or Government Obligations held by the Trustee or
Paying Agent pursuant to Section 1405.
SECTION 1407. Currency Exchange. So long as Texas Commerce Bank
National Association is acting as Trustee with respect to any series of
Securities issued pursuant to this Indenture, and in the event that the Trustee
is required to determine the exchange rate between the currency or currencies,
currency unit or units or composite currency or currencies in which Securities
are denominated or stated to be payable and the currency or currencies, currency
unit or units or composite currency or currencies in which such Securities are
to be so payable, such determination will be made by the Trustee by reference to
the noon buying rate in the City of New York for transfers of such currency
("Exchange rate"), as such Exchange rate is reported or otherwise made available
by the Federal Reserve Bank of New York on the date of such payment, or, if such
rate is not then available, on the basis of the most recently available Exchange
Rate.
* * * * *
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute
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but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed all as of the day and year first above written.
DYNEX CAPITAL, INC.
By: ____________________________
Lynn Geurin
Executive Vice President,
Chief Financial Officer and Secretary
Attest:
________________________
Title:
Texas Commerce Bank National Association
as Trustee
By: ____________________________
Rafael A. Herrera
Vice President and Trust Officer
Attest:
_________________________
Title:
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EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as
set forth below, the above-captioned Securities held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise Dynex Capital, Inc. or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior
to the date on which you intend to submit your certification relating to the
above-captioned Securities held by
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you for our account in accordance with your Operating Procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
This certificate excepts and does not relate to [U.S.$]
__________ of such interest in the above-captioned Securities in respect of
which we are not able to certify and as to which we understand an exchange for
an interest in a Permanent Global Security or an exchange for and delivery of
definitive Securities (or, if relevant, collection of any interest) cannot be
made until we do so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:__________, 19___
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii)
the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Name of Person Making
Certification]
______________________
(Authorized Signator)
Name:
Title:
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<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications
that we have received in writing, by tested telex or by electronic transmission
from each of the persons appearing in our records as persons entitled to a
portion of the principal amount set forth below (our "Member Organizations")
substantially in the form attached hereto, as of the date hereof, [U.S.$]
_____________ principal amount of the above-captioned Securities (i) is owned by
person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States person(s)"), (ii) is owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
are herein referred to as "financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Dynex
Capital, Inc. or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and its
"possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith
for exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of
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our Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection
with certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________, 19___
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[Morgan Guaranty Trust Company of New York,
Brussels Office,] as Operator of the Euroclear System [Cedel S.A.]
By: __________________
81
OFFICERS' CERTIFICATE
Thomas H. Potts, President, and Lynn K. Geurin, Secretary, of Dynex
Capital, Inc., ("Company"), pursuant to Section 301 of the Indenture dated as of
July 14, 1997 between the Company and Texas Commerce Bank National Association,
as Trustee (the "Indenture"), hereby certify that a series of Securities with
the following terms has been established by a Board Resolution, and we further
certify as follows with respect to such series of the Securities (unless
otherwise defined herein, capitalized terms shall have the meanings set forth in
the Indenture):
1. The title of the series of Securities established hereby shall be
"7.875% Senior Notes Due July 15, 2002" ("Senior Notes"). The Senior Notes shall
constitute a series of Securities as defined in the Indenture and be senior,
unsecured obligations of the Company and will rank prior to all subordinated
indebtedness of the Company and pari passu with all other senior unsecured
indebtedness of the Company outstanding on the date of the issuance of the
Senior Notes.
2. The maximum aggregate principal amount of Senior Notes that may be
authenticated and delivered under the Indenture shall be $100,000,000 (except
for Senior Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of other Senior Notes pursuant to Section 304,
305, 306, 906, 1107 or 1305 of the Indenture).
3. The outstanding principal amount of the Senior Notes shall be
payable on July 15, 2002.
<PAGE>
4. The Interest Payment Dates shall be July 15 and January 15
commencing January 15, 1998 and at Maturity and the Regular Record Date for
interest payable on any Interest Payment Date shall be July 1 and January 1.
Interest is payable in semi-annually in arrears from July 15, 1997 at a rate of
7.875% per annum. Interest on overdue principal shall be paid at the rate borne
by the Senior Noes (the "Overdue Rate"); interest on Defaulted Interest (as
defined in the Indenture) shall be payable at the Overdue Rate to the extent
lawful.
5. Principal, interest and Make-Whole Amounts, if any, payable in
respect of the Senior Notes shall be payable, and subject to Section 305 of the
Indenture, Senior Notes may be surrendered for registration of transfer and
exchange at the Corporate Trust Office, (as defined in the Indenture) and
notices or demands to or upon the Company in respect of the Senior Notes and the
Indenture may be served at 10900 Nuckols Road, Glen Allen, Virginia 23060 Attn:
President or at such other address as the Company may notify the Trustee in
writing.
6. The Senior Notes are redeemable at any time at the option of the
Company, in whole or from time to time in part, at a redemption price payable in
U.S. Dollars equal to the sum of: (i) the principal amount of the Senior Notes
being redeemed plus accrued interest thereon to the Redemption Date; and (ii)
the Make-Whole Amount (as defined below), if any, with respect to such Senior
Notes in accordance with the Article Eleven of the Indenture.
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Definitions: As used herein:
"Make-Whole Amount" means, in connection with any optional redemption
of any of the Senior Notes, the excess in U.S. Dollars, if any, of (i) the
aggregate present value as of the date of such redemption of each dollar of
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect of
each such dollar if such redemption had not been made, determined by
discounting, on a semi-annual basis, such principal and interest at the
Reinvestment Rate (determined on the third Business Day preceding the date
notice of such redemption is given) from the respective dates on which such
principal and interest would have been payable if such redemption had not been
made, to the date of redemption; over (ii) the aggregate principal amount of the
Senior Notes being redeemed.
"Reinvestment Rate" means the yield on Treasury securities at a
constant maturity corresponding to the remaining life (as of the date of
redemption, and rounded to the nearest month) to Stated Maturity of the
principal being redeemed (the "Treasury Yield"), plus 0.25%. For purposes
hereof, the Treasury Yield shall be equal to the arithmetic mean of the yields
published in the Statistical Release (as defined below) under the heading "Week
Ending" for "U.S. Government Securities -- Treasury Constant Maturities" with a
maturity equal to such remaining life; provided, that if no published maturity
exactly corresponds to such remaining life, then the Treasury Yield shall be
interpolated or extrapolated on a straight-line basis from the arithmetic means
of the yields for the next shortest and next longest published maturities. For
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole Amount
shall be used. If the format or
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content of the Statistical Release changes in a manner that precludes
determination of the Treasury Yield in the above manner, then the Treasury yield
shall be determined in the manner that most closely approximates the above
manner, as reasonably determined by the Company.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded United States
government securities adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Company.
7. Except as provided in Section 14 hereof, the Securities are not
redeemable at the option of the Holder thereof and the Company is not obligated
to redeem, repay or purchase the Securities pursuant to any sinking fund or
analogous provision.
8. Events of Default - in addition to the Events of Default set forth
in Article Five of the Indenture, each of the following shall constitute an
Event of Default:
(i) failure by the Company for 60 days after notice to comply with any
of its other agreements in the Indenture or the Notes; (ii) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company, any of its Subsidiaries or any of its Affiliates in an amount in excess
of $10 million, which results in the acceleration of such Indebtedness; (iii)
failure by the Company, any of its Subsidiaries or any of its Affiliates to pay
final judgments aggregating in excess of $10 million, which judgments are not
paid, discharged or stayed for a period of 60 days.
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9. Payments of all principal, interest and Make-Whole Amounts, if any,
shall be made solely in U.S. Dollars and shall be made in immediately available
funds.
10. The Senior Notes shall be subject to the following covenants in
addition to the covenants set forth in Article 10:
(i) Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock.
(A) The Company will not, and will not permit any of
its Subsidiaries or Affiliates to incur any Indebtedness
(including Acquired Indebtedness), other than Permitted
Indebtedness, or issue any shares of Disqualified Stock,
unless immediately after giving effect to the incurrence of
such Indebtedness or the issuance of such Disqualified
Stock, the Company's Adjusted Consolidated Indebtedness
would not exceed 150% of the Company's Adjusted
Consolidated Tangible Net Worth.
