As filed with the Securities and Exchange Commission on July 17, 1998
Registration No. 333-____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRSTCITY FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 76-0243729
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
FIRSTCITY FINANCIAL CORPORATION JAMES T. SARTAIN
6400 IMPERIAL DRIVE FIRSTCITY FINANCIAL CORPORATION COPY TO:
WACO, TEXAS 76712 P. O. BOX 8216 STEVEN D. RUBIN, ESQ.
(254) 751-1750 WACO, TEXAS 76714-8216 WEIL, GOTSHAL & MANGES LLP
(Address, Including Zip Code, and Telephone (254) 751-1750 700 LOUISIANA, SUITE 1600
Number, (Name, Address, Including Zip Code and HOUSTON, TEXAS 77002
Including Area Code, of Registrant's Telephone Number, Including Area (713) 546-5000
Principal Executive Offices) Code, of Agent For Service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to be Proposed maximum Proposed maximum aggregate Amount of
securities to be registered registered (1) (2) offering price per offering price (2) registration
unit fee
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Debt Securities(3).............................
Preferred Stock, par value $.01 per share (4) $250,000,000 (2) $250,000,000 $73,750
Common Stock, par value $.01 per share (5)
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(1) In United States dollars or the equivalent thereof in foreign currency
or currency units.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended. The
aggregate public offering price of the Debt Securities, Preferred Stock, and
Common Stock registered hereby will not exceed $250,000,000. No separate
consideration will be received for Common Stock, Preferred Stock or Debt
Securities that are issued upon conversion or exchange of Preferred Stock or
Debt Securities.
(3) Such indeterminate amount of Debt Securities as may from time to time be
issued at indeterminate prices or issuable upon conversion or exchange of Debt
Securities, Preferred Stock or Common Stock, to the extent such Debt Securities,
Preferred Stock or Common Stock are, by their terms, convertible into or
exchangeable for Debt Securities.
(4) Such indeterminate number of shares of Preferred Stock as may from time
to time be issued at indeterminate prices or issuable upon conversion or
exchange of Debt Securities, Preferred Stock or Common Stock, to the extent such
Debt Securities, Preferred Stock or Common Stock are, by their terms,
convertible into or exchangeable for shares of Preferred Stock.
(5) Such indeterminate number of shares of Common Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion or exchange
of Debt Securities or Preferred Stock, to the extent such Debt Securities or
Preferred Stock are, by their terms, convertible into or exchangeable for shares
of Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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HOFS04...:\92\54892\0011\1612\REG7068W.52B
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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FIRSTCITY FINANCIAL CORPORATION
SUBJECT TO COMPLETION, DATED JULY 17, 1998
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$250,000,000
DEBT SECURITIES PREFERRED STOCK COMMON STOCK
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FirstCity Financial Corporation, a Delaware corporation (the "Company"),
may issue from time to time, together or separately, (1) its debt securities
(the "Debt Securities"), which may be either senior ("Senior Securities") or
subordinated ("Subordinated Securities") and which may be convertible into or
exchangeable for shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"), shares of preferred stock, par value $0.01 per
share, of the Company (the "Preferred Stock"), or other Debt Securities; (2)
Preferred Stock, which may be convertible into or exchangeable for shares of
Common Stock, shares of Preferred Stock or Debt Securities and (3) Common Stock,
including Common Stock issuable upon the conversion or exchange of Debt
Securities or Preferred Stock offered hereunder, to the extent such Debt
Securities or Preferred Stock are, by their terms, convertible into or
exchangeable for shares of Common Stock, in amounts, at prices and on terms to
be determined by market conditions at the time of offering thereof. The Debt
Securities, Preferred Stock and Common Stock are collectively referred to herein
as the "Offered Securities."
The Offered Securities may be issued in one or more series or issuances
and will be limited to $250,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt Securities
are issued for one or more foreign currencies or currency units). The Offered
Securities may be sold for U.S. dollars, or any foreign currency or currencies
or currency units, and the principal of, and any premium or interest on, the
Debt Securities may be payable in U.S. dollars, or any foreign currency or
currencies or currency units.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, (1) in
the case of Debt Securities, the specific designation, aggregate principal
amount, authorized denomination, initial offering price, maturity, premium (if
any), interest rate (which may be fixed or floating), time of and method of
calculating the payment of interest, if any, the currency in which principal,
premium, if any, and interest, if any, are payable, any redemption or sinking
fund terms, any terms for the conversion into or exchange for shares of Common
Stock or Preferred Stock or other Debt Securities, terms of subordination of
Subordinated Securities, and other specific terms; (2) in the case of Preferred
Stock, the specific designation, any dividend, liquidation, redemption, sinking
fund, voting or other rights, time of payment of dividends, any terms for the
conversion into or exchange for shares of Common Stock or shares of Preferred
Stock or Debt Securities, the initial offering price and other specific terms;
and (3) in the case of the Common Stock, the initial offering price. The
Prospectus Supplement will also contain information, where applicable, about
certain United States Federal income tax considerations relating to, and any
listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
-----------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------------
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company or any dealers or underwriters are
involved in the sale of the Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers or underwriters
and any applicable agent's commission, dealer's purchase price or underwriter's
discount will be set forth in or may be calculated from the Prospectus
Supplement. The net proceeds to the Company from such sale will be the purchase
price less such commission in the case of an agent, the purchase price in the
case of a dealer, or the public offering price less such discount in the case of
an underwriter and less, in each case, other attributable issuance expenses. See
"Plan of Distribution."
The date of this Prospectus is July , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities that
the Commission maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Chicago,
Illinois 60661. Copies of these materials can be obtained at prescribed rates
from the Public Reference Section of the Commission at the principal offices of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Commission maintains a site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to the
Offered Securities. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus concerning the contents of
any documents referred to herein are not necessarily complete. With respect to
each such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description, and
each such statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under the
Exchange Act are hereby incorporated by reference into this Prospectus: (a) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997; (b) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998; (c) the Company's Current Reports on Form 8-K filed with
the Commission on April 29, 1998 and July 6, 1998; and (d) the description of
the Company's Common Stock contained in the Company's Form 8-A Registration
Statement filed with the Commission on July 25, 1995 (File No. 0-26500), as
amended by the Company's Form 8-A/A filed with the Commission on August 25, 1995
and the Company's Form 8-A/A No. 2 filed with the Commission on September 6,
1995, including any amendment or report filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Offered Shares offered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the respective dates of filing of such documents.
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Any statement or information contained herein or in any document all or
part of which is incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement or information contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement or information. Any such
statement or information so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than certain exhibits to such documents). Requests for such copies should be
directed to Gary H. Miller, Senior Vice President and Chief Financial Officer,
FirstCity Financial Corporation, 6400 Imperial Drive, Waco, Texas 76712,
telephone number (254) 751-1750.
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THE COMPANY
The Company is a diversified financial services company headquartered in
Waco, Texas with over 90 offices throughout the United States and a presence in
France, Asia and Mexico. The Company began operations in 1986 as a specialty
financial services company focused on acquiring and resolving distressed loans
and other assets purchased at a discount relative to the aggregate unpaid
principal balance of the loans or the appraised value of the other assets ("Face
Value"). To date, the Company has acquired, for its own account and through
various affiliated partnerships, pools of assets or single assets (collectively
referred to as "Portfolio Assets" or "Portfolios") with a Face Value of
approximately $3.0 billion. In 1996, the Company adopted a growth strategy to
diversify and expand its financial services business. To implement its growth
strategy, the Company has acquired or established several businesses in the
financial services industry, building upon its core strength and expertise as
one of the earliest participants in the business of acquiring and resolving
distressed financial assets and other assets. The Company's servicing expertise,
which it has developed largely through the resolution of distressed assets, is a
cornerstone of its growth strategy. Today the Company is engaged in three
principal businesses: (i) residential and commercial mortgage banking, which is
operated through FirstCity Financial Mortgage Corporation ("Mortgage Corp.") and
FC Capital Corporation ("Capital Corp."); (ii) Portfolio Asset acquisition and
resolution, which is operated through FirstCity Commercial Corporation
("Commercial Corp."); and (iii) consumer lending, which is operated through
FirstCity Consumer Lending Corporation ("Consumer Corp.").
Unless the context otherwise requires, references in this Prospectus and
in the Prospectus Supplement to the "Company" and "FirstCity" shall mean
FirstCity Financial Corporation, a Delaware corporation, and its subsidiaries
and predecessors. References to the Company for periods prior to July 3, 1995
refer to the Company's predecessor, J-Hawk Corporation ("J-Hawk").
The Company's principal executive offices are located at 6400 Imperial
Drive, Waco, Texas 76712, and its telephone number is (254) 751-1750. The
mailing address of the Company's principal executive offices is P.O. Box 8216,
Waco, Texas 76714-8216
RISK FACTORS
In addition to the other information contained in this Prospectus and the
Prospectus Supplement and incorporated herein by reference, prospective
investors in any of the Offered Securities should carefully consider the
following risk factors.
RISKS ASSOCIATED WITH RAPID GROWTH AND ENTRY INTO NEW BUSINESSES
Following the Company's acquisition by merger (the "Merger") of First City
Bancorporation of Texas, Inc. ("FCBOT"), the Company embarked upon a strategic
diversification of its business. Previously, the Company had been engaged
primarily in the Portfolio Asset acquisition and resolution business. The
Company has recently entered the residential and commercial mortgage banking
business and the consumer lending business through a combination of acquisitions
and the start-up of new business ventures. The entry of the Company into these
new businesses has resulted in increased demands on the Company's
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personnel and systems. The development and integration of the new businesses
requires the investment of additional capital and the continuous involvement of
senior management. The Company also must manage a variety of businesses with
differing markets, customer bases, financial products, systems and managements.
An inability to develop, integrate and manage its businesses could have a
material adverse effect on the Company's financial condition, results of
operations and business prospects. The Company's ability to support and manage
continued growth is dependent upon, among other things, its ability to attract
and retain senior management for each of its businesses, to hire, train, and
manage its workforce and to continue to develop the skills necessary for the
Company to compete successfully in its existing and new business lines. There
can be no assurance that the Company will successfully meet all of these
challenges.
CONTINUING NEED FOR FINANCING
General. The successful execution of the Company's business strategy
depends on its continued access to financing for each of its major operating
subsidiaries. In addition to the need for such financing, the Company must have
access to liquidity to invest as equity or subordinated debt to meet the capital
needs of its subsidiaries. Liquidity is generated by the cash flow to the
Company from subsidiaries, access to the public debt and equity markets and
borrowings incurred by the Company. The Company's access to the capital markets
is affected by such factors as changes in interest rates, general economic
conditions, and the perception in the capital markets of the Company's business,
results of operations, leverage, financial condition and business prospects. In
addition, the Company's ability to issue and sell common equity (including
securities convertible into, or exercisable or exchangeable for, common equity)
is limited as a result of the tax laws relating to the preservation of the net
operating loss carryforwards ("NOLs") available to the Company as a result of
the Merger. There can be no assurance that the Company's funding relationships
with commercial banks, investment banks and financial services companies that
have previously provided financing for the Company and its subsidiaries will
continue past their respective current maturity dates. The majority of the
credit facilities to which the Company and its subsidiaries are parties have
short-term maturities. If the Company and its subsidiaries are unable to extend
the terms of such credit facilities prior to their maturity and the Company or
its subsidiaries cannot find alternative funding sources on satisfactory terms,
or at all, the Company's financial condition, results of operations and business
prospects would be materially adversely affected.
Each of the Company and its major operating subsidiaries has its own
source of debt financing. In certain circumstances, a default by the Company or
any of its major operating subsidiaries in respect of indebtedness owed to a
third party constitutes a default under the Company's revolving credit facility.
The credit facilities to which the Company's major operating subsidiaries are
party do not contain similar cross-default or cross-acceleration provisions.
Although the Company intends to continue to segregate the debt obligations of
each such subsidiary, there can be no assurance that its existing financing
sources will continue to agree to such arrangements or that alternative
financing sources that would accept such arrangements would be available. In the
event the Company's major operating subsidiaries are compelled to accept
cross-guarantees, or cross-default or cross-acceleration provisions in
connection with their respective credit facilities, financial difficulties
experienced by one of the Company's subsidiaries could adversely impact the
Company's other subsidiaries.
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Dependence on Warehouse Financing. As is customary in the mortgage banking
and consumer lending businesses, the Company's subsidiaries depend upon
warehouse credit facilities with financial institutions or institutional lenders
to finance the origination and purchase of loans on a short-term basis pending
sale or securitization. Implementation of the Company's business strategy
requires the continued availability of warehouse credit facilities, and may
require increases in the permitted borrowing levels under such facilities. There
can be no assurance that such financing will be available on terms satisfactory
to the Company. The inability of the Company to arrange additional warehouse
credit facilities, to extend or replace existing facilities when they expire or
to increase the capacity of such facilities may have a material adverse effect
on the Company's financial condition, results of operations and business
prospects.
RISKS OF SECURITIZATION
Significance of Securitization. The Company believes that it will become
increasingly dependent upon its ability to securitize residential mortgage loans
to borrowers who have significant equity in their homes and who generally do not
satisfy the more rigid underwriting standards of the traditional residential
mortgage lending market (referred to herein as "Home Equity Loans"), sub-prime
automobile loans and other loans to efficiently finance the volume of assets
expected to be generated. Accordingly, adverse changes in the secondary market
for such loans could impair the Company's ability to originate, purchase and
sell loans on a favorable or timely basis. Any such impairment could have a
material adverse effect upon the Company's financial condition, results of
operations and business prospects. Proceeds from the securitization of
originated and acquired loans are required to be used to repay borrowings under
warehouse credit facilities, thereby making such facilities available to finance
the origination and purchase of additional loan assets. There can be no
assurance that, as the Company's volume of loans originated or purchased
increases and other new products available for securitization increases, the
Company will be able to securitize its loan production efficiently. An inability
to efficiently securitize its loan production could have a material adverse
effect on the Company's financial condition, results of operations and business
prospects.
Securitization transactions may be affected by a number of factors, some
of which are beyond the Company's control, including, among other things, the
adverse financial condition of, or developments related to, some of the
Company's competitors, conditions in the securities markets in general, and
conditions in the asset-backed securitization market. The Company's
securitizations typically utilize credit enhancements in the form of financial
guaranty insurance policies in order to achieve enhanced credit ratings. Failure
to obtain insurance company credit enhancement could adversely affect the timing
of, or ability of the Company to effect, securitizations. In addition, the
failure to satisfy rating agency requirements with respect to loan pools would
adversely impact the Company's ability to effect securitizations.
Contingent Risks. Although the Company intends to sell substantially all
of the Home Equity Loans, sub-prime automobile loans and other consumer loans
that it originates or purchases, the Company retains some degree of credit risk
on substantially all loans sold. During the period in which loans are held
pending sale, the Company is subject to various business risks associated with
the lending business, including the risk of borrower default, the risk of
foreclosure and the risk that a rapid increase in interest rates would result in
a decline
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in the value of loans to potential purchasers. The Company expects that the
terms of its securitizations will require it to establish deposit accounts or
build over-collateralization levels through retention of distributions otherwise
payable to the holders of subordinated interests in the securitization. The
Company also expects to be required to commit to repurchase or replace loans
that do not conform to the representations and warranties made by the Company at
the time of sale.
Retained Risks of Securitized Loans. The Company makes various
representations with respect to the loans that it securitizes. With respect to
acquired loans, the Company's representations rely in part on similar
representations made by the originators of such loans when they were purchased
by the Company. In the event of a breach of its representations, the Company may
be required to repurchase or replace the related loan using its own funds. While
the Company may have a claim against the originator in the event of a breach of
any of these representations made by the originators, the Company's ability to
recover on any such claim will be dependent on the financial condition of the
originator. There can be no assurance that the Company will not experience a
material loss in respect of any of these contingencies.
Performance Assumptions. The future net income of certain of the Company's
subsidiaries will be highly dependent on realizing securitization gains on the
sale of loans. Such gains will be dependent largely upon the estimated present
values of the subordinated interests expected to be derived from the
transactions and retained by the Company. Management makes a number of
assumptions in determining the estimated present values for the subordinated
interests. These assumptions include, but are not limited to, prepayment speeds,
default rates and subsequent losses on the underlying loans, and the discount
rates used to present value the future cash flows. All of the assumptions are
subjective. Varying the assumptions can have a material effect on the present
value determination in one securitization as compared to any other. Subsequent
events will cause the actual occurrences of prepayments, losses and interest
rates to be different from the assumptions used for such factors at the time of
the recognition of the sale of the loans. The effect of the subsequently
occurring events could cause a re-evaluation of the carrying values of the
previously estimated values of the subordinated interests and excess spreads and
such adjustment could be material.
Because the subordinated interests to be retained by such subsidiaries
represent claims to future cash flow that are subordinated to holders of senior
interests, such subsidiaries retain a significant portion of the risk of whether
the full value of the underlying loans may be realized. In addition, holders of
the senior interests may have the right to receive certain additional payments
on account of principal in order to reduce the balance of the senior interests
in proportion to the credit enhancement requirements of any particular
transaction. Such payments for the benefit of the senior interest holders will
delay the payment, if any, of excess cash flow to such subsidiaries as the
holder of the subordinated interests.
IMPACT OF CHANGING INTEREST RATES
Because most of the Company's borrowings are at variable rates of
interest, the Company will be impacted by fluctuations in interest rates. The
Company monitors the interest rate environment and employs hedging strategies
designed to mitigate certain effects of changes in interest rates when the
Company deems such strategies appropriate. However, certain effects of changes
in interest rates, such as increased prepayments of outstanding loans, cannot be
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mitigated. Fluctuations in interest rates could have a material adverse effect
on the Company's financial condition, results of operations and business
prospects.
Among other things, a decline in interest rates could result in increased
prepayments of outstanding loans, particularly on loans in the servicing
portfolio of Mortgage Corp. The value of servicing rights is a significant asset
of Mortgage Corp. As prepayments of serviced mortgages increase, the value of
such servicing rights (as reflected on the Company's balance sheet) declines,
with a corresponding reduction in income as a result of the impairment of the
value of mortgage servicing rights. Although to date the impact of such effect
has largely been mitigated by increased production of mortgages from
refinancings during periods of declining interest rates, there can be no
assurance that new mortgage production will be sufficient to mitigate such
effect in the future. Absent a level of new mortgage production sufficient to
mitigate the effect of mortgage loan prepayments, the future revenue and
earnings of the Company will be adversely affected. In addition to prepayment
risks, during periods of declining interest rates, Mortgage Corp. experiences
higher levels of borrowers who elect not to close on loans for which they have
applied because they tend to find loans at lower interest rates. If Mortgage
Corp. has entered into commitments to sell such a loan on a forward basis and
the prospective borrower fails to close, Mortgage Corp. must nevertheless meet
its commitment to deliver the contracted for loans at the promised yields.
Mortgage Corp. will incur a loss if it is required to deliver loans to an
investor at a committed yield higher than current market rates. A substantial
and sustained decline in interest rates also may adversely impact the amount of
distressed assets available for purchase by the Company. The value of the
Company's interest-earning assets and liabilities may be directly affected by
the level of and fluctuations in interest rates, including the valuation of any
residual interests in securitizations that would be severely impacted by
increased loan prepayments resulting from declining interest rates.
Conversely, a substantial and sustained increase in interest rates could
adversely affect the ability of the Company to originate loans and could reduce
the gains recognized by the Company upon their securitization and sale.
Fluctuating interest rates also may affect the net interest income earned by the
Company resulting from the difference between the yield to the Company on
mortgage and other loans held pending sale and the interest paid by the Company
for funds borrowed under the Company's warehouse credit facilities or otherwise.
CREDIT IMPAIRED BORROWERS
The Company's sub-prime borrowers generally are unable to obtain credit
from traditional financial institutions due to factors such as an impaired or
poor credit history, low income or another adverse credit event. The Company is
subject to various risks associated with these borrowers, including, but not
limited to, the risk that the borrowers will not satisfy their debt service
obligations and that the realizable value of the assets securing their loans
will not be sufficient to repay the borrowers' debt. While the Company believes
that the underwriting criteria and collection methods it employs enable it to
identify and control the higher risks inherent in loans made to such borrowers,
and that the interest rates charged compensate the Company for the risks
inherent in such loans, no assurance can be given that such criteria or methods,
or such interest rates, will afford adequate protection against, or compensation
for, higher than anticipated delinquencies, foreclosures or losses. The actual
rate of delinquencies, foreclosures or losses could be significantly accelerated
by an economic
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downturn or recession. Consequently, the Company's financial condition, results
of operations and business prospects could be materially adversely affected. The
Company has established an allowance for loan losses through periodic earnings
charges and purchase discounts on acquired receivables to cover anticipated loan
losses on the loans currently in its portfolio. No assurance can be given,
however, that loan losses in excess of the allowance will not occur in the
future or that additional provisions will not be required to provide for
adequate allowances in the future.
AVAILABILITY OF PORTFOLIO ASSETS
The Portfolio Asset acquisition and resolution business is affected by
long-term cycles in the general economy. In addition, the volume of domestic
Portfolio Assets available for purchase by investors such as the Company has
generally declined since 1993 as large pools of distressed assets acquired by
governmental agencies in the 1980s and early 1990s have been resolved or sold.
