<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
MERCURY FINANCE COMPANY
(Name of Applicant)
100 FIELD DRIVE, LAKE FOREST, ILLINOIS 60045
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
9% SENIOR SECURED NOTES
DUE 2001, SERIES A $[ UNDETERMINED ]
SENIOR SECURED NOTES
DUE 2001, SERIES B $[ UNDETERMINED ]
Approximate date of issuance: On or as soon as possible after the
Effective Date (as defined in the
First Amended Plan of Reorganization
dated October 15, 1998 of Mercury
Finance Company under chapter 11 of
the United States Bankruptcy Code).
Name and address of agent for service: Mark Dapier, Esq.
Mercury Finance Company
100 Field Drive
Lake Forest, Illinois 60045
(847) 295-8600
With a copy to:
Grant A. Bagan, P.C.
Lewis S. Rosenbloom
McDermott, Will & Emery
227 West Monroe St., Suite 3100
Chicago, Illinois 60606
(312) 372-2000
THE APPLICANT HEREBY AMENDS THIS APPLICATION FOR QUALIFICATION ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVENESS UNTIL (i) THE 20TH DAY
AFTER THE FILING OF A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT IT SHALL
SUPERSEDE THIS AMENDMENT, OR (ii) SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SECTION 307(c) OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED (THE "ACT"),
MAY DETERMINE UPON THE WRITTEN REQUEST OF THE APPLICANT.
<PAGE>
GENERAL
1. GENERAL INFORMATION. Furnish the following as to the applicant:
(a) Form of organization.
A corporation.
(b) State or other sovereign power under the laws of which organized.
Delaware.
2. SECURITIES ACT EXEMPTION APPLICABLE. State briefly the facts relied
upon by the applicant as a basis for the claim that registration of the
indenture securities under the Securities Act of 1933 is not required.
On July 15, 1998, Mercury Finance Company, a Delaware corporation (the
"Company"), filed a voluntary petition for relief under chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the Northern District of Illinois Eastern Division (the "Bankruptcy
Court"). As part of the first Amended Plan of Reorganization of the Company
dated October 15, 1998 (the "Plan of Reorganization"), the Company proposes to
issue 9% Senior Secured Notes due 2001, Series A and 9% Senior Secured Notes due
2001, Series B (collectively, the "New Senior Notes"). The Plan of
Reorganization also provides for the issuance of 9% Senior Subordinated Notes
due 2003 (the "New Senior Subordinated Notes"), as well as shares of common
stock of the Company (the "New Common Stock") and warrants to purchase shares of
New Common Stock (the "Warrants"). The New Senior Notes and the New Senior
Subordinated Notes will be issued in part to discharge claims of existing
creditors in the Bankruptcy Case described below.
On October 15, 1998, the Bankruptcy Court approved the Company's First
Amended Disclosure Statement dated October 15, 1998 (the "Disclosure Statement")
as containing "adequate information" for the purpose of soliciting votes of
holders of claims or equity interests in the Company for acceptance or rejection
of the Plan of Reorganization (Case No. 98 B 20763) and authorized the Company
to solicit acceptances of its Plan of Reorganization. A hearing to confirm the
Plan of Reorganization is anticipated to begin on December 21, 1998. The New
Senior Notes are to be issued under an indenture and supplemental indentures
(together with the supplemental indentures thereto, the "Senior Note Indenture")
between the Company and Norwest Bank Minnesota, National Association, as
trustee, forms of which are attached hereto as Exhibits T3C1 and T3C2.
A copy of the Disclosure Statement is attached as Exhibit T3E5 to this
Form T-3 and a copy of the Plan of Reorganization is attached as Exhibit T3E6 to
this Form T-3. Information in this Form T-3 relating to future actions or
intentions of the Company, or other parties pursuant to the Plan of
Reorganization, are the current intentions of such parties, pursuant to the Plan
of Reorganization and as described in the Disclosure Statement, which actions
may
<PAGE>
be subject to modification, provided that all necessary approvals and/or
consents have been obtained.
The New Senior Notes and the New Senior Subordinated Notes are
proposed to be issued in reliance upon the exemption from registration under
the Securities Act of 1933, as amended (the "Securities Act"), set forth in
Section 1145(a)(1) of Title 11 of the Bankruptcy Code, applicable to the
offer or sale under a plan of reorganization under Chapter 11 of the
Bankruptcy Code by an entity that is not an underwriter of a security of a
debtor principally in exchange for a claim against such debtor.
Section 1145 of Title 11 of the Bankruptcy Code exempts the offer
or sale of securities under a plan of reorganization from registration under
the Securities Act and state securities laws if three principal requirements
are satisfied: (1) the securities are issued by a debtor, its successor, or
an affiliate participating in a joint plan with the debtor (provided that
such entity is not an underwriter as defined in Section 1145(b) of the
Bankruptcy Code) under a plan of reorganization; (2) the recipients of the
securities hold a claim against the debtor or such affiliate, an interest in
the debtor or such affiliate, or a claim for an administrative expense
against the debtor or such affiliate; and (3) the securities are issued
entirely in exchange for the recipients' claim against or interest in the
debtor or such affiliate, or "principally" in such exchange and "partly" for
cash or property.
The Company believes that the issuance of the New Senior Notes and
the New Senior Subordinated Notes to certain creditors of the Company
pursuant to the Plan of Reorganization will satisfy all three conditions of
Section 1145 of the Bankruptcy Code because (a) the issuances of the New
Senior Notes and the New Senior Subordinated Notes are expressly contemplated
under the Plan of Reorganization as part of the reorganization; (b) the
recipients are holders of "claims" against the Company; and (c) the
recipients will obtain such New Senior Notes and the New Senior Subordinated
Notes principally in exchange for their prepetition claims.
AFFILIATIONS
3. AFFILIATES. Furnish a list or diagram of all affiliates of the
applicant and indicate the respective percentages of voting securities or
other bases of control.
The following table sets forth the relationship among the Company
and all of its affiliates, including their respective percentages of voting
securities, as of September 30, 1998. Pursuant to the federal securities
laws, the directors and executive officers set forth below may be deemed to
be affiliates of the Company due to their positions with the Company;
however, their inclusion in this item is not an admission of their affiliated
status with the Company. The table is based on information within the
Company's possession including Schedules 13D and 13G filed with the
Securities and Exchange Commission. As of September 30, 1998, there were not
any persons or entities known by the Company to be the beneficial owners of
more than five percent of the Company's voting securities. The address for
all of the persons listed below is the address of the Company.
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<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
NAME RELATIONSHIP SECURITIES
- ------- -------------- -------------
<S> <C> <C>
Dennis H. Chookaszian Director *
William C. Croft Director *
Clifford R. Johnson Director *
Andrew McNally IV Director *
Bruce I. McPhee Director *
Fred G. Steingraber Director *
Philip J. Wicklander Director *
William A. Brandt, Jr President & Chief Executive *
Officer
Fred Caruso Acting Chief Operating Officer *
Patrick O'Malley Acting Principal Financial & *
Accounting Officer
Mercury Finance Corporation of Alabama (Ala) Subsidiary NA
Mercury Finance Company of Arizona (Ariz.) Subsidiary NA
Merc. Finance Company of California (Cal) Subsidiary NA
Mercury Finance Company of Colorado (Del) Subsidiary NA
Mercury Finance Company of Delaware (Del) Subsidiary NA
Mercury Finance Company of Florida (Del) Subsidiary NA
Mercury Finance Company of Georgia (Del) Subsidiary NA
Mercury Finance Company of Illinois (Del) Subsidiary NA
Mercury Finance Company of Idaho (Del) Subsidiary NA
Mercury Finance Company of Iowa (Del) Subsidiary NA
Mercury Finance Company of Indiana (Del) Subsidiary NA
Mercury Finance Company of Kansas (Del) Subsidiary NA
Mercury Finance Company of Kentucky (Del) Subsidiary NA
Mercury Finance Company of Louisiana (Del) Subsidiary NA
Mercury Finance Company Michigan (Del) Subsidiary NA
Mercury Finance Company of Missouri (Del) Subsidiary NA
Mercury Finance Company of Mississippi (Del) Subsidiary NA
Mercury Finance Company of Nevada (Nev.) Subsidiary NA
Mercury Finance Company of New Mexico (Del) Subsidiary NA
Mercury Finance Company of New York (Del) Subsidiary NA
Mercury Finance Company of North Carolina (Del) Subsidiary NA
Mercury Finance Company of Ohio (Del) Subsidiary NA
MFC Finance Company of Oklahoma (Del) Subsidiary NA
Mercury Finance Company of Oregon (Del) Subsidiary NA
Mercury Finance Company of Pennsylvania (Del) Subsidiary NA
Mercury Finance Company of South Carolina (Del) Subsidiary NA
Mercury Finance Company of Tennessee (Tenn.) Subsidiary NA
MFC Finance Company of Texas (Del) Subsidiary NA
Mercury Finance Company of Utah (Del) Subsidiary NA
Mercury Finance Company of Virginia (Del) Subsidiary NA
Mercury Finance Company of Washington (Del) Subsidiary NA
Mercury Finance Company of Wisconsin (Del) Subsidiary NA
Filco Marketing Company (Del) Subsidiary NA
Gulfco Investment Inc. (La) Subsidiary NA
Gulfco Finance Company (La) Subsidiary NA
Midland Finance Co. (IL) Subsidiary NA
MFN Insurance Company (Turks and Caicos) Subsidiary NA
MFC Financial Services, Inc. of Florida Subsidiary NA
</TABLE>
___________________
*Less than one percent
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On the date of the effectiveness of the Plan of Reorganization (the
"Effective Date"), all of the Company's current common stock will be canceled.
Pursuant to the Plan of Reorganization, as of the Effective Date, (a) 10,000,000
shares of New Common Stock of the Company will be issued to holders of Senior
Debt Claims (as defined in the Plan of Reorganization) pro rata, based upon each
creditor's percentage of the Senior Debt Claims, and (b) the stockholders of the
Company and holders of Securities Fraud Claims (as defined in the Plan of
Reorganization) will be entitled to receive Warrants to purchase up to 15% of
the New Common Stock of the Company. Accordingly, as of the Effective Date,
based upon the holders of the Senior Debt Claims on September 30, 1998, the
following table sets forth certain creditors of the Company (including the
amount and percentage of voting securities of the Company to be owned after the
Effective Date due to the issuance of New Common Stock pursuant to the Plan of
Reorganization) who may be deemed to be affiliates of the Company after the
Effective Date of the Plan of Reorganization due to their ownership of more than
10% of the New Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
NAME AND ADDRESS AMOUNT OWNED SECURITIES OWNED
- ------------------ ------------- --------------------
<S> <C> <C>
Franklin Mutual Series 1,632,000 19.2%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07075
Goldman, Sachs & Co. 1,606,500 18.9%
85 Broad Street
New York, New York 10004
Silver Oak Capital, L.L.C. 935,000 11.0%
c/o Angelo, Gordon & Co. L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Principal Life Insurance Co. 875,500 10.3%
711 High Street
Des Moines, Iowa 50392
Merrill Lynch Pierce Fenner & 816,000 9.96%
Smith Incorporated
250 Vesey Street
New York, New York 10281
</TABLE>
MANAGEMENT AND CONTROL
4. DIRECTORS AND EXECUTIVE OFFICERS. List the names and complete mailing
addresses of all directors and executive officers of the applicant and all
persons chosen to become directors or executive officers. Indicate all offices
with the applicant held or to be held by each person named.