(B) The Company may not and will not permit any of
its Subsidiaries or Affiliates to incur any Unsecured
Indebtedness if the ratio of Income Available for Interest
Payments to Interest Expense for the four consecutive fiscal
quarters most recently ended prior to the date such additional
Indebtedness is to be incurred shall have been less than 2 to
1 on a pro forma basis, after giving effect thereto and the
application of proceeds therefrom.
(ii) Limitation on Restricted Payments. The Company will not,
and will not permit any of its Subsidiaries or Affiliates, to directly
or indirectly, make any Restricted Payments unless (i) at the time of
such Restricted Payments after giving pro forma effect to such
Restricted Payments, no Default or Event of Default shall have
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occurred and be continuing or would occur as a consequence thereof
under any Indebtedness of the Company, including under the Indenture
and (ii) the aggregate amount of all such Restricted Payments does not
exceed the sum of (a) the cumulative real estate investment trust
taxable income of the Company earned for tax years ending after
December 31, 1996 as determined by Section 857(b)(2) of the Code, but
without giving effect to the dividends paid deduction defined in
Section 561 of the Code, (b) the aggregate net proceeds to the Company
from sales of its Capital Stock since the date of the Indenture and (c)
$25 million; provided, however, that the foregoing limitations shall
not apply to any distribution which is necessary to maintain the
Company's status as a real estate investment trust under the Code.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at the date of declaration such payment
would have complied with the provisions of the Indenture;
(ii)(a) the redemption, repurchase, retirement or other
acquisition of any Equity Interests (the "Retired Capital Stock") or
Subordinated Indebtedness of the Company in exchange for, or out of the
proceeds of the substantially concurrent sale of, Equity Interests of
the Company (other than any Disqualified Stock) (the "Refunding Capital
Stock"), and (b) the declaration and payment of dividends on the
Refunding Capital Stock in an aggregate amount per year no greater than
the aggregate amount of dividends per annum that was declarable and
payable on such Retired Capital Stock immediately prior to such
retirement;
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(iii) the redemption, repurchase or other acquisition or
retirement of any Subordinated Indebtedness of the Company made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, new Indebtedness of the Company so long as (A) the principal
amount of such new Indebtedness does not exceed the principal amount of
the Subordinated Indebtedness being so redeemed, repurchased, acquired
or retired for value (plus the amount of any premium required to be
paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired), (B)
such Indebtedness is subordinated to the Notes at least to the same
extent as such Subordinated Indebtedness so redeemed, repurchased,
acquired or retired for value, (C) such Indebtedness has a final
scheduled maturity date equal to or later than the final scheduled
maturity date of the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired and (D) such Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the
remaining Weighted Average Life to Maturity of the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired; and
(iv) (A) the declaration and payment of dividends to holders
of any class or series of Preferred Stock (including Disqualified
Stock) and (B) the declaration and payment of dividends on Refunding
Capital Stock in excess of the dividends declarable and payable thereon
pursuant to clause (ii); provided, however, that for the most recently
ended four consecutive fiscal quarters immediately preceding the date
of the declaration of such dividends, after giving effect to such
declaration on a pro forma basis, the Company on a consolidated basis
would have had a Coverage Ratio of at least 2 to 1;
-7-
<PAGE>
provided however, that at the time of and after giving effect to any
Restricted Payment permitted under clauses (ii), (iii) and (iv) of this
paragraph, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and provided
further, that for purposes of determining the aggregate amount expended
for Restricted Payments under the initial paragraph under this covenant
"Limitation on Restricted Payments," any amounts expended or set aside
under (i) - (iv) shall be excluded.
(iii) Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Subsidiaries or Affiliates to,
directly or indirectly, enter into or suffer to exist any transaction
or series of related transactions (including, without limitation, the
sale, purchase, exchange or lease of assets, property or services) with
any Related Person (other than a Subsidiary or an Affiliate) unless (a)
such transaction or series of transactions is on terms that are no less
favorable to the Company or such Subsidiary or Affiliate, as the case
may be, than would be available in a comparable transaction with an
unrelated third party and (b)(1) where such transaction or series of
transactions involves aggregate consideration in excess of $5 million,
such transaction or series of transactions is approved by a majority of
the Board of Directors of the Company, including the approval of a
majority of the independent, disinterested directors, as evidenced by a
resolution relating thereto of the Board of Directors filed with the
Trustee and (2) where such transaction or series of transactions
involves aggregate consideration in excess of $15 million, the Company
also delivers to the Trustee an opinion from a nationally recognized
investment banking firm as to the
-8-
<PAGE>
fairness of such transaction or series of transactions to the Company
or such Subsidiary from a financial point of view. Notwithstanding the
foregoing, this provision will not apply to (A) compensation or
employee benefit arrangements with any officer or director of the
Company; and (B) any transaction entered into in the ordinary course of
business by the Company, Subsidiary or Affiliate with a Subsidiary or
an Affiliate.
(iv) Provision of Financial Information. Whether or not the
Company is subject to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act"), the Company must, to the
extent permitted under the Exchange Act, file with the Securities and
Exchange Commission (the "SEC") the annual reports, quarterly reports
and other documents which the Company would have been required to file
with the SEC pursuant to such Section 13 or 15(d) (the "Financial
Statements") if the Company were so subject, on or prior to the
respective dates (the "Required Filing Dates") by which the Company
would have been required to file such documents. The Company must also
in any event: (i) within 15 days after each Required Filing Date (a)
transmit by mail to all Holders of Notes, as their names and addresses
appear in the Security Register, without cost to such Holders, copies
of the annual reports and quarterly reports which the Company would
have been required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act if the Company were subject to such Sections; and
(ii) if filing such documents by the Company with the SEC is not
permitted under the Exchange Act, promptly upon written request and
payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder of the Notes.
-9-
<PAGE>
Definitions. As used herein,
"Acquired Indebtedness" means (i) with respect to any Person that
becomes a Subsidiary (or is merged into the Company or any of its Subsidiaries)
or an Affiliate after the date of the Indenture, Indebtedness of such Person or
any of its subsidiaries existing at the time such Person becomes a Subsidiary
(or is merged into the Company or any of its Subsidiaries or Affiliates) that
was not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary (or merged into the Company or any of its Subsidiaries) or
an Affiliate; and (ii) with respect to the Company, any Subsidiary or any
Affiliate, any Indebtedness assumed by the Company, any Subsidiary or any
Affiliate in connection with the acquisition of any asset from another Person,
which Indebtedness was not incurred by such other Person in connection with, or
in contemplation of, such acquisition.
"Adjusted Consolidated Indebtedness" of the Company means the sum of
the aggregate principal amount of all Indebtedness of the Company, on a
consolidated basis, minus the aggregate principal amount of Indebtedness
described in clauses (ii), (iii) and (iv) of the definition of Permitted
Indebtedness and with respect to clause (v) of the definition of Permitted
Indebtedness, those amounts other than amounts described with respect to clause
(i) of the definition of Permitted Indebtedness.
"Adjusted Consolidated Tangible Net Worth" of the Company means, as of
any date all amounts that would be included under shareholders' equity
determined on a consolidated balance sheet of the Company and in accordance with
generally accepted accounting principles, minus the sum of (i) all intangible
assets, determined in accordance with generally accepted accounting principles
and (ii) minority interests in any joint
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<PAGE>
venture, partnership or other similar arrangement, whether in corporate,
partnership or other legal form, that is not a Subsidiary or Affiliate. For the
purposes of this definition, loan servicing rights of the Company or its
Subsidiaries and Affiliates are not considered intangible assets.
"Affiliate" of the Company means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company; or (ii) any other Person in which the Company has a
non-controlling ownership interest exceeding 50%. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of Voting Stock, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Beneficial Owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act, as in effect on the date of the
execution of the Indenture.