The Company cannot predict its future annual acquisition volume of Portfolio
Assets. Moreover, future Portfolio Asset purchases will depend on the
availability of Portfolios offered for sale, the availability of capital and the
Company's ability to submit successful bids to purchase Portfolio Assets. The
acquisition of Portfolio Assets has become highly competitive in the United
States. This may require the Company to acquire Portfolio Assets at higher
prices thereby lowering profit margins on the resolution of such Portfolios.
Under certain circumstances, the Company may choose not to bid for Portfolio
Assets that it believes cannot be acquired at attractive prices. As a result of
all the above factors, Portfolio Asset purchases, and the revenue derived from
the resolution of Portfolio Assets, may vary significantly from quarter to
quarter.
AVAILABILITY OF NET OPERATING LOSS CARRYFORWARDS
The Company believes that, as a result of the Merger, approximately $596
million of NOLs were available to the Company to offset future taxable income as
of December 31, 1995. Since December 31, 1995, the Company estimates that it has
generated an additional $12 million in NOLs. Accordingly, as of December 31,
1997, the Company estimates that it had approximately $608 million of NOLs
available to offset future taxable income. In accordance with the terms of
Financial Accounting Standards Board Statement Number 109 (relating to
accounting for income taxes), the Company has established a future utilization
equivalent to approximately $87.7 million of the total $608 million of NOLs,
which equates to a $30.6 million deferred tax asset on the Company's books and
records. However, because the Company's position in respect of its NOLs is based
upon factual determinations and upon legal issues with respect to which there is
uncertainty and because no ruling has been obtained from the Internal Revenue
Service (the "IRS") regarding the amount or availability of the NOLs to the
Company, there can be no assurance that the IRS will not challenge the amount or
availability of the Company's NOLs and, if challenged, that the IRS will not be
successful in disallowing the entire amount of the Company's NOLs, with the
result that the Company's $30.6 million deferred tax asset would be reduced or
eliminated.
Assuming that the $608 million in NOLs is available to the Company, the
entire amount of such NOLs may be carried forward to offset future taxable
income of the Company until the tax year 2005. Thereafter, the NOLs begin to
expire. The ability of the Company to utilize such NOLs will be severely limited
if there is a more than 50% ownership change of the
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Company during a three-year testing period within the meaning of section 382 of
the Internal Revenue Code of 1986, as amended (the "Tax Code"). There can be no
assurance that future transactions, alone or in combination, including the
issuance of Offered Securities, will not result in a more than 50% ownership
change of the Company and a limitation of the Company's utilization of such
NOLs.
If the Company were unable to utilize its NOLs to offset future taxable
income, it would lose significant competitive advantages that it now enjoys.
Such advantages include, but are not limited to, the Company's ability to offset
non-cash income recognized by the Company in connection with certain
securitizations, to generate capital to support its expansion plans on a
tax-advantaged basis, to offset its and its consolidated subsidiaries' pre-tax
income, and to have access to the cash flow that would otherwise be represented
by payments of federal tax liabilities.
For a more detailed discussion of these and other tax considerations,
including certain tax considerations relating to transactions undertaken in
connection with the Merger, see "Certain Federal Income Tax Considerations."
ASSUMPTIONS UNDERLYING PORTFOLIO ASSET PERFORMANCE
The purchase price and carrying value of Portfolio Assets acquired by
Commercial Corp. is determined largely by estimating expected future cash flows
from such assets. The Company develops and revises such estimates based on its
historical experience and current market conditions, and based on the discount
rates that the Company believes are appropriate for the assets comprising the
Portfolios. In addition, many obligors on Portfolio Assets have impaired credit,
with risks associated with such obligors similar to the risks described in
respect of borrowers under "-- Credit Impaired Borrowers." If the amount and
timing of actual cash flows is materially different from estimates, the
Company's financial condition, results of operations and business prospects
could be materially adversely affected.
GENERAL ECONOMIC CONDITIONS
Periods of economic slowdown or recession, or declining demand for
residential or commercial real estate, automobile loans or other commercial or
consumer loans may adversely affect the Company's business. Economic downturns
may reduce the number of loan originations by the Company's mortgage banking,
consumer and commercial finance businesses and negatively impact its
securitization activity and generally reduce the value of the Company's assets.
In addition, periods of economic slowdown or recession, whether general,
regional or industry-related, may increase the risk of default on mortgage loans
and other loans and could have a material adverse effect on the Company's
financial condition, results of operations and business prospects. Such periods
also may be accompanied by declining values of homes, automobiles and other
property securing outstanding loans, thereby weakening collateral coverage and
increasing the possibility of losses in the event of default. Significant
increases in homes or automobiles for sale during recessionary economic periods
may depress the prices at which such collateral may be sold or delay the timing
of such sales. There can be no assurance that there will be adequate markets for
the sale of foreclosed homes or repossessed automobiles. Any material
deterioration of such markets could reduce recoveries from the sale of
collateral.
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Such economic conditions could also adversely affect the resolution of
Portfolio Assets, lead to a decline in prices or demand for collateral
underlying Portfolio Assets, or increase the cost of capital invested by the
Company and the length of time that capital is invested in a particular
Portfolio. All or any one of these events could decrease the rate of return and
profits to be realized from such Portfolio and materially adversely affect the
Company's financial condition, results of operations and business prospects.
RISK OF DECLINING VALUE OF COLLATERAL
The value of the collateral securing mortgage loans, automobile and other
consumer loans and loans acquired for resolution, as well as real estate or
other acquired distressed assets, is subject to various risks, including
uninsured damage, change in location or decline in value caused by use, age or
market conditions. Any material decline in the value of such collateral could
adversely affect the financial condition, results of operations and business
prospects of the Company.
GOVERNMENT REGULATION
Many aspects of the Company's business are subject to regulation,
examination and licensing under various federal, state and local statutes and
regulations that impose requirements and restrictions affecting, among other
things, the Company's loan originations, credit activities, maximum interest
rates, finance and other charges, disclosures to customers, the terms of secured
transactions, collection, repossession and claims handling procedures, multiple
qualification and licensing requirements for doing business in various
jurisdictions, and other trade practices. The Company believes it is currently
in compliance in all material respects with applicable regulations, but there
can be no assurance that the Company will be able to maintain such compliance.
Failure to comply with, or changes in, these laws or regulations, or the
expansion of the Company's business into jurisdictions that have adopted more
stringent regulatory requirements than those in which the Company currently
conducts business, could have an adverse effect on the Company by, among other
things, limiting the interest and fee income the Company may generate on
existing and additional loans, limiting the states in which the Company may
operate or restricting the Company's ability to realize on the collateral
securing its loans.
The mortgage banking industry in particular is highly regulated. Failure
to comply with any of the various state and federal laws affecting the industry,
all of which are subject to regular modification, may result in, among other
things, demands for indemnification or mortgage loan repurchases, certain rights
of rescission for mortgage loans, class action lawsuits, administrative
enforcement actions and civil and criminal liability. Furthermore, currently
there are proposed various laws, rules and regulations which, if adopted, could
materially affect the Company's business. There can be no assurance that these
proposed laws, rules and regulations, or other such laws, rules or regulations
will not be adopted in the future that will make compliance more difficult or
expensive, restrict the Company's ability to originate, purchase, service or
sell loans, further limit or restrict the amount of commissions, interest and
other charges earned on loans originated, purchased, serviced or sold by the
Company, or otherwise have a material adverse effect on the Company's financial
condition, results of operations and business prospects.
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Members of Congress and government officials have from time to time
suggested the elimination of the mortgage interest deduction for federal income
tax purposes, either entirely or in part, based on borrower income, type of loan
or principal amount. The reduction or elimination of these tax benefits may
lessen the demand for residential mortgage loans and Home Equity Loans, and
could have a material adverse effect on the Company's financial condition,
results of operations and business prospects.
ENVIRONMENTAL LIABILITIES
The Company, through its subsidiaries and affiliates, acquires real
property in its Portfolio Asset acquisition and resolution business, and
periodically acquires real property through foreclosure of mortgage loans that
are in default. There is a risk that properties acquired by the Company could
contain hazardous substances or waste, contaminants or pollutants. The Company
may be required to remove such substances from the affected properties at its
expense, and the cost of such removal may substantially exceed the value of the
affected properties or the loans secured by such properties. Furthermore, the
Company may not have adequate remedies against the prior owners or other
responsible parties to recover its costs, either as a matter of law or
regulation, or as a result of such prior owners' financial inability to pay such
costs. The Company may find it difficult or impossible to sell the affected
properties either prior to or following any such removal.
COMPETITION
All of the businesses in which the Company operates are highly
competitive. Some of the Company's principal competitors are substantially
larger and better capitalized than the Company. Because of their resources,
these companies may be better able than the Company to obtain new customers for
mortgage or other loan production, to acquire Portfolio Assets, to pursue new
business opportunities or to survive periods of industry consolidation. Access
to and the cost of capital are critical to the Company's ability to compete.
Many of the Company's competitors have superior access to capital sources and
can arrange or obtain lower cost of capital, resulting in a competitive
disadvantage to the Company with respect to such competitors.
In addition, certain of the Company's competitors may have higher risk
tolerances or different risk assessments, which could allow these competitors to
establish lower margin requirements and pricing levels than those established by
the Company. In the event a significant number of competitors establish pricing
levels below those established by the Company, the Company's ability to compete
would be adversely affected.
RISKS ASSOCIATED WITH FOREIGN OPERATIONS
The Company has acquired, and manages and resolves, Portfolio Assets
located in France and is actively pursuing opportunities to purchase additional
pools of distressed assets in France, other areas of Western Europe, Asia and
Mexico. Foreign operations are subject to various special risks, including
currency translation risks, currency exchange rate fluctuations, exchange
controls and different political, social and legal and regulatory environments
within such foreign markets. To the extent future financing in foreign
currencies is unavailable at reasonable rates, the Company would be further
exposed to currency translation risks, currency
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exchange rate fluctuations and exchange controls. In addition, earnings of
foreign operations may be subject to foreign income taxes that reduce cash flow
available to meet debt service requirements and other obligations of the
Company, which may be payable even if the Company has no earnings on a
consolidated basis. Any or all of the foregoing could have a material adverse
effect on the Company's financial condition, results of operations and business
prospects.
DEPENDENCE ON INDEPENDENT MORTGAGE BROKERS
The Company depends in large part on independent mortgage brokers for the
origination and purchase of mortgage loans. A substantial portion of the loans
originated by Mortgage Corp., and all of the Home Equity Loans originated by
Capital Corp., are currently originated by independent mortgage brokers or
otherwise acquired from third parties. These independent mortgage brokers deal
with multiple lenders for each prospective borrower. The Company competes with
these lenders for the independent brokers' business based on a number of
factors, including price, service, loan fees and costs. The Company's financial
condition, results of operations and business prospects could be adversely
affected by changes in the volume and profitability of mortgage loans resulting
from, among other things, competition with other lenders and purchasers of such
loans.
Class action lawsuits have been filed against a number of mortgage
lenders, including Mortgage Corp., alleging that such lenders have violated the
federal Real Estate Settlement Procedures Act of 1974 by making certain payments
to independent mortgage brokers. If these cases are resolved against the
lenders, it may cause an industry-wide change in the way independent mortgage
brokers are compensated. Such changes may have a material adverse effect on the
Company's results of operations, financial condition and business prospects.
DEPENDENCE ON AUTOMOBILE DEALERSHIP RELATIONSHIPS
The ability of the Company to expand into new geographic markets and to
maintain or increase its volume of automobile loans is dependent upon
maintaining and expanding the network of franchised automobile dealerships from
which it purchases contracts. Increased competition, including competition from
captive finance affiliates of automobile manufacturers, could have a material
adverse effect on the Company's ability to maintain or expand its dealership
network.
LITIGATION
Industry participants in the lending business from time to time are named
as defendants in litigation involving alleged violations of federal and state
consumer protection or other similar laws and regulations. A judgment against
the Company in connection with any such litigation could have a material adverse
effect on the Company's financial condition, results of operations and business
prospects.
RELATIONSHIP WITH AND DEPENDENCE UPON CARGILL
The Company's relationship with Cargill Financial Services Corporation
("Cargill Financial") is significant in a number of respects. Cargill Financial,
a subsidiary of Cargill,
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Incorporated, a privately held, multi-national agricultural company, provides
equity and debt financings for many of the investment entities (each such
entity, an "Acquisition Partnership") formed by the Company and one or more
co-investors to acquire Portfolio Assets. Cargill Financial owns approximately
2.7% of the Company's outstanding Common Stock, and a Cargill Financial
designee, David W. MacLennan, serves as a director of the Company. The Company
believes its relationship with Cargill Financial significantly enhances the
Company's credibility as a purchaser of Portfolio Assets and facilitates its
ability to expand into other businesses and foreign markets. Although management
believes that the Company's relationship with Cargill Financial is excellent,
there can be no assurance that such relationship will continue in the future.
Absent such relationship, the Acquisition Partnerships would be required to find
alternative sources for the financing that Cargill Financial has historically
provided. There can be no assurance that such alternative financing would be
available. Any termination of such relationship could have a material adverse
effect on the Company's financial condition, results of operations and business
prospects.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the efforts of its senior executive officers,
particularly James R. Hawkins (Chairman and Chief Executive Officer), James T.
Sartain (President and Chief Operating Officer), Rick R. Hagelstein (Executive
Vice President and Director of Subsidiary Operations), Matt A. Landry, Jr.
(Executive Vice President and Chief Administrative Officer) and Richard J.
Gillen (Managing Director of Mortgage Finance). The Company is also dependent on
several of the key members of management of each of its operating subsidiaries,
many of whom were instrumental in developing and implementing the business
strategy for such subsidiaries. The inability or unwillingness of one or more of
these individuals to continue in his present role could have a material adverse
effect on the Company's financial condition, results of operations and business
prospects. Except for Mr. Gillen, none of the senior executive officers has
entered into an employment agreement with the Company. There can be no assurance
that any of the foregoing individuals will continue to serve in his current
capacity or for what time period such service might continue. The Company does
not maintain key person life insurance for any of its senior executive officers
other than Mr. Gillen.
INFLUENCE OF CERTAIN SHAREHOLDERS
The directors and executive officers of the Company collectively
beneficially own approximately 30.9% of the Common Stock. Although there are no
agreements or arrangements with respect to voting such Common Stock among such
persons except as described below, such persons, if acting together, may
effectively be able to control any vote of shareholders of the Company and
thereby exert considerable influence over the affairs of the Company. James R.
Hawkins, the Chairman of the Board and Chief Executive Officer of the Company,
is the beneficial owner of approximately 11.5% of the outstanding Common Stock.
James T. Sartain, President and Chief Operating Officer of the Company, and
ATARA I, Ltd. ("ATARA"), an entity associated with Rick R. Hagelstein, Executive
Vice President and Director of Subsidiary Operations of the Company,
beneficially own approximately 4.3% and 4.1% of the outstanding Common Stock,
respectively. In addition, Cargill Financial owns approximately 2.7% of the
Common Stock. Mr. Hawkins, Mr. Sartain, Cargill Financial and ATARA are parties
to a shareholder voting agreement (the "Shareholder Voting Agreement").
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Under the Shareholder Voting Agreement, Mr. Hawkins, Mr. Sartain and ATARA are
required to vote their shares in favor of Cargill Financial's designee for
director of the Company, and Cargill Financial is required to vote its shares in
favor of one or more of the designees of Messrs. Hawkins and Sartain and ATARA.
ATARA, Cargill Financial and Messrs. Hawkins and Sartain are the beneficial
owners of an aggregate of 22.5% of the outstanding Common Stock and are able to
exert considerable influence over the affairs of the Company. Richard J. Gillen,
Managing Director of Mortgage Finance, and Ed Smith are the beneficial owners of
7.8% and 7.2%, respectively, of the Common Stock. As a result, Messrs. Gillen
and Smith may be able to exert influence over the affairs of the Company and if
their shares are combined with the holdings of Messrs. Hawkins and Sartain and
the shares held by ATARA, will have effective control of the Company. There can
be no assurance that the interests of management or the other entities and
individuals named above will be aligned with the Company's other shareholders.
RELIANCE ON SYSTEMS; YEAR 2000 ISSUES
The Company's computer systems are integral to the operation of its
businesses. There can be no assurance that these systems will continue to be
adequate to support the Company's growth. A failure of the Company's computer
systems, including a failure of data integrity or accuracy, could have a
material adverse effect on the Company's financial condition, results of
operations and business prospects.
Although the Company maintains its own computer systems for a significant
portion of its operations, the Company is substantially dependent on the
services of third-party servicers in its mortgage banking and Portfolio Asset
acquisition and resolution businesses. The Company has been informed by such
servicers that, although they intend to make the necessary modifications to
their computer systems, the computer systems operated by them are not yet year
2000 compliant. In addition, the Company interacts electronically with several
government agencies, including FHLMC, FNMA, FHA, FMHA and GNMA, whose computer
systems are not yet year 2000 compliant. There can be no assurance that such
third parties and government agencies will make the necessary modifications to
their respective computer systems to enable proper processing of transactions
relating to the year 2000 and beyond. Any failure by such entities to timely
correct year 2000 issues could have a material adverse effect on the Company's
financial condition, results of operations and business prospects.
ANTI-TAKEOVER CONSIDERATIONS
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and by-laws contain a number of provisions
relating to corporate governance and the rights of shareholders. Certain of
these provisions may be deemed to have a potential "anti-takeover" effect to the
extent they are utilized to delay, defer or prevent a change of control of the
Company by deterring unsolicited tender offers or other unilateral takeover
proposals and compelling negotiations with the Company's Board of Directors
rather than non-negotiated takeover attempts even if such events may be in the
best interests of the Company's shareholders. The Certificate of Incorporation
also contains certain provisions restricting the transfer of its securities that
are designed to prevent ownership changes that might limit or eliminate the
ability of the Company to use its NOLs. See "Description of Common Stock."
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PERIOD TO PERIOD VARIANCES
The Company recognizes revenue from Portfolio Assets and Acquisition
Partnerships based on proceeds realized from the resolution of the Portfolio
Assets, which proceeds have historically varied significantly and likely will
continue to vary significantly from period to period. Consequently, the
Company's period to period revenue and net income have historically varied, and
are likely to continue to vary, correspondingly. Such variances, alone or with
other factors, such as conditions in the economy or the financial services
industries or other developments affecting the Company, may result in
significant fluctuations in the reported earnings of the Company and in the
trading prices of the Company's securities, particularly the Common Stock.
TAX, MONETARY AND FISCAL POLICY CHANGES
The Company originates and acquires financial assets, the value and income
potential of which are subject to influence by various state and federal tax,
monetary and fiscal policies in effect from time to time. The nature and
direction of such policies are entirely outside the control of the Company, and
the Company cannot predict the timing or effect of changes in such policies.
Changes in such policies could have a material adverse effect on the Company's
financial condition, results of operations and business prospects.
RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's and its consolidated
subsidiaries' ratios of earnings to fixed charges and ratios of earnings to
combined fixed charges and preferred stock dividends for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31,
--------------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............. 1.30x 2.22x 1.47x 1.74x 1.61x 1.23x 1.67x
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.................. 1.18x 1.82x 1.29x 1.42x 1.41x 1.23x 1.67x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, "earnings"
consist of income from continuing operations before federal income taxes and
fixed charges, less undistributed income of less than fifty-percent-owned
entities. "Fixed charges" consist of interest expense.
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USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Offered Securities will be used for general corporate
purposes, including repayment of borrowings, redemption of outstanding
securities, working capital, capital expenditures and acquisitions. Additional
information on the use of net proceeds from the sale of the Offered Securities
is set forth in the Prospectus Supplement relating to such Offered Securities.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
and the extent, if any, to which such general provisions may apply to any series
of Debt Securities will be described in the Prospectus Supplement relating to
such series.
The Debt Securities are to be issued under one or more Indentures
(collectively, the "Indenture") between the Company and a trustee selected by
the Company, which trustee shall be named in a Prospectus Supplement (the
"Trustee"). The following statements are subject to the detailed provisions of
the Indenture, a copy of which is filed as an exhibit to the Registration
Statement. Wherever any particular provisions of the Indenture or terms defined
therein are referred to, such provisions and terms are incorporated by reference
as a part of the statements made herein and such statements are qualified in
their entirety by such references. Defined terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Indenture.
GENERAL
The Debt Securities may be either Senior Securities or Subordinated
Securities and will be secured or unsecured. The Indenture does not limit the
amount of Debt Securities which may be issued thereunder and Debt Securities may
be issued thereunder up to the aggregate principal amount which may be
authorized from time to time by the Company. Debt Securities will be issued from
time to time and offered on terms determined by market conditions at the time of
sale.
The Senior Securities will be secured or unsecured and will rank on a
parity with all other unsubordinated indebtedness of the Company. To the extent
provided in the Prospectus Supplement relating thereto, the Company may be
required to secure Senior Securities equally and ratably with other Debt (as
defined in the Indenture) with respect to which the Company elects or is
required to provide security. The Subordinated Securities will be secured or
unsecured and will be subordinated and junior to all "Senior Indebtedness"
(which for this purpose includes any Senior Securities) to the extent set forth
in the applicable supplemental Indenture and the Prospectus Supplement relating
to such series.