The address for each director and executive officer listed below is
100 Field Drive, Lake Forest, Illinois 60045.
<TABLE>
<CAPTION>
NAME OFFICE
- ------ -------
<S> <C>
Dennis H. Chookaszian Director
William C. Croft Director.
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NAME OFFICE
- ------ -------
Clifford R. Johnson Director.
Andrew McNally IV Director.
Bruce I. McPhee Director.
Fred G. Steingraber Director.
Philip J. Wicklander Director.
William A. Brandt, Jr. President and Chief Executive Officer of the Company.
Fred Caruso Acting Chief Operating Officer.
Patrick J. O'Malley Acting Principal Financial and Accounting Officer.
Edward G. Stautzenbach Vice President - Marketing.
Steven G. Gould Vice President - Operations.
George R. Carey Vice President - Operations.
Sheila M. Tilson Vice President - Operations and Assistant Secretary.
John N. Brincat, Jr. Vice President - Operations.
Michael Caul Vice President - Operations.
David Joseph Peters Vice President - Operations.
Charles H. Lam Vice President - Operations.
Allan Green Vice President - Portfolio Management.
</TABLE>
Upon the effectiveness of the Plan of Reorganization, it is expected
that the composition of the directors and executive officers of the Company will
change; however, as of September 30, 1998, no definitive plans for such change
have been formalized.
5. PRINCIPAL OWNERS OF VOTING SECURITIES. Furnish the following
information as to each person owning 10 percent or more of the voting securities
of the applicant.
As of September 30, 1998, based on information and reports filed with
the Securities and Exchange Commission, there were not any persons or entities
known by the Company to be the beneficial owners of more than five percent of
the Company's voting securities.
As of the effectiveness of the Plan of Reorganization (the "Effective
Date"), all of the Company's current common stock and options to purchase common
stock will be canceled. Pursuant to the Plan of Reorganization, as of the
Effective Date, (a) 10,000,000 shares of New Common Stock of the Company will be
issued to holders of Senior Debt Claims (as defined in the Plan of
Reorganization) pro rata, based upon each creditor's percentage of the Senior
Debt Claims, and (b) the stockholders of the Company and holders of Securities
Fraud Claims (as defined in the Plan of Reorganization) will be entitled to
receive Warrants to purchase up to 15% of the New Common Stock of the Company.
Accordingly, as of the Effective Date, based upon the holders of the Senior Debt
Claims on September 30, 1998, the following table sets forth certain creditors
of the Company, including their respective percentage ownership of voting
securities of the Company, who may be deemed to be affiliates of the Company
after the effective date of the Plan of Reorganization due to their ownership of
more than 10% of the New Common Stock.
<TABLE>
<CAPTION>
SECURITIES OWNED
NAME AND ADDRESS AMOUNT OWNED PERCENTAGE OF VOTING
- ------------------- ------------- -----------------------
<S> <C> <C>
Franklin Mutual Series 1,632,000 19.2%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07075
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<PAGE>
Goldman, Sachs & Co. 1,606,500 18.9%
85 Broad Street
New York, New York 10004
Silver Oak Capital, L.L.C. 935,000 11.0%
c/o Angelo, Gordon & Co. L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Principal Life Insurance Co. 875,500 10.3%
711 High Street
Des Moines, Iowa 50392
Merrill Lynch Pierce Fenner & 816,000 9.96%
Smith Incorporated
250 Vesey Street
New York, New York 10281
</TABLE>
UNDERWRITERS
6. UNDERWRITERS. Give the name and complete mailing address of (a) each
person who, within three years prior to the date of filing the application,
acted as an underwriter of any securities of the applicant which were
outstanding on the date of filing the application, and (b) each proposed
principal underwriter of the securities proposed to be offered. As to each
person specified in (a), give the title of each class of securities
underwritten.
(a) None.
(b) The New Common Stock, New Senior Notes and the New Senior
Subordinated Notes proposed to be offered will be exchanged with certain holders
of claims against the Company, as set forth in the Plan, without the assistance
of any underwriter.
CAPITAL SECURITIES
7. CAPITALIZATION. (a) Furnish the following information as to each
authorized class of securities of the applicant.
As of September 30, 1998:
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.01 per share ................... 300,000,000 177,900,671
</TABLE>
___________________
(1) Does not include options to purchase an aggregate of ___________ shares of
Common Stock at various exercise prices which are currently outstanding.
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<PAGE>
As of the Effective Date of the Plan of Reorganization:
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.01 per share (1)...................... 25,000,000 10,000,000
Preferred Stock, no par value.................................. [ ] -
Senior Secured Notes due 2001, Series A and Series B...........$[ ] $[ ]
9% Senior Subordinated Notes due 2003..........................$[ ] $[ ]
</TABLE>
- -------------------
(1) Does not include three series of warrants to purchase an aggregate of
1,500,000 shares of New Common Stock (500,000 for each series ) that were
issued pursuant to the Plan of Reorganization. The Series A, Series B and
Series C Warrants shall be exercisable for $__________, $__________,
$___________ per share, respectively, on the Effective Date of the Plan of
Reorganization, and shall expire on the third, fourth and fifth anniversary
of the Effective Date of the Plan of Reorganization, respectively.
(b) Give a brief outline of the voting rights of each class of voting
securities referred to in paragraph (a) above.
Each outstanding share of the Company's existing Common Stock and the
New Common Stock has or will have, as applicable, one vote with respect to all
matters subject to common stockholder vote. The other securities are not voting
securities.
Holders of the New Senior Notes and New Senior Subordinated Notes do
not have any voting rights by reason of ownership of those securities.
8. ANALYSIS OF INDENTURE PROVISIONS. Insert at this point the analysis
of indenture provisions required under section 305(a)(2) of the Act.
The New Senior Notes will be issued pursuant to an Indenture between
the Company and Norwest Bank Minnesota, National Association, as trustee (the
"Senior Note Indenture"), a copy of which (including the supplemental indentures
thereto) is attached hereto as Exhibits T3C1 and T3C2. Capitalized terms used
in this Section 8 which are not otherwise defined below or elsewhere in the
Application have the respective meanings assigned to them in the Senior Note
Indenture. Section references used in this Section 8 shall, unless otherwise
specified or the context otherwise requires, be references to the corresponding
sections of the Senior Note Indenture. The following summary of certain
provisions of the Senior Note Indenture does not purport to be complete and is
subject to, and is qualified in its entirety, by reference to all of the
provisions of the Senior Note Indenture.
(A) EVENTS OF DEFAULT AND NOTICE OF DEFAULT.
The following are Events of Default under the Senior Note Indenture:
(i) failure by the Company to pay interest on the New Senior Notes
for 10 days after becoming due;
(ii) failure by the Company to pay the principal of or premium (if
any) on the New Senior Notes, whether at maturity or upon redemption,
repurchase or otherwise;
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<PAGE>
(iii) failure by the Company to comply with any of its covenants
or the breach by the Company of any of its covenants or warranties under
the Senior Note Indenture (other than a breach of a covenant or warranty
which is specifically provided for elsewhere in this section (A)) for 30
days after written notice specifying the failure and that the same is a
Default shall have been given to the Company by the Trustee or to the
Company and the Trustee by the Holders of 25% in principal amount of the
New Senior Notes outstanding;
(iv) default or defaults, including a payment default (after giving
effect to all applicable grace periods), under any evidence of Indebtedness
under which the Company or any of its Subsidiaries has an aggregate
principal amount of Indebtedness in excess of $10 million and either (A)
such Indebtedness is already due and payable in full or (B) such default or
defaults have resulted in the acceleration of the maturity of such
Indebtedness. Subject to Sections 10.01 and 9.08 of the Senior Note
Indenture, the Trustee will not be deemed to have knowledge of such default
unless either (1) a Responsible Officer of the Trustee has actual knowledge
of the default or (2) the Trustee has received written notice thereof from
the Company, from any Holder, from the holder of any such Indebtedness or
from the trustee under the agreement or instrument relating to such
Indebtedness;
(v) any judgment or order for the payment of money is entered
against the Company or any Subsidiary for $25 million or more (in excess of
insured amounts) either individually or in the aggregate for all such
judgments or orders against all such Persons and remains undischarged,
unstayed or otherwise unsatisfied for 60 days;
(vi) a court of competent jurisdiction enters a judgment, decree or
order under any state or federal insolvency, bankruptcy, reorganization or
other similar law that is for relief against the Company or any Subsidiary
of the Company, in an involuntary case or proceeding, or enters a decree or
order:
(a) adjudging the Company or any Subsidiary a bankrupt or
insolvent,
(b) approving a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company or any
Subsidiary of the Company,
(c) appointing a Custodian or other similar official for the
Company or any Subsidiary of the Company or for all or
substantially all of the property of any of them, or
(d) ordering the winding-up or liquidation of the Company or any
Subsidiary of the Company,
and in each case the judgment, order or decree remains unstayed and in
effect for 60 days.