"Business Day" shall mean, in addition to the meaning given in the
Indenture, any day, other than a Saturday or Sunday, that is neither a legal
holiday nor a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights or other equivalents of or interests in
(however designated) equity of such person, including any Preferred Stock and if
such Person is a partnership, partnership interests (whether general or limited)
and any other interest or participation
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<PAGE>
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
"Cash Equivalents" means, at any time, (a) any evidence of Indebtedness
with a maturity of 180 days or less from the date of acquisition issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof); (b) certificates of
deposit, money market deposit accounts and acceptances with a maturity of 180
days or less from the date of acquisition of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $500 million; (c) commercial paper with a
maturity of 180 days or less from the date of acquisition 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 whose debt
rating, at the time as of which such investment is made, is at least "A-1" by
Standard & Poor's Ratings Services or at least "P-1" by Moody's Investors
Service, Inc. or rated at least an equivalent rating category of another
nationally recognized securities rating agency; (d) repurchase agreements and
reverse repurchase agreements having a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered into
with a financial institution meeting the qualifications described in clause (b)
above; (e) any security, maturing not more than 180 days after the date of
acquisition, backed by standby or direct pay letters of credit issued by a bank
meeting the qualifications described in clause (b) above; and (f) any security,
maturing not more than 180 days after the date of acquisition, issued or fully
guaranteed by any state, commonwealth, or territory of the
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<PAGE>
United States of America, or by any political subdivision thereof, and rated at
least "A" by Standard & Poor's Ratings Service or at least "A" by Moody's
Investors Service, Inc. or rated at least an equivalent rating category of
another nationally recognized securities rating agency.
"Change of Control" means any event or series of events by which (i)
any "Person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the Beneficial Owner, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of transactions, of
shares of Capital Stock of the Company entitling such Person to exercise 50% or
more of the total voting power of all shares of Voting Stock of the Company;
(ii) any consolidation of the Company with, or merger of the Company into, any
other Person, any consolidation of any other Person with, or merger of another
Person into, the Company, in any such event pursuant to a transaction in which
the Voting Stock of the Company outstanding immediately prior to the
effectiveness thereof is cancelled or changed into or exchanged for cash,
securities or other property (other than a transaction where (a) the outstanding
Voting Stock of the Company is changed into or exchanged for Voting Stock of the
surviving corporation that is not Disqualified Stock, and (b) the holders of the
Voting Stock of the Company immediately prior to such transaction own, directly
or indirectly, more than 50% of the total voting power of all shares of Voting
Stock of the surviving corporation immediately after such transaction); (iii)
any sale, conveyance, transfer or lease (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company to
another Person; (iv) the shareholders of the Company approve any plan of
liquidation or
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<PAGE>
dissolution of the Company; or (v) Continuing Directors cease to constitute at
least a majority of the Board of Directors of the Company.
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Rating Decline.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Dynex Capital, Inc.
"Continuing Director" means a director who either was a member of the
Board of Directors of the Company on the date that the Indenture became
effective or who became a director of the Company subsequent to such date and
whose election, or nomination for election by the Company's shareholders, was
duly approved by a majority of the Continuing Directors then on the Board of
Directors of the Company, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the entire Board of Directors of
the Company in which such individual is named as a nominee for director.
"Coverage Ratio" means the ratio of (i) the sum of (a) Income Available
for Interest Payments plus (b) any dividends payable to holders of any series or
classes of Preferred Stock to (ii) the sum of (a) Interest Expense plus (b) any
dividends payable to holders of any series or classes of Preferred stock.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any person, any capital
stock or partnership interest of such person which by the terms of such capital
stock or partnership interest (or by the terms of any security into which it is
convertible or for which it is
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<PAGE>
exchangeable or exercisable), upon the occurrence of any event or otherwise: (i)
matures or is mandatory redeemable, pursuant to a sinking fund obligation or
otherwise; (ii) is convertible into or exchangeable or exercisable for
Indebtedness or Disqualified Stock described by clause (i) or (iii) of this
definition; or (iii) is redeemable at the option of the holder thereof, in whole
or in part, in each case on or prior to the maturity of the relevant series of
Notes.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding Indebtedness that is
convertible into, or exchangeable for, the Company's Capital Stock and warrants,
options or other rights to acquire the Company's Capital Stock, including Stock
Appreciation Rights, issuable or granted under the Company's existing Stock
Incentive Plan).
"Hedging Obligations" means the obligations of the Company or its
Subsidiaries or Affiliates incurred in the normal course of its business under
(i) currency exchange or interest rate swap agreements, currency exchange or
interest rate cap agreements and currency exchange or interest rate collar
agreements and (ii) other agreements or arrangements designed to protect the
Company against fluctuations in currency exchange or interest rates.
"Income Available for Interest Payments" for any periods means Net
Income plus Interest Expense; minus (i) extraordinary gains and losses; (ii) any
other gains and losses that do not otherwise relate to the sale or
securitization of Assets in the ordinary course of business; and (iii) the
effect of any non-cash charge resulting from a change in accounting principles
in determining Net Income for such period.
-15-
<PAGE>
"Indebtedness" of the Company means any indebtedness of the Company,
whether or not contingent, in respect of: (i) borrowed money or other
indebtedness evidenced by bonds, notes, debentures or similar instruments; (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property owned by the Company, including but not
limited to collateralized bonds and collateralized repurchase agreements; (iii)
letters of credit or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable; (iv) the principal amount of all obligations
of the Company with respect to redemption, repayment or other repurchase of any
Disqualified Stock; or (v) any lease of property by the Company as lessee which
is reflected on the Company's consolidated balance sheet as a capitalized lease
in accordance with generally accepted accounting principles; provided, that, in
the case of items in indebtedness under (i) through (iii) above such
indebtedness shall be included only to the extent that any such items (other
than letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with generally accepted accounting
principles, and also shall include, to the extent not otherwise included, any
obligation of the Company to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Company), it being
understood that Indebtedness shall be deemed to be incurred by the Company,
whenever the Company or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof.
-16-
<PAGE>
"Interest Expense" means for any period, the sum of (a) interest and
related expense relating solely to Unsecured Indebtedness (including, but not
limited to, amortization of original issue discount or premium, as the case may
be, non-cash interest payments, the interest component of any deferred payment
obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings and net payments
(if any) pursuant to obligations under hedging instruments but excluding
amortization of deferred financing fees) of the Company on a consolidated basis
and (b) capitalized interest relating to Unsecured Indebtedness of the Company,
whether paid or accrued, all as determined on a consolidated basis and in
accordance with generally accepted accounting principles.
"Investments" means with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding advances to customers,
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
in another Person that are required by generally accepted accounting principles
to be classified on the balance sheet of the Company in the same manner as the
other investments included in this definition to the extent such transactions
involve the transfer of cash or other property.
"Net Income" means net income as presented in the consolidated
financial statements of the Company as determined in accordance with generally
accepted accounting principles, and is calculated before any deduction for
dividends on Preferred Stock.
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<PAGE>
"Permitted Indebtedness" means (i) all indebtedness of the Company or
its Subsidiaries or Affiliates at the time of closing of the issuance and sale
of the Notes, (ii) indebtedness under any loan repurchase agreements or
repurchase facilities entered into in the ordinary course of business with an
original maturity not to exceed 180 days, (iii) indebtedness under any warehouse
line of credit, letter of credit or similar facility secured primarily by loans
held for sale or securitization or tax-exempt bonds, (iv) collateralized bond
obligations that are non-recourse to the Company or its Subsidiaries or
Affiliates and (v) the incurrence by the Company or its Subsidiaries or
Affiliates of Indebtedness which serves to refund, refinance or restructure any
Indebtedness incurred as permitted under clauses (i)-(iv) above, or any
Indebtedness issued to so refund, refinance or restructure such Indebtedness
including additional Indebtedness incurred to pay premiums and fees in
connection therewith (the "Refinancing Indebtedness") prior to its respective
maturity, provided that, with respect to the refinancing of Indebtedness
referred to in clause (i) above, such Refinancing Indebtedness (a) does not
increase the principal amount of total Permitted Indebtedness at the time of the
issuance and sale of the Notes, (b) has a Weighted Average Life to Maturity at
the time such Refinancing Indebtedness is incurred which is not less than the
remaining Weighted Average Life to Maturity of Indebtedness being refunded or
refinanced, (c) to the extent that such Refinancing Indebtedness refinances
Indebtedness that is unsecured, such Refinancing Indebtedness is likewise
unsecured, or (d) to the extent such Refinancing Indebtedness refinances
Indebtedness subordinated or pari passu to the Notes, such Refinancing
Indebtedness is subordinated or pari passu to the Notes at least to the same
extent as the Indebtedness being refinanced or refunded.