The Debt Securities may be issued in one or more series with the same or
various maturities at par, at a premium or at a discount. Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates will be sold at a discount (which may be substantial) from their
stated principal amount. Federal income tax
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consequences and other special considerations applicable to any such
substantially discounted Debt Securities will be described in the Prospectus
Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities offered hereby: (i) the designation, aggregate principal
amount and authorized denominations of such Debt Securities; (ii) the percentage
of their principal amount at which such Debt Securities will be issued; (iii)
the date or dates on which the Debt Securities will mature; (iv) the rate or
rates (which may be fixed or floating) per annum at which the Debt Securities
will bear interest, if any, or the method of determining such rate or rates; (v)
the date or dates on which any such interest will be payable, the date or dates
on which payment of any such interest will commence and the Regular Record Dates
for such Interest Payment Dates; (vi) whether such Debt Securities are Senior
Securities or Subordinated Securities; (vii) whether such Debt Securities are
secured or unsecured; (viii) the terms of any mandatory or optional redemption
(including any provisions for any sinking, purchase or other analogous fund) or
repayment option; (ix) the currency, currencies or currency units for which the
Debt Securities may be purchased and the currency, currencies or currency units
in which the principal thereof, any premium thereon and any interest thereon may
be payable; (x) if the currency, currencies or currency units for which the Debt
Securities may be purchased or in which the principal thereof, any premium
thereon and any interest thereon may be payable is at the election of the
Company or the purchaser, the manner in which such election may be made; (xi) if
the amount of payments on the Debt Securities is determined with reference to an
index based on one or more currencies or currency units, changes in the price of
one or more securities or changes in the price of one or more commodities, the
manner in which such amounts may be determined; (xii) the extent to which any of
the Debt Securities will be issuable in temporary or permanent global form, or
the manner in which any interest payable on a temporary or permanent Global
Security will be paid; (xiii) the terms and conditions upon which conversion or
exchange of the Debt Securities into or for Common Stock, Preferred Stock or
other Debt Securities will be effected, including the conversion price or
exchange ratio, the conversion or exchange period and any other conversion or
exchange provisions; (xiv) information with respect to book-entry procedures, if
any; (xv) a discussion of certain Federal income tax, accounting and other
special considerations, procedures and limitations with respect to the Debt
Securities; and (xvi) any other specific terms of the Debt Securities not
inconsistent with the Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or any
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, Federal
income tax consequences, specific terms and other information with respect to
such issue of Debt Securities and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement, the principal of,
any premium on, and any interest on the Debt Securities will be payable, and the
Debt Securities will be transferable, at the Corporate Trust Office of the
Trustee specified in the applicable Indenture, provided that payment of
interest, if any, may be made at the option of the Company by check mailed on or
before the payment date, first class mail, to the address of the person entitled
thereto as it appears on the registry books of the Company or its agent.
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Unless otherwise specified in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form and in denominations of
$1,000 and any integral multiple thereof. No service charge will be made for any
transfer or exchange of any Debt Securities, but the Company may, except in
certain specified cases not involving any transfer, require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
GLOBAL SECURITIES
The Debt Securities of a series may be issued, in whole or in part, in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee of such Depositary to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture governing such Debt Securities.
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Payments of principal of, any premium on, and any interest on, individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. Neither the Company, the Trustee for such Debt Securities, any
Paying Agent, nor the Security Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such participants.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. In addition, the Company
may at any time and in its sole discretion, subject to any limitations described
in the Prospectus Supplement relating to such Debt Securities, determine not to
have any Debt Securities of a series represented by one or more Global
Securities and, in such event, will issue individual Debt Securities of such
series in exchange for the Global Security or Securities representing such
series of Debt Securities. Further, if the Company so specifies with respect to
the Debt Securities of a series, an owner of a beneficial interest in a Global
Security representing Debt Securities of such series may, on terms acceptable to
the Company, the Trustee and the Depositary for such Global Security, receive
individual Debt Securities of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof.
SENIOR SECURITIES
The Senior Securities will be direct, secured or unsecured obligations of
the Company, and will constitute Senior Indebtedness (in each case as defined in
the applicable supplemental Indenture) ranking on a parity with all other
unsubordinated indebtedness of the Company.
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SUBORDINATED SECURITIES
The Subordinated Securities will be direct, secured or unsecured
obligations of the Company. The obligations of the Company pursuant to the
Subordinated Securities will be subordinate in right of payment to the extent
set forth in the Indenture and the applicable supplemental Indenture to all
Senior Indebtedness (including all Senior Securities) (in each case as defined
in the applicable supplemental Indenture). Except to the extent otherwise set
forth in a Prospectus Supplement, the Indenture does not contain any restriction
on the amount of Senior Indebtedness that the Company may incur.
The terms of the subordination of a series of Subordinated Securities,
together with the definition of Senior Indebtedness related thereto, will be as
set forth in the applicable supplemental Indenture and the Prospectus Supplement
relating to such series.
The Subordinated Securities will not be subordinated to indebtedness of
the Company that is not Senior Indebtedness, and the creditors of the Company
that do not hold Senior Indebtedness will not benefit from the subordination
provisions described herein. In the event of the bankruptcy or insolvency of the
Company before or after maturity of the Subordinated Securities, such other
creditors would rank pari passu with holders of the Subordinated Securities,
subject, however, to the broad equity powers of the Federal bankruptcy court
pursuant to which such court may, among other things, reclassify the claims of
any series of Subordinated Securities into a class of claims having a different
relative priority with respect to the claims of such other creditors or any
other claims against the Company.
COVENANTS
The Indenture contains certain covenants that will be applicable (unless
waived or amended) so long as any of the Debt Securities are outstanding, unless
stated otherwise in the Prospectus Supplement.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless (i) the successor Person
shall be a corporation or partnership organized and existing under the laws of
the United States or any State thereof or the District of Columbia, and shall
expressly assume by a supplemental indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of, any premium on, and any interest on, all the outstanding Debt
Securities and the performance of every covenant in the Indenture on the part of
the Company to be performed or observed; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental Indenture
comply with the foregoing provisions relating to such transaction. In case of
any such consolidation, merger, conveyance or transfer, such successor Person
will succeed to and be substituted for the Company as obligor
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on the Debt Securities, with the same effect as if it had been named in the
Indenture as the Company.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of Debt Securities, an Event of Default is defined in the
Indenture as (a) default for 30 days in payment of any interest on the Debt
Securities of such series; (b) default in payment of principal of or any premium
on the Debt Securities of such series at maturity; (c) default in payment of any
sinking or purchase fund or analogous obligation, if any, on the Debt Securities
of such series; (d) default by the Company in the performance of any other
covenant or warranty contained in the Indenture for the benefit of such series
which shall not have been remedied by the end of a period of 60 days after
notice is given as specified in the Indenture; (e) certain events of bankruptcy,
insolvency and reorganization of the Company; and (f) to the extent set forth in
the applicable supplemental Indenture and Prospectus Supplement, certain
defaults under other Debt.
A default under one series of Debt Securities will not necessarily be a
default under another series. Any additions, deletions or other changes to the
Events of Default that will be applicable to a series of Debt Securities will be
described in the Prospectus Supplement relating to such series of Debt
Securities.
The Indenture provides that (i) if an Event of Default described in clause
(a), (b), (c), (d) or (f) above (if the Event of Default under clause (d) is
with respect to less than all series of Debt Securities then outstanding) shall
have occurred and be continuing with respect to any series, either the Trustee
or the holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding (each such series acting as a
separate class) may declare the principal (or, in the case of Original Issue
Discount Securities, the portion thereof specified in the terms thereof) of all
outstanding Debt Securities of such series and the interest accrued thereon, if
any, to be due and payable immediately and (ii) if an Event of Default described
in clause (d) or (f) above (if the Event of Default under clause (d) is with
respect to all series of Debt Securities then outstanding) shall have occurred
and be continuing, either the Trustee or the holders of at least 25% in
aggregate principal amount of all Debt Securities then outstanding (treated as
one class) may declare the principal (or, in the case of Original Issue Discount
Securities, the portion thereof specified in the terms thereof) of all Debt
Securities then outstanding and the interest accrued thereon, if any, to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults (except for defaults in the payment of principal of,
any premium on, or any interest on, such Debt Securities and in compliance with
certain covenants) may be waived by the holders of a majority in aggregate
principal amount of the Debt Securities of such series then outstanding. If an
Event of Default described in clause (e) occurs and is continuing, then the
principal amount (or, in the case of Debt Securities originally issued at a
discount, such portion of the principal amount as may be specified in the terms
hereof) of all the Debt Securities then outstanding and all accrued interest
thereon shall become and be due and payable immediately, without any declaration
or other act by the Trustee or any other Holder.
Under the Indenture the Trustee must give to the holders of each series of
Debt Securities notice of all uncured defaults known to it with respect to such
series within 90 days after such a default occurs (the term default to include
the events specified above without
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notice or grace periods); provided that, except in the case of default in the
payment of principal of, any premium on, or any interest on, any of the Debt
Securities, or default in the payment of any sinking or purchase fund
installment or analogous obligations, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of the holders of the Debt Securities of such
series.
No holder of any Debt Securities of any series may institute any action
under the Indenture unless (a) such holder shall have given the Trustee written
notice of a continuing Event of Default with respect to such series; (b) the
holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding shall have requested the Trustee to
institute proceedings in respect of such Event of Default; (c) such holder or
holders shall have offered the Trustee such reasonable indemnity as the Trustee
may require; (d) the Trustee shall have failed to institute an action for 60
days thereafter and (e) no inconsistent direction shall have been given to the
Trustee during such 60-day period by the holders of a majority in aggregate
principal amount of Debt Securities of such series.
The holders of a majority in aggregate principal amount of the Debt
Securities of any series affected and then outstanding will have the right,
subject to certain limitations, 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 such series of Debt
Securities. The Indenture provides that, in case an Event of Default shall occur
and be continuing, the Trustee, in exercising its rights and powers under the
Indenture, will be required to use the degree of care of a prudent man in the
conduct of his own affairs. The Indenture further provides that 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 under the Indenture
unless it has reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is reasonably assured to it.
The Company must furnish to the Trustee within 120 days after the end of
each fiscal year a statement signed by one of certain officers of the Company to
the effect that a review of the activities of the Company during such year and
of its performance under the Indenture and the terms of the Debt Securities has
been made, and, to the best of the knowledge of the signatories based on such
review, the Company has complied with all conditions and covenants of the
Indenture or, if the Company is in default, specifying such default.
If any Debt Securities are denominated in a coin or currency other than
that of the United States, then for the purposes of determining whether the
holders of the requisite principal amount of Debt Securities have taken any
action as herein described, the principal amount of such Debt Securities shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of the spot rate of exchange into United
States dollars for the currency in which such Debt Securities are denominated
(as evidenced to the Trustee by an Officers' Certificate) as of the date the
taking of such action by the holders of such requisite principal amount is
evidenced to the Trustee as provided in the Indenture.
If any Debt Securities are Original Issue Discount Securities, then for
the purposes of determining whether the holders of the requisite principal
amount of Debt Securities have taken any action herein described, the principal
amount of such Debt Securities shall be deemed to
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be the portion of such principal amount that would be due and payable at the
time of the taking of such action upon a declaration of acceleration of maturity
thereof.
MODIFICATION OF THE INDENTURE
The Company and the Trustee may, without the consent of the holders of the
Debt Securities, enter into indentures supplemental to the Indenture for, among
others, one or more of the following purposes: (i) to evidence the succession of
another corporation to the Company, and the assumption by such successor of the
Company's obligations under the Indenture and the Debt Securities of any series;
(ii) to add covenants of the Company, or surrender any rights of the Company,
for the benefit of the holders of Debt Securities of any or all series; (iii) to
cure any ambiguity, omission, defect or inconsistency in such Indenture; (iv) to
establish the form or terms of any series of Debt Securities, including any
Subordinated Securities; (v) to evidence and provide for the acceptance of any
successor Trustee with respect to one or more series of Debt Securities or to
facilitate the administration of the trusts thereunder by one or more trustees
in accordance with such Indenture; and (vi) to provide any additional Events of
Default.
With certain exceptions, the Indenture or the rights of the holders of the
Debt Securities may be modified by the Company and the Trustee with the consent
of the holders of a majority in aggregate principal amount of the Debt
Securities of each series affected by such modification then outstanding, but no
such modification may be made without the consent of the holder of each
outstanding Debt Security affected thereby which would (i) change the maturity
of any payment of principal of, or any premium on, or any installment of
interest on any Debt Security, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of computing the amount of
principal thereof or interest thereon on any date or change any place of payment
where, or the coin or currency in which, any Debt Security or any premium or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the maturity thereof (or, in the
case of redemption or repayment, on or after the redemption date or the
repayment date, as the case may be), or (ii) reduce the percentage in principal
amount of the outstanding Debt Securities of any series, the consent of whose
holders is required for any such modification, or the consent of whose holders
is required for any waiver of compliance with certain provisions of the
Indenture or certain defaults thereunder and their consequences provided for in
the Indenture, or (iii) modify any of the provisions of certain Sections of the
Indenture, including the provisions summarized in this paragraph, except to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Debt Security affected thereby.
DISCHARGE AND DEFEASANCE
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company can discharge or defease its obligations with respect to any series of
Debt Securities as set forth below.
The Company may discharge all of its obligations (except those set forth
below) to holders of any series of Debt Securities issued under any Indenture
that have not already been delivered to the Trustee for cancellation and that
have either become due and payable, or are
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by their terms due and payable within one year (or scheduled for redemption
within one year), by irrevocably depositing with the Trustee cash or U.S.
Government Obligations (as defined in such Indenture), or a combination thereof,
as trust funds in an amount certified to be sufficient to pay when due the
principal of, premium, if any, and interest, if any, on all outstanding Debt
Securities of such series and to make any mandatory sinking fund payments, if
any, thereon when due.
Unless otherwise provided in the applicable Prospectus Supplement, the
Company may also elect at any time to (a) defease and be discharged from all of
its obligations (except those set forth below) to holders of any series of Debt
Securities issued under each Indenture ("defeasance") or (b) be released from
all of its obligations with respect to certain covenants applicable to any
series of Debt Securities issued under each supplemental Indenture ("covenant
defeasance"), if, among other things: (i) the Company irrevocably deposits with
the Trustee cash or U.S. Government Obligations, or a combination thereof, as
trust funds in an amount certified to be sufficient to pay when due the
principal of, premium, if any, and interest, if any, on all outstanding Debt
Securities of such series and to make any mandatory sinking fund payments, if
any, thereon when due and such funds have been so deposited for 91 days; (ii)
such deposit will not result in a breach or violation of, or cause a default
under, any agreement or instrument to which the Company is a party or by which
it is bound; and (iii) the Company delivers to the Trustee an opinion of counsel
to the effect that the holders of such series of Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance or covenant defeasance and that defeasance or covenant
defeasance will not otherwise alter the Federal income tax treatment of such
holders' principal and interest payments, if any, on such series of Debt
Securities.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The Board of Directors of the Company (the "Board of Directors") is
authorized, without action by the holders of Common Stock, to issue up to
98,000,000 shares of Optional Preferred Stock in one or more classes or series.
Prior to issuance of shares of each series, the Board of Directors is required
by the Delaware General Corporation Law (the "DGCL") and the Company's
Certificate of Incorporation to adopt resolutions and file a Certificate of
Designations (the "Certificate of Designations") with the Secretary of State of
the State of Delaware, fixing for each such series the designations, powers,
preferences and rights of the shares of such series and the qualifications,
limitations and restrictions thereof, including, but not limited to, dividend
rights, dividend rate or rates, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences as are permitted by the DGCL. The Board
of Directors could authorize the issuance of shares of Preferred Stock with
terms and conditions that could have the effect of discouraging a takeover or
other transaction, which holders of some, or a majority, of such shares might
believe to be in their best interests or in which holders of some, or a
majority, of such shares might receive a premium for their shares over the
then-market price of such shares.
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Subject to limitations prescribed by the DGCL, the Board of Directors is
authorized to fix the number of shares constituting each series of Preferred
Stock and the designations and powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, including such provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets, conversion or
exchange, and such other subjects or matters as may be fixed by resolution of
the Board of Directors or duly authorized committee thereof. The Preferred Stock
offered hereby will, upon issuance and full payment of the purchase price
therefor, be fully paid and nonassessable and will not have, or be subject to,
any preemptive or similar rights.
Reference is made to the Prospectus Supplement relating to the series of
Preferred Stock being offered for the specific terms thereof, including: (i) the
title and stated value of such Preferred Stock; (ii) the number of shares of
such Preferred Stock offered, the liquidation preference per share and the
purchase price of such Preferred Stock; (iii) the dividend rate(s), period(s)
and/or payment date(s) or method(s) of calculation thereof applicable to such
Preferred Stock; (iv) whether dividends shall be cumulative or non-cumulative
and, if cumulative, the date from which dividends on such Preferred Stock shall
accumulate; (v) the procedures for any auction and remarketing, if any, for such
Preferred Stock; (vi) the provisions for a sinking fund, if any, for such
Preferred Stock; (vii) the provisions for redemption, if applicable, of such
Preferred Stock; (viii) any listing of such Preferred Stock on any securities
exchange; (ix) the terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock, including the conversion
price (or manner of calculation thereof) and conversion period; (x) voting
rights, if any, of such Preferred Stock; (xi) a discussion of any material
and/or special Federal income tax considerations applicable to such Preferred
Stock; (xii) the relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of the
affairs of the Company; (xiii) any limitations on issuance of any series of
Preferred Stock ranking senior to or on a parity with such series of Preferred
Stock as to dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company, and (xv) any other specific terms,
preferences, rights, limitations or restrictions of such Preferred Stock.
Unless otherwise specified in the applicable Prospectus Supplement, the
shares of each series of Preferred Stock will upon issuance rank junior to the
Company's Special Preferred Stock and Adjusting Rate Preferred Stock with
respect to divided rights and rights upon liquidation, dissolution or winding up
of the Company. At the close of business on July 15, 1998, there were
outstanding 849,777 shares of the Special Preferred Stock and 1,073,704 shares
of the Adjusting Rate Preferred Stock.
Unless otherwise specified in the applicable Prospectus Supplement, the
transfer agent and registrar for each series of Preferred Stock will be American
Stock Transfer & Trust Company, whose principal offices are located at 40 Wall
Street, New York, New York 10005.
DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is subject in
all respects to the applicable provisions of the DGCL and the Certificate of
Incorporation. The Company is
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presently authorized to issue 100,000,000 shares of Common Stock, par value
$0.01 per share. At the close of business on July 15, 1998, an aggregate of
8,260,622 shares of Common Stock were outstanding.
The holders of shares of Common Stock are entitled to one vote for each
share on all matters submitted to a vote of common stockholders. Except as
otherwise provided by law or by the Certificate of Incorporation (including all
rights of holders of the Company's outstanding series of preferred stock to vote
on certain matters under certain circumstances) or by the by-laws of the
Company, the holders of shares of Common Stock exclusively possess the voting
power for the election of directors and for all other purposes. Except as
otherwise provided by law, the Certificate of Incorporation or the by-laws of
the Company, the vote of the holders of at least a majority of the outstanding
shares of Common Stock who are present, in person or by proxy, at a meeting at
which a quorum is present is required to take action. There is no provision in
the Certificate of Incorporation for cumulative voting with respect to the
election of directors of the Company. Directors of the Company are elected by a
plurality of the votes of the shares entitled to vote in the election of
directors. Each share of Common Stock is entitled to participate equally in
dividends, when, as and if declared by the board of directors of the Company,
and in the distribution of net assets in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, subject in
all cases to any prior rights of outstanding shares of preferred stock of the
Company. The shares of Common Stock have no preemptive or conversion rights,
redemption rights or sinking fund provisions and are not subject to calls,
assessments or rights of redemption by the Company.
As set forth in the Certificate of Incorporation, subject to certain
limited exceptions (including the prior approval of the board of directors of
the Company), during the period (the "Restricted Transfer Period") beginning on
July 3, 1995 (the "Effective Date") and ending on the earlier of (1) the
expiration of 15 years after the Effective Date and (2) the first day of the
taxable year of the Company to which no Tax Benefits (as such term is defined
below) may be carried forward by the Company, the shares of Common Stock may not
be sold or otherwise transferred to any transferee (including a group acting in
concert) who directly or indirectly owns 4.75% or more of the outstanding shares
of the Common Stock or any other class of securities of the Company similarly
restricted or, after giving effect to the sale or transfer, would directly or
indirectly own more than 4.75% of the outstanding shares of the Common Stock or
any other class of securities of the Company similarly restricted. In addition,
any transfer of Common Stock by a transferor who directly or indirectly owns or
is treated as owning 5% or more of the outstanding shares of the Common Stock
shall be void ab initio and shall not be effective to transfer any of such
shares of Common Stock to the purported transferee. "Tax Benefits" is defined as
net operating loss carryovers, capital loss carryovers, general business credit
carryovers, alternative minimum tax carryovers, foreign tax credit carryovers
and any net unrealized built-in losses.