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<PAGE>
(vii) the Company or any of its Subsidiaries pursuant to or within
the meaning of any state or federal insolvency, bankruptcy, reorganization
or other similar law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding,
(c) consents to the institution of a bankruptcy or an insolvency
proceeding against it,
(d) files a petition or answer or consent seeking reorganization or
relief with respect to the Company under any applicable law,
(e) consents to the appointment of, or taking possession by, a
Custodian or other similar official of it or any subsidiary for
all or substantially all of its property,
(f) makes an assignment for the benefit of its creditors,
(g) generally is not able to pay its debts as they become due, or
(h) takes any corporate action to authorize or effect any of the
foregoing;
(viii) the Subsidiaries Guaranty Agreement or any future guaranty
agreement entered into by a Subsidiary hereafter acquired or created is
held to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Subsidiary guarantor, or any Person acting on
behalf of any Subsidiary guarantor denies to disaffirm its obligations
under its subsidiary guarantee agreement;
(ix) default in the performance, or breach, of any covenant or
warranty of the Company or any Subsidiary, and the continuance of such
default or breach for a period of time which extends beyond the applicable
grace or cure period provided, in any Collateral Security Document; or
(x) notwithstanding anything in Section 9.01 of the Senior Note
Indenture to the contrary, if the Company defaults in the performance of or
breaches any covenant in Article III of the First Supplemental Indenture or
Article III of the Second Supplemental Indenture to the Senior Note
Indenture (other than Section 3.8 of the First Supplemental Indenture and
Second Supplemental Indenture) or Section 7.05 of the Senior Note
Indenture, an Event of Default will immediately occur, without giving
effect to the passage of time, notice, or both.
If a Default or an Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to Holders a
notice of the Default or Event of Default within 90 days after it occurs.
In the case of any Default of the character
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<PAGE>
specified in Section clause (iii) of this Section 8(A), no such notice to
Holders will be given until at least 30 days after the Default occurs. The
Company will notify the Trustee of any uncured Event of Default within 10
days after any Responsible Officer of the Company becomes aware of or
receives actual notice of the Event of Default.
(B) AUTHENTICATION AND DELIVERY OF THE NEW SENIOR NOTES AND THE
APPLICATION OF PROCEEDS THEREOF.
A New Senior Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
New Senior Note has been authenticated and delivered under the Senior Note
Indenture. The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate the New Senior Notes. An authenticating agent may
authenticate the New Senior Notes whenever the Trustee may do so. Each
reference in the Senior Note Indenture to authentication by the Trustee includes
authentication by such agent. Notwithstanding the foregoing, if any New Senior
Note has been authenticated and delivered but never issued and sold by the
Company, and the Company shall deliver the New Senior Note to the Trustee for
cancellation, such New Senior Note will be deemed never to have been
authenticated and delivered and will not be entitled to the benefits of the
Senior Note Indenture.
There will be no proceeds from the issuance of the New Senior Notes
because the New Senior Notes will be issued as part of an exchange for the
cancellation of the Company's Senior Debt Claims (as defined in the Plan of
Reorganization).
(C) RELEASE OF PROPERTY SUBJECT TO THE LIEN OF THE SENIOR NOTE INDENTURE.
The Company's obligations under the New Senior Notes issued under the
Senior Note Indenture are secured by liens on, and security interests in, on the
assets of the Company and certain of its Subsidiaries. Pursuant to the terms
and conditions of the First Supplemental Indenture and of the Second
Supplemental Indenture, the Company and its Subsidiaries may, without requesting
the consent of the Trustee or the holders of New Senior Notes, (a) sell used,
worn out or surplus equipment in the ordinary course of business and (b)
consummate sales, contributions and transfers of Receivables pursuant to any
Warehouse Facility.
Subject to applicable law, the release of any Company Collateral or
Subsidiary Collateral from Liens created by the Collateral Documents or the
release of, in whole or in part, the Liens created by the Collateral Documents,
will not be deemed to impair the Collateral Documents in contravention of the
Senior Note Indenture if and to the extent the Company Collateral, Subsidiary
Collateral or Liens are released pursuant to, and in accordance with, the
applicable Collateral Documents or pursuant to, and in accordance with, the
terms of the Senior Note Indenture. To the extent applicable, without
limitation, the Company and the Subsidiaries of the Company party to the
Subsidiaries Guaranty Agreement (the "Subsidiary Guarantors") shall cause
Section 314(d) of the Act, relating to the release of property or securities
from the Liens of the Collateral Documents, to be complied with.
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<PAGE>
(D) SATISFACTION AND DISCHARGE.
The obligations of the Company under the New Senior Notes and the
Senior Note Indenture will terminate (except for certain obligations of the
Company to indemnify the Trustee and the Authenticating Agent under certain
circumstances, and certain obligations with respect to unclaimed funds) when (i)
all outstanding New Senior Notes theretofore authenticated and delivered (other
than New Senior Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07 of the Senior Note Indenture)
have been delivered to the Trustee for cancellation, (ii) the Company has paid
or caused to be paid all other sums payable by it, and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent specified by the Senior Note
Indenture relating to the satisfaction and discharge of the Senior Note
Indenture have been complied with.
(E) EVIDENCE AS TO COMPLIANCE WITH CONDITIONS AND COVENANTS.
The Company is required to furnish the Trustee, within 120 days after
the end of each fiscal year of the Company, an Officers' Certificate complying
with Section 314(a)(4) of the Trust Indenture Act and stating whether or not the
signers know of any Default that occurred during such fiscal year. If they do,
the Officers' Certificate shall describe the Default and its status. Such
compliance shall be determined without regard to periods of grace or notice
requirements.
The Company is also required to deliver to the Trustee an Officers'
Certificate promptly upon becoming aware of any Event of Default or a Default
which could result in an Event of Default described in clause (vi) or clause
(vii) of Section (A) above and which Officer's Certificate will specify such
Default or Event of Default.
9. OTHER OBLIGORS. Give the name and complete mailing address of any
person, other than the applicant, who is an obligor upon the indenture
securities.
The Subsidiaries of the Company are guaranteeing the obligations of
the Company under the Senior Note Indenture pursuant to the Subsidiaries
Guaranty Agreement and are pledging their assets to secure their obligations
thereunder pursuant to the Subsidiaries Security Agreement.
CONTENTS OF APPLICATION FOR QUALIFICATION. This application for
qualification comprises:
(a) Pursuant to Rule 309(a) of Regulation S-T, requirements as to
sequential numbering shall not apply to this electronic format document.
(b) The statement of eligibility and qualification of each trustee under
the indenture or to be qualified.
(c) The following Exhibits in addition to those filed as a part of the
statement of eligibility and qualification of each trustee.
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<PAGE>
Exhibit T3A. Certificate of Incorporation of the Company, incorporated by
reference to Exhibit 3A to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (Sec File No. 0-10176).
The Certificate of Incorporation will be amended and restated in
connection with the Plan of Reorganization. The form of Amended
and Restated Certificate of Incorporation of the Company is
attached as Exhibit I to the Disclosure Statement (and is filed
as Exhibit T3E14 to this Form T-3).
Exhibit T3B. By-Laws of the Company, incorporated by reference to Exhibit 3B
to the Company's Form 10 filed February 1, 1989 (Sec File
No. 0-10176). The By-Laws will be amended and restated in
connection with the Plan of Reorganization. The form of Restated
By-Laws of the Company is attached as Exhibit I to the Disclosure
Statement (and is filed as Exhibit T3E14 to this Form T-3).
Exhibit T3C1. Form of the New Senior Note Indenture between the Company and
Norwest Bank Minnesota, National Association, as trustee.
Exhibit T3C2 Form of Supplemental Indentures with respect to the New Senior
Notes between the Company and Norwest Bank Minnesota, National
Association, as trustee.
Exhibit T3D. Not applicable.
Exhibit T3E1. Order Governing Plan Confirmation Hearing of Mercury Finance
Company.
Exhibit T3E2. Notice of Last Date for Filing of Proofs of Claim Against Mercury
Finance Company and Procedure Therefor.
Exhibit T3E3. Proof of Claim Form.
Exhibit T3E4. Notice of Hearing to Consider Confirmation of Mercury Finance
Company's First Amended Plan of Reorganization and Deadline for
Filing Objections and Conducting Related Discovery Thereto.
Exhibit T3E5. First Amended Disclosure Statement with respect to the Plan of
Reorganization dated as of October 15, 1998 (the "Disclosure
Statement"). The Exhibits to the Disclosure Statement are filed
as separate Exhibits to this Form T-3.
Exhibit T3E6. Mercury Finance Company First Amended Plan of Reorganization
dated as of October 15, 1998 (Exhibit A to the Disclosure
Statement).
-13-
<PAGE>
Exhibit T3E7. Form of the Supplemental New Senior Note Indentures between the
Company and Norwest Bank Minnesota, National Association, as
trustee (Exhibit B to the Disclosure Statement). See Exhibit
T3C2 above.
Exhibit T3E8. Form of the New Senior Note Indenture between the Company and
Norwest Bank Minnesota, National Association, as trustee
(Exhibit C to the Disclosure Statement). See Exhibit T3C1
above.
Exhibit T3E9. Form of Collateral Documents for the New Senior Notes (Exhibit D
to the Disclosure Statement).
Exhibit T3E10 Form of Supplemental Subordinated Note Indenture between the
Company and Norwest Bank Minnesota, National Association, as
trustee (Exhibit E to the Disclosure Statement).
Exhibit T3E11. Form of the Subordinated Note Indenture between the Company and
Norwest Bank Minnesota, National Association, as trustee
(Exhibit F to the Disclosure Statement).
Exhibit T3E12. Form of Registration Rights Agreement among the Company and the
persons identified on Schedule 1 therein (Exhibit G to the
Disclosure Statement).
Exhibit T3E13. Form of Warrant Agreement between the Company and Harris Trust
and Savings Bank, as trustee (Exhibit H to the Disclosure
Statement).
Exhibit T3E14. Form of the Charter and Bylaws of the Company upon the
effectiveness of the Plan of Reorganization (Exhibit I to the
Disclosure Statement).
Exhibit T3E15. [Intentionally Omitted]
Exhibit T3E16. Fairness Opinion of Investment Bank (Exhibit K to the Disclosure
Statement).
Exhibit T3E17. Agreement dated May 14, 1998 among the Company and certain
creditors of the Company (Exhibit L to the Disclosure
Statement), incorporated by reference to the Company's Form 8-K
filed with the Securities and Exchange Commission on May 15,
1998 (Sec File No. 0-10176).
Exhibit T3E18. Projected Financial Information of the Company (Exhibit M to the
Disclosure Statement).
Exhibit T3E19. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997; the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998, and, the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998 (Exhibit N to the
-14-
<PAGE>
Disclosure Statement), all incorporated herein by reference
(Sec File No. 0-10176).
Exhibit T3E20. Liquidation Analysis of the Company (Exhibit O to the Disclosure
Statement).
Exhibit T3E21. Forms of Ballots for accepting or rejecting the Plan of
Reorganization.
Exhibit T3E22. Financial Analysis by Certain Claimants (Exhibit P to the
Disclosure Statement).
Exhibit T3E23. Exhibit Q to the Disclosure Statement. See Exhibit T3A and T3B
above.
Exhibit T3E24. Form of Indemnification Agreement for certain officers and
directors of the Company (Exhibit R to the Disclosure
Statement).