-18-
<PAGE>
"Permitted Investments" means (a) any Investment in the Company or any
Wholly Owned Subsidiary; (b) any Investment in cash and Cash Equivalents; (c)
any Investment in financial assets not constituting Cash or Cash Equivalents
made in the ordinary course of business, including but not limited to portfolio
assets (such as collateral for collateralized bonds, mortgage securities, other
portfolio assets and available-for-sale investments), loans held for
securitization, all as determined in accordance with generally accepted
accounting principles; (d) any Investment by the Company, any Subsidiary or any
Affiliate in a Person if as a result of such Investment (i) such Person becomes
a Wholly Owned Subsidiary or (ii) such person, in one transaction or a series of
related transactions, is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary; (e) any Investment existing on the
date of the closing date for the sale and original issuance of the Notes under
the Indenture; (f) advances to employees not in excess of $1 million outstanding
at any one time in the aggregate; (g) any Investment acquired by the Company,
any Subsidiary or any Affiliate (i) in exchange for any other Permitted
Investment or (ii) as a result of a foreclosure by the Company, any Subsidiary
or any Affiliate with respect to any secured Investment; (h) Hedging
Obligations; (i) loans and advances to officers, directors and employees for
business related travel expenses, moving expenses and other similar expenses, in
each case, incurred in the ordinary course of business; and (j) Investments the
payment for which consists of Equity Interests of the Company or its
Subsidiaries or Affiliates (exclusive of Disqualified Stock).
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<PAGE>
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Preferred Stock" as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Rating Agencies" means both (i) Standard & Poor's Rating Services or
any successor ("S&P") and (ii) Moody's Investors Service, Inc. or any successor
("Moody's") or (iii) if S&P or Moody's or both shall not make a rating of the
Notes publicly available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Company, which shall be
substituted for S&P or Moody's or both, as the case may be.
"Rating Decline" means the occurrence of one of the following on, or
within 90 days after, the date of public notice of the occurrence of a Change of
Control or of the intention by the Company to effect a Change of Control: (a) a
downgrading in the rating by one of the Rating Agencies by one or more
gradations (each gradation for S&P being measured by a "+" or "-" and each
gradation for Moody's being measured by "1", "2" or "3" or their equivalent if
the gradation system used by the Rating Agency in question is changed) or (b)
the public announcement by one of the Rating Agencies that it has under
surveillance or review, with possible negative implications, its rating of the
Notes. In determining whether the rating of the Notes has decreased by one or
more gradations,
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<PAGE>
gradations within the rating categories of the Rating Agencies ("+" and "-" for
S&P; "1", "2" and "3" for Moody's, or the equivalent gradations for another
Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline
in a rating from BB+ to BB, as well as from BB- to B+, will constitute a
decrease of one gradation).
"Related Person" means (a) any Affiliate of the Company, (b) any Person
who directly or indirectly holds 5% or more of any class of Voting Stock of the
Company, (c) any Person who is an executive officer or director of the Company
and (d) any Affiliate of or any relative by blood, marriage or adoption not more
remote than first cousin of any such Person referred to in clause (b) or (c)
above.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" means any of the following actions by the
Company: (i) the declaration or payment of any dividends or the making of any
distribution on account of the Company's Equity Interests, including any
dividend or distribution payable in connection with any merger or consolidation
(other than (A) dividends or distributions by the Company payable in Equity
Interests (other than Disqualified Stock) of the Company or (B) dividends or
distributions by a Subsidiary or an Affiliate, so long as in the case of any
dividend or distribution payable on or in respect of any class or series of
securities issued by a Subsidiary or an Affiliate, as the case may be, the
Company, a Subsidiary or an Affiliate, as the case may be, receives at least
its pro rata share of such dividend or distribution in accordance with its
Equity Interests in such class or series of securities); (ii) the
purchase, redemption, defeasance or, otherwise, acquisition or retirement
for value of any Equity Interests of the Company, excluding the conversion
of any security into an Equity Interest (other than Disqualified Stock) or
redemption thereof with an Equity Interest (other than
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Disqualified Stock); (iii) the making of any principal payments on, or
redemption, repurchase, defeasance or, otherwise, acquisition or retirement for
value (unless with an Equity Interest other than Disqualified Stock) in each
case, prior to any scheduled repayment, or maturity, of any Subordinated
Indebtedness existing on the date of the Indenture; or (iv) the making of any
Restricted Investment.
"Subordinated Indebtedness" means with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes.
"Subsidiary" means a corporation, a majority of the outstanding Voting
Stock, of which is owned directly or indirectly, by the Company or by one or
more other Subsidiaries of the Company.
"Unsecured Indebtedness" as of any date means the sum of any
Indebtedness of the Company that is not secured or collateralized by any
mortgage, lien, charge, pledge or other security interest, determined on a
consolidated basis in accordance with generally accepted accounting principles,
excluding (i) any amounts owed under accrued interest payable and (ii) any
letters of credit that are secured or will be secured by other than assets of
the Company in the event such letters of credit are drawn upon.
"Voting Stock" means all outstanding classes of Capital Stock of any
entity entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the
quotient obtained by dividing (i) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or
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<PAGE>
similar payment with respect to such Disqualified Stock, as the case may be,
multiplied by the amount of such payment, by (ii) the sum of all such payments.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person 95% of the outstanding Capital Stock or other ownership interest of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
11. The Senior Notes shall be issued as Registered Securities only in
the form of a permanent global note which will be deposited with the Depository
Trust Corporation and shall be exchangeable only as provided in Section 305 of
the Indenture. The form of the Senior Notes is attached hereto.
12. The provisions of Sections 1402 and 1403 of the Indenture with
respect to defeasance and discharge and covenant defeasance, respectively, shall
be applicable to the Senior Notes without modification.
13. The Company will not pay any Additional Amounts in respect of the
Senior Notes.
14. Repurchase at Option of Holders Upon a Change of Control Triggering
Event. Upon the occurrence of a Change of Control Triggering Event, each Holder
of Senior Notes shall have the right, at the Holder's option, to require the
Company to repurchase all of such Holder's Senior Notes, or any portion thereof
that is an integral multiple of $1,000, for cash on the date (the "Repurchase
Date") that is not more than 45 days after the date of the Company Notice (as
defined below), which date shall be set so as to comply with all applicable
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") including regulations thereunder regarding prompt
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payment to Holders of the Senior Notes, at a price equal to 101% of the
principal amount of the Senior Notes to be repurchased (the "Repurchase Price"),
together with the accrued interest to the Repurchase Date.
Within 30 days after the occurrence of a Change of Control Triggering
Event, the Company shall mail to all Holders of record of the Senior Notes a
notice (the "Company Notice") of the occurrence of such Change of Control
Triggering Event and of the repurchase right arising as a result thereof. The
Company shall deliver a copy of the Company Notice to the Trustee and cause a
copy or a summary of such notice to be published in a newspaper of general
circulation in the City of New York. To exercise the repurchase right a Holder
of Senior Notes shall deliver on or before the 30th day after the date of the
Company Notice a written notice (which notice shall be irrevocable except as
otherwise required by applicable law) to the Trustee of the Holder's exercise of
such right, specifying the amount of Senior Notes owned by the Holder for which
the right is being exercised, duly signed by the Holder. The Company will comply
with all applicable tender offer rules under the Exchange Act in the event that
a Change of Control Triggering Event occurs under these Change of Control
provisions and the Company is required to repurchase Senior Notes as described
above.
July 14 1997 /s/ THOMAS H. POTTS
--------------------------
Thomas H. Potts, President
/s/ LYNN K. GEURIN
--------------------------
Lynn K. Geurin, Secretary
-24-
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS A
NOMINEE OF THE DEPOSITORY TRUST COMPANY ("DTC"). THIS GLOBAL SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES HEREINAFTER DESCRIBED AND MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC, BY A NOMINEE OF DTC
TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR TO
DTC OR A NOMINEE OF SUCH SUCCESSOR TO DTC.
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS GLOBAL SECURITY
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON EXCEPT PURSUANT TO THE
PROVISIONS HEREOF.
Unless this Security is presented by an authorized representative of
The Depository Trust Company, a New York corporation, to Dynex Capital, Inc. or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
DYNEX CAPITAL, INC.