The Company is a Delaware corporation and is subject to Section 203
("Section 203") of the DGCL. In general, Section 203 will prevent an "interested
stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) of the Company from engaging in a
"business combination" (as therein defined) with the Company for three years
following the date such person became an interested stockholder, unless (i)
before such person became an interested stockholder, the Board of Directors
approved the business combination in question, or the transaction which resulted
in such person becoming an
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interested stockholder; (ii) upon consummation of the transaction that resulted
in the interested stockholder becoming such, the interested stockholder owns at
least 85% of the voting stock of the Company outstanding at the time such
transaction commenced (excluding stock held by directors who are also officers
of the Company and by employee stock plans that do not provide employees with
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) following the transaction
in which such person became an interested stockholder, the business combination
is approved by the Board of Directors and authorized at a meeting of
stockholders by the affirmative vote of the holders of not less than 66-2/3% of
the outstanding voting stock of the Company not owned by the interested
stockholder. Under Section 203, the restrictions described above do not apply to
certain business combinations proposed by an interested stockholder following
the announcement (or notification) of one of certain extraordinary transactions
involving the Company and a person who had not been an interested stockholder
during the preceding three years or who became an interested stockholder with
the approval of the Board of Directors, and which transactions are approved or
not opposed by a majority of the members of the Board of Directors then in
office who were directors prior to any person becoming an interested stockholder
during the previous three years or were recommended for election or elected to
succeed such directors by a majority of such directors.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, whose principal offices are located at 40 Wall Street,
New York, New York 10005.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING DISCUSSION IS A SUMMARY OF CERTAIN OF THE SIGNIFICANT
FEDERAL INCOME TAX CONSIDERATIONS IN RESPECT OF THE COMPANY AND THE OFFERED
SECURITIES. NO LEGAL OPINIONS WILL BE RENDERED WITH RESPECT TO SUCH
CONSIDERATIONS AND NO RULINGS HAVE BEEN REQUESTED FROM THE IRS. THE FOLLOWING
DISCUSSION DOES NOT ADDRESS ANY ASPECT OF STATE AND LOCAL TAXATION, INCLUDING,
WITHOUT LIMITATION, THE EFFECT OF STATE LAW LIMITATIONS ON THE USE OF THE
COMPANY'S NOLS.
THIS SUMMARY IS BASED ON THE TAX CODE, TREASURY REGULATIONS PROMULGATED
AND PROPOSED THEREUNDER, JUDICIAL DECISIONS AND PUBLISHED ADMINISTRATIVE RULES
AND PRONOUNCEMENTS OF THE IRS AS IN EFFECT ON THE DATE HEREOF OR, IN THE CASE OF
THE TAX CONSEQUENCES OF THE MERGER AND RELATED TRANSACTIONS, ON THE DATE OR
DATES THEREOF. CHANGES IN SUCH RULES OR NEW INTERPRETATIONS THEREOF MAY HAVE
RETROACTIVE EFFECT AND COULD THEREFORE SIGNIFICANTLY AFFECT THE TAX CONSEQUENCES
DESCRIBED BELOW.
CERTAIN TAX CONSEQUENCES OF THE MERGER
The Merger. On July 3, 1995, J-Hawk merged with and into FCBOT. The
Company believes that the Merger constituted a tax-free reorganization under the
Tax Code. Therefore,
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no gain or loss was recognized by J-Hawk as a result of the reorganization and
the initial tax basis of the Company in the acquired assets was the same as it
was in the hands of J-Hawk immediately prior to the reorganization. The Company
did not obtain any rulings from the IRS or any legal opinions from counsel with
respect to any tax aspects of the Merger and there can be no assurance that the
Company's position will be sustained.
The Spin-off. Prior to, and in anticipation of, the consummation of the
Merger, J-Hawk formed Combined Financial Corporation ("Combined Financial"), to
which it transferred certain of its assets and assigned certain of its
indebtedness, and then distributed the stock of Combined Financial to its
shareholders (the "Spin-off"). The Company believes that the transfer of these
assets from J-Hawk to Combined Financial and the distribution of the Combined
Financial stock by J-Hawk to its shareholders constituted a tax free spin-off
under section 355 of the Tax Code. However, no private letter ruling from the
IRS or opinion of counsel to that effect was sought or obtained, and there can
be no assurance that the Company's position will be sustained. If the Company's
position is sustained, then no gain or loss would be recognized by J-Hawk as a
result of the Spin-off. If the Company's position is not sustained, gain or loss
would be recognized in an amount equal to the difference between the fair market
value of the assets transferred to Combined Financial and their adjusted tax
basis at the time of the transfer, and any tax liability incurred by J-Hawk on
the Spin-off would be inherited by the Company as a consequence of the Merger.
Although the Company believes that there was not any significant gain realized
as a result of the consummation of the Spin-off, it is possible that the IRS
could contend both that the Spin-off was taxable to J-Hawk and that the value of
the assets transferred was greater than the value assigned to such assets by
J-Hawk. In such event, there might be taxable gain incurred by J-Hawk in
connection with the Spin-off that would be inherited by the Company, which gain
could not be offset by the Company's NOLs.
Net Operating Loss Carryforwards Generally. The Company believes that, as
a result of the Merger, approximately $596 million of NOLs were available to the
Company to offset future taxable income as of December 31, 1995. Since December
31, 1995, the Company estimates that it has generated an additional $12 million
in NOLs. Accordingly, as of December 31, 1997, the Company estimates that it had
approximately $608 million of NOLs available to offset future taxable income. In
this regard, the Tax Code provides that, for tax years beginning before August
6, 1997, a net operating loss for a taxable year may be carried back to offset
income in each of the three taxable years preceding the taxable year of such
loss and carried forward to each of the fifteen taxable years following the
taxable year of the loss. Under this provision of the Tax Code, the entire $608
million of the Company's NOLs may be carried forward to offset future taxable
income until the tax year 2005, subject to the discussion below. Thereafter, the
Company's NOLs begin to expire and (assuming that the Company has not previously
utilized any of its NOLs) the amount available to offset future taxable income
would be reduced as set forth below opposite the applicable tax year:
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<PAGE>
AMOUNT OF EXPIRING AMOUNT OF
NOLS AS OF END OF REMAINING
TAX YEAR PRIOR TAX YEAR NOLS AVAILABLE
-------- -------------- --------------
(Dollars in thousands)
2006.................. $ 68,147 $ 539,853
2007.................. 192,885 346,968
2008.................. 153,611 193,357
2009.................. 12,980 180,377
2010.................. 99,566 80,811
2011.................. 68,811 12,000
2012.................. --0-- 12,000
The amount of the foregoing NOLs is based upon factual and legal issues
with respect to which there can be no certainty. No ruling has been obtained
from the IRS regarding the amount or availability of the NOLs. The amount and
availability of such NOLs is therefore subject to audit and adjustment by the
IRS and it is possible that such NOLs could be significantly less than the
amounts set forth above.
Utilization of Net Operating Loss Carryforwards and other Tax Attributes
under Tax Code Sections 382, 383 and 384. In general, whenever there is a more
than 50% ownership change of a corporation during a three-year testing period,
the ownership change rules in section 382 of the Tax Code limit the
corporation's utilization of pre-change NOLs on an annual basis following the
ownership change to the product of the fair market value of the stock of the
corporation immediately before the ownership change and the "long-term tax
exempt rate" then in effect (which is an interest rate published monthly by the
IRS). A more than 50% ownership change occurs when the percentage of stock of
the corporation owned by one or more five-percent shareholders has increased by
more than 50 percentage points (determined by value) over the lowest percentage
of the corporation's stock owned by the same shareholders during the three-year
testing period. In any given year, the annual limitation imposed by section 382
may be increased by certain built-in gains realized after, but accruing
economically before, the ownership change and by the carryover of unused section
382 limitations from prior years. Pursuant to section 383 of the Tax Code, the
principles of section 382 similarly apply to certain other tax attributes (such
as general business credits, minimum tax credits, foreign tax credits and
capital loss carryovers).
The harsh effect of the ownership change rules of section 382 may be
ameliorated by an exception that applies in the case of federal bankruptcy
reorganizations. Under the so-called "section 382(l)(5) bankruptcy exception" to
section 382, if the reorganization results in an exchange by qualifying
creditors and stockholders of their claims and interests for at least 50% of the
debtor corporation's stock (determined by vote and value), then the general
ownership change rules will not apply. Instead, the debtor corporation will be
subject to a different tax regime under which NOLs are not limited on an annual
basis but are reduced by (i) the amount of interest deductions claimed during
the three taxable years preceding the date of the reorganization, and during the
part of the taxable year prior to and including the reorganization, in respect
of debt of the corporation converted into stock in the reorganization, and (ii)
in the case of a title 11 case filed on or before December 31, 1994 (such as
that of the Company), 50% of the excess of the amount of debt of the corporation
(other than indebtedness for interest included in clause (i)) satisfied with
stock in an exchange to which the former stock-for-debt exception from the
realization of discharge of indebtedness income applied over the value of the
stock so issued. Moreover, if the section 382(l)(5) bankruptcy
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<PAGE>
exception applies, section 382(l)(5)(D) provides that any further more than 50%
ownership change (as defined in section 382(g) of the Tax Code) of the debtor
within a two-year period will result in forfeiture of all of the debtor's NOLs
incurred through the date of such second ownership change.
The Company believes that a more than 50% ownership change occurred as a
result of the Merger. However, because of the application of the section
382(l)(5) bankruptcy exception, the Company believes that the general ownership
change rules of section 382 did not apply to limit the utilization of the
Company's NOLs. In addition, none of the mandatory reductions in the amount of
NOLs required by the section 382(l)(5) bankruptcy exception applied.
Accordingly, the Company believes that section 382 did not limit, or otherwise
reduce, the NOLs that existed at the time of the Merger and, therefore,
approximately $596 million of NOLs were available to the Company to offset
future taxable income as of December 31, 1995. In addition, the Company believes
that it has not experienced a more than 50% ownership change (as defined in
section 382(g) of the Tax Code) since the prior ownership change that occurred
as a result of the Merger and, therefore, that the Company's NOLs have not been
forfeited under section 382(l)(5)(D) and are not otherwise subject to an annual
limitation imposed by section 382. In order to prevent such a future change in
ownership, the Company's Certificate of Incorporation contains certain transfer
restrictions on the Company's capital stock, including the Common Stock. See
"Description of Common Stock." The Company also believes that section 383 did
not apply to limit the Company's utilization of certain other tax attributes
(such as general business credits, minimum tax credits, foreign tax credits and
capital loss carryovers).
Aside from sections 382 and 383, section 384 of the Tax Code provides
that, if the assets of a corporation are acquired by another corporation in a
reorganization described in subparagraphs (A), (C) or (D) of section 368(a)(1)
of the Tax Code, any built-in gain in the acquired assets that is recognized
(i.e., the "recognized built-in gain") during the five-year period beginning on
the acquisition date (i.e., the "recognition period") may not be offset by any
preacquisition loss (including NOLs and possible built-in losses). For purposes
of applying this rule, the term "recognized built-in gain" means any gain
recognized during the recognition period on the disposition of any asset except
to the extent that it is established by the acquiring corporation that (1) such
asset was not held on the acquisition date or (2) such gain exceeds the excess
(if any) of the fair market value of such asset on the acquisition date over the
adjusted tax basis of such asset on such date. Moreover, any item of income
which is properly taken into account for any recognition period taxable year but
which is attributable to periods before the acquisition date will be treated as
a recognized built-in gain for the taxable year in which it is properly taken
into account. The amount of the recognized built-in gains for any recognition
period taxable year cannot exceed the "net unrealized built-in gain" (as defined
in section 382(h) of the Tax Code) immediately before the acquisition date,
reduced by the recognized built-in gains for the prior years ending in the
recognition period which (but for the application of this rule) would have been
offset by preacquisition losses.
The Company has taken the position that the Merger was a reorganization
described in section 368(a)(1)(G) of the Tax Code and, therefore, section 384
does not apply to limit the Company's ability to use its NOLs to offset any
built-in gain that may be inherent in the assets acquired from J-Hawk. Based
upon a private letter ruling issued to another taxpayer, the Company believes
that the IRS may take a contrary position. If the IRS were successful in
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<PAGE>
challenging the Company's position, the Company would not be able to use its
NOLs to offset any such recognized built-in gains. The Company believes,
however, that even if its position with respect to section 384 is not sustained
in a dispute with the IRS, the amount of any built-in gain that may be inherent
in the assets acquired from J-Hawk and subject to section 384 will not have a
material adverse effect on the Company's consolidated financial position or
results of operations. In addition to potentially applying to the assets
acquired from J-Hawk, section 384 will apply to limit the Company's ability to
use its NOLs to offset any built-in gain that may be inherent in the assets of
Harbor Financial Mortgage Corporation acquired by the Company, and may limit the
Company's ability to use its NOLs to offset any built-in gain which may be
inherent in the assets of other corporations acquired by the Company.
Application of Tax Code Section 269. Pursuant to section 269(a) of the Tax
Code, the IRS may disallow a corporate tax benefit if the principal purpose for
(1) an acquisition of 50% or more (determined by vote or value) of the stock of
a corporation (see section 269(a)(1)) or (2) a tax-free acquisition, directly or
indirectly, of property of another corporation, which corporation was not
controlled by the acquiring corporation or its stockholders immediately prior to
such acquisition (see section 269(a)(2)), is the evasion or avoidance of federal
income tax by securing a corporate tax benefit that would not otherwise be
available. Thus, in addition to the limitations on, and reductions in, tax
attributes set forth in sections 382, 383 and 384, the IRS may assert that
section 269 authorizes it to disallow any deduction of the Company's NOLs if
section 269(a)(1) or section 269(a)(2) were to apply and the Merger is
determined to have been structured principally for tax avoidance purposes. This
determination is primarily a question of fact. In connection with a more than
50% ownership change(as defined in section 382(g) of the Tax Code) to which the
section 382(l)(5) bankruptcy exception (discussed above) applies, an acquisition
of control or property within the meaning of sections 269(a)(1) and 269(a)(2),
respectively, is presumed to be made for the principal purpose of tax avoidance
unless the corporation carries on more than an insignificant amount of an active
trade or business during and subsequent to the title 11 case.
Because certain J-Hawk shareholders owned FCBOT common stock prior to the
Merger such that former J-Hawk shareholders' aggregate ownership of FCBOT
immediately following the Merger exceeded 50%, an acquisition of control may
have occurred within the meaning of section 269(a)(1). Furthermore, even if such
an acquisition of control did not occur, section 269 may nevertheless be
rendered potentially applicable as a result of the Company's acquisition of
J-Hawk (see section 269(a)(2)). In either case, the Company does not believe
that section 269 will limit the utilization of the $596 million of NOLs
available to the Company as of December 31, 1995 because the Merger was
structured primarily for business reasons and the Company has retained and
carried on more than an insignificant amount of FCBOT's pre-bankruptcy active
trade or business. Nonetheless, there can be no assurance that the IRS will not
challenge the utilization of such NOLs under section 269 and, if challenged,
that the IRS would not be successful in disallowing all or a significant portion
of the Company's NOLs arising prior to the Merger.
CURRENT IRS AUDIT
The federal income tax returns of J-Hawk for the tax year ended December
31, 1994 and for the short tax year ended July 2, 1995 are currently being
audited by the IRS. To date, the IRS has not proposed any significant
adjustments to the tax returns as originally filed. The
32
<PAGE>
IRS, however, has not completed its audit and it is possible that future
adjustments to the tax returns could be proposed. None of the Company's federal
income tax returns are currently under audit.
ALTERNATIVE MINIMUM TAX
A corporation is required to pay alternative minimum tax to the extent
that 20% of the corporation's "alternative minimum taxable income" ("AMTI")
exceeds the corporation's regular tax liability for the year. AMTI is generally
equal to regular taxable income with certain adjustments. For purposes of
computing AMTI, a corporation is entitled to offset no more than 90% of its AMTI
with NOLs (as computed for alternative minimum tax purposes). Thus, if the
Company is subject to the alternative minimum tax, a federal tax of 2% (20% of
the 10% of AMTI not offset by NOLs) will apply to any net taxable income earned
by the Company that is otherwise offset by NOLs.
33
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities offered hereby (1) through
underwriters or dealers; (2) through agents; (3) directly to purchasers; or (4)
through a combination of any such methods of sale. Any such underwriter, dealer
or agent may be deemed to be an underwriter within the meaning of the Securities
Act. The Prospectus Supplement relating to the Offered Securities will set forth
their offering terms, including the name or names of any underwriters, dealers
or agents, the purchase price of the Offered Securities and the proceeds to the
Company from such sale, any underwriting discounts, commissions and other items
constituting compensation to underwriters, dealers or agents, any initial public
offering price, any discounts or concessions allowed or reallowed or paid by
underwriters or dealers to other dealers, and any securities exchanges on which
the Offered Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities
will be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such prevailing market prices, or at negotiated
prices. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of underwriters or dealers to purchase
the Offered Securities will be subject to certain conditions precedent and the
underwriters or dealers will be obligated to purchase all the Offered Securities
if any are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid by underwriters or dealers to other
dealers may be changed from time to time.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or agents to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject to any conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts. The underwriters and
other persons soliciting such contracts will have no responsibility for the
validity or performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
by the Company to payments they may be required to make in respect thereof. The
terms and conditions of such indemnification will be described in an applicable
Prospectus Supplement. Underwriters, dealers and agents may be
34
<PAGE>
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
Each series of Offered Securities other than Common Stock will be a new
issue of securities with no established trading market. Any underwriters to whom
Offered Securities are sold by the Company for public offering and sale may make
a market in such Offered Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any Offered
Securities.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by Weil, Gotshal & Manges LLP, Houston, Texas.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, have been incorporated herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
included in such Form 10-K, and upon the authority of said firm as experts in
accounting and auditing.
The combined financial statements of the WAMCO Partnerships as of December
31, 1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997, included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, have been incorporated herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
included in such Form 10-K, and upon the authority of said firm as experts in
accounting and auditing.
-----------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
-----------------------------
35
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Securities and Exchange Commission Registration Fee $ 73,750
Trustee's Fees and Expenses.......................... 25,000
Printing Expenses.................................... 100,000
Rating Agencies' Fees................................ 100,000
Legal Fees and Expenses.............................. 200,000
Accountants' Fees and Expenses....................... 100,000
Blue Sky Fees and Expenses........................... 5,000
-----------
Total............................................. $ 603,750
===========
- ---------------
* All amounts are estimated except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that no director of
the Company shall be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty or the duty of care as a director, except
for liability for breach of the director's duty of loyalty, acts or omissions
not in good faith or that involve intentional misconduct or knowing violations
of law, unlawful payment of dividends or stock purchases or redemptions, or
transactions in which the director derived an improper personal benefit. The
Company's Certificate of Incorporation provides for the indemnification of
directors and officers to the fullest extent permitted by Delaware law.
Generally, Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed action,
including any action by or in the right of the corporation (unless such person
was adjudged liable to the corporation, in which event indemnification is
permitted if, but only to the extent that, the court in which such action was
brought determined such indemnification is fair and reasonable) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving in such capacity for another corporation or
entity at the request of the corporation, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Such indemnification may
include all expenses (including attorneys' fees) and, in the case of any action
other than an action by or in the right of the corporation, all judgments, fines
and amounts paid in settlement, to the extent such expenses, judgments, fines
and amounts were actually paid and reasonably incurred by the indemnified party
in connection with such action.
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<PAGE>
ITEM 16. EXHIBITS
1.1* - Form of Underwriting Agreement
2.1 - Joint Plan of Reorganization by First City Bancorportion of Texas,
Inc., Official Committee of Equity Security Holders and J-Hawk
Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code,
Case No. 392-39474-HCA-11 (incorporated by reference herein to Exhibit
2.1 of the Company's Current Report on Form 8-K dated July 3, 1995
filed with the Commission on July 18, 1995)
2.2 - Agreement and Plan of Merger, dated as of July 3, 1995, by and between
First City Bancorporation of Texas, Inc. and J-Hawk Corporation
(incorporated herein by reference to Exhibit 2.2 of the Company's
Current Report on Form 8- K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.1 - Form of Indenture
4.2 - Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.3 - Certificate of Designations of the New Preferred Stock ($0.01 par
value) of the Company (incorporated herein by reference to Exhibit 4.1
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997)
4.4 - Bylaws of the Company (incorporated herein by reference to Exhibit 3.2
of the Company's Current Report on Form 8-K dated July 3, 1995 filed
with the Commission on July 18, 1995)
4.5 - Warrant Agreement, dated July 3, 1995, by and between the Company and
American Stock Transfer & Trust Company, as Warrant Agent
(incorporated herein by reference to Exhibit 4.2 of the Company's
Current Report on Form 8-K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.6 - Registration Rights Agreement, dated July 1, 1997, among the Company,
Richard J. Gillen, Bernice J. Gillen, Harbor Financial Mortgage
Company Employees Pension Plan, Lindsey Capital Corporation, Ed Smith
and Thomas E. Smith (incorporated herein by reference to Exhibit 4.3
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997)
5.1 - Opinion of Weil, Gotshal & Manges LLP, counsel for the Company
12.1 - Computation of Ratio of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of KPMG Peat Marwick LLP
23.3 - Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (set forth on signature page to this Registration
Statement)
25.1* - Statement of Eligibility of Trustee of Form T-1
- ---------------
* To be filed by amendment or incorporated herein by reference.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed with or
furnished to the Commission by the Company pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the
II-3
<PAGE>
provisions described under Item 15 above, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Waco, State of Texas, on July 16, 1998.