*Exhibit T3E25. Operating Report of the Company (Exhibit S to the Disclosure
Statement).
Exhibit T3F. See Cross Reference Sheet showing the location in the New Senior
Note Indenture of the provisions inserted therein pursuant to
Section 310 through 318(a), inclusive, of the Trust Indenture
Act of 1939 (included in Exhibit T3C1 hereof).
- -------------
* To be filed by amendment.
-15-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Company, Mercury Finance Company, a corporation organized and existing under the
laws of Delaware, has duly caused this application to be signed on its behalf by
the undersigned, thereunto duly authorized, and its seal to be hereunto affixed
and attested, all in the city of Chicago, and State of Illinois, on the 19th day
of October, 1998.
MERCURY FINANCE COMPANY
Attest: By: /s/ William Brandt
-----------------------------------------
President and Chief Executive Officer
Attest: By: /s/ Patrick O'Malley
-----------------------------------------
Chief Accounting Officer
-16-
<PAGE>
Exhibit T3C1
Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
-----------------------
INDENTURE
Dated as of ______________, 1998
-----------------------
SENIOR SECURED NOTES
<PAGE>
SENIOR SECURED NOTES
CROSS REFERENCE SHEET*
This Cross Reference Sheet shows the location in the
Indenture of the provisions inserted pursuant to Sections 310 - 318(a),
inclusive, of the Trust Indenture Act of 1939, as amended.
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTIONS OF INDENTURE
------------------- ----------------------
<S> <C>
Section 310(a)(1)...........................................................................10.08
(a)(2) ..............................................................................10.08
(a)(3) ..............................................................................Inapplicable
(a)(4) ..............................................................................Inapplicable
(a)(5) ..............................................................................10.08
(b) ..............................................................................10.07
(c) ..............................................................................Inapplicable
Section 311(a)..............................................................................10.12
(b) ..............................................................................10.12
(c) ..............................................................................Inapplicable
Section 312(a)..............................................................................8.01, 8.02
(b) ..............................................................................8.02
(c) ..............................................................................8.02
Section 313(a)..............................................................................8.03
(b) ..............................................................................8.03
(c) ..............................................................................8.03
(d) ..............................................................................8.03
Section 314(a)..............................................................................8.04
(a)(4) ..............................................................................7.07
(b) ..............................................................................5.02
(c)(1) ..............................................................................14.05
(c)(2) ..............................................................................14.05
(c)(3) ..............................................................................Inapplicable
(d) ..............................................................................5.03
(e) ..............................................................................14.05
(f) ..............................................................................Inapplicable
Section 315(a)..............................................................................10.01
(b) ..............................................................................9.08
(c) ..............................................................................10.01
(d) ..............................................................................10.01, 10.02
(e) ..............................................................................9.07
Section 316(a)(1)(A)........................................................................9.01, 9.06
(a)(1)(B) ..............................................................................9.01
(a)(2) ..............................................................................Inapplicable
(b) ..............................................................................9.04, 9.09
(c) ..............................................................................14.11
Section 317(a)(1)...........................................................................9.02
(a)(2) ..............................................................................9.11
(b) ..............................................................................7.03
Section 318(a)..............................................................................14.08
</TABLE>
- ----------
* The Cross Reference Sheet is not part of the Indenture.
2
<PAGE>
Table of Contents*
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recitals.......................................................................................1
ARTICLE I. Definitions........................................................................1
Section 1.01. Certain Terms Defined...................................................1
ACT..........................................................................1
AFFILIATE....................................................................2
AUTHENTICATING AGENT.........................................................2
BOARD OF DIRECTORS...........................................................2
BOARD RESOLUTION.............................................................2
BUSINESS DAY.................................................................2
CAPITAL LEASE................................................................2
CAPITAL LEASE OBLIGATIONS....................................................2
COLLATERAL SECURITY DOCUMENTS................................................3
COMMISSION...................................................................3
COMMON STOCK.................................................................3
COMPANY......................................................................3
COMPANY REQUEST OR COMPANY ORDER.............................................3
CORPORATE TRUST OFFICE.......................................................4
COVENANT DEFEASANCE..........................................................4
DEFAULT......................................................................4
DEFAULTED INTEREST...........................................................4
DEFEASANCE...................................................................4
DEFEASIBLE SERIES............................................................4
DEPOSITARY...................................................................4
EVENT OF DEFAULT.............................................................4
EXCHANGE ACT.................................................................5
GAAP.........................................................................5
GLOBAL SECURITY..............................................................5
HOLDER.......................................................................5
INDEBTEDNESS.................................................................5
INDENTURE....................................................................6
INTEREST.....................................................................6
INTEREST PAYMENT DATE........................................................6
MATERIAL ADVERSE EFFECT......................................................6
MATURITY.....................................................................7
NOTICE OF DEFAULT............................................................7
OFFICER'S CERTIFICATE........................................................7
OPINION OF COUNSEL...........................................................7
ORIGINAL ISSUE DISCOUNT SECURITY.............................................7
OUTSTANDING..................................................................7
PAYING AGENT.................................................................8
PERSON.......................................................................8
PLACE OF PAYMENT.............................................................8
PREDECESSOR SECURITY.........................................................8
REDEMPTION DATE..............................................................9
REDEMPTION PRICE.............................................................9
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
REGULAR RECORD DATE..........................................................9
RESPONSIBLE OFFICER..........................................................9
SECURITIES...................................................................9
SECURITY REGISTER AND SECURITY REGISTRAR....................................10
SPECIAL RECORD DATE.........................................................10
STATED MATURITY.............................................................10
SUBSIDIARY..................................................................10
TRUST INDENTURE ACT.........................................................11
TRUSTEE.....................................................................11
U.S. GOVERNMENT OBLIGATION..................................................11
VICE PRESIDENT..............................................................11
ARTICLE II. THE SECURITIES...................................................................12
Section 2.01. Designation and Amount of Securities...................................12
Section 2.02. Form of Securities and Trustee's Certificate of
Authentication..............................................................14
Section 2.03. Date and Denominations.................................................15
Section 2.04. Execution, Authentication, and Delivery of Securities..................15
Section 2.05. Registration of Transfer and Exchange..................................16
Section 2.06. Temporary Securities...................................................18
Section 2.07. Mutilated, Destroyed, Lost, and Stolen Securities......................18
Section 2.08. Cancellation of Surrendered Securities.................................19
Section 2.09. Payment of Interest; Interest Rights Preserved.........................20
Section 2.10. Persons Deemed Owners..................................................21
Section 2.11. Computation of Interest................................................21
Section 2.12. CUSIP Numbers..........................................................21
ARTICLE III. REDEMPTION OF SECURITIES........................................................21
Section 3.01. Applicability of Article...............................................21
Section 3.02. Election to Redeem; Notice to Trustee..................................22
Section 3.03. Deposit of Redemption Price............................................23
Section 3.04. Securities Payable on Redemption Date..................................23
Section 3.05. Securities Redeemed in Part............................................23
ARTICLE IV. SINKING FUNDS....................................................................23
Section 4.01. Applicability of Article...............................................24
Section 4.02. Satisfaction of Sinking Fund Payments With Securities..................24
Section 4.03. Redemption of Securities for Sinking Fund..............................24
ARTICLE V. SECURITY..........................................................................24
Section 5.01. Security Interest......................................................24
Section 5.02. Recording of Security Interests; Opinions of Counsel...................25
Section 5.03. Release of Collateral..................................................27
Section 5.04. Release upon Defeasance or Release of Company's Obligations............27
Section 5.05. Reliance on Opinion of Counsel.........................................27
Section 5.06. Payment of Expenses....................................................27
Section 5.07. Trustee's Duties.......................................................27
ARTICLE VI. DEFEASANCE AND COVENANT DEFEASANCE...............................................28
Section 6.01. Company's Option to Effect Defeasance or Covenant Defeasance...........28
Section 6.02. Defeasance and Discharge...............................................28
Section 6.03. Covenant Defeasance....................................................29
Section 6.04. Conditions to Defeasance or Covenant Defeasance........................30
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Section 6.05. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.......................................31
Section 6.06. Reinstatement..........................................................32
ARTICLE VII. PARTICULAR COVENANTS OF THE COMPANY.............................................32
Section 7.01. Payment of Principal, Premium, and Interest on Securities..............32
Section 7.02. Maintenance of Office or Agency........................................33
Section 7.03. Money for Securities Payments to be Held in Trust......................33
Section 7.04. Payment of Taxes and Other Claims......................................34
Section 7.05. Existence..............................................................35
Section 7.06. Compliance with Laws...................................................35
Section 7.07. Statement by Officers as to Default....................................35
Section 7.08. Waiver of Certain Covenants............................................35
Section 7.09. Calculation of Original Issue Discount.................................36
ARTICLE VIII. SECURITIES HOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE..............................................................................36
Section 8.01. Company to Furnish Trustee Names and Addresses of Holders..............36
Section 8.02. Preservation of Information; Communication to Holders..................36
Section 8.03. Reports by Trustee.....................................................36
Section 8.04. Reports by Company.....................................................37
ARTICLE IX. DEFAULT..........................................................................37
Section 9.01. Event of Default.......................................................37
Section 9.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Securities on Default in Payment of Interest or Principal; Suits for
Enforcement by Trustee......................................................40
Section 9.03. Application of Money Collected by Trustee..............................42
Section 9.04. Limitation on Suits by Holders of Securities...........................42
Section 9.05. Rights and Remedies Cumulative; Delay or Omission in Exercise
of Rights not a Waiver of Event of Default..................................43
Section 9.06. Rights of Holders of Majority in Principal Amount of
Outstanding Securities to Direct Trustee....................................43
Section 9.07. Requirement of an Undertaking to Pay Costs in Certain Suits
Under the Indenture or Against the Trustee..................................43
Section 9.08. Notice of Defaults.....................................................43
Section 9.09. Unconditional Right of Holders to Receive Principal, Premium,
and Interest................................................................44
Section 9.10. Restoration of Rights and Remedies.....................................44
Section 9.11. Trustee May File Proofs of Claims......................................44
ARTICLE X. CONCERNING THE TRUSTEE............................................................46
Section 10.01. Certain Duties and Responsibilities...................................46
Section 10.02. Certain Rights of Trustee.............................................46
Section 10.03. Not Responsible for Recitals or Issuance of Securities................47
Section 10.04. May Hold Securities...................................................47
Section 10.05. Money Held in Trust...................................................47
Section 10.06. Compensation and Reimbursement........................................47
Section 10.07. Disqualification; Conflicting Interests...............................48
Section 10.08. Corporate Trustee Required Eligibility................................48
Section 10.09. Resignation and Removal; Appointment of Successor.....................48
Section 10.10. Acceptance of Appointment by Successor................................50
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Section 10.11. Merger, Conversion, Consolidation, or Succession to
Business...................................................................51
Section 10.12. Preferential Collection of Claims Against Company.....................51
Section 10.13. Appointment of Authenticating Agent...................................52
ARTICLE XI. SUPPLEMENTAL INDENTURES AND CERTAIN ACTIONS......................................53
Section 11.01. Purposes for Which Supplemental Indentures May Be Entered
Into Without Consent of Holders.............................................53
Section 11.02. Modification of Indenture With Consent of Holders of at
Least a Majority in Principal Amount of Outstanding Securities..............54
Section 11.03. Execution of Supplemental Indentures..................................55
Section 11.04. Effect of Supplemental Indentures.....................................56
Section 11.05. Conformity with Trust Indenture Act...................................56
Section 11.06. Reference in Securities to Supplemental Indentures....................56
ARTICLE XII. CONSOLIDATION, MERGER, SALE, OR TRANSFER........................................56
Section 12.01. Consolidations and Mergers of Company and Sales Permitted
Only on Certain Terms.......................................................56
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE........................................57
Section 13.01. Satisfaction and Discharge of Indenture...............................57
Section 13.02. Application of Trust Money............................................58
ARTICLE XIV. MISCELLANEOUS PROVISIONS........................................................58
Section 14.01. Successors and Assigns of Company Bound by Indenture..................58
Section 14.02. Service of Required Notice to Trustee and Company.....................58
Section 14.03. Service of Required Notice to Holders; Waiver.........................58
Section 14.04. Indenture and Securities to be Construed in Accordance with
the Laws of the State of New York...........................................59
Section 14.05. Compliance Certificates and Opinions..................................59
Section 14.06. Form of Documents Delivered to Trustee................................59
Section 14.07. Payments Due on Non-Business Days.....................................59
Section 14.08. Provisions Required by Trust Indenture Act to Control.................60
Section 14.09. Invalidity of Particular Provisions...................................60
Section 14.10. Indenture May be Executed In Counterparts.............................60
Section 14.11. Acts of Holders; Record Dates.........................................60
Section 14.12. Effect of Headings and Table of Contents..............................62
Section 14.13. Benefits of Indenture.................................................62
</TABLE>
6
<PAGE>
This INDENTURE, dated as of ___________ __, 1998, between
Mercury Finance Company, a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"), and Norwest Bank Minnesota,
National Association, a U.S. national banking association, as Trustee (the
"Trustee").