7.875% SENIOR NOTE DUE JULY 15, 2002
No. 1 CUSIP No. 26817Q AA 8
Dynex Capital, Inc., a corporation duly organized and existing under
the laws of the Commonwealth of Virginia (herein called the "Company," which
term includes any successor corporation to the Indenture hereinafter referred
to), for value received, hereby promises to pay to CEDE & CO., as a nominee of
The Depository Trust Company ("DTC"), or its registered assigns, the principal
sum of ONE HUNDRED MILLION DOLLARS ($100,000,000) on July 15, 2002 and to pay
interest thereon semi-annually in arrears on January 15 and July 15 in each
year, commencing January 15, 1998, and at Maturity (each, an "Interest Payment
Date") at the rate of 7.875% per annum until the principal hereof is paid or
made available for payment. This Global Security shall bear interest from the
most recent Interest Payment Date to which interest in respect hereof has been
<PAGE>
2
paid, unless no interest has been paid on this Global Security, in which case
from July 15, 1997. Any payment of principal or interest that is due and payable
shall accrue interest, to the extent lawful, at the rate borne by this Global
Security from the day after the date on which such payment becomes due and
payable to the date payment has been made, compounded on a semi-annual basis.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture referred to on the reverse hereof, be paid to the Person in whose name
this Global Security is registered on the Security Register for the Securities
at the close of business on the Regular Record Date immediately preceding such
Interest Payment Date. The Regular Record Date with respect to any Interest
Payment Date will be January 1 or July 1, as the case may be, immediately
preceding such Interest Payment Date. Interest on this Global Security will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment shall be made on the next Business
Day as if it were made on the date such payment was due and no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date or the Maturity Date, as the case may be and as provided in the
Indenture.
Payment of the principal, interest and Make-Whole Amounts, if any, on
this Global Security will be made at the corporate trust office of the Trustee,
which as of July 21, 1997, is located at 600 Travis Street, 8th Floor, Houston,
Texas 77002, or, at the option of the Holder, at the office of the Trustee in
The City of New York, which as of July 21, 1997, is Texas Commerce Trust
Company, 55 Water Street, North Building, Room 234, Window 20, New York, New
York 10041, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.
The indebtedness represented by this Global Security is, to the extent
provided in the Indenture, senior, unsecured indebtedness of the Company and
ranks prior to all subordinated indebtedness of the Company and pari passu with
all other unsecured indebtedness of the Company outstanding on July 21, 1997.
Reference is hereby made to the further provisions of this Global
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Global
<PAGE>
3
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Company has caused this instrument to be duly
executed under its corporate seal.
Dated: July 21, 1997
DYNEX CAPITAL, INC.
By: ______________________________
Name:
Title:
Attest:
__________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein
and referred to in the within-mentioned Indenture.
TEXAS COMMERCE BANK NATIONAL
BANK ASSOCIATION, as Trustee
By: ______________________________
Authorized Signatory
Date: July 21, 1997
<PAGE>
[REVERSE OF SECURITY]
DYNEX CAPITAL, INC.
1. Indenture. This Global Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an Indenture, dated as of July 14, 1997 (the
"Indenture"), by and between the Company and Texas Commerce Bank National
Association, as trustee (herein called the "Trustee" which term includes any
successor trustee under the Indenture). The terms of the Senior Securities
include those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbb)
as in effect on the date of the Indenture. Reference is hereby made to the
Indenture and all indentures supplemental thereto and to the Trust Indenture Act
for a statement of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. All terms used in this Global Security and not
otherwise defined herein which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
This Global Security is one of the series designated on the face hereof
limited (except as provided in the Indenture) in aggregate principal amount to
$100,000,000 (herein called the "Senior Securities").
No reference herein to the Indenture and no provision of this Global
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
interest, if any, on this Global Security at the times, place and rate, if any,
and in the coin or currency, herein prescribed.
2. Redemption. The Senior Securities may be redeemed at any time at the
option of the Company, in whole or from time to time in part, at a redemption
price payable in U.S. dollars equal to the sum of: (i) the principal amount of
the Senior Securities being redeemed plus accrued interest thereon to the
redemption date; and (ii) the Make-Whole Amount (as defined in the Indenture),
if any, with respect to such Senior Securities (the "Redemption Price").
If notice of redemption has been given as provided in the Indenture and
funds for the redemption of any Senior Securities called for redemption shall
have been made available on the redemption date referred to in such notice, such
Senior Securities will cease to bear interest on the date fixed for such
redemption specified in such notice and the only right of the Holders of such
Senior Securities from and after the redemption date will be to receive payment
<PAGE>
2
of the Redemption Price upon surrender of such Senior Securities in accordance
with such notice. Notice of any optional redemption of any Senior Securities
will be given to Holders at their addresses, as shown in the Security Register
for the Senior Securities, not more than 60 nor less than 30 days prior to the
date fixed for redemption as defined in the Indenture. The notice of redemption
will specify, among other items, the Redemption Price and principal amount of
the Senior Securities held by such Holder to be redeemed. If less than all the
Senior Securities are to be redeemed at the option of the Company, the Company
will notify the Trustee at least 60 days prior to giving notice of redemption
(or such shorter period as may be satisfactory to the Trustee) of the aggregate
principal amount of Senior Securities to be redeemed and their redemption date.
The Trustee shall select, in such manner as it shall deem fair and appropriate,
the Senior Securities to be redeemed in whole or in part.
In the event of redemption of any Senior Securities in part only, a new
Senior Security or Securities shall be issued in the name of the Holder thereof
in principal amount equivalent to the unredeemed portion of the partially
redeemed Senior Security, and the Senior Security to be redeemed in part shall
be cancelled.
3. Repurchase at Option of Holders Upon a Change of Control Triggering
Event. In accordance with the procedures set forth in the Indenture, upon the
occurrence of a Change of Control Triggering Event (as defined in the
Indenture), each Holder of Senior Securities will have the right, at such
Holder's option, to require the Company to repurchase all of such Holder's
Senior Securities, or any portion thereof that is an integral multiple of
$1,000, for cash at a repurchase price equal to 101% of the principal amount of
the Senior Securities to be repurchased, together with accrued interest to the
repurchase date.
4. Satisfaction and Discharge. The Indenture contains provisions for
the satisfaction and discharge of the entire indebtedness of the Senior
Securities upon compliance by the Company with certain conditions set forth in
the Indenture.
5. Defeasance. The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company under the Senior Securities
and (b) certain restrictive covenants and related defaults and Events of
Default, in each case upon compliance by the Company with certain conditions set
forth in the Indenture.
<PAGE>
3
6. Defaults and Remedies. If an Event of Default with respect to the
Senior Securities shall occur and be continuing, then the Trustee or the Holders
of not less than 25% in the aggregate principal amount of the outstanding Senior
Securities may declare the principal of the Senior Securities and the accrued
interest thereon, if any, to be due and payable in the manner and with the
effect provided in the Indenture.
7. Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment or supplementing thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Senior Securities at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in principal amount of
all outstanding Securities affected by such amendment, supplement or
modification. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Senior Securities outstanding,
on behalf of the Holders of all the Senior Securities, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and the consequences of any such defaults. Any such consent
or waiver shall be conclusive and binding upon the Holders and upon all future
Holders of this Global Security and of any Senior 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 Global
Security.
8. Denominations, Transfer and Exchange. The Senior Securities are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof (except for Senior Securities issued in global
form, which may be of any denomination).
This Global Security shall be exchangeable only as provided in this
paragraph and as provided in the Indenture. This Global Security may be
transferred, in whole but not in part, only to a nominee of DTC, or by a nominee
of DTC to DTC, or to a successor to DTC for this Global Security selected or
approved by the Company or to a nominee of such successor to DTC. This Global
Security shall be exchangeable for Senior Securities registered in the names of
Persons other than DTC or its nominee if (x) DTC notifies the Company that it is
unwilling or unable to continue as depositary for the Senior Securities or at
any time ceases to be a clearing agency registered as such under the Securities
Exchange Act of 1934, as amended, and the successor depositary for such series
is not appointed by the Company within 90 days after the Company receives notice
or becomes aware of such unwillingness, inability or ineligibility, (y) there
shall have occurred and be continuing an Event of Default and the beneficial
owners representing a majority in principal amount of the Senior
<PAGE>
4
Securities represented by this Global Security advise DTC to cease acting as
depositary for such Senior Securities, or (z) the Company, in its sole
discretion, notifies DTC in writing at any time that all Senior Securities (but
not less than all) shall no longer be represented by this Global Security.