FIRSTCITY FINANCIAL CORPORATION
By: /s/ James R. Hawkins
-----------------------------------
James R. Hawkins
Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
James R. Hawkins, James T. Sartain and Matt A. Landry, Jr., and each of them,
his true and lawful attorneys-in-fact and agents with full power of substitution
and resubstitution, for him and in his name, place and stead, and in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or his or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
II-5
<PAGE>
Signature Title Date
--------- ----- ----
/s/ James R. Hawkins Chairman of the Board, July 16, 1998
- -------------------------- Chief Executive
James R. Hawkins Officer and Director
(principal executive officer)
/s/ Matt A. Landry, Jr. Executive Vice President, Chief July 16, 1998
- -------------------------- Administrative Officer and Director
Matt A. Landry, Jr. (principal financial officer and
accounting officer)
/s/ C. Ivan Wilson Director July 16, 1998
- --------------------------
C. Ivan Wilson
/s/ James T. Sartain Director July 16, 1998
- --------------------------
James T. Sartain
/s/ Rick R. Hagelstein Director July 16, 1998
- --------------------------
Rick R. Hagelstein
/s/ Richard Gillen Director July 16, 1998
- --------------------------
Richard Gillen
/s/ Richard E. Bean Director July 16, 1998
- --------------------------
Richard E. Bean
/s/ Bart A. Brown Director July 16, 1998
- --------------------------
Bart A. Brown
/s/ Donald J. Douglass Director July 16, 1998
- --------------------------
Donald J. Douglass
/s/ Thomas E. Smith Director July 16, 1998
- --------------------------
Thomas E. Smith
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
- --- -------
1.1* - Form of Underwriting Agreement
2.1 - Joint Plan of Reorganization by First City Bancorportion of Texas,
Inc., Official Committee of Equity Security Holders and J-Hawk
Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code,
Case No. 392-39474-HCA-11 (incorporated by reference herein to Exhibit
2.1 of the Company's Current Report on Form 8-K dated July 3, 1995
filed with the Commission on July 18, 1995)
2.2 - Agreement and Plan of Merger, dated as of July 3, 1995, by and between
First City Bancorporation of Texas, Inc. and J-Hawk Corporation
(incorporated herein by reference to Exhibit 2.2 of the Company's
Current Report on Form 8- K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.1 - Form of Indenture
4.2 - Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.3 - Certificate of Designations of the New Preferred Stock ($0.01 par
value) of the Company (incorporated herein by reference to Exhibit 4.1
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997)
4.4 - Bylaws of the Company (incorporated herein by reference to Exhibit 3.2
of the Company's Current Report on Form 8-K dated July 3, 1995 filed
with the Commission on July 18, 1995)
4.5 - Warrant Agreement, dated July 3, 1995, by and between the Company and
American Stock Transfer & Trust Company, as Warrant Agent
(incorporated herein by reference to Exhibit 4.2 of the Company's
Current Report on Form 8-K dated July 3, 1995 filed with the
Commission on July 18, 1995)
4.6 - Registration Rights Agreement, dated July 1, 1997, among the Company,
Richard J. Gillen, Bernice J. Gillen, Harbor Financial Mortgage
Company Employees Pension Plan, Lindsey Capital Corporation, Ed Smith
and Thomas E. Smith (incorporated herein by reference to Exhibit 4.3
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997)
5.1 - Opinion of Weil, Gotshal & Manges LLP, counsel for the Company
12.1 - Computation of Ratio of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of KPMG Peat Marwick LLP
23.3 - Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (set forth on signature page to this Registration
Statement)
25.1* - Statement of Eligibility of Trustee of Form T-1
- ---------------
* To be filed by amendment or incorporated herein by reference.
EXHIBIT 4.1
FIRSTCITY FINANCIAL CORPORATION
and
--------------------------------,
Trustee
INDENTURE
Dated as of __________________
Providing for Issuance of Securities in Series
Exhibit 4.1 - 1
HOFS02...:\92\54892\0011\1612\IND7168N.480
<PAGE>
TABLE OF CONTENTS
PAGE
Recitals of the Company..................................................... 1
Agreements of the Parties................................................... 1
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions............................................. 1
Act...................................................... 2
Affiliate................................................ 2
Authenticating Agent..................................... 2
Board of Directors....................................... 2
Board Resolution......................................... 2
Business Day............................................. 2
Commission............................................... 2
Company.................................................. 3
Company Request", "Company Order" and "Company Consent... 3
Corporate Trust Office................................... 3
Debt..................................................... 3
Defaulted Interest....................................... 3
Depositary............................................... 3
Domestic Subsidiary...................................... 3
Event of Default......................................... 3
Global Security.......................................... 3
Holder................................................... 4
"Indenture" or "this Indenture".......................... 4
Independent.............................................. 4
Interest................................................. 4
Interest Payment Date.................................... 4
Maturity................................................. 4
Mortgage................................................. 4
Officers' Certificate.................................... 4
Opinion of Counsel....................................... 4
Original Issue Discount Security......................... 5
Outstanding.............................................. 5
Paying Agent............................................. 6
Person................................................... 6
Place of Payment......................................... 6
Predecessor Securities................................... 6
Redemption Date.......................................... 6
Exhibit 4.1 - i
<PAGE>
Redemption Price......................................... 6
Regular Record Date...................................... 6
Repayment Date........................................... 6
Repayment Price.......................................... 6
Responsible Officer...................................... 6
Security" or "Securities................................. 7
Securityholder........................................... 7
Security Register........................................ 7
Security Registrar....................................... 7
Special Record Date...................................... 7
Stated Maturity.......................................... 7
Subsidiary............................................... 7
Trust Indenture Act...................................... 7
Trustee.................................................. 7
Vice President........................................... 7
Voting Stock............................................. 8
Section 102. Compliance Certificates and Opinions.................... 8
Section 103. Form of Documents Delivered to Trustee.................. 8
Section 104. Acts of Securityholders................................. 9
Section 105. Notices, Etc., to Trustee and Company................... 10
Section 106. Notices to Securityholders; Waiver...................... 10
Section 107. Conflict with Trust Indenture Act....................... 11
Section 108. Effect of Headings and Table of Contents................ 11
Section 109. Successors and Assigns.................................. 11
Section 110. Separability Clause..................................... 11
Section 111. Benefits of Indenture................................... 11
Section 112. Governing Law........................................... 11
Section 113. Counterparts............................................ 11
Section 114. Judgment Currency....................................... 12
ARTICLE TWO
Security Forms
Section 201. Forms Generally......................................... 12
Section 202. Forms of Securities..................................... 13
Section 203. Form of Trustee's Certificate of Authentication......... 13
Section 204. Securities Issuable in the Form of a Global Security.... 13
Exhibit 4.1 - ii
<PAGE>
ARTICLE THREE
The Securities
Section 301. General Title; General Limitations; Issuable in
Series; Terms of Particular Series...................... 15
Section 302. Denominations........................................... 18
Section 303. Execution, Authentication and Delivery and Dating....... 18
Section 304. Temporary Securities.................................... 19
Section 305. Registration, Transfer and Exchange..................... 20
Section 306. Mutilated, Destroyed, Lost and Stolen Securities........ 21
Section 307. Payment of Interest; Interest Rights Preserved.......... 22
Section 308. Persons Deemed Owners................................... 23
Section 309. Cancellation............................................ 23
Section 310. Computation of Interest................................. 24
Section 311. Medium-Term Securities.................................. 24
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture................. 24
Section 402. Application of Trust Money.............................. 25
Section 403. Satisfaction, Discharge and Defeasance of
Securities of any Series................................ 26
ARTICLE FIVE
Remedies
Section 501. Events of Default....................................... 28
Section 502. Acceleration of Maturity; Rescission and Annulment...... 29
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.............................................. 30
Section 504. Trustee May File Proofs of Claim........................ 31
Section 505. Trustee May Enforce Claims Without Possession of
Securities.............................................. 32
Section 506. Application of Money Collected.......................... 32
Section 507. Limitation on Suits..................................... 32
Section 508. Unconditional Right of Securityholders to Receive
Principal, Premium and Interest......................... 33
Section 509. Restoration of Rights and Remedies...................... 33
Section 510. Rights and Remedies Cumulative.......................... 33
Section 511. Delay or Omission Not Waiver............................ 34
Section 512. Control by Securityholders.............................. 34
Section 513. Waiver of Past Defaults................................. 34
Exhibit 4.1 - iii
<PAGE>
Section 514. Undertaking for Costs................................... 35
Section 515. Waiver of Stay or Extension Laws........................ 35
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities..................... 35
Section 602. Notice of Defaults...................................... 36
Section 603. Certain Rights of Trustee............................... 37
Section 604. Not Responsible for Recitals or Issuance of Securities.. 38
Section 605. May Hold Securities..................................... 38
Section 606. Money Held in Trust..................................... 38
Section 607. Compensation and Reimbursement.......................... 38
Section 608. Disqualification; Conflicting Interests................. 39
Section 609. Corporate Trustee Required; Eligibility................. 39
Section 610. Resignation and Removal; Appointment of Successor....... 39
Section 611. Acceptance of Appointment by Successor.................. 41
Section 612. Merger, Conversion, Consolidation or Succession
to Business............................................. 41
Section 613. Preferential Collection of Claims Against Company....... 42
Section 614. Appointment of Authenticating Agent..................... 46
ARTICLE SEVEN
Securityholders' Lists and Reports by Trustee and Company
Section 701. Company To Furnish Trustee Names and Addresses of
Securityholders......................................... 47
Section 702. Preservation of Information; Communications to
Securityholders......................................... 48
Section 703. Reports by Trustee...................................... 49
Section 704. Reports by Company...................................... 50
ARTICLE EIGHT
Consolidation, Merger, Conveyance or Transfer
Section 801. Company May Consolidate, Etc., Only on Certain Terms.... 51
Section 802. Successor Corporation Substituted....................... 52
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of
Securityholders......................................... 52
Section 902. Supplemental Indentures With Consent of
Securityholders......................................... 53
Exhibit 4.1 - iv
<PAGE>
Section 903. Execution of Supplemental Indentures.................... 54
Section 904. Effect of Supplemental Indentures....................... 54
Section 905. Conformity with Trust Indenture Act..................... 54
Section 906. Reference in Securities to Supplemental Indentures...... 54
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest............ 55
Section 1002. Maintenance of Office or Agency....................... 55
Section 1003. Money for Security Payments to be Held in Trust....... 55
Section 1004. Statement as to Compliance............................ 57
Section 1005. Corporate Existence................................... 57
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.............................. 57
Section 1102. Election to Redeem; Notice to Trustee................. 57
Section 1103. Selection by Trustee of Securities to Be Redeemed..... 58
Section 1104. Notice of Redemption.................................. 58
Section 1105. Deposit of Redemption Price........................... 59
Section 1106. Securities Payable on Redemption Date................. 59
Section 1107. Securities Redeemed in Part........................... 60
Section 1108. Provisions with Respect to any Sinking Funds.......... 60
Exhibit 4.1 - v
<PAGE>
THIS INDENTURE between FIRSTCITY FINANCIAL CORPORATION, a Delaware
corporation (hereinafter called the "Company") having its principal office at
6400 Imperial Drive, Waco, Texas 76712 and
________________________________________, a _____________________________
incorporated and existing under the laws of ______________________, trustee
(hereinafter called the "Trustee"), is made and entered into
as of this ______ day of _________________.
Recitals of the Company
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its debentures, notes, bonds or other
evidences of indebtedness, to be issued in one or more fully registered series.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Agreements of the Parties
To set forth or to provide for the establishment of the terms and
conditions upon which the Securities are and are to be authenticated, issued and
delivered, and in consideration of the premises and the purchase of Securities
by the Holders thereof, it is mutually covenanted and agreed as follows, for the
equal and proportionate benefit of all Holders of the Securities or of a series
thereof, as the case may be:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions. For all purposes of this Indenture and of any
indenture supplemental hereto, 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 Trust Indenture
Act or by Commission rule under the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to
Exhibit 4.1 - 1
<PAGE>
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States of America at the date
of such computation;
(4) all references in this instrument to designated "Articles", "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of this instrument as originally executed. 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; and
(5) "including" and words of similar import shall be deemed to be followed
by "without limitation".
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Securityholder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
authenticate Securities under Section 614.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted 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" means each day which is neither a Saturday, Sunday or other
day on which banking institutions in the pertinent Place or Places of Payment
are authorized or required by law or executive order to be closed.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this 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.
Exhibit 4.1 - 2
<PAGE>
"Company" means the Person named as the "Company" in the first paragraph
of this instrument 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", "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company by its Chairman of the Board, President or a Vice President, and by its
Treasurer, an Assistant Treasurer, Controller, an Assistant Controller,
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
____________________________, at which at any particular time its corporate
trust business shall be principally administered, which office at the date
hereof is located at ______________________________, except that with respect to
the presentation of Securities for payment or for registration of transfer and
exchange, such term shall mean the office or the agency of the Trustee in said
city at which at any particular time its corporate agency business shall be
conducted, which office at the date hereof is located _______________________.
"Debt" means indebtedness for money borrowed.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, unless otherwise specified by the Company pursuant to
either Section 204 or 301, with respect to Securities of any series issuable or
issued as a Global Security, The Depository Trust Company, New York, New York,
or any successor thereto registered as a clearing agency under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation.
"Domestic Subsidiary" means a Subsidiary which is incorporated in the
United States of America or any State thereof.
"Event of Default" has the meaning specified in Article Five.
"Global Security" means with respect to any series of Securities issued
hereunder, a Security which is executed by the Company and authenticated and
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with this Indenture and an indenture supplemental
hereto, if any, or Board Resolution and pursuant to a Company Request, which
shall be registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Securities of such series or any
portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due, and interest rate or method of determining interest.
Exhibit 4.1 - 3
<PAGE>
"Holder", when used with respect to any Security, means a Securityholder.
"Indenture" or "this 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.
"Independent", when used with respect to any specified Person, means such
a Person who (1) is in fact independent, (2) does not have any direct financial
interest or any material indirect financial interest in the Company or in any
other obligor upon the Securities or in any Affiliate of the Company or of such
other obligor, and (3) is not connected with the Company or such other obligor
or any Affiliate of the Company or of such other obligor, as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Trustee, such Person shall be
appointed by a Company Order and approved by the Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read this definition and that the signer is Independent within the meaning
hereof.
"Interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any series of
Securities, means the Stated Maturity of any installment of interest on those
Securities.
"Maturity", when used with respect to any Securities, means the date on
which the principal of any such Security becomes due and payable as therein or
herein provided, whether on a Repayment Date, at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee. Wherever this
Indenture requires that an Officers' Certificate be signed also by an engineer
or an accountant or other expert, such engineer, accountant or other expert
(except as otherwise expressly provided in this Indenture) may be in the employ
of the Company, and shall be acceptable to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may (except
as otherwise expressly provided in this Indenture) be an employee of or of
counsel to the
Exhibit 4.1 - 4
<PAGE>
Company. Such counsel shall be acceptable to the Trustee, whose acceptance shall
not be unreasonably withheld.
"Original Issue Discount Security" means (i) 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, and (ii) any other
Security deemed an Original Issue Discount Security for United States Federal
income tax purposes.
"Outstanding", when used with respect to Securities or Securities of any
series, means, as of the date of determination, all such Securities theretofore
authenticated and delivered under this Indenture, except:
(i) such Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) such Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory
to the Trustee has been made; and
(iii) such Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture, or which shall have been paid pursuant to the terms of Section
306 (except with respect to any such Security as to which proof
satisfactory to the Trustee is presented that such Security is held by a
person in whose hands such Security is a legal, valid and binding
obligation of the Company).
In determining whether the Holders of the requisite principal amount of
such Securities Outstanding have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (i) the principal amount of any
Original Issue Discount Security that shall be deemed to be Outstanding shall be
the amount of the principal thereof that would be due and payable as of the date
of the taking of such action upon a declaration of acceleration of the Maturity
thereof and (ii) 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. In determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer assigned to the corporate trust department of the Trustee knows to be
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor 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
to act as owner with respect to
Exhibit 4.1 - 5
<PAGE>
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" means with respect to any series of Securities issued
hereunder the city or political subdivision so designated with respect to the
series of Securities in question in accordance with the provisions of Section
301.
"Predecessor Securities" 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 lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
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 specified in the Security at which it is to be redeemed pursuant
to this Indenture.
"Regular Record Date" for the interest payable on any Security on any
Interest Payment Date means the date specified in such Security as the Regular
Record Date.
"Repayment Date", when used with respect to any Security to be repaid,
means the date fixed for such repayment pursuant to such Security.
"Repayment Price", when used with respect to any Security to be repaid,
means the price at which it is to be repaid pursuant to such Security.
"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, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
senior trust officer or trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust
Exhibit 4.1 - 6
<PAGE>
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Security" or "Securities" means any note or notes, bond or bonds,
debenture or debentures, or any other evidences of indebtedness, as the case may
be, of any series authenticated and delivered from time to time under this
Indenture.
"Securityholder" means a Person in whose name a Security is registered in
the Security Register.
"Security Register" shall have the meaning specified in Section 305.
"Security Registrar" means the Person who keeps the Security Register
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest (as
defined in Section 307) means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity" when used with respect to any Security or any
installment of principal thereof or interest thereon means the date specified in
such Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" of any specified corporation means any corporation at least a
majority of whose outstanding Voting Stock shall at the time be owned, directly
or indirectly, by the specified corporation or by one or more of its
Subsidiaries, or both.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, as in force at the date as of
which this instrument was executed except as provided in Section 905.
"Trustee" means the Person named as the Trustee in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean and
include each Person who is then a Trustee hereunder. If at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Vice President" when used with respect to the Company or the Trustee
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president", including, without
limitation, an assistant vice president.
Exhibit 4.1 - 7
<PAGE>
"Voting Stock", as applied to the stock of any corporation, means stock of
any class or classes (however designated) having by the terms thereof ordinary
voting power to elect a majority of the members of the board of directors (or
other governing body) of such corporation other than stock having such power
only by reason of the happening of a contingency.
Section 102. Compliance Certificates and Opinions. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such Counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents 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 (except for the written statement
required by Section 1004) shall include
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(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 covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
the other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless
Exhibit 4.1 - 8
<PAGE>
such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters is
in the possession of the Company, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Securityholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Securityholders or Securityholders of any
series may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Company. If any Securities are denominated in coin or currency other than that
of the United States, then for the purposes of determining whether the Holders
of the requisite principal amount of Securities have taken any action as herein
described, the principal amount of such Securities shall be deemed to be that
amount of United States dollars that could be obtained for such principal amount
on the basis of the spot rate of exchange into United States dollars for the
currency in which such Securities are denominated (as evidenced to the Trustee
by an Officers' Certificate) as of the date the taking of such action by the
Holders of such requisite principal amount is evidenced to the Trustee as
provided in the immediately preceding sentence. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Securityholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness to such
execution or by the certificate of any 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 an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
Exhibit 4.1 - 9
<PAGE>
(c) The ownership of Securities shall be proved by the Security Register.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, by Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Securities
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Securities Outstanding shall be computed as of the record date;
provided that no such authorization, agreement or consent by the Holders on the
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind the Holder of every
Security issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by the Trustee or
the Company in reliance thereon whether or not notation of such action is made
upon such Security.
Section 105. Notices, Etc., to Trustee and Company. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Securityholders 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 Securityholder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Securityholder shall be
sufficient for every purpose hereunder (except as provided in Section 501(4) or,
in the case of a request for repayment, as specified in the Security carrying
the right to repayment) 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 instrument or at any other address previously
furnished in writing to the Trustee by the Company.
Section 106. Notices to Securityholders; Waiver. Where this Indenture or
any Security provides for notice to Securityholders of any event, such notice
shall be sufficiently given (unless otherwise herein or in such Security
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Securityholder 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
Exhibit 4.1 - 10
<PAGE>
date, prescribed for the giving of such notice. In any case where notice to
Securityholders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Securityholder shall
affect the sufficiency of such notice with respect to other Securityholders.
Where this Indenture or any Security 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 Securityholders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or otherwise, it shall be impractical to mail notice
of any event to any Securityholder when such notice is required to be given
pursuant to any provision of this Indenture, then any method of notification as
shall be satisfactory to the Trustee and the Company shall be deemed to be a
sufficient giving of such notice.
Section 107. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with the duties imposed by any of Sections 310 to
317, inclusive, of the Trust Indenture Act through the operation of Section
318(c) thereof, such imposed duties shall control.
Section 108. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 109. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
Section 110. Separability Clause. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 111. Benefits of Indenture. Nothing in this Indenture or in any
Securities, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Authenticating Agent or Paying Agent,
the Security Registrar and the Holders of Securities (or such of them as may be
affected thereby), any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 112. Governing Law. This Indenture shall be construed in
accordance with and governed by the laws of the State of New York.
Section 113. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Exhibit 4.1 - 11
<PAGE>
Section 114. Judgment Currency. The Company agrees, to the fullest extent
that it may effectively do so under applicable law, that (a) if for the purpose
of obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of, or premium or interest, if any, on the Securities
of any series (the "Required Currency") into a currency in which a judgment will
be rendered (the "Judgment Currency"), the rate of exchange used shall be the
rate at which in accordance with normal banking procedures the Trustee could
purchase in the City of New York the Required Currency with the Judgment
Currency on the New York Banking Day (as defined below) preceding that on which
final unappealable judgment is given and (b) its obligations under this
Indenture to make payments in the Required Currency (i) shall not be discharged
or satisfied by any tender, or any recovery pursuant to any judgment (whether or
not entered in accordance with subsection (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in the City of New York or a day on which banking institutions in
the City of New York are authorized or required by law or executive order to
close.
ARTICLE TWO
Security Forms
Section 201. Forms Generally. The Securities shall have such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon, as may be
required to comply with applicable laws or regulations or with the rules of any
securities exchange, or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities, subject, with
respect to the Securities of any series, to the rules of any securities exchange
on which such Securities are listed.