RECITALS
A. The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its senior
secured notes (the "Securities"), to be issued in one or more series as in this
Indenture provided.
B. All acts and things necessary to make the Securities, when
the Securities have been executed by the Company and authenticated by the
Trustee and delivered as provided in this Indenture, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
indenture and agreement according to its terms, have been done and performed,
and the execution and delivery by the Company of this Indenture and the issue
hereunder of the Securities have in all respects been duly authorized; and the
Company, in the exercise of legal right and power in it vested, is executing and
delivering this Indenture and proposes to make, execute, issue and deliver the
Securities.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the
Securities are authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Securities by the Holders
thereof, it is mutually agreed, for the equal and proportionate benefit of the
respective Holders from time to time of the Securities or of a series thereof,
as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. CERTAIN TERMS DEFINED.
(a) The terms defined in this Section 1.01 for all purposes of
this Indenture and of any indenture supplemental hereto (except as herein or
therein otherwise expressly provided or unless the context of this Indenture or
any indenture supplemental hereto otherwise requires) have the respective
meanings specified in this Section 1.01. All other terms used in this Indenture
that are defined in the Trust Indenture Act, either directly or by reference
therein (except as herein otherwise expressly provided or unless the context of
this Indenture otherwise requires), have the respective meanings assigned to
such terms in the Trust Indenture Act as in force at the date of original
execution of this Indenture.
ACT:
The term "Act," when used with respect to any Holder, has the
meaning set forth in Section 14.11.
<PAGE>
AFFILIATE:
The term "Affiliate" means, with respect to a particular
Person, any Person that, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, control of a 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 of the foregoing.
AUTHENTICATING AGENT:
The term "Authenticating Agent" means any Person authorized by
the Trustee pursuant to Section 10.13 to act on behalf of the Trustee to
authenticate Securities of one or more series.
BOARD OF DIRECTORS:
The term "Board of Directors" means the Board of Directors of
the Company or any duly authorized committee of such Board.
BOARD RESOLUTION:
The term "Board Resolution" means a copy of a resolution
delivered to the Trustee and 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.
BUSINESS DAY:
The term "Business Day," when used with respect to any Place
of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment are authorized
or required by law or executive order to close.
CAPITAL LEASE:
The term "Capital Lease" means, with respect to any Person,
any lease of property (whether real, personal, or mixed) by such Person or any
of its Subsidiaries as lessee that would be capitalized on a balance sheet of
such Person or any of its Subsidiaries prepared in conformity with GAAP, other
than, in the case of such Person or any of its Subsidiaries, any such lease
under which such Person or any of its Subsidiaries is the lessor.
CAPITAL LEASE OBLIGATIONS:
2
<PAGE>
The term "Capital Lease Obligations" means, with respect to
any Person, the capitalized amount of all obligations of such Person and its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.
COLLATERAL SECURITY DOCUMENTS:
The term "Collateral Security Documents" has the meaning set
forth in Section 5.01(a).
COMMISSION:
The term "Commission" means the Securities and Exchange
Commission, as from time to time constituted, 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 at such time.
COMMON STOCK:
The term "Common Stock" means the common stock of the Company.
COMPANY:
The term "Company" means Mercury Finance Company, a Delaware
corporation, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" will mean such
successor Person.
COMPANY COLLATERAL:
The term "Company Collateral" means, collectively, (i) "Collateral" as
such term is defined in the Company Pledge Agreement and (ii) "Collateral" as
such term is defined in the Company Security Agreement.
COMPANY PLEDGE AGREEMENT:
The term "Company Pledge Agreement" means the Company Pledge
Agreement dated as of ___________ __, 1998 between the Company and the Trustee,
as supplemented and amended from time to time in accordance with the terms
thereof.
COMPANY REQUEST OR COMPANY ORDER:
The term "Company Request" or "Company Order" means a written
request or order signed in the name of the Company by one of its Responsible
Officers and delivered to the Trustee.
COMPANY SECURITY AGREEMENT:
3
<PAGE>
The term "Company Security Agreement" means the Company
Security Agreement dated as of ___________ __, 1998 between the Company and the
Trustee, as supplemented and amended from time to time in accordance with the
terms thereof.
COMPANY SECURITY DOCUMENTS:
The term "Company Security Documents" means the Company Pledge
Agreement and the Company Security Agreement.
CORPORATE TRUST OFFICE:
The term "Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust business is
principally administered, which on the date hereof is Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479.
COVENANT DEFEASANCE:
The term "Covenant Defeasance" has the meaning set forth in
Section 6.03.
DEFAULT:
The term "Default" means any event which, with notice or
passage of time or both, would constitute an Event of Default.
DEFAULTED INTEREST:
The term "Defaulted Interest" has the meaning set forth in
Section 2.09.
DEFEASANCE:
The term "Defeasance" has the meaning set forth in Section
6.02.
DEFEASIBLE SERIES:
The term "Defeasible Series" has the meaning set forth in
Section 6.01.
DEPOSITARY:
The term "Depositary" means, with respect to Securities of any
series issuable in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Exchange Act that is
designated to act as Depositary for such Securities in accordance with Section
2.01.
EVENT OF DEFAULT:
The term "Event of Default" has the meaning set forth in
Section 9.01(a).
4
<PAGE>
EXCHANGE ACT:
The term "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, as the same may be in effect from time to time.
FINANCE BUSINESS
The term "Finance Business" means the business of acquiring
and/or making loans (a majority of which shall be secured) and/or servicing
Finance Receivables and the transaction of such other business as may be
reasonably incidental thereto including, without limitation, the leasing
business and the direct lending business including the sale of insurance as
agent or broker.
GAAP:
The term "GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and The American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by any
successor entity as may be in general use by significant segments of the
accounting profession, which are applicable to the circumstances as of the date
of determination.
GLOBAL SECURITY:
The term "Global Security" means a Security that evidences all
or part of the Securities of any series and is authenticated and delivered to,
and registered in the name of, the Depositary for such Securities or a nominee
thereof.
HOLDER:
The term "Holder" means a person in whose name a particular
Security is registered in the Security Register.
INDEBTEDNESS:
The term "Indebtedness" means, as applied to any Person,
without duplication, (a) indebtedness for borrowed money, all indebtedness
evidenced by notes, bonds, debentures or other evidences of indebtedness, and
all indebtedness under purchase money mortgages or other purchase money liens or
conditional sales or similar title retention agreements, in each case where such
indebtedness has been created, incurred, assumed or guaranteed by such Person or
where such Person is otherwise liable therefor, and (b) indebtedness for
borrowed money secured by any mortgage, pledge or other lien or encumbrance upon
property owned by such Person even though such Person has not assumed or become
liable for the payment of such indebtedness; PROVIDED, HOWEVER, that
indebtedness of the type referred to in clause (b) above shall be
5
<PAGE>
included within the definition of "Indebtedness" only to the extent of the
lesser of: (i) the amount of the underlying indebtedness referred to in the
clause (b) above and (ii) the aggregate value of the security for such
indebtedness.
INDENTURE:
The term "Indenture" means this Indenture, as this Indenture
may be amended, supplemented or otherwise modified from time to time, including,
for all purposes of this Indenture and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" will also include the terms of particular series of Securities
established in accordance with Section 2.01.
INDENTURE OBLIGATIONS:
The term "Indenture Obligations" means the obligations of the
Company to pay principal of, premium, if any, and interest on, and other amounts
payable in respect of, the Securities at the Stated Maturity of each such
payment, and (to the extent permitted by applicable law) as provided in the
Securities, interest on overdue principal, if any, of, overdue interest, if any,
on, and other overdue amounts, if any, payable with respect to, the Securities
and the performance of all other obligations of the Company and its Subsidiaries
to the Trustee and the Holders (with respect to the Securities) under this
Indenture, the Securities and the Company Security Documents, according to the
terms thereunder, and all other amounts due or to become due under this
Indenture, the Company Security Documents and the Subsidiaries Security
Agreement.