Senior Securities so issued in exchange for this Global Security shall be of the
same series, having the same terms as this Global Security, and in the aggregate
have the same principal amount as this Global Security and shall be registered
in such names as DTC shall direct.
As provided in the Indenture and subject to certain limitations set
forth therein, every Senior Security presented or surrendered for registration
of transfer or for exchange or redemption shall (if so required by the Company
or the Security Registrar) be duly endorsed, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Senior Securities, of any authorized
denominations and of a like aggregate principal amount, and containing identical
terms and provisions as such Senior Security, will be issued to the designated
transferee or transferees.
No service charge shall be made for any such registration of transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith, as provided in and
subject to the limitations set forth in the Indenture.
9. Persons Deemed Owners. Prior to due presentment of any Senior
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Senior
Security is registered as the owner thereof for all purposes, whether or not
such Senior Security be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
10. No Recourse Against Others. No recourse shall be had, directly or
indirectly, for the payment of the principal or interest, if any, on the Senior
Securities, or for any claim based thereon, or otherwise in respect of any
Senior Security, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, or against any past, present or
future stockholder, director or officer, as such, of the Company or the Trustee,
or of any successor of the Company or the Trustee, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being expressly waived and released.
<PAGE>
5
11. GOVERNING LAW. THIS GLOBAL SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
July 14, 1997
Dynex Capital, Inc.
10900 Nuckols Road
Glen Allen, VA 23060
Re: Registration Statement on Form S-3
(Reg. No. 333-10783)
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Dynex Capital, Inc., a Virginia corporation
(the "Company"), in connection with its proposed public offering of $100,000,000
aggregate principal amount of Notes pursuant to a Registration Statement filed
on Form S-3 (Registration No. 333-10783) ("Registration Statement"). On July 14,
1997 the Company filed a Prospectus and a Prospectus Supplement thereto (the
"Prospectus") with the Securities and Exchange Commission with respect to the
offer and sale of the Notes.
In that connection, we have examined originals or copies of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate for purposes of this opinion including the Articles of
Incorporation, as amended, Bylaws of the Company, the Indenture governing the
Notes and the proposed Board of Directors resolutions which establish the terms
of the Notes. We have assumed without independent verification the genuineness
of signatures, the authenticity of documents, and the conformity with originals
of copies.
Based on the foregoing, we are of the opinion that the Notes being sold
by the Company, when issued and sold in accordance with the terms of the
Underwriting Agreement in substantially the same form filed as Exhibit 1.1 to
the Form 8-K filed by the Company with Securities and Exchange Commission in
connection with the offer and sale of the Notes (the "Form 8-K"), will be
binding obligations of the Company.
<PAGE>
Dynex Capital, Inc.
July 14, 1997
Page 2
We are members of the Bars of the State of Maryland and the
Commonwealth of Virginia and the opinions expressed herein are limited to the
corporate laws of such States pertaining to such matters as the issuance of
securities and the incurrence of indebtedness, but not including the
"securities" or "Blue Sky" laws of such States.
You may rely on this opinion in connection with the sale of the Notes
pursuant to the Registration Statement and Prospectus. No other person may rely
on this opinion without our prior written consent.
We hereby consent to the use of this opinion as an exhibit to the Form
8-K and incorporation by reference thereof into the Registration Statement and
to the reference to our firm under "Legal Opinions" in the Prospectus and "Legal
Matters" in the Preliminary Prospectus Supplement" comprising a part of the
Registration Statement.
By giving the foregoing consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
July 16, 1997
Dynex Capital, Inc.
10900 Nuckols Road
Glen Allen, Virginia 23060
Re: Tax Opinion
-----------
Ladies and Gentlemen:
We have acted as counsel to Dynex Capital, Inc. ("Dynex"), in
connection with the preparation of a registration statement (the "Registration
Statement") to be filed with the Securities and Exchange Commission with respect
to an offering of Senior Notes (the "Notes") by Dynex. You have requested our
opinion regarding Dynex's qualification as a real estate investment trust
("REIT") pursuant to sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), for its 1996 taxable year. Unless otherwise
stated, all section references herein are to the Code. In addition, you have
requested our opinion with respect to whether Dynex's organization and
contemplated method of operations are such as to enable it to continue to
qualify as a REIT for its 1997 taxable year and subsequent taxable years.
Dynex has a number of wholly-owned subsidiaries ("qualified REIT
subsidiaries"), the income, liabilities, and assets of which are consolidated
with those of Dynex for federal income tax purposes. This letter refers to
Dynex, together with such subsidiaries, as "Consolidated Dynex." In connection
with the opinions rendered below, we have examined the following:
1. The Articles of Incorporation of Dynex, as amended;
2. The bylaws of Dynex as restated on June 22, 1992;
3. Consolidated Dynex's federal income tax returns for its taxable
years 1994 and 1995; and
4. The prospectus included in the registration statement to which this
letter will be filed as an exhibit.
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 2
In connection with the opinions rendered below, we have assumed that:
1. Each of the documents referred to above has been duly authorized,
executed, and delivered, is authentic, if an original, or accurate, if a copy,
and has not been amended;
2. During Consolidated Dynex's 1997 taxable year and subsequent taxable
years, it will continue to conduct its affairs in a manner that will make the
representations set forth below true for such years;
3. Neither Dynex nor any subsidiary of Dynex will make any amendments
to its organizational documents after the date of this opinion that would affect
Consolidated Dynex's qualification as a REIT for any taxable year; and
4. No actions will be taken by Consolidated Dynex or any subsidiary of
Dynex after the date hereof that would have the effect of altering the facts
upon which the opinions set forth below are based.
Furthermore, we have relied upon the correctness of the following
representations of Consolidated Dynex and its authorized representatives that,
at all times relevant hereto:
From the date Dynex and Consolidated Dynex were organized through the
date hereof:
1. Neither Dynex nor any subsidiary thereof has ever been subject by
law to the supervision or examination by state, or federal authorities having
supervision over banking institutions.
2. Neither Dynex nor any subsidiary thereof has ever been a savings
institution chartered or supervised as a savings and loan or similar association
under federal or state law.
3. Neither Dynex nor any subsidiary thereof has ever been a small
business investment company operating under the Small Business Investment Act of
1958.
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 3
4. Neither Dynex nor any subsidiary thereof was created by or pursuant
to an act of a state legislature for purposes of promoting, maintaining, and
assisting the economy and industry within a state on a regional or state-wide
basis by making loans to be used in trades or businesses which would generally
not be made by banks within such region or state in the ordinary course of
business.
5. Neither Dynex nor any subsidiary thereof was an insurance company to
which Subchapter L of the Code applies.
6. Beneficial ownership of the shares of Dynex (the "Shares") was held
by 100 or more persons.
7. Dynex is a self-managed entity and its Shares, subject to certain
excess share limitations, are transferable.
8. At no time during the last half of any taxable year was more than
50% in value of the outstanding stock of Dynex owned, directly or indirectly, by
or for five or fewer individuals. For this purpose, the Shares are treated as
owned indirectly by or for an individual if such individual would be treated as
owning such Shares under section 544 as modified by section 856(h).
9. Consolidated Dynex's election to be treated as a REIT was properly
made, has not been revoked, and Dynex has not been notified that such election
has been terminated.
10. At the close of each quarter of each taxable year seventy-five
percent (75%) or more of the value of Consolidated Dynex's total assets
consisted of cash and cash items (including receivables arising in the ordinary
course of Consolidated Dynex's operations), government securities, and real
estate assets (including interests in real property, interests in mortgages on
real property, and interests in REMICs to the extent provided in section
856(c)(6)(E)), and shares or transferable certificates of beneficial interest in
other qualified REITs) (the "75% test").
11. With respect to any consumer installment loans on manufactured
housing, which are assets of Consolidated Dynex as described in paragraph 10
immediately
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 4
above, that the associated manufactured housing units are secured to a site and
are inherently permanent structures.