Exhibit 4.1 - 12
<PAGE>
Section 202. Forms of Securities. Each Security shall be in one of the
forms approved from time to time by or pursuant to a Board Resolution, or
established in one or more indentures supplemental hereto. Prior to the delivery
of a Security to the Trustee for authentication in any form approved by or
pursuant to a Board Resolution, the Company shall deliver to the Trustee the
Board Resolution by or pursuant to which such form of Security has been
approved, which Board Resolution shall have attached thereto a true and correct
copy of the form of Security which has been approved thereby or, if a Board
Resolution authorizes a specific officer or officers to approve a form of
Security, a certificate of such officer or officers approving the form of
Security attached thereto. Any form of Security approved by or pursuant to a
Board Resolution must be acceptable as to form to the Trustee, such acceptance
to be evidenced by the Trustee's authentication of Securities in that form or a
certificate signed by a Responsible Officer of the Trustee and delivered to the
Company.
Section 203. Form of Trustee's Certificate of Authentication. The form of
Trustee's Certificate of Authentication for any Security issued pursuant to this
Indenture shall be substantially as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
------------------------------
as Trustee,
By:___________________________
Authorized Signatory
Section 204. Securities Issuable in the Form of a Global Security. (a) If
the Company shall establish pursuant to Sections 202 and 301 that the Securities
of a particular series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee or its
agent shall, in accordance with Section 303 and the Company Request delivered to
the Trustee or its agent thereunder, authenticate and deliver such Global
Security or Securities, which (i) shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, the Outstanding Securities
of such series to be represented by such Global Security or Securities, or such
portion thereof as the Company shall specify in a Company Request, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or its nominee, (iii) shall be delivered by the Trustee or its agent to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Unless and until it is exchanged
in whole
Exhibit 4.1 - 13
<PAGE>
or in part for the individual Securities represented hereby, this Global
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
(b) Notwithstanding any other provisions of this Section 204 or of Section
305, and subject to the provisions of paragraph (c) below, unless the terms of a
Global Security expressly permit such Global Security to be exchanged in whole
or in part for individual Securities, a Global Security may be transferred, in
whole but not in part and in the manner provided in Section 305, only to a
nominee of the Depositary for such Global Security, or to the Depositary, or a
successor Depositary for such Global Security selected or approved by the
Company, or to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time the Depositary for the Securities for such series
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, or other applicable statute or regulation, the Company shall
appoint a successor Depositary with respect to such Global Security. If a
successor Depositary for such Global Security is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will execute, and the Trustee or its agent, upon
receipt of a Company Request for the authentication and delivery of individual
Securities of such series in exchange for such Global Security, will
authenticate and deliver, individual Securities of such series of like tenor and
terms in an aggregate principal amount equal to the principal amount of the
Global Security in exchange for such Global Security.
(ii) The Company may at any time and in its sole discretion
determine that the Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the
Company will execute, and the Trustee, upon receipt of a Company Request
for the authentication and delivery of individual Securities of such
series in exchange in whole or in part for such Global Security, will
authenticate and deliver individual Securities of such series of like
tenor and terms in definitive form in an aggregate principal amount equal
to the principal amount of such Global Security or Securities representing
such series or portion thereof in exchange for such Global Security or
Securities.
(iii) If specified by the Company pursuant to Sections 202 and 301
with respect to Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such
Global Security in exchange in whole or in part for individual Securities
of such series of like tenor and terms in definitive form on such terms as
are acceptable to the Company and such Depositary. Thereupon the
Exhibit 4.1 - 14
<PAGE>
Company shall execute, and the Trustee or its agent shall authenticate and
deliver, without service charge, (1) to each Person specified by such
Depositary a new Security or Securities of the same series of like tenor
and terms and of any authorized denomination as requested by such Person
in aggregate principal amount equal to and in exchange for such Person's
beneficial interest in the Global Security; and (2) to such Depositary a
new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount
of the surrendered Global Security and the aggregate principal amount of
Securities delivered to the Holders thereof.
(iv) In any exchange provided for in any of the preceding three
paragraphs, the Company will execute and the Trustee or its agent will
authenticate and deliver individual Securities in definitive registered
form in authorized denominations. Upon the exchange of the entire
principal amount of a Global Security for individual Securities, such
Global Security shall be cancelled by the Trustee or its agent. Except as
provided in the preceding paragraph, Securities issued in exchange for a
Global Security pursuant to this Section shall be registered in such names
and in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or the Security
Registrar. The Trustee or the Security Registrar shall deliver such
Securities to the Persons in whose names such Securities are so
registered.
ARTICLE THREE
The Securities
Section 301. General Title; General Limitations; Issuable in Series; Terms
of Particular Series. The aggregate principal amount of Securities which may be
authenticated and delivered and Outstanding under this Indenture is not limited.
The Securities may be issued in one or more series up to an aggregate
principal amount of Securities as from time to time may be authorized by the
Board of Directors. All Securities of each series under this Indenture shall in
all respects be equally and ratably entitled to the benefits hereof with respect
to such series without preference, priority or distinction on account of the
actual time of the authentication and delivery or Stated Maturity of the
Securities of such series.
Each series of Securities shall be created either by or pursuant to a
Board Resolution or by or pursuant to an indenture supplemental hereto. The
Securities of each such series may bear such date or dates, be payable at such
place or places, have such Stated Maturity or Maturities, be issuable at such
premium over or discount from their face value, bear interest at such rate or
rates (which may be fixed or floating), from such date or dates, payable in such
Exhibit 4.1 - 15
<PAGE>
installments and on such dates and at such place or places to the Holders of
Securities registered as such on such Regular Record Dates, or may bear no
interest, and may be redeemable or repayable at such Redemption Price or Prices
or Repayment Price or Prices, as the case may be, whether at the option of the
Holder or otherwise, and upon such terms, all as shall be provided for in or
pursuant to the Board Resolution or in or pursuant to the supplemental indenture
creating that series. There may also be established in or pursuant to a Board
Resolution or in or pursuant to a supplemental indenture prior to the issuance
of Securities of each such series, provision for:
(1) the exchange or conversion of the Securities of that series, at the
option of the Holders thereof, for or into new Securities of a different series
or other securities or other property, including shares of capital stock of the
Company or any subsidiary of the Company or securities directly or indirectly
convertible into or exchangeable for any such shares;
(2) a sinking or purchase fund or other analogous obligation;
(3) if other than U.S. dollars, the currency or currencies or units based
on or related to currencies (including European Currency Units) in which the
Securities of such series shall be denominated and in which payments of
principal of, and any premium and interest on, such Securities shall or may be
payable;
(4) if the principal of (and premium, if any) or interest, if any, on the
Securities of such series are to be payable, at the election of the Company or a
holder thereof, in a currency or currencies or units based on or related to
currencies (including European Currency Units) other than that in which the
Securities are stated to be payable, the period or periods within which, and the
terms and conditions upon which, such election may be made;
(5) if the amount of payments of principal of (and premium, if any) or
interest, if any, on the Securities of such series may be determined with
reference to an index based on (i) a currency or currencies or units based on or
related to currencies (including European Currency Units) other than that in
which the Securities are stated to be payable, (ii) changes in the price of one
or more other securities or groups or indexes of securities or (iii) changes in
the prices of one or more commodities or groups or indexes of commodities, or
any combination of the foregoing, the manner in which such amounts shall be
determined;
(6) if the aggregate principal amount of the Securities of that series is
to be limited, such limitations;
(7) the exchange of Securities of that series, at the option of the
Holders thereof, for other Securities of the same series of the same aggregate
principal amount of a different authorized kind or different authorized
denomination or denominations, or both;
Exhibit 4.1 - 16
<PAGE>
(8) the appointment by the Trustee of an Authenticating Agent in one or
more places other than the location of the office of the Trustee with power to
act on behalf of the Trustee and subject to its direction in the authentication
and delivery of the Securities of any one or more series in connection with such
transactions as shall be specified in the provisions of this Indenture or in or
pursuant to the Board Resolution or the supplemental indenture creating such
series;
(9) the portion of the principal amount of Securities of the series, if
other than the total principal amount thereof, which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
provable in bankruptcy pursuant to Section 504;
(10) any Event of Default with respect to the Securities of such series,
if not set forth herein and any additions, deletions or other changes to the
Events of Default set forth herein that shall be applicable to the Securities of
such series (including a provision making any Event of Default set forth herein
inapplicable to the Securities of that series);
(11) any covenant solely for the benefit of the Securities of such series
and any additions, deletions or other changes to the provisions of Article Ten
or any definitions relating to such Article that shall be applicable to the
Securities of such series (including a provision making any Section of such
Article inapplicable to the Securities of such series);
(12) the applicability of Section 403 of this Indenture to the Securities
of such series;
(13) if the Securities of the series shall be issued in whole or in part
in the form of a Global Security or Global Securities, the terms and conditions,
if any, upon which such Global Security or Global Securities may be exchanged in
whole or in part for other individual Securities; and the Depositary for such
Global Security or Global Securities (if other than the Depositary specified in
Section 101 hereof);
(14) the subordination of the Securities of such series to any other
indebtedness of the Company, including without limitation, the Securities of any
other series; and
(15) any other terms of the series, which shall not be inconsistent with
the provisions of this Indenture, all upon such terms as may be determined in or
pursuant to a Board Resolution or in or pursuant to a supplemental indenture
with respect to such series. All Securities of the same series shall be
substantially identical in tenor and effect, except as to denomination.
The form of the Securities of each series shall be established pursuant to
the provisions of this Indenture in or pursuant to the Board Resolution or in or
pursuant to the supplemental indenture creating such series. The Securities of
each series shall be distinguished from the Securities of each other series in
such manner, reasonably satisfactory to the Trustee, as the Board of Directors
may determine.
Exhibit 4.1 - 17
<PAGE>
Unless otherwise provided with respect to Securities of a particular
series, the Securities of any series may only be issuable in registered form,
without coupons.
Any terms or provisions in respect of the Securities of any series issued
under this Indenture may be determined pursuant to this Section by providing in
a Board Resolution or supplemental indenture for the method by which such terms
or provisions shall be determined.
Section 302. Denominations. The Securities of each series shall be
issuable in such denominations and currency as shall be provided in the
provisions of this Indenture or in or pursuant to the Board Resolution or the
supplemental indenture creating such series. In the absence of any such
provisions with respect to the Securities of any series, the Securities of that
series shall be issuable only in fully registered form in denominations of
$1,000 and any integral multiple thereof.
Section 303. Execution, Authentication and Delivery and Dating. The
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its President, one of its Vice Presidents or its Treasurer under its
corporate seal reproduced thereon and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication; and the Trustee shall, upon Company Order,
authenticate and deliver such Securities as in this Indenture provided and not
otherwise.
Prior to any such authentication and delivery, the Trustee shall be
entitled to receive, in addition to any Officers' Certificate and Opinion of
Counsel required to be furnished to the Trustee pursuant to Section 102, and the
Board Resolution and any certificate relating to the issuance of the series of
Securities required to be furnished pursuant to Section 202, an Opinion of
Counsel stating that:
(1) all instruments furnished to the Trustee conform to the requirements
of the Indenture and constitute sufficient authority hereunder for the Trustee
to authenticate and deliver such Securities;
(2) the form and terms (or in connection with the issuance of medium-term
Securities under Section 311, the manner of determining the terms) of such
Securities have been established in conformity with the provisions of this
Indenture;
Exhibit 4.1 - 18
<PAGE>
(3) all laws and requirements with respect to the execution and delivery
by the Company of such Securities have been complied with, the Company has the
corporate power to issue such Securities and such Securities have been duly
authorized and delivered by the Company and, assuming due authentication and
delivery by the Trustee, constitute legal, valid and binding obligations of the
Company enforceable in accordance with their terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws and legal principles affecting creditors' rights generally from time
to time in effect and to general equitable principles, whether applied in an
action at law or in equity) and entitled to the benefits of this Indenture,
equally and ratably with all other Securities, if any, of such series
Outstanding; and
(4) such other matters as the Trustee may reasonably request;
and, if the authentication and delivery relates to a new series of Securities
created by an indenture supplemental hereto, also stating that all laws and
requirements with respect to the form and execution by the Company of the
supplemental indenture with respect to that series of Securities have been
complied with, the Company has corporate power to execute and deliver any such
supplemental indenture and has taken all necessary corporate action for those
purposes and any such supplemental indenture has been executed and delivered and
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws and
legal principles affecting creditors' rights generally from time to time in
effect and to general equitable principles, whether applied in an action at law
or in equity).
The Trustee shall not be required to authenticate such Securities if the
issue thereof will adversely affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture.
Unless otherwise provided in the form of Security for any series, all
Securities shall be dated the date of their authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature 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.
Section 304. Temporary Securities. Pending the preparation of definitive
Securities of any series, the Company may execute, and, upon receipt of the
documents required by Section 303, together with a Company Order, the Trustee
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
Exhibit 4.1 - 19
<PAGE>
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, 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, without charge to the Holder; and upon
surrender for cancellation of any one or more temporary Securities the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of such series of
authorized denominations and of like tenor and terms. Until so exchanged the
temporary Securities of such series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series.
Section 305. Registration, Transfer and Exchange. The Company shall keep
or cause to be kept a register (herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities, or of Securities
of a particular series, and for transfers of Securities or of Securities of such
series. Any such register shall be in written form or in any other form capable
of being converted into written form within a reasonable time. At all reasonable
times the information contained in such register or registers shall be available
for inspection by the Trustee at the office or agency to be maintained by the
Company as provided in Section 1002.
Subject to Section 204, upon surrender for transfer of any Security of any
series at the office or agency of the Company in a Place of Payment, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of such
series of any authorized denominations, of a like aggregate principal amount and
Stated Maturity and of like tenor and terms.
Subject to Section 204, at the option of the Holder, Securities of any
series may be exchanged for other Securities of such series of any authorized
denominations, of a like aggregate principal amount and Stated Maturity and of
like tenor and terms, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Securityholder making the exchange is entitled to receive.
All Securities issued upon any 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
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument
Exhibit 4.1 - 20
<PAGE>
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.
Unless otherwise provided in the Security to be transferred or exchanged,
no service charge shall be made on any Securityholder for any transfer or
exchange of Securities, but the Company may (unless otherwise provided in such
Security) require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Securities, other than exchanges pursuant to Section 304 or 906 not
involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange any
Security of any series during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities of
such series selected for redemption under Section 1103 and ending at the close
of business on the date of such mailing, or (ii) to transfer or exchange any
Security so selected for redemption in whole or in part, except for the portion
of such Security not so selected for redemption.
None of the Company, the Trustee, any agent of 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 Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company initially appoints the Trustee to act as Security Registrar
for the Securities on its behalf. The Company may at any time and from time to
time authorize any Person to act as Security Registrar in place of the Trustee
with respect to any series of Securities issued under this Indenture.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If (i) any
mutilated Security is surrendered to the Trustee, or the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Security, a new Security
of like tenor, series, Stated Maturity and principal amount, bearing a number
not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Exhibit 4.1 - 21
<PAGE>
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 issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of the same series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved. Unless
otherwise provided with respect to such Security pursuant to Section 301,
interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date by virtue of his having been such Holder; and,
except as hereinafter provided, such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (1) or Clause (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names any such Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit 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 nor 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
Exhibit 4.1 - 22
<PAGE>
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to the Holder of each such Security at his
address as it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose names such
Securities (or their respective Predecessor Securities) are registered on such
Special Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
If any installment of interest the Stated Maturity of which is on or prior
to the Redemption Date for any Security called for redemption pursuant to
Article Eleven is not paid or duly provided for on or prior to the Redemption
Date in accordance with the foregoing provisions of this Section, such interest
shall be payable as part of the Redemption Price of such Securities.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon 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. The Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name any Security is
registered in the Security Register as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any), and (subject
to Section 307) interest on, such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 309. Cancellation. All Securities surrendered for payment,
redemption, transfer, conversion or exchange or credit against a sinking fund
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and, if not already cancelled, shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Security 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. The Trustee shall dispose of all
cancelled Securities in accordance with its customary procedures and shall
deliver a certificate of such disposition to the Company.
Exhibit 4.1 - 23
<PAGE>
Section 310. Computation of Interest. Unless otherwise provided as
contemplated in Section 301, interest on the Securities shall be calculated on
the basis of a 360-day year of twelve 30-day months.
Section 311. Medium-Term Securities. Notwithstanding any contrary
provision herein, if all Securities of a series are not to be originally issued
at one time, it shall not be necessary for the Company to deliver to the Trustee
an Officers' Certificate, Board Resolution, supplemental indenture, Opinion of
Counsel or Company Request otherwise required pursuant to Sections 202, 301 and
303 at or prior to the time of authentication of each Security of such series if
such documents are delivered to the Trustee or its agent at or prior to the
authentication upon original issuance of the first Security of such series to be
issued; provided that any subsequent request by the Company to the Trustee to
authenticate Securities of such series upon original issuance shall constitute a
representation and warranty by the Company that as of the date of such request,
the statements made in the Officers' Certificate delivered pursuant to Section
102 shall be true and correct as if made on such date.
An Officers' Certificate, supplemental indenture or Board Resolution
delivered by the Company to the Trustee in the circumstances set forth in the
preceding paragraph may provide that Securities which are the subject thereof
will be authenticated and delivered by the Trustee or its agent on original
issue from time to time upon the telephonic or written order of persons
designated in such Officers' Certificate, Board Resolution or supplemental
indenture (any such telephonic instructions to be confirmed promptly in writing
by such persons) and that such persons are authorized to determine, consistent
with such Officers' Certificate, supplemental indenture or Board Resolution,
such terms and conditions of said Securities as are specified in such Officers'
Certificate, supplemental indenture or Board Resolution.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to any series of Securities (except
as to any surviving rights of conversion, transfer or exchange of Securities of
such series expressly provided for herein or in the form of Security for such
series), and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture as to such series, when
Exhibit 4.1 - 24
<PAGE>
(1) either
(A) all Securities of that series theretofore authenticated and
delivered (other than (i) Securities of such series which have been
destroyed, lost or stolen and which have been replaced or paid as provided
in Section 306, and (ii) Securities of such series for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
cancelled or for cancellation; or
(B) all such Securities of that series not theretofore delivered to
the Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) 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 deposited or
caused to be deposited with the Trustee as trust funds in trust for such purpose
an amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee cancelled or for
cancellation, for principal (and premium, if any) and interest 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;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to the Securities of such series; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture with respect to
the Securities of such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any series of Securities, the obligations of the Company to the
Trustee with respect to that series under Section 607 shall survive and the
obligations of the Trustee under Sections 402 and 1003 shall survive.
Section 402. Application of Trust Money. All money and obligations
deposited with the Trustee pursuant to Section 401 or Section 403 and all money
received by the Trustee in
Exhibit 4.1 - 25
<PAGE>
respect of such obligations shall be held in trust and applied by it, in
accordance with the provisions of the series of Securities in respect of which
it was deposited and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money and obligations have
been deposited with or received by the Trustee; but such money and obligations
need not be segregated from other funds except to the extent required by law.
Section 403. Satisfaction, Discharge and Defeasance of Securities of any
Series. If this Section 403 is specified, as contemplated by Section 301, to be
applicable to Securities of any series, the Company shall be deemed to have paid
and discharged the entire indebtedness on all the Securities of any such series
at the time outstanding, and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction, discharge and defeasance
of such indebtedness, when
(1) either
(A) with respect to all Securities of such series at the time
outstanding,
(i) the Company has deposited or caused to be deposited with
the Trustee as trust funds in trust for such purpose an amount
sufficient, together with any obligations deposited pursuant to
clause (ii) below, to pay and discharge the entire indebtedness on
all such Securities for principal (and premium, if any) and
interest, on the days on which such principal (and premium, if any)
or interest, as the case may be, is due and payable in accordance
with the terms of this Indenture and such Securities, to the date of
maturity or date of redemption thereof as contemplated by the
penultimate paragraph of this Section 403, as the case may be; or
(ii) the Company has deposited or caused to be deposited with
the Trustee as obligations in trust for such purpose such amount of
direct obligations of, or obligations the principal of and interest
on which are fully guaranteed by, the government which issued the
currency in which such Securities are denominated (other than such
obligations as are redeemable at the option of the issuer thereof)
as will, together with the income to accrue thereon without
consideration of any reinvestment thereof, be sufficient, in the
written opinion of a firm of nationally recognized independent
public accountants (which may be the Company's auditors) delivered
to the Trustee, together with any funds deposited pursuant to clause
(i) above, to pay and discharge the entire indebtedness on all such
Securities for principal (and premium, if any) and interest, on the
days on which such principal (and premium, if any) or interest, as
the case may be, is due and payable in accordance with the terms of
this Indenture and such Securities, to the date of maturity or date
of redemption
Exhibit 4.1 - 26
<PAGE>
thereof as contemplated by the penultimate paragraph of this Section
403, as the case may be; or
(B) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by Section
301, to be applicable to the Securities of such series;
(2) the Company has paid or caused to be paid all other sums payable with
respect to the Securities of such series at the time Outstanding;
(3) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(4) no Event of Default or event which, after notice or lapse of time or
both, would become an Event of Default shall have occurred and be continuing on
the date of such deposit; and
(5) 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, discharge and defeasance of the
entire indebtedness on all Securities of any such series at the time Outstanding
have been complied with.