INTEREST:
The term "interest," (i) when used with respect to an Original
Issue Discount Security, which by its terms bears interest only after Maturity,
means interest which accrues from and after and is payable after Maturity and
(ii) when used with respect to any Security, means the amount of all interest
accruing on such Security, including any default interest and any interest that
would have accrued after any Event of Default but for the occurrence of such
Event of Default, whether or not a claim for such interest would be otherwise
allowable under applicable law.
INTEREST PAYMENT DATE:
The term "Interest Payment Date," when used with respect to
any Security, means the Stated Maturity of an installment of interest on such
Security.
MATERIAL ADVERSE EFFECT:
The term "Material Adverse Effect" means a material adverse
effect on the business, assets, financial condition or results of operations of
the Company (taken together with its Subsidiaries as a whole).
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MATURITY:
The term "Maturity," when used with respect to any Security,
means the date on which the principal of that Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption, or
otherwise.
NOTICE OF DEFAULT:
The term "Notice of Default" means a written notice of the
kind set forth in Section 9.01(a)(iv).
OFFICER'S CERTIFICATE:
The term "Officer's Certificate" means a certificate executed
on behalf of the Company by a Responsible Officer and delivered to the Trustee.
OPINION OF COUNSEL:
The term "Opinion of Counsel" means an opinion in writing
signed by legal counsel, who, subject to any express provisions hereof, may be
an employee of or counsel to the Company or any Subsidiary, reasonably
acceptable to the Trustee.
ORIGINAL ISSUE DISCOUNT SECURITY:
The term "Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 9.01(b).
OUTSTANDING:
The term "Outstanding" means, when used with reference to
Securities as of a particular time, all Securities theretofore issued by the
Company and authenticated and delivered by the Trustee under this Indenture,
except (a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation, (b) Securities in respect of which (i) notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made, and (ii) money in the amount required
for the redemption thereof has been deposited with the Trustee or any Paying
Agent (other than the Company) in trust for the Holders of such Securities, (c)
Securities paid pursuant to Section 2.07(c), and (d) Securities in exchange for
or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Company; PROVIDED, HOWEVER, that in determining
whether the Holders of the requisite principal amount of the Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent, or waiver hereunder, (x)
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the principal amount of an Original Issue Discount Security that will be deemed
to be Outstanding will be the amount of the principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof to such date pursuant to Section 9.01(b), (y) the principal
amount of a Security denominated in one or more foreign currencies or currency
units will be the U.S. dollar equivalent, determined in the manner contemplated
by Section 2.01 on the date of original issuance of such Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Security of the
amount determined as provided in clause (i) above) of such Security, and (z)
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor will be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee will be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, or waiver, only Securities which a Responsible Officer of the
Trustee actually knows to be so owned will be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor.
PAYING AGENT:
The term "Paying Agent" means any Person authorized by the
Company to pay the principal of or any premium or interest on any Securities on
behalf of the Company.
PERSON:
The term "Person" means any individual, partnership,
corporation, limited liability company, limited liability partnership, joint
stock company, business trust, trust, unincorporated association, joint
venture, or other entity, or a governmental or political subdivision or
agency thereof.
PLACE OF PAYMENT:
The term "Place of Payment," when used with respect to the
Securities of any series, means the place or places for the payment of the
principal of and any premium and interest on the Securities of that series
established in accordance with Section 2.01.
PREDECESSOR SECURITY:
The term "Predecessor Security," when used with respect to any
particular Security, means every previous Security evidencing all or a portion
of the same debt as that evidenced by such Security; and, for the purposes of
this definition, any Security authenticated and delivered under Section 2.07 in
exchange for or in lieu of a mutilated, destroyed, lost, or stolen Security will
be deemed to evidence the same debt as the mutilated, destroyed, lost, or stolen
Security.
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RECEIVABLES:
The term "Receivables" means (i) consumer installment sale
contracts and loans evidenced by promissory notes secured by new and used
automobiles and light trucks, (ii) other consumer installment sale contracts or
lease contracts and (iii) loans secured by residential mortgages, in the case of
each of the clauses (i), (ii) and (iii), that are purchased or originated in the
ordinary course of business by the Company or any Subsidiary of the Company.
REDEMPTION DATE:
The term "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:
The term "Redemption Price," when used with respect to any
Security to be redeemed, means the price (including premium, if any) at which it
is to be redeemed pursuant to this Indenture.
REGULAR RECORD DATE:
The term "Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the date established
for that purpose in accordance with Section 2.01.
RESPONSIBLE OFFICER:
The term "Responsible Officer," when used (a) with respect to
the Company, means the Chief Executive Officer, the President, the Chief
Financial Officer or the Secretary of the Company and (b) with respect to the
Trustee, means any Vice President, any Assistant Vice President, any Assistant
Secretary, any Assistant Treasurer, any trust officer or assistant trust
officer, or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
are such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
SECURITIES:
The term "Securities" has the meaning set forth in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
SECURITY INTEREST:
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The term "Security Interest" means the security interest in
the Company Collateral and the Subsidiaries Collateral, including the priority
thereof, created by the Collateral Security Documents in favor of the Trustee
for the benefit of the Holders of the Securities issued hereunder.
SECURITY REGISTER AND SECURITY REGISTRAR:
The terms "Security Register" and "Security Registrar" have
the respective meanings set forth in Section 2.05.
SPECIAL RECORD DATE:
The term "Special Record Date" for the payment of any
Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.09.
STATED MATURITY:
The term "Stated Maturity," when used with respect to any
Security, any installment of interest thereon, or any other amount payable under
this Indenture or the Securities, means the date specified in this Indenture or
such Security as the regularly scheduled date on which the principal of such
Security, such installment of interest, or such other amount, is due and
payable.
SUBSIDIARIES COLLATERAL:
The term "Subsidiaries Collateral" has the meaning assigned to
the term "Collateral" in the Subsidiaries Security Agreement.
SUBSIDIARIES GUARANTY AGREEMENT:
The term "Subsidiaries Guaranty Agreement" means the
Subsidiaries Guaranty Agreement dated as of ___________ __, 1998 made by each
Subsidiary of the Company in favor of the Trustee for the benefit of the Holders
as it may be supplemented and amended from time to time in accordance with the
terms thereof.
SUBSIDIARIES SECURITY AGREEMENT:
The term "Subsidiaries Security Agreement" means the
Subsidiaries Security Agreement dated as of ____________ __, 1998 between each
Subsidiary and the Trustee.
SUBSIDIARY:
The term "Subsidiary" means, as applied with respect to any
Person, any corporation, partnership, or other business entity of which, in the
case of a corporation, more than 50% of the issued and outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation has or
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might have voting power upon the occurrence of any contingency), or, in the case
of any partnership or other legal entity, more than 50% of the ordinary equity
capital interests, is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries, or by one
or more of such Person's other Subsidiaries. Unless the context of this
Indenture or any indenture supplemental hereto otherwise expressly requires, the
term "Subsidiary" shall refer to a Subsidiary of the Company.
TRUST INDENTURE ACT:
The term "Trust Indenture Act" means the Trust Indenture Act
of 1939, as amended, as in force at the date as of which this instrument was
executed; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939
is amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939, as so amended.
TRUSTEE:
The term "Trustee" means the Person named as the "Trustee" in
the first paragraph of this Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture and,
thereafter, "Trustee" will mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series will mean each Trustee with
respect to Securities of that series.
U.S. GOVERNMENT OBLIGATION:
The term "U.S. Government Obligation" means (a) any security
that is (i) a direct obligation of the United States of America for the payment
of which the full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof and (b) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any U.S. Government Obligation
specified in clause (a), which U.S. Government Obligation is held by such
custodian for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal of or interest on any such U.S.
Government Obligation, PROVIDED that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
VICE PRESIDENT:
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The term "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."
WAREHOUSE FACILITY:
The term "Warehouse Facility" means any funding arrangement
with a financial institution or other lender or purchaser to the extent (and
only to the extent) funding thereunder is used exclusively to finance or
refinance the purchase or origination of Receivables by the Company or any
Subsidiary in each case in the ordinary course of the Finance Business.
(b) The words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture. 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. Certain terms
used principally in Articles VI, VII, and X are defined in those Articles. Terms
in the singular include the plural and terms in the plural include the singular.
ARTICLE II. THE SECURITIES
SECTION 2.01. DESIGNATION AND AMOUNT OF SECURITIES.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
(b) The Securities may be issued in one or more series. There
will be established in or pursuant to a Board Resolution and, subject to Section
2.04, set forth or determined in the manner provided in an Officer's
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series: (i) the title of the Securities of
the series (which will distinguish the Securities of the series from Securities
of any other series); (ii) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in the exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.05, 2.06, 2.07, 3.05, or 11.06 and except for any
Securities which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder); (iii) the Person to whom any interest on
a Security of the series will be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest; (iv) the date or dates
on which the principal of the Securities of the series is payable; (v) the rate
or rates at which the Securities of the series will bear interest, if any, the
date or dates from which such interest will accrue, the Interest Payment Dates
on which any such interest will be payable, and the Regular Record Date for any
interest payable on any Interest Payment Date; (vi) the place or places where
the principal of and any premium and interest on Securities of the series will
be payable; (vii) the period or periods within which, the price or prices at
which, and the terms and conditions upon which Securities
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of the series may be redeemed, in whole or in part, at the option of the
Company; (viii) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon which Securities of
the series will be redeemed or purchased, in whole or in part, pursuant to such
obligation; (ix) if other than denominations of $1,000 and integral multiples
thereof, the denominations in which Securities of the series will be issuable;
(x) the currency, currencies, or currency units in which payment of the
principal of and any premium and interest on any Securities of the series will
be payable if other than the currency of the United States of America and the
manner of determining the equivalent thereof in the currency of the United
States of America for purposes of the definition of "Outstanding" in Section
1.01; (xi) if the amount of payments of principal of or any premium or interest
on any Securities of the series may be determined with reference to an index,
based upon a formula, or in some other manner, the manner in which such amounts
will be determined; (xii) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company or a
Holder thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable, the currency,
currencies, or currency units in which payment of the principal of and any
premium and interest on Securities of such series as to which such election is
made will be payable, and the periods within which and the terms and conditions
upon which such election is to be made; (xiii) if other than the principal
amount thereof, the portion of the principal amount of Securities of the series
which will be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 9.01(b); (xiv) if applicable, that the Securities of the
series will be subject to either or both of Defeasance or Covenant Defeasance as
provided in Article VI, provided that no series of Securities that is
convertible into Common Stock pursuant to Section 2.01(b)(xvi) or convertible
into or exchangeable for any other securities pursuant to Section 2.01(b)(xvii)
will be subject to Defeasance pursuant to Section 6.02; (xv) if and as
applicable, that the Securities of the series will be issuable in whole or in
part in the form of one or more Global Securities and, in such case, the
Depositary or Depositaries for such Global Security or Global Securities and any
circumstances other than those set forth in Section 2.05 in which any such
Global Security may be transferred to, and registered and exchanged for
Securities registered in the name of, a Person other than the Depositary for
such Global Security or a nominee thereof and in which any such transfer may be
registered; (xvi) the terms and conditions, if any, pursuant to which the
Securities are convertible into Common Stock; (xvii) the terms and conditions,
if any, pursuant to which the Securities are convertible into or exchangeable
for any other securities, including (without limitation) securities of Persons
other than the Company; (xviii) if and as applicable, that the Securities of the
series will be subordinate and subject in right of payment to the prior payment
of other Indebtedness; and (xix) any other terms of, or provisions, covenants,
rights or other matters applicable to, the series (which terms, provisions,
covenants, rights or other matters will not be inconsistent with the provisions
of this Indenture, except as permitted by Section 11.01(d)).