12. Not more than five percent (5%) of the value of Consolidated
Dynex's total assets consisted of securities of any one issuer, unless such
securities are treated as real estate assets under the 75% test.
13. The only stock that has ever been held by Consolidated Dynex in
Dynex Holding, Inc., SMFC Holding, Inc., and Saxon Holding, Inc. (the "non-REIT
subsidiaries"), is nonvoting preferred stock and Consolidated Dynex does not
have any agreement with the holders of the voting stock of the non-REIT
subsidiaries or the directors of the non-REIT subsidiaries as to (i) who will be
elected as a director of a non-REIT subsidiary; (ii) who can own the voting
stock of a non-REIT subsidiary; or (iii) who can or will serve as an officer of
a non-REIT subsidiary. In addition, Consolidated Dynex does not own, and has not
owned, more than ten percent (10%) of the outstanding voting securities of any
other corporation (or entity treated as a corporation for federal income tax
purposes) at any point in time since the formation of Dynex, excluding for
purposes of this representation such securities treated as real estate assets
under the 75% test.
14. Consolidated Dynex did not receive or accrue any rents (other than
an immaterial amount received from sublease tenants) from either real or
personal property.
15. Consolidated Dynex did not receive or accrue as income, directly or
indirectly, any interest or other amount determined in whole or in part with
reference to the income or profits derived by any person (excluding interest (A)
based solely on a fixed percentage or percentages of receipts or sales or (B) to
the extent described in section 856(f)(2)).
16. Consolidated Dynex did not own any mortgage whose terms entitled it
to receive a specified portion of any gain realized on the sale or exchange of
the real property securing the mortgage or any gain that would be realized if
such property were sold on a specified date (i.e., shared appreciation
mortgages).
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 5
17. At least seventy-five percent (75%) of Consolidated Dynex's gross
income (excluding gross income from prohibited transactions) for any taxable
year was derived from:
(a) interest on obligations secured by mortgages (including
consumer installment loans on manufactured housing) on real property or on
interests in real property,
(b) gain from the sale or other disposition of real property
(including interests in real property and interests in mortgages on real
property) which was not held as inventory or primarily for sale to customers in
the ordinary course of its trade or business,
(c) dividends or other distributions on, and gain (other than gain
from prohibited transactions) from the sale or other disposition of,
transferable shares (or transferable certificates of beneficial interest) in
other REITs,
(d) abatements and refunds of taxes on real property,
(e) income and gain derived from foreclosure property,
(f) amounts (other than amounts the determination of which depends
in whole or in part on the income or profits of any person) received or accrued
as consideration for entering into agreements (i) to make loans secured by
mortgages on real property or on interests in real property, or (ii) to purchase
or lease real property (including interests in real property and interests in
mortgages on real property),
(g) gain from the sale or other disposition of real estate assets
which is not a prohibited transaction solely by reason of section 857(b)(6), and
(h) income which was attributable to stock or debt instruments
acquired through the temporary investment of new capital and received or accrued
during the one year period beginning on the date on which Consolidated Dynex
received such capital.
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 6
18. At least ninety-five percent (95%) of Consolidated Dynex's gross
income (excluding gross income from prohibited transactions) for any taxable
year was derived from:
(a) sources which satisfy the seventy-five percent (75%) income
test described in paragraph 17 above,
(b) dividends,
(c) interest,
(d) payments with respect to bona fide interest rate swap, cap, or
floor agreements entered into to hedge any variable interest rate indebtedness
incurred or to be incurred to acquire or carry real estate assets ("interest
rate agreements"), and
(e) gain from the sale or other disposition of stocks and
securities (including interest rate agreements).
19. Less than thirty percent (30%) of Consolidated Dynex's gross income
for any taxable year was derived from the sale or other disposition of:
(a) stock or securities (including interest rate agreements) held
for less than one year,
(b) property in a transaction which is a prohibited transaction,
and
(c) real property (including interests in real property and
interests in mortgages on real property) held for less than four years other
than (i) property compulsorily or involuntarily converted within the meaning of
section 1033, and (ii) property which is foreclosure property.
20. For each taxable year, the deduction for dividends paid during the
taxable year (determined without regard to capital gains dividends) equaled or
exceeded (i) the sum of ninety-five percent (95%) of Consolidated Dynex's real
estate investment trust taxable income for the taxable year (determined without
regard to the deduction for
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 7
dividends paid and excluding any net capital gains), and ninety-five percent
(95%) of the excess of the net income from foreclosure property over the tax
imposed on such income by section 857(b)(4)(A), minus (ii) any excess noncash
income as determined under section 857(e).
21. All distributions paid by Consolidated Dynex with respect to its
Shares were pro rata with no preference to any share of stock as compared to any
other shares of the same class and with no preference (other than as required
under the Amended Articles of Incorporation of Dynex between its common and
preferred stock) to one class of stock as compared to another class.
22. As of the close of any taxable year, Consolidated Dynex had no
earnings and profits accumulated in any non-REIT year.
23. During its taxable year 1996, Dynex has had at least 2000
shareholders of record of its shares on any dividend record date. In prior
taxable years, Dynex had at least 201 shareholders of record of its shares as of
any dividend record date.
24. Promptly after the end of each taxable year, Dynex demanded written
statements from shareholders of record who on any dividend record date owned 5%
(or 1%, as the case may be), or more of the Shares disclosing (i) the actual
owners of the shares (those persons required to include Dynex's dividends in
gross income), (ii) and the maximum number of Shares (including the number and
face value of securities convertible into Shares) that were considered owned,
directly or indirectly (within the meaning of section 544 as modified by section
856(h)) by each of the actual owners of the Shares.
25. Dynex maintained the information received with respect to such
written demands in its filing district available for inspection by the Internal
Revenue Service at any time.
26. Dynex maintained sufficient records to show that it complied with
the 75% test described at paragraph 10 above for all taxable years in its filing
district available for inspection by the Internal Revenue Service at any time.
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 8
27. Dynex and the plan administrator under Dynex's Dividend
Reinvestment and Stock Purchase Plan (the "Plan") have administered the Plan in
accordance with the terms of the prospectus describing the Plan.
28. Dynex has owned all the stock of each qualified REIT subsidiary at
all times during the period of such corporation's existence.
29. During its 1997 taxable year and subsequent taxable years,
Consolidated Dynex expects to continue to satisfy all of the representations
described in paragraphs 1 through 27 above.
As used herein, the term "prohibited transaction" means the sale or
other disposition of property held as inventory or primarily for sale to
customers in the ordinary course of Consolidated Dynex's trade or business. The
term "foreclosure property" means any real property (including interests in real
property) and any personal property incident to such real property, acquired by
Consolidated Dynex as the result of its having bid in such property at
foreclosure, or having otherwise reduced such property to ownership or
possession by agreement or process of law after there was a default (or default
was imminent) on a lease of such property or on an indebtedness which such
property secured. Such term does not include property acquired by Consolidated
Dynex as a result of indebtedness arising from the sale or other disposition of
property held as inventory or for sale in the ordinary course of Consolidated
Dynex's trade or business which was not originally acquired as foreclosure
property.
Based solely on the documents, assumptions, and representations set
forth above, and without further investigation, we are of the opinion that
Consolidated Dynex qualified as a REIT in its 1996 taxable year and that its
organization and contemplated method of operation are such that it will continue
to so qualify for its 1997 taxable year and subsequent taxable years. Except as
described herein we have performed no further due diligence and have made no
efforts to verify the accuracy or genuineness of the documents, assumptions, and
representations set forth above.
The foregoing opinion is based on current provisions of the Code and
Treasury Regulations, published administrative interpretations thereof, and
published court
<PAGE>
Dynex Capital, Inc.
July 16, 1997
Page 9
decisions. The Internal Revenue Service has not yet issued Regulations or
administrative interpretations with respect to various provisions of the Code
relating to REIT qualification. No assurance can be given that the law will not
change in a way that will prevent Consolidated Dynex from qualifying as a REIT
or that the Internal Revenue Service will not disagree with this opinion.
The foregoing opinion is limited to federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax matters or any issues arising under the tax laws of any state or
locality. We undertake no obligation to update this opinion after the date of
this letter. This opinion letter is solely for the information and use of the
addressee and may not be relied upon, quoted, or otherwise used for any purpose
by any other person without our express written consent.