Any deposits with the Trustee referred to in Section 403(1)(A) above
shall be irrevocable. If any Securities of such series at the time outstanding
are to be redeemed prior to their Stated Maturity, whether pursuant to any
optional redemption provisions or in accordance with any mandatory sinking fund
requirement, the Company shall make such arrangements as are satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.
Upon the satisfaction of the conditions set forth in this Section 403 with
respect to all the Securities of any series at the time Outstanding, the terms
and conditions of such series, including the terms and conditions with respect
thereto set forth in this Indenture (except as to any surviving rights of
conversion, transfer or exchange of Securities of such series expressly provided
for herein or in the form of Security for such series), shall no longer be
binding upon, or applicable to, the Company, provided that the Company shall not
be discharged from any payment obligations in respect of Securities of such
series which are deemed not to be Outstanding under clause (iii) of the
definition thereof if such obligations continue to be valid obligations of the
Company under applicable law.
Notwithstanding the satisfaction of the conditions set forth in this
Section 403 with respect to all Securities of any series at the time
Outstanding, the obligations of the Company
Exhibit 4.1 - 27
<PAGE>
to the Trustee with respect to that series under Section 607 and the obligations
of the Trustee with respect to that series under Section 402 and 1003 shall
survive.
ARTICLE FIVE
Remedies
Section 501. Events of Default. "Event of Default", wherever used herein,
means with respect to any series of Securities any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), unless such event is either inapplicable
to a particular series or it is specifically deleted or modified in the
supplemental indenture creating such series of Securities or in the form of
Security for such series:
(1) default in the payment of any interest upon any Security of that
series when it 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 at its Maturity; or
(3) default in the payment of any sinking or purchase fund or analogous
obligation when the same becomes due by the terms of the Securities of such
series; or
(4) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture in respect of the Securities of such series (other
than a covenant or warranty in respect of the Securities of such series a
default in the performance of which or the breach of which is elsewhere in this
Section specifically dealt with), all of such covenants and warranties in the
Indenture which are not expressly stated to be for the benefit of a particular
series of Securities being deemed in respect of the Securities of all series for
this purpose, 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 such series, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(5) the entry of an order for relief against the Company under the Federal
Bankruptcy Code by a court having jurisdiction in the premises or a decree or
order by a court having jurisdiction in the premises adjudging the Company
bankrupt or insolvent under any other applicable Federal or State law, or the
entry of a decree or order approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company under the Federal Bankruptcy Code or any other applicable Federal or
State
Exhibit 4.1 - 28
<PAGE>
law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or
(6) the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under the Federal Bankruptcy Code or
any other applicable Federal or State law, or the consent by it to the filing of
any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by the
Company in furtherance of any such action; or
(7) any other Event of Default provided in the supplemental indenture
under which such series of Securities is issued or in the form of Security for
such series.
Section 502. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default described in paragraph (1), (2), (3), (4) or (7) (if the Event
of Default under paragraph (4) or (7) is with respect to less than all series of
Securities then Outstanding) of Section 501 occurs and is continuing with
respect to any series, then and in each and every such case, unless the
principal of all the Securities of such series shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities of such series then Outstanding hereunder
(each such series acting as a separate class), by notice in writing to the
Company (and to the Trustee if given by Holders), may declare the principal
amount (or, if the Securities of such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Securities of such series then Outstanding and
all accrued interest thereon to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Securities of such series contained to the
contrary notwithstanding. If an Event of Default described in paragraph (4) or
(7) (if the Event of Default under paragraph (4) or (7) is with respect to all
series of Securities then Outstanding), (5) or (6) of Section 501 occurs and is
continuing, then and in each and every such case, unless the principal of all
the Securities shall have already become due and payable, either the Trustee or
the Holders of not less than 25% in aggregate principal amount of all the
Securities then Outstanding hereunder (treated as one class), by notice in
writing to the Company (and to the Trustee if given by Holders), may declare the
principal amount (or, if any Securities are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms thereof)
of all the Securities then Outstanding and all accrued interest thereon to be
due and payable immediately, and upon any such declaration the same shall become
and shall be immediately due and payable, anything in this Indenture or in the
Securities contained to the contrary notwithstanding.
Exhibit 4.1 - 29
<PAGE>
At any time after such a declaration of acceleration has been made with
respect to the Securities of any series 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 such 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
(A) all overdue installments of interest on the Securities of
such series,
(B) the principal of (and premium, if any, on) any such series which
have become due otherwise than by such declaration of acceleration, and
interest thereon at the rate or rates prescribed therefor by the terms of
the Securities of such series, to the extent that payment of such interest
is lawful,
(C) interest upon overdue installments of interest at the rate or
rates prescribed therefor by the terms of the Securities of such series to
the extent that payment of such interest is lawful, 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 all other amounts due the Trustee
under Section 607;
and
(2) all Events of Default with respect to such series of Securities, other
than the nonpayment of the principal of the Securities of such series which have
become due solely by such acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if
(1) default is made in the payment of any installment of interest on any
Security of any series when such interest becomes due and payable, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof, or
(3) default is made in the payment of any sinking or purchase fund or
analogous obligation when the same becomes due by the terms of the Securities of
any series,
Exhibit 4.1 - 30
<PAGE>
and any such default continues for any period of grace provided with respect to
the Securities of such series, the Company will, upon demand of the Trustee, pay
to it, for the benefit of the Holder of any such Security (or the Holders of any
such series in the case of Clause (3) above), the whole amount then due and
payable on any such Security (or on the Securities of any such series in the
case of Clause (3) above) for principal (and premium, if any) and interest, with
interest, to the extent that payment of such interest shall be legally
enforceable, upon the overdue principal (and premium, if any) and upon overdue
installments of interest, at such rate or rates as may be prescribed therefor by
the terms of any such Security (or of Securities of any such series in the case
of Clause (3) above); 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 and all other amounts due the Trustee under Section 607.
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 the Securities of such series and
collect the money adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to any series of Securities occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceedings or otherwise, (i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary and
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 all other amounts due the Trustee under
Section 607) and of the Securityholders 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
Exhibit 4.1 - 31
<PAGE>
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each
Securityholder to make such payment to the Trustee and in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities of any
series may be prosecuted and enforced by the Trustee without the possession of
any of the Securities of such series 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 agent and counsel, be
for the ratable benefit of the Holders of the Securities of the series in
respect of which such judgment has been recovered.
Section 506. Application of Money Collected. Any money collected by the
Trustee with respect to a series of Securities 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, upon presentation of the Securities of such series and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607.
SECOND: To the payment of the amounts then due and unpaid upon the
Securities of that series for principal (and premium, if any) and
interest, in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
(and premium, if any) and interest, respectively.
Section 507. Limitation on Suits. No Holder of any Security of any series
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
Exhibit 4.1 - 32
<PAGE>
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to Securities of such series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of 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 such series;
it being understood and intended that no one or more Holders of Securities of
such series 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 Holders of Securities of such series, or to obtain or to
seek to obtain priority or preference over any other such Holders or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal and proportionate benefit of all the Holders of all Securities of such
series.
Section 508. Unconditional Right of Securityholders to Receive Principal,
Premium and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 307) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption or
repayment, on the Redemption Date or Repayment Date, as the case may be) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies. If the Trustee or any
Securityholder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, then and in every such case the Company, the Trustee and the
Securityholders 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 Securityholders shall
continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Securityholders is intended
to be exclusive of any
Exhibit 4.1 - 33
<PAGE>
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 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
Securityholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Securityholders, as the case may be.
Section 512. Control by Securityholders. The Holders of a majority in
principal amount of the Outstanding Securities of any series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Securities of such series, provided that
(1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, determines that the action
so directed may not lawfully be taken or would conflict with this Indenture or
if the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed would involve it in personal liability or be unjustly
prejudicial to the Holders not taking part in such direction, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default not theretofore cured
(1) in the payment of the principal of (or premium, if any) or interest on
any Security of such series, or in the payment of any sinking or purchase fund
or analogous obligation with respect to the Securities of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series.
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
Exhibit 4.1 - 34
<PAGE>
no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
Section 514. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any 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 an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder, or
group of Securityholders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series to which the suit relates, or
to any suit instituted by any Securityholder for the enforcement of the payment
of the principal of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or, in the case of
redemption or repayment, on or after the Redemption Date or Repayment Date).
Section 515. Waiver of Stay or Extension Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law 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.
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities. (a) Except during the
continuance of an Event of Default with respect to any series of Securities,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture with respect to the
Securities of such series, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may, with
respect to Securities of such series, conclusively rely, as to the truth
of the statements and the
Exhibit 4.1 - 35
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correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default with respect to any series of Securities
has occurred and is continuing, the Trustee shall exercise with respect to the
Securities of such series such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities of any series relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
Section 602. Notice of Defaults. Within 90 days after the occurrence of
any default hereunder with respect to Securities of any series, the Trustee
shall transmit by mail to all Securityholders of such series, as their names and
addresses appear in the Security Register,
Exhibit 4.1 - 36
<PAGE>
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
any Security of such series or in the payment of any sinking or purchase fund
installment or analogous obligation with respect to 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 Securityholders of such
series; and provided, further, that in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series no such
notice to Securityholders of such series shall be given until at least 90 days
after the occurrence thereof. For the purpose of this Section, the term
"default", with respect to Securities of any series, means any event which is,
or after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 603. Certain Rights of Trustee. Except as otherwise provided in
Section 601:
(a) 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 or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Securityholders pursuant to this Indenture, unless such Securityholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its
Exhibit 4.1 - 37
<PAGE>
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys 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.
Section 604. Not Responsible for Recitals or Issuance of Securities. The
recitals contained herein and in the Securities, except the certificates of
authentication, shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities. The Trustee, any Paying Agent, the
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 606. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
Section 607. Compensation and Reimbursement. The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee 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 the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust, including the costs and expenses of
Exhibit 4.1 - 38
<PAGE>
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the 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 (and premium, if any) or interest on
particular Securities.
Section 608. Disqualification; Conflicting Interests. The Trustee for the
Securities of any series issued hereunder shall be subject to the provisions of
Section 310(b) of the Trust Indenture Act during the period of time provided for
therein. Nothing herein shall prevent the Trustee from filing with the
Commission the application referred to in the second to last paragraph of
Section 310(b) of the Trust Indenture Act.
Section 609. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder with respect to each series of Securities, which
shall be a corporation organized and doing business under the laws of the United
States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000, and subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee with respect to any series of Securities 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.
Section 610. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 611.
(b) The Trustee may resign with respect to any series of Securities at any
time 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 with respect to any series of Securities at
any time by Act of the Holders of a majority in principal amount of the
Outstanding Securities of that series, delivered to the Trustee and to the
Company.
Exhibit 4.1 - 39
<PAGE>
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act pursuant to Section 608(a) with respect to any series
of Securities after written request therefor by the Company or by any
Securityholder who has been a bona fide Holder of a Security of that
series for at least 6 months, or
(2) the Trustee shall cease to be eligible under Section 609 with
respect to any series of Securities and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting with respect to any
series of Securities, or
(4) the Trustee 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 a Board Resolution may remove the
Trustee, with respect to the series, or in the case of Clause (4), with respect
to all series, or (ii) subject to Section 514, any Securityholder who has been a
bona fide Holder of a Security of such series for at least 6 months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee with respect to the series, or, in the case of Clause (4),
with respect to all series.
(e) If the Trustee shall resign, be removed or become incapable of acting
with respect to any series of Securities, or if a vacancy shall occur in the
office of the Trustee with respect to any series of Securities for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee
for that series of Securities. If, within one year after such resignation,
removal or incapacity, or the occurrence of such vacancy, a successor Trustee
with respect to such series of Securities 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 such series and supersede the successor
Trustee appointed by the Company with respect to such series. If no successor
Trustee with respect to such series shall have been so appointed by the Company
or the Securityholders of such series and accepted appointment in the manner
hereinafter provided, any Securityholder who has been a bona fide Holder of a
Security of that series for at least 6 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 such series.
Exhibit 4.1 - 40
<PAGE>
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to any series and each appointment of a successor
Trustee with respect to any series by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities of that series
as their names and addresses appear in the Security Register. Each notice shall
include the name of the successor Trustee and the address of its principal
Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the predecessor Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the predecessor Trustee shall become
effective with respect to any series as to which it is resigning or being
removed as Trustee, and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the predecessor Trustee with respect to any such series; but, on request of
the Company or the successor Trustee, such predecessor Trustee shall, upon
payment of its reasonable charges, if any, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
predecessor Trustee, and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such predecessor Trustee
hereunder with respect to all or any such series, subject nevertheless to its
lien, if any, provided for in Section 607. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
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
predecessor Trustee and each successor Trustee with respect to the Securities of
any applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the predecessor
Trustee with respect to the Securities of any series as to which the predecessor
Trustee is not being succeeded shall continue to be vested in the predecessor
Trustee, and shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.
No successor Trustee with respect to any series of Securities shall accept
its appointment unless at the time of such acceptance such successor Trustee
shall be qualified and eligible with respect to that series under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which
it may be
Exhibit 4.1 - 41
<PAGE>
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 shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company. (a)
Subject to Subsection (b) of this Section, if the Trustee shall be or shall
become a creditor, directly or indirectly, secured or unsecured, of the Company
within 3 months prior to a default, as defined in Subsection (c) of this
Section, or subsequent to such a default, then, unless and until such default
shall be cured, the Trustee shall set apart and hold in a special account for
the benefit of the Trustee individually, the Holders of the Securities and the
holders of other indenture securities (as defined in Subsection (c) of this
Section):
(1) an amount equal to any and all reductions in the amount due and owing
upon any claim as such creditor in respect of principal or interest, effected
after the beginning of such 3-month period and valid as against the Company and
its other creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this Subsection, or
from the exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or against the Company upon the
date of such default; and
(2) all property received by the Trustee in respect of any claim as such
creditor, either as security therefor, or in satisfaction or composition
thereof, or otherwise, after the beginning of such 3-month period, or an amount
equal to the proceeds of any such property, if disposed of, subject, however, to
the rights, if any, of the Company and its other creditors in such property or
such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee
(A) to retain for its own account (i) payments made on account of
any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim by
the Trustee to a third person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Act or applicable State law;
Exhibit 4.1 - 42
<PAGE>
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such 3-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
3-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within 3 months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim
as provided in paragraph (B) or (C), as the case may be, to the extent of
the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such 3-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned between
the Trustee, the Securityholders and the holders of other indenture securities
in such manner that the Trustee, the Securityholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Securityholders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Federal Bankruptcy Act or applicable State
law, but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than from such
dividends and from the funds and property so held in such special account. As
used in this paragraph, with respect to any claim, the term "dividends" shall
include any distribution with respect to such claim, in bankruptcy or
receivership or proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, whether such distribution is made in
cash, securities, or other property,
Exhibit 4.1 - 43
<PAGE>
but shall not include any such distribution with respect to the secured portion,
if any, of such claim. The court in which such bankruptcy, receivership or
proceedings for reorganization is pending shall have jurisdiction (i) to
apportion between the Trustee and the Securityholders and the holders of other
indenture securities in accordance with the provisions of this paragraph, the
funds and property held in such special account and proceeds thereof, or (ii) in
lieu of such apportionment, in whole or in part, to give to the provisions of
this paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee and the Securityholders and the holders
of other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
3-month period shall be subject to the provisions of this Subsection as though
such resignation or removal had not occurred. If any Trustee has resigned or
been removed prior to the beginning of such 3-month period, it shall be subject
to the provisions of this Subsection if and only if the following conditions
exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such 3-month period; and
(ii) such receipt of property or reduction of claim occurred within
3 months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien of
this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the circumstances
surrounding the making thereof is given to the Securityholders at the time
and in the manner provided in this Indenture;
Exhibit 4.1 - 44
<PAGE>
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Subsection (c) of this
Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper as defined in Subsection (c)
of this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due
and payable.
(2) The term "other indenture securities" means securities, if any,
upon which the Company is an obligor outstanding under any other indenture
(i) under which the Trustee is also trustee, (ii) which contains
provisions substantially similar to the provisions of this Section, and
(iii) under which a default exists at the time of the apportionment of the
funds and property held in such special account.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within 7 days after delivery
of the goods or securities in currency or in checks or other orders drawn
upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
Exhibit 4.1 - 45
<PAGE>
(5) The term "Company" means any obligor upon the Securities.
Section 614. Appointment of Authenticating Agent. At any time when any of
the Securities remain Outstanding the Trustee, with the approval of the Company,
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 thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as an Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and,
if other than the Company itself, subject to supervision or examination by
Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and, if other than the Company, to the Company. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and, if other than
the Company, 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,
with the approval of the Company, may appoint a successor Authenticating Agent
which shall be acceptable to the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Securities
of the series with respect to which such
Exhibit 4.1 - 46
<PAGE>
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent (other than an
Authenticating Agent appointed at the request of the Company from time to time)
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
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 the Trustee's certificate of authentication, an alternate
certificate of authentication 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
By:_____________________________________
Authorized Signatory
ARTICLE SEVEN
Securityholders' Lists and Reports by Trustee and Company
Section 701. Company To Furnish Trustee Names and Addresses of
Securityholders. The Company will furnish or cause to be furnished to the
Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, in each year in such form as the Trustee may reasonably
require, a list of the names and addresses of the Holders of
Securities of such series as of such date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar
Exhibit 4.1 - 47
<PAGE>
form and content as of a date not more than 15 days prior to
the time such list is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702. Preservation of Information; Communications to
Securityholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Securities
contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders of Securities received by the
Trustee in its capacity as Security Registrar. The Trustee may destroy any list
furnished to it as provided in Section 701 upon receipt of a new list so
furnished.
(b) If 3 or more Holders of Securities of any series (hereinafter referred
to as "applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Security of such series
for a period of at least 6 months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of such series or with the Holders of all Securities with
respect to their rights under this Indenture or under such Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within 5 Business Days
after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or all Securities, as the case may be, whose
names and addresses appear in the information preserved at the time by the
Trustee in accordance with Section 702(a), and as to the approximate cost
of mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of a Security of such series or to all Securityholders, as
the case may be, whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless, within 5 days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders of
Securities of such series or all Securityholders, as the case may be, or would
Exhibit 4.1 - 48
<PAGE>
be in violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all Securityholders of such series or all Securityholders, as
the case may be, with reasonable promptness after the entry of such order and
the renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders of Securities in accordance with Section
702(b), regardless of the source from which such information was derived, and
that the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 702(b).
Section 703. Reports by Trustee. (a) The term "reporting date" as used in
this Section means ________________. Within 60 days after the reporting date in
each year, beginning in 199__, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear in the Security Register, a
brief report dated as of such reporting date with respect to any of the
following events which may have occurred during the 12 months preceding the date
of such report (but if no such event has occurred within such period no report
need be transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608;
(2) the creation of or any material change to a relationship
specified in Section 310(b)(1) through Section 310(b)(10) of the Trust
Indenture Act;
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of Securities of any series, on any property or
funds held or collected by it as Trustee, except that the Trustee shall
not be required (but may elect) to report such advances if such advances
so remaining unpaid aggregate not more than 1/2 of 1% of the principal
amount of the Securities of such series outstanding on the date of such
report;
(4) any change to the amount, interest rate and maturity date of all
other indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of
Exhibit 4.1 - 49
<PAGE>
any property held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in a manner described in
Section 613(b)(2), (3), (4) or (6);
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(6) any additional issue of Securities which the Trustee has not
previously reported; and
(7) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Securities, except action in respect of a default,
notice of which has been or is to be withheld by the Trustee in accordance
with Section 602.
(b) The Trustee shall transmit by mail to all Securityholders, as their
names and addresses appear in the Security Register, a brief report with respect
to the character and amount of any advances (and if the Trustee elects so to
state, the circumstances surrounding the making thereof) made by the Trustee (as
such) since the date of the last report transmitted pursuant to Subsection (a)
of this Section (or if no such report has yet been so transmitted, since the
date of execution of this instrument) for the reimbursement of which it claims
or may claim a lien or charge, prior to that of the Securities of any series, on
property or funds held or collected by it as Trustee, and which it has not
previously reported pursuant to this Subsection, except that the Trustee shall
not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
the Securities Outstanding of such series at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, and also with the Commission. The Company will notify the
Trustee when the Securities are listed on any stock exchange.
Section 704. 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 said
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
Exhibit 4.1 - 50
<PAGE>
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 covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(3) transmit by mail to all Securityholders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof with
the Trustee, 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.
ARTICLE EIGHT
Consolidation, Merger, Conveyance or Transfer
Section 801. Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other corporation or convey
or transfer its properties and assets substantially as an entirety to any
Person, unless:
(1) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer the properties
and assets of the Company substantially as an entirety shall be a corporation
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest on all the Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger, conveyance
or transfer and such supplemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such transaction have
been complied with.
Exhibit 4.1 - 51
<PAGE>
Section 802. Successor Corporation Substituted. Upon any consolidation or
merger, or any conveyance or transfer of the properties and assets of the
Company substantially as an entirety in accordance with Section 801, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein. In the event of any such conveyance or transfer,
the Company as the predecessor corporation may be dissolved, wound up or
liquidated at any time thereafter.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Securityholders.