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(c) All Securities of any one series will be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to below and (subject to Section
2.04) set forth or determined in the manner provided in the Officer's
Certificate referred to above or in any such indenture supplemental hereto.
(d) If any of the terms of the series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action will be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee concurrently with or prior to the delivery
of the Officer's Certificate setting forth the terms of the series.
SECTION 2.02. FORM OF SECURITIES AND TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
(a) The Securities of each series will be in such form as may
be established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, 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 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. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, a copy
of an appropriate record of such action will be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee concurrently
with or prior to the delivery of the Company Order contemplated by Section 2.04
for the authentication and delivery of such Securities.
(b) The definitive Securities will be printed, lithographed,
or engraved on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may be
listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
(c) The Trustee's certificate of authentication will be in
substantially the following form:
[Form of Trustee's Certificate of Authentication for Securities]
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:
-----------------------------
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Authorized Signatory
(d) Every Global Security authenticated and delivered
hereunder will bear a legend in substantially the following form:
[Form of Legend for Global Securities]
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee thereof. This Security may not be transferred to, or registered or
exchanged for Securities registered in the name of, any Person other than the
Depositary or a nominee thereof, and no such transfer may be registered, except
in the limited circumstances described in the Indenture. Every Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, this Security will be a Global Security subject to the
foregoing, except in such limited circumstances.
SECTION 2.03. DATE AND DENOMINATIONS.
Each Security will be dated the date of its authentication.
The Securities of each series will be issuable only in registered form without
coupons in such denominations as may be specified in accordance with Section
2.01. In the absence of any such specified denomination with respect to the
Securities of any series, the Securities of such series will be issuable in
denominations of $1,000 and integral multiples thereof.
SECTION 2.04. EXECUTION, AUTHENTICATION, AND DELIVERY OF SECURITIES.
(a) The Securities will be executed on behalf of the Company
by the Chief Executive Officer or the President of the Company and attested by
the Treasurer or the Secretary of the Company under its corporate seal. The
signature of any of these officers on the Securities may be manual or facsimile.
The seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted, or otherwise reproduced on the Securities.
(b) Only such Securities bearing the Trustee's certificate of
authentication, signed manually by the Trustee, will be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such execution of
the certificate of authentication by the Trustee upon any Securities executed by
the Company will be conclusive evidence that the Securities so authenticated
have been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 2.08, for all
purposes of this Indenture such Security will be deemed never to have been
authenticated and delivered hereunder and will never be entitled to the benefits
of this Indenture.
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(c) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company will 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.
(d) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order will authenticate and make such
Securities available for delivery. If the form or terms of the Securities of the
series have been established in or pursuant to one or more Board Resolutions as
permitted by Sections 2.01 and 2.02, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee will be entitled to receive, and (subject to
Section 10.01) will be fully protected in relying upon, an Opinion of Counsel
stating (i) if the form of such Securities has been established by or pursuant
to a Board Resolution as permitted by Section 2.02, that such form has been
established in conformity with the provisions of this Indenture, (ii) if the
terms of such Securities have been established by or pursuant to a Board
Resolution as permitted by Section 2.01, that such terms have been established
in conformity with the provisions of this Indenture, and (iii) that such
Securities, when authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and binding obligations of the Company
enforceable in accordance with their terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws of general applicability relating to or affecting creditors' rights and by
general principles of equity.
(e) Notwithstanding the provisions of Sections 2.01 and
2.04(d), if all Securities of a series are not to be originally issued at one
time, it will not be necessary to deliver the Officer's Certificate otherwise
required pursuant to Section 2.01 or the Company Order and Opinion of Counsel
otherwise required pursuant to Section 2.04(d) at or prior to the time of
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
SECTION 2.05. REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company will cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company will provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
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(b) Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of Payment for that
series, the Company will execute, and the Trustee will authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and tenor.
(c) At the option of the Holder, Securities of any series may
be exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company will execute, and the
Trustee will authenticate and make available for delivery, the Securities which
the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration
of transfer or exchange will (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument or instruments of
transfer, in form reasonably satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing. No service charge will be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 2.06, 3.05, or 11.06 not involving any transfer.
The Company will not be required (i) to issue, register the transfer of, or
exchange Securities of any series during a period beginning at the opening of
business 15 calendar days before the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 3.02(c) and
ending at the close of business on the day of such mailing or (ii) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Securities to be redeemed in part, the
portion thereof not being redeemed.
(e) All Securities issued upon any registration of transfer or
exchange of Securities will be valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
(f) Notwithstanding any other provision in this Indenture, no
Global Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such Global
Security or any nominee thereof, and no such transfer may be registered, unless
(i) such Depositary (A) notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or (B) ceases to be a clearing
agency registered under the Exchange Act, (ii) the Company executes and delivers
to the Trustee a Company Order that such Global Security shall be so
transferable, registrable, and exchangeable, and such transfers shall be
registrable, (iii) there shall have occurred and be continuing an Event
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of Default with respect to the Securities evidenced by such Global Security or
(iv) there shall exist such other circumstances, if any, as have been specified
for this purpose in accordance with Section 2.01. Notwithstanding any other
provision in this Indenture, a Global Security to which the restriction set
forth in the preceding sentence shall have ceased to apply may be transferred
only to, and may be registered and exchanged for Securities registered only in
the name or names of, such Person or Persons as the Depositary for such Global
Security shall have directed and no transfer thereof other than such a transfer
may be registered. Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security to which the
restriction set forth in the first sentence of this Section 2.05(f) shall apply,
whether pursuant to this Section 2.05, Section 2.06, 2.07, 3.05, or 11.06 or
otherwise, will be authenticated and delivered in the form of, and will be, a
Global Security.
SECTION 2.06. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any
series, the Company may execute and register and upon Company Order the Trustee
will authenticate and make available for delivery temporary Securities (printed,
lithographed, or typewritten), of any authorized denomination, and substantially
in the form of the definitive Securities but with such omissions, insertions,
and variations as may be appropriate for temporary Securities, all as may be
determined by the officers executing such Securities as evidenced by their
execution of such Securities; PROVIDED, HOWEVER, that the Company will use
reasonable efforts to have definitive Securities of that series available at the
times of any issuance of Securities under this Indenture. Every temporary
Security will be executed and registered by the Company and be authenticated by
the Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Securities. The Company will execute and
register and furnish definitive Securities of such series as soon as practicable
and thereupon any or all temporary Securities of such series may be surrendered
in exchange therefor at the office or agency of the Company in the Place of
Payment for that series, and the Trustee will authenticate and make available
for delivery in exchange for such temporary Securities of such series one or
more definitive Securities of the same series, of any authorized denominations,
and of a like aggregate principal amount and tenor. Such exchange will be made
by the Company at its own expense and without any charge to the Holder therefor.
Until so exchanged, the temporary Securities of any series will be entitled to
the same benefits under this Indenture as definitive Securities of the same
series authenticated and delivered hereunder.
SECTION 2.07. MUTILATED, DESTROYED, LOST, AND STOLEN SECURITIES.
(a) If any mutilated Security is surrendered to the Trustee,
the Company will execute and the Trustee will authenticate and make available
for delivery in exchange therefor a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
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(b) If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss, or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company will execute and the Trustee will authenticate
and make available for delivery, in lieu of any such destroyed, lost, or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
(c) 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.
(d) Upon the issuance of any new Security under this Section
2.07, 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.
(e) Every new Security of any series issued pursuant to this
Section 2.07 in exchange for any mutilated Security or in lieu of any destroyed,
lost, or stolen Security will constitute an original additional contractual
obligation of the Company, whether or not the mutilated, destroyed, lost, or
stolen Security shall be at any time enforceable by anyone, and will be entitled
to all the benefits of this Indenture equally and proportionately with any and
all other Securities of that series duly issued hereunder.
(f) The provisions of this Section 2.07 are exclusive and will
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 2.08. CANCELLATION OF SURRENDERED SECURITIES.
All Securities surrendered for payment, redemption,
registration of transfer or exchange, or for credit against any sinking fund
payment will, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and will be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered will be promptly canceled by the Trustee. No Securities will be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 2.08, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee will be disposed of as directed by a
Company Order, provided, however, that the Trustee will not be required to
destroy canceled Securities except in accordance with its established policies.
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SECTION 2.09. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) Except as otherwise provided in accordance with Section
2.01 with respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date will 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.
(b) Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") will forthwith cease to be
payable to the Holder on the relevant regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company
together with interest thereon (to the extent permitted by law) at the rate of
interest applicable to such Security, at its election in each case, as provided
in clause (i) or (ii) below:
(i) The Company may elect to make payment of any
Defaulted Interest (and interest thereon, if any) to the Persons in
whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
will be fixed in the following manner. The Company will notify the
Trustee in writing of the amount of Defaulted Interest (and interest
thereon, if any) proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company
will deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest (and
interest thereon, if any) or will 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 (and interest thereon, if
any) as in this clause (i) provided. Thereupon the Trustee will fix a
Special Record Date for the payment of such Defaulted Interest (and
interest thereon, if any) which will be not more than 15 calendar days
and not less than 10 calendar days prior to the date of the proposed
payment and not less than 10 calendar days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee will
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, will cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Securities of such series at such Holder's address as it appears in the
Security Register, not less than 10 calendar days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest
(and interest thereon, if any) and the Special Record Date therefor
having been so mailed, such Defaulted Interest will be paid to the
Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and will no longer be payable
pursuant to the following clause (ii).
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(ii) The Company may make payment of any Defaulted
Interest (and interest thereon, if any) on the Securities of any series
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which such Securities may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this clause (ii), such manner of payment shall be deemed practicable by
the Trustee.