We consent to the references to this firm in the prospectus filed with
the Registration Statement and to the filing of this opinion as an exhibit to
the Registration Statement in which the prospectus is included. We do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
Consent of Independent Auditors
Board of Directors
Dynex Capital, Inc.
We consent to the use of our report incorporated in the registration statement
on Form S-3 (Registration No. 333-10783) and to the reference to our firm under
the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Richmond, Virginia
July 14, 1997
1 PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Cass English
July 15, 1997 804-217-5800
DYNEX CAPITAL, INC. REPORTS
SECOND QUARTER 1997 EARNINGS
Dynex Capital, Inc. (NYSE: DX) today reported net income of $18.4
million, or $0.35 per common share for the second quarter of 1997, compared to
$18.3 million, or $0.35 per common share for the first quarter of 1997, and
$25.9 million, or $0.58 per common share for the second quarter of 1996. The
second quarter of 1996 included a one-time $18.9 million gain from the sale of
the Company's single-family operations. Prior period per share information has
been adjusted for the Company's 2-for-1 stock split, effective May 5, 1997. The
Company previously declared a dividend of $0.335 per common share for the second
quarter.
In commenting on the Company's results, Thomas H. Potts, President,
stated, "The second quarter of 1997 produced solid results for the Company. Net
interest margin exceeded $21 million, a record for one quarter, in spite of the
tightening by the Federal Reserve in March. The Company issued $984 million in
collateralized bonds during the quarter, which reduced our short-term borrowings
and provides the basis for future net interest margin growth over the balance of
the year. The mark-to-market on the Company's investment portfolio increased to
a record $77 million primarily as a result of the issuance of the collateralized
bonds. We continue to feel that the quality of our income remains strong."
During the second quarter, the Company's fundings totaled $833 million,
consisting of $38 million in multi-family/commercial loans, $69 million in
manufactured housing loans, $703 million in bulk purchases of single-family
loans, and $23 million through its specialty finance division which concentrates
on loan products designed for home builders and single-family homeowners.
Mr. Potts noted, "Multi-family lending volumes increased
during the second quarter but were below expectations due to delays in
construction and lease-up of the corresponding apartment projects. The delays
are temporary and we expect production volumes to be strong for the remainder of
the year." The Company currently has $533 million in commitments outstanding to
originate multi-family loans over the next 18 months. The Company continues its
expansion into other complementary markets, funding $14 million in commercial
real estate loans during the quarter. The Company expects to securitize
approximately $300 million of multi-family and commercial loans during the
fourth quarter of this year.
Regarding the Company's manufactured housing production operations,
production volume increased from $29 million in the first quarter to $69 million
in the second quarter. The Company plans to introduce loan programs for
"land/home" financing during the third quarter. Mr. Potts commented, "We are
steadily building our infrastructure in manufactured housing lending. We have
established ourselves in all our targeted markets, and will shortly offer a full
selection of loan programs for our customers. We successfully securitized over
$100 million of manufactured housing loans during the second quarter, and
delinquencies are at low levels. We expect continued growth in our manufactured
housing lending volume."
<PAGE>
Regarding the outlook for the balance of 1997, Mr. Potts remarked, "We
are positive about our prospects for the balance of the year. We expect
increasing production in our multi-family/commercial, manufactured housing
lending and specialty finance areas. We should also see continued growth in our
net interest margin as a result of the recent growth in our investment portfolio
and our expectation of a stable interest rate environment."
Dynex Capital, Inc. is a mortgage and consumer finance company which
uses its production operations to create investments for its portfolio. The
Company's primary production operations include the origination of mortgage
loans secured by multi-family and commercial real estate properties and the
origination of loans secured by manufactured homes. The Company has elected to
be treated as a real estate investment trust (REIT) for federal income tax
purposes. The Company's strategy is to create investments from its production
operations at a lower effective cost than if assets were purchased in the
market, and as a result, steadily increase its net interest margin income and
earnings per share over time.
Note: This document contains "forward-looking statements"(within the meaning of
the Private Securities Litigation Act of 1995) that inherently involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of unforeseen
external factors. As discussed in the Company's filings with the SEC, these
factors may include, but are not limited to, changes in general economic
conditions, fluctuations in interest rates, increases in costs and other general
competitive factors.
# # #
<PAGE>
DYNEX CAPITAL, INC.
Consolidated Balance Sheets
(Thousands except share data)
June 30, December 31,
1997 1996
---------- ------------
ASSETS
Investments:
Portfolio assets:
Collateral for collateralized bonds $3,338,916 $2,702,294
Mortgage securities 1,181,424 892,037
Other 135,748 96,236
Loans held for securitization 307,392 265,537
---------- ----------
4,963,480 3,956,104
Cash 7,910 11,396
Accrued interest receivable 8,632 8,078
Other assets 58,778 11,879
---------- ----------
$5,038,800 $3,987,457
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Collateralized bonds $3,110,678 $2,519,708
Repurchase agreements 661,310 756,448
Notes payable 306,594 177,124
Payable for investments purchased 393,844 --
Accrued interest payable 2,501 2,717
Other liabilities 31,542 27,843
---------- ----------
4,506,469 3,483,840
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share,
50,000,000 shares authorized:
9.75% Cumulative Convertible Series A
1,481,160 and 1,552,500 issued 33,831 35,460
and outstanding, respectively
9.55% Cumulative Convertible Series B
2,061,243 and 2,196,824 issued 48,251 51,425
and outstanding, respectively
9.73% Cumulative Convertible Series C
1,839,000 and 1,840,000 issued 52,711 52,740
and outstanding, respectively
Common stock, par value $.01 per share,
50,000,000 shares authorized,
42,822,154 and 41,307,186 issued
and outstanding, respectively 428 414
Additional paid-in capital 311,080 291,430
Net unrealized gain on investments 77,006 64,402
available-for-sale
Retained earnings 9,024 7,746
---------- ----------
532,331 503,617
---------- ----------
$5,038,800 $3,987,457
========== ==========
<PAGE>
DYNEX CAPITAL, INC.
Consolidated Statements of Operations
(Thousands except share data)
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
1997 1996 1997 1996
-------------- -------------- -------------- ----------------
<S> <C>
Interest income:
Collateral for collateralized bonds $ 45,433 $ 32,134 $ 93,895 $ 55,643
Mortgage securities 21,598 35,419 41,279 71,956
Other portfolio assets 2,887 999 5,249 1,667
Loans held for securitization 11,113 9,774 17,669 21,225
------------- ------------- ------------- -------------
81,031 78,326 158,092 150,491
------------- ------------- ------------- -------------
Interest and related expense:
Collateralized bonds 38,266 26,306 77,618 44,079
Repurchase agreements 15,363 29,856 27,691 62,960
Notes payable 4,191 2,337 7,391 4,845
Other 413 1,135 969 1,696
Provision for losses 1,420 400 2,415 800
------------- ------------- ------------- -------------
59,653 60,034 116,084 114,380
------------- ------------- ------------- -------------
Net interest margin 21,378 18,292 42,008 36,111
Gain on sale of single-family operations - 18,899 - 18,899
Gain on sale of assets, net of associated costs 2,201 (6,397) 4,688 (6,196)
Other income 574 407 986 1,023
General and administrative expenses (5,769) (5,304) (10,988) (11,255)
------------- ------------- ------------- -------------
Net income $ 18,384 $ 25,897 $ 36,694 $ 38,582
============= ============= ============= =============
Net income 18,384 25,897 36,694 38,582
Dividends on preferred stock (3,716) (2,193) (7,403) (4,386)
------------- ------------- ------------- -------------
Net income available to common shareholders $ 14,668 $ 23,704 $ 29,291 $ 34,196
============= ============= ============= =============
Per common share (1):
Primary $ 0.35 $ 0.58 $ 0.70 $ 0.84
Fully diluted $ 0.34 $ 0.54 $ 0.69 $ 0.80
Weighted average number of common
shares outstanding (1)
Primary 42,430,631 40,758,848 42,050,785 40,644,624
Fully diluted 53,445,725 48,257,496 53,185,945 48,143,272
</TABLE>
(1) Adjusted for two-for-one common stock split effective May 5, 1997