Without the consent of the Holders of any Securities, the Company, when
authorized by 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:
(1) to evidence the succession of another corporation 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, or to surrender any right or
power herein conferred upon the Company, for the benefit of the
Holders of the Securities of any or all series (and if such
covenants or the surrender of such right or power are to be for the
benefit of less than all series of Securities, stating that such
covenants are expressly being included or such surrenders are
expressly being made solely for the benefit of one or more specified
series); or
(3) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions
arising under this Indenture; or
(4) to add to this Indenture such provisions as may be expressly
permitted by the TIA, excluding, however, the provisions referred to
in Section 316(a)(2) of the TIA as in effect at the date as of which
this instrument was executed or any corresponding provision in any
similar federal statute hereafter enacted; or
(5) to establish any form of Security, as provided in Article Two, and
to provide for the issuance of any series of Securities as provided
in Article Three and to
Exhibit 4.1 - 52
<PAGE>
set forth the terms thereof, and/or to add to the rights of the
Holders of the Securities of any series; or
(6) to evidence and provide for the acceptance of appointment by another
corporation as a successor Trustee hereunder with respect to one or
more series of Securities and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to Section 611; or
(7) to add any additional Events of Default in respect of the Securities
of any or all series (and if such additional Events of Default are
to be in respect of less than all series of Securities, stating that
such Events of Default are expressly being included solely for the
benefit of one or more specified series); or
(8) to provide for the issuance of Securities in coupon as well as fully
registered form.
No supplemental indenture for the purposes identified in Clauses (2), (3),
(5) or (7) above may be entered into if to do so would adversely affect the
interest of the Holders of Securities of any series.
Section 902. Supplemental Indentures With Consent of Securityholders. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture or indentures, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by 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 the Securities of each such series under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Maturity of the principal of, or the Stated Maturity of
any premium on, or any installment of interest on, any Security, or
reduce the principal amount thereof or the interest or any premium
thereon, or change the method of computing the amount of principal
thereof or interest thereon on any date or change any Place of
Payment where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after
the Maturity or the Stated Maturity, as the case may be, thereof
(or, in the case of redemption or repayment, on or after the
Redemption Date or the Repayment Date, as the case may be); or
Exhibit 4.1 - 53
<PAGE>
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders
is required for any waiver of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences,
provided for in this Indenture; or
(3) modify any of the provisions of this Section or Section 513, except
to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected
thereby.
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.
It shall not be necessary for any Act of Securityholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not (except to the extent required in
the case of a supplemental indenture entered into under Section 901(4) or
901(6)) be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby to the
extent provided therein.
Section 905. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this
Exhibit 4.1 - 54
<PAGE>
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 so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest. With respect to
each series of Securities, the Company will duly and punctually pay the
principal of (and premium, if any) and interest on such Securities in accordance
with their terms and this Indenture, and will duly comply with all the other
terms, agreements and conditions contained in, or made in the Indenture for the
benefit of, the Securities of such series.
Section 1002. Maintenance of Office or Agency. The Company will maintain
an office or agency in each Place of Payment where Securities may be presented
or surrendered for payment, where Securities may be surrendered for transfer or
exchanged and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and of any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain such 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 principal Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
Section 1003. Money for Security Payments to be Held in Trust. If the
Company shall at any time act as its own Paying Agent for any series of
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on, any of the Securities of such series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, on or prior to each due date of the principal of (and
premium, if any) or interest on, any Securities of such series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal (and premium, if any) or interest, and
Exhibit 4.1 - 55
<PAGE>
(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 for any
series of Securities 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 of such series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities of such series) in the making of any such payment of
principal (and premium, if any) or interest on the Securities of such series;
and
(3) at any time during the continuance of any such 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 with respect to any series of Securities 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 in
respect of each and every series of Securities as to which it seeks to discharge
this Indenture or, if for any other purpose, all sums so held in trust by the
Company in respect of all Securities, such sums to be held by the Trustee upon
the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease. The Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company mail to
the Holders of the Securities as to which the money to be repaid was held in
trust, as their names and addresses appear in the Security Register, a notice
that such moneys remain unclaimed and that, after a date specified in the
notice, which shall not be less than 30 days from the date on which the notice
was first mailed to the Holders of the Securities as to which the money to be
repaid was held in trust, any
Exhibit 4.1 - 56
<PAGE>
unclaimed balance of such moneys then remaining will be paid to the Company free
of the trust formerly impressed upon it.
The Company initially authorizes the Trustee to act as Paying Agent for
the Securities on its behalf. The Company may at any time and from time to time
authorize one or more Persons to act as Paying Agent in addition to or in place
of the Trustee with respect to any series of Securities issued under this
Indenture.
Section 1004. Statement as to Compliance. The Company will deliver to the
Trustee, within 120 days after the end of each fiscal year, a written statement
signed by the principal executive officer, principal financial officer or
principal accounting officer of the Company, stating that
(1) a review of the activities of the Company during such year and of the
Company's performance under this Indenture and under the terms of the Securities
has been made under his supervision; and
(2) to the best of his knowledge, based on such review, the Company has
complied with all conditions and covenants under this Indenture through such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to him and the nature and status thereof.
Section 1005. Corporate 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.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article. The Company may reserve the right
to redeem and pay before Stated Maturity all or any part of the Securities of
any series, either by optional redemption, sinking or purchase fund or analogous
obligation or otherwise, by provision therefor in the form of Security for such
series established and approved pursuant to Section 202 and on such terms as are
specified in such form or in the Board Resolution or indenture supplemental
hereto with respect to Securities of such series as provided in Section 301.
Redemption of Securities of any series shall be made in accordance with the
terms of such Securities and, to the extent that this Article does not conflict
with such terms, the succeeding Sections of this Article.
Section 1102. Election to Redeem; Notice to Trustee. The election of the
Company to redeem any Securities redeemable at the election of the Company shall
be evidenced by, or
Exhibit 4.1 - 57
<PAGE>
made pursuant to authority granted by, a Board Resolution. In case of any
redemption at the election of the Company of any Securities of any series, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed.
In the case of any redemption of Securities (i) prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, or (ii) pursuant to an election of the Company
which is subject to a condition specified in the terms of such Securities, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction or condition.
Section 1103. Selection by Trustee of Securities to Be Redeemed. If less
than all the Securities of like tenor and terms of any series 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 not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may include provision
for the selection for redemption of portions of the principal of Securities of
such series of a denomination larger than the minimum authorized denomination
for Securities of that series. Unless otherwise provided in the terms of a
particular series of Securities, the portions of the principal of Securities so
selected for partial redemption shall be equal to the minimum authorized
denomination of the Securities of such series, or an integral multiple thereof,
and the principal amount which remains outstanding shall not be less than the
minimum authorized denomination for Securities of such series. If less than all
the Securities of unlike tenor and terms of a series are to be redeemed, the
particular Securities to be redeemed shall be selected by the Company.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Security 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 of such Security which has been or is to be redeemed.
Section 1104. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each holder of Securities to be redeemed, at
his address appearing in the Security Register.
Exhibit 4.1 - 58
<PAGE>
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts) of the Securities to be redeemed, from the Holder
to whom the notice is given;
(4) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security, and that interest, if any, thereon shall cease
to accrue from and after said date;
(5) the place where such Securities are to be surrendered for payment of
the Redemption Price, which shall be the office or agency of the Company in the
Place of Payment; and
(6) that the redemption is on account of a sinking or purchase fund, or
other analogous obligation, if that be the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price. On or prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money sufficient to pay the Redemption
Price of all the Securities which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date. Notice of Redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the Company shall default in the
payment of the Redemption Price) such Securities shall cease to bear interest.
Upon surrender of such Securities for redemption in accordance with the notice,
such Securities shall be paid by the Company at the Redemption Price.
Installments of interest the Stated Maturity of which is on or prior to the
Redemption Date shall be payable to the Holders of such Securities registered as
such on the relevant Regular Record Dates according to their terms and the
provisions of Section 307.
Exhibit 4.1 - 59
<PAGE>
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Security, or as otherwise provided in
such Security.
Section 1107. Securities Redeemed in Part. Any Security which is to be
redeemed only in part shall be surrendered at the office or agency of the
Company in the Place of Payment with respect to that series (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series and Stated Maturity and of like tenor and terms, 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.
Section 1108. Provisions with Respect to any Sinking Funds. Unless the
form or terms of any series of Securities shall provide otherwise, in lieu of
making all or any part of any mandatory sinking fund payment with respect to
such series of Securities in cash, the Company may at its option (1) deliver to
the Trustee for cancellation any Securities of such series theretofore acquired
by the Company, or (2) receive credit for any Securities of such series (not
previously so credited) acquired by the Company and theretofore delivered to the
Trustee for cancellation or redeemed by the Company other than through the
mandatory sinking fund, and if it does so then (i) Securities so delivered or
credited shall be credited at the applicable sinking fund Redemption Price with
respect to Securities of such series, and (ii) on or before the 60th day next
preceding each sinking fund Redemption Date with respect to such series of
Securities, the Company will deliver to the Trustee (A) an Officers' Certificate
specifying the portions of such sinking fund payment to be satisfied by payment
of cash and by delivery or credit of Securities of such series acquired by the
Company or so redeemed, and (B) such Securities so acquired, to the extent not
previously surrendered. Such Officers' Certificate shall also state the basis
for such credit and that the Securities for which the Company elects to receive
credit have not been previously so credited and were not redeemed by the Company
through operation of the mandatory sinking fund, if any, provided with respect
to such Securities and shall also state that no Event of Default with respect to
Securities of such series has occurred and is continuing. All Securities so
delivered to the Trustee shall be cancelled by the Trustee and no Securities
shall be authenticated in lieu thereof.
If the sinking fund payment or payments (mandatory or optional) with
respect to any series of Securities made in cash plus any unused balance of any
preceding sinking fund payments with respect to Securities of such series made
in cash shall exceed $50,000 (or a lesser sum if the Company shall so request),
unless otherwise provided by the terms of such series of Securities, that cash
shall be applied by the Trustee on the sinking fund Redemption Date with respect
to Securities of such series next following the date of such payment to the
redemption of Securities of such series at the applicable sinking fund
Redemption Price with
Exhibit 4.1 - 60
<PAGE>
respect to Securities of such series, together with accrued interest, if any, to
the date fixed for redemption, with the effect provided in Section 1106. The
Trustee shall select, in the manner provided in Section 1103, for redemption on
such sinking fund Redemption Date a sufficient principal amount of Securities of
such series to utilize that cash and shall thereupon cause notice of redemption
of the Securities of such series for the sinking fund to be given in the manner
provided in Section 1104 (and with the effect provided in Section 1106) for the
redemption of Securities in part at the option of the Company. Any sinking fund
moneys not so applied or allocated by the Trustee to the redemption of
Securities of such series shall be added to the next cash sinking fund payment
with respect to Securities of such series received by the Trustee and, together
with such payment, shall be applied in accordance with the provisions of this
Section 1108. Any and all sinking fund moneys with respect to Securities of any
series held by the Trustee at the Maturity of Securities of such series, and not
held for the payment or redemption of particular Securities of such series,
shall be applied by the Trustee, together with other moneys, if necessary, to be
deposited sufficient for the purpose, to the payment of the principal of the
Securities of such series at Maturity.
On or before each sinking fund Redemption Date provided with respect to
Securities of any series, the Company shall pay to the Trustee in cash a sum
equal to all accrued interest, if any, to the date fixed for redemption on
Securities to be redeemed on such sinking fund Redemption Date pursuant to this
Section 1108.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
FIRSTCITY FINANCIAL CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
Attest:
______________________________
Joe S. Greak, Secretary
{SEAL}
Exhibit 4.1 - 61
<PAGE>
By:_____________________________
Attest:
_____________________________
Name:________________________
Title:_______________________
{SEAL}
Exhibit 4.1 - 62
<PAGE>
STATE OF TEXAS )
) ss:
COUNTY OF HARRIS )
On the ____ day of ______________, 1997 before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he resides at Houston, Texas; that he is ______________ of FirstCity
Financial Corporation, one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to that instrument is such corporate seal; that it was affixed by
authority of the board of directors of the corporation; and that he signed his
name thereto by like authority.
---------------------------------------
Name:
{SEAL}
- -----------------------------
{Notarial Seal}
Exhibit 4.1 - 63
<PAGE>
STATE OF _________ )
) ss:
COUNTY OF ________ )
On the ____ day of _____________, 1997 before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he resides at ________________________________; that he is _______________
of _____________________, one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to that instrument is such corporate seal; that it was affixed by
authority of the board of directors of the corporation; and that he signed his
name thereto by like authority.
------------------------------------------
Name:
{SEAL}
- -----------------------------------
{Notarial Seal}
Exhibit 4.1 - 64
EXHIBIT 5.1
-----------
WEIL, GOTSHAL & MANGES LLP
700 LOUISIANA, SUITE 1600
HOUSTON, TEXAS 77002
(713) 546-5000
July 17, 1998
FirstCity Financial Corporation
6400 Imperial Drive
Waco, Texas 76712
Ladies and Gentlemen:
We have acted as counsel to FirstCity Financial Corporation, a
Delaware corporation (the "Company"), in connection with the preparation and
filing by the Company of a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), pertaining
to the issuance by the Company from time to time, together or separately, and as
set forth in the prospectus contained in the Registration Statement (the
"Prospectus") and in one or more supplements to the Prospectus (each, a
"Prospectus Supplement"), of up to $250,000,000 aggregate offering price of (1)
debt securities (the "Debt Securities"), which may be either senior or
subordinated and which may be convertible into or exchangeable for shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"),
shares of preferred stock, par value $.01 per share, of the Company (the
"Preferred Stock"), or other Debt Securities; (2) Preferred Stock, which may be
convertible into or exchangeable for shares of Common Stock, shares of Preferred
Stock or Debt Securities and (3) Common Stock, including Common Stock issuable
upon the conversion or exchange of Debt Securities or Preferred Stock offered
thereunder, to the extent such Debt Securities or Preferred Stock are, by their
terms, convertible into or exchangeable for shares of Common Stock, in amounts,
at prices and on terms to be determined by market conditions at the time of
offering thereof. The Debt Securities will be issued pursuant to one or more
indentures (each, an "Indenture") in the form filed as an exhibit to the
Registration Statement, as amended or supplemented from time to time, between
the Company, as obligor, and a trustee (each, a "Trustee") chosen by the Company
and qualified to act as such under the Trust Indenture Act of 1939, as amended
(the "TIA").
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Amended and Restated
Certificate of
Exhibit 5.1 - 1
HOFS02...:\92\54892\0011\1612\LTR7158P.400
<PAGE>
Incorporation (the "Certificate"), the resolutions adopted by the Board of
Directors of the Company authorizing the filing of the Registration Statement
and such other corporate records, agreements, documents and other instruments,
and such certificates or comparable documents of public officials and of
officers and representatives of the Company, and have made such inquiries of
such officers and representatives, as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. When (1) the Registration Statement shall have become effective
under the Act, (2) an Indenture shall have been duly executed and delivered by
the Company and a Trustee and duly qualified under the TIA, duly establishing
the terms of particular Debt Securities, and (3) such Debt Securities shall have
been (a) duly authorized, executed, authenticated, issued and delivered against
payment therefor as contemplated by the Indenture, the Registration Statement
and the applicable Prospectus Supplement or (b) duly authorized and issued upon
conversion or exchange of Debt Securities or Preferred Stock which, by their
respective terms, are convertible into or exchangeable for Debt Securities, in
each case as contemplated by the Indenture and the Registration Statement and
the applicable Prospectus Supplement, and the Company shall have received any
additional consideration which is payable upon such conversion or exchange, such
Debt Securities will constitute binding obligations of the Company enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to indemnification and
contribution thereunder and under the Indenture may be limited by federal or
state securities laws or public policy relating thereto.
2. When (1) the Registration Statement shall have become effective
under the Act, (2) a series of Preferred Stock shall have been (a) duly
authorized, duly established in accordance with the terms of the Company's
Certificate and applicable law, and upon adoption by the Board of Directors of
the Company of one or more resolutions in form and content as required by
applicable law, issued and sold against payment therefor as contemplated by the
Registration Statement and the applicable Prospectus Supplement and by such
resolution(s), or (b) duly authorized, duly established in accordance with the
terms of the Company's Certificate
Exhibit 5.1 - 2
<PAGE>
and applicable law, and upon adoption by the Board of Directors of the Company
of one or more resolutions in form and content as required by applicable law,
issued upon conversion or exchange of Debt Securities or Preferred Stock which,
by their respective terms, are convertible into or exchangeable for such shares
of Preferred Stock, and the Company shall have received any additional
consideration which is payable upon such conversion or exchange, in each case as
contemplated by the Registration Statement and the applicable Prospectus
Supplement and by such resolution(s), and assuming for the purpose of each
opinion set forth in this paragraph 2 that the Company shall have sufficient
authorized but unissued shares of Preferred Stock to so issue such shares of
such series of Preferred Stock, such shares of such series of Preferred Stock
will be validly issued, fully paid and non-assessable.
3. When (1) the Registration Statement shall have become effective
under the Act and (2) shares of Common Stock shall have been (a) duly authorized
pursuant to adoption by the Board of Directors of the Company of one or more
resolutions in form and content as required by applicable law, and issued and
sold against payment therefor as contemplated by the Registration Statement and
the applicable Prospectus Supplement and by such resolution(s), or (b) duly
authorized, and upon adoption by the Board of Directors of the Company of one or
more resolutions in form and content as required by applicable law, issued upon
conversion or exchange of Debt Securities or Preferred Stock which, by their
respective terms, are convertible into or exchangeable for such shares of Common
Stock, and the Company shall have received any additional consideration which is
payable upon such conversion or exchange, in each case as contemplated by the
Registration Statement and the applicable Prospectus Supplement and by such
resolution(s), and assuming for the purpose of each opinion set forth in this
paragraph 3 that the Company shall have sufficient authorized but unissued
shares of Common Stock to so issue such shares of Common Stock, such shares of
Common Stock will be validly issued, fully paid and non-assessable.
To the extent that the obligations of the Company under any
Indenture may be dependent upon such matters, we assume for purposes of the
opinions set forth herein that each Trustee is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; that
each Trustee is duly qualified to engage in the activities contemplated by each
Indenture to which it is a party; that each Indenture has been duly authorized,
executed and delivered by the Trustee party thereto and constitutes the legal,
valid and binding obligation of such Trustee, enforceable against such Trustee
in accordance with its terms; that each Trustee is in compliance, generally and
with respect to acting as a Trustee under each Indenture to which it is a party,
with all applicable laws and regulations; and that each Trustee has the
requisite organizational and legal power and authority to perform its
obligations under each Indenture to which it is a party.
The opinions expressed herein are limited to the laws of the State
of New York, the corporate laws of the State of Delaware, and the federal laws
of the United States, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
Exhibit 5.1 - 3
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our Firm under the caption "Legal
Matters" in the Prospectus contained therein.
Very truly yours,
/s/ WEIL, GOTSHAL & MANGES LLP
Exhibit 5.1 - 4
EXHIBIT 12.1
FIRSTCITY FINANCIAL CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
Three Months ended Year Ended December 31,
March 31,
------------------------ -------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ----------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE TO COVER FIXED CHARGES:
Net earnings before minority interest,
preferred dividends and income.......... $5,581 $9,217 $20,300 $25,380 $16,444 $8,216 $10,189
Undistributed earnings of less than fifty
percent owned subsidiaries.............. (986) - - - - - -
Interest charges........................... 3,418 2,862 12,433 10,403 4,721 22,544 9,577
Interest charges on subordinated debt...... - - - 3,892 4,721 - -
Proportionate share of interest charges of
fifty percent owned subsidiaries........ 822 10,502 5,330 11,033 13,517 11,272 4,789
----------- ----------- ----------- ----------- ----------- ----------- ---------
Earnings available to cover fixed
charges........................... $8,835 $22,581 $38,063 $50,708 $39,403 $42,032 $24,555
=========== =========== =========== =========== =========== =========== =========
FIXED CHARGES:
Interest charges........................... 3,418 2,862 12,433 10,403 4,721 22,544 9,577
Interest charges on subordinated debt...... - - - 3,892 4,721 - -
Proportionate share of interest charges of
fifty percent owned subsidiaries........ 822 10,502 5,330 11,033 13,517 11,272 4,789
----------- ----------- ----------- ----------- ----------- ----------- ---------
Total fixed charges..................... $4,240 $13,364 $17,763 $25,328 $22,959 $33,816 $14,366
=========== =========== =========== =========== =========== =========== =========
Ratio of earnings to fixed charges......... 1.30x 2.22x 1.47x 1.74x 1.61x 1.23x 1.67x
Preferred dividends........................ 1,515 1,659 6,203 7,709 3,876 - -
----------- ----------- ----------- ----------- ----------- ----------- ---------
Fixed charges combined with preferred
dividends............................... $3,030 $3,318 $12,406 $15,418 $7,752 $0 $0
=========== =========== =========== =========== =========== =========== =========
Ratio of earnings to fixed charges combined
with preferred dividends................ 1.18x 1.82x 1.29x 1.42x 1.41x 1.23x 1.67x
</TABLE>
HOFS02...:\92\54892\0011\1612\TBL7178K.580
EXHIBIT 23.1
The Board of Directors and Shareholders
FirstCity Financial Corporation:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Fort Worth, Texas
July 16, 1998
HOFS02...:\92\54892\0011\1612\EXH7178K.160
EXHIBIT 23.2
The Partners
WAMCO Partnerships:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Fort Worth, Texas
July 16, 1998
HOFS02...:\92\54892\0011\1612\EXH7178K.160