(c) Subject to the foregoing provisions of this Section 2.09,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security will carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 2.10. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and any
premium and (subject to Section 2.09) any interest on such Security and for all
other purposes whatsoever, whether or not such Security shall be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
will be affected by notice to the contrary.
SECTION 2.11. COMPUTATION OF INTEREST.
Except as otherwise specified in accordance with Section 2.01
for Securities of any series, interest on the Securities of each series will be
computed on the basis of a 360-day year consisting of 12 30-day months.
SECTION 2.12. CUSIP NUMBERS.
The Company, in issuing Securities of any series, may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee will use
"CUSIP" numbers in notices of redemption as a convenience to Holders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption will
not be affected by any defect in or omission of such numbers. To the extent
applicable, the Company will promptly notify the Trustee of any change in the
"CUSIP" numbers.
ARTICLE III. REDEMPTION OF SECURITIES
SECTION 3.01. APPLICABILITY OF ARTICLE.
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Securities of any series which are redeemable before their
Stated Maturity will be redeemable in accordance with their terms and (except as
otherwise specified in accordance with Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
(a) The election of the Company to redeem any Securities will
be evidenced by a Board Resolution. In case of any redemption at the election of
the Company, the Company will, at least 60 calendar days prior to the Redemption
Date fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company will furnish the Trustee with an Officer's Certificate evidencing
compliance with such restriction.
(b) Notice of redemption of Securities to be redeemed at the
election of the Company will be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and will
be irrevocable. Notice of redemption will be given by mail, first-class postage
prepaid, not less than 30 or more than 60 calendar days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register. All notices of redemption will identify the Securities to
be redeemed (including the CUSIP numbers thereof, if applicable) and will state
(i) the Redemption Date, (ii) the Redemption Price, (iii) if less than all the
Outstanding Securities of any series are to be redeemed, the identification
(and, in the case of partial redemption of any Securities, the principal
amounts) of the particular Securities to be redeemed, (iv) that on the
Redemption Date the Redemption Price will become due and payable upon each such
Security to be redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date, (v) the place or places where such Securities are
to be surrendered for payment of the Redemption Price, (vi) that the redemption
is for a sinking fund, if such is the case, and (vii) the specific provision of
this Indenture pursuant to which such Securities are to be redeemed.
(c) If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed will be selected not more
than 60 calendar 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 may deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. The Trustee
will promptly notify the Company in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
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(d) For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities will
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities which has been or is
to be redeemed.
SECTION 3.03. DEPOSIT OF REDEMPTION PRICE.
At or prior to 10:00 a.m., New York City time, on any
Redemption Date, the Company will deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 7.03) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) any accrued interest on, all of the Securities that are to be
redeemed on that date.
SECTION 3.04. SECURITIES PAYABLE ON REDEMPTION DATE.
(a) Notice of redemption having been given as aforesaid, the
Securities so to be redeemed will, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company defaults in the payment of the Redemption Price and accrued
interest) such Securities will cease to accrue interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security will
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; PROVIDED, HOWEVER, that, unless otherwise specified in
accordance with Section 2.01, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates in accordance with their terms
and the provisions of Section 2.09.
(b) If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium will, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 3.05. SECURITIES REDEEMED IN PART.
Any Security that is to be redeemed only in part will be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company will execute, and
the Trustee will authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities of the same
series and of like tenor, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE IV. SINKING FUNDS
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SECTION 4.01. APPLICABILITY OF ARTICLE.
The provisions of this Article IV will be applicable to any
sinking fund for the retirement of Securities of a series except as otherwise
specified in accordance with Section 2.01 for Securities of such series. The
minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
amount of any sinking fund payment may be subject to reduction as provided in
Section 4.02. Each sinking fund payment with respect to Securities of a
particular series will be applied to the redemption of Securities of such series
as provided for by the terms of Securities of such series.
SECTION 4.02. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series, provided that such Securities have not been previously so credited. Such
Securities will be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment will be reduced
accordingly.
SECTION 4.03. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 calendar days prior to each sinking fund
payment date for any series of Securities, the Company will deliver to the
Trustee an Officer's Certificate specifying the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of that series, the
portion thereof, if any, that is to be satisfied by payment of cash and the
portion thereof, if any, that is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 4.02 and will also deliver to the
Trustee any Securities to be so delivered. Not less than 30 calendar days before
each such sinking fund payment date, the Trustee will select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in
Section 3.02(c) and cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner provided in Section
3.02(b). Such notice having been duly given, the redemption of such Securities
will be made upon the terms and in the manner stated in Sections 3.04 and 3.05.
ARTICLE V. SECURITY
SECTION 5.01. SECURITY INTEREST.
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(a) In order to secure the payment of the Indenture
Obligations, the Company and the Trustee have entered into the Company Security
Documents. In addition, the Subsidiaries of the Company have guaranteed the
payment of the Indenture Obligations pursuant to the Subsidiaries Guaranty
Agreement. Payment of amounts due by the Subsidiaries under the Subsidiaries
Guaranty Agreement is secured by the Subsidiaries Security Agreement entered
into by each Subsidiary and the Trustee. The Company Security Documents, the
Subsidiaries Guaranty Agreement and the Subsidiaries Security Agreement are
herein referred to collectively as the "Collateral Security Documents." The
Trustee and each Holder, by accepting Securities issued under this Indenture,
acknowledge the binding effect of the Collateral Security Documents as in effect
and in existence on the date hereof; PROVIDED, that in the event of a conflict
between the provisions of any of the Collateral Security Documents and the
provisions of the Trust Indenture Act, the provisions of the Trust Indenture Act
will control.
(b) The Trustee and each Holder, by accepting Securities
issued under this Indenture, acknowledge and agree that, as more fully set forth
in the Subsidiaries Guaranty Agreement and the Subsidiaries Security Agreement,
if any Subsidiary enters into a Warehouse Facility, the rights of any party
lending money to a Subsidiary pursuant to such Warehouse Facility, with respect
to certain assets comprising a portion of the Subsidiaries Collateral will be
senior to those of the Holders of Securities.
(c) The Company Collateral, and subject to subsection (b) of
this Section 5.01, the Subsidiaries Collateral, will be held for the equal and
ratable benefit and security of the Holders of Securities of each series issued
under this Indenture without preference, priority, or distinction of any thereof
over any other by reason of difference in time of issuance, sale, or otherwise,
and for the enforcement of the Indenture Obligations.
SECTION 5.02. RECORDING OF SECURITY INTERESTS; OPINIONS OF COUNSEL.
(a) The Company and each Subsidiary, as applicable, has
executed, delivered, filed, and recorded or, as set forth on Schedule ___, will
execute, deliver, file, and record, all instruments and documents, and has done
or, as set forth on Schedule ___, will do all such acts and other things, at the
Company's or such Subsidiaries' expense, as applicable, as are necessary to
subject the Company Collateral and the Subsidiaries Collateral to the Security
Interest. The Company will, and will cause each Subsidiary, as applicable, to
execute, deliver, file and record all instruments and do all acts and other
things as may be reasonably necessary to perfect, maintain and protect the
Security Interest.
(b) In addition to its obligations under the Collateral
Security Documents, the Company will, and will cause each Subsidiary to, deliver
promptly after the execution and delivery of this Indenture, as contemplated in
Schedule ___, any other instrument of further assurance or amendment or waiver
of any provision of this
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Indenture or the Collateral Security Documents relating to the lien and security
interest in the Company Collateral and the Subsidiaries Collateral for the
benefit of the Holders of Securities, an Opinion of Counsel in a form acceptable
to the Trustee either (i) stating that, in the opinion of such Counsel, this
Indenture, the Collateral Security Documents, any financing statements, any
continuation statements, and any other instruments of further assurance or
amendment have been properly recorded, registered, and filed with respect to
such types of Company Collateral or Subsidiaries Collateral as to which a lien
and security interest may be perfected by such actions, and that all such other
acts and things have been done, to the extent necessary under applicable law to
perfect and make effective the Security Interest therein and reciting the
elements of such action in reasonable detail, and stating that, as to the
Collateral Security Documents, such recording, registrations and filing, and
such other acts and things are the only recordings, registrations and filings,
or other acts and things, necessary under applicable law to give notice thereof
and that no rerecordings, reregistrations, refilings, or other acts or things,
are necessary under applicable law to maintain such notice, further stating that
all financing statements and continuation statements have been executed and
filed that are necessary under applicable law fully to preserve and protect the
rights of the Holders of Securities and the Trustee hereunder and under the
Collateral Security Documents with respect to types of Company Collateral or
Subsidiary Collateral as to which a lien and security interest may be perfected
by such filing, or (ii) stating that, in the opinion of such counsel, no such
action is necessary under applicable law to perfect or make effective the
Security Interest. Any such opinion may be based upon reasonable assumptions not
inconsistent with the terms of this Indenture or the Collateral Security
Documents as to future matters and as to actions taken and to be taken by the
Company and any Subsidiary or any other Person (other than the Trustee), and may
set forth the reasons underlying such opinion.
(c) In addition to its obligations under the Collateral
Security Documents, the Company will furnish to the Trustee, within thirty
calendar days after ___________ __, in each year beginning with the year 1999,
an Opinion of Counsel (which may be an opinion of internal counsel), dated as of
such date, in a form acceptable to the Trustee, either (i) stating that, in the
opinion of such Counsel, such action has been taken with respect to the
recording, registering, filing, rerecording, reregistering, and refiling of the
Indenture, all supplemental indentures, the Collateral Security Documents,
financing statements, continuation statements, and all other instruments of
further assurance as is necessary under applicable law to maintain the Security
Interest and reciting the elements of such action in reasonable detail, and
stating that all financing statements and continuation statements have been
executed and filed and such other acts and things have been done that are
necessary under applicable law fully to preserve and protect the rights of the
Holders and the Trustee hereunder and under the Collateral Security Documents,
or (ii) stating that, in the opinion of such Counsel, no such action is
necessary under applicable law to maintain the Security Interest. Any such
opinion may be based upon reasonable assumptions not inconsistent with the terms
of this Indenture or the Collateral Security Documents as to future matters and
as to actions taken or to be taken by the Company, any Subsidiary or any
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other Person (other than the Trustee), and may set forth the reasons underlying
such opinion.
SECTION 5.03. RELEASE OF COLLATERAL.
In addition to its relative obligations under the Collateral
Security Documents, as a condition to any release of Company Collateral or
Subsidiaries Collateral, the Company will, and will cause each Subsidiary to,
deliver to the Trustee the certificate or opinion, if any, required by Section
314(d) of the Trust Indenture Act as to the fair value of any Company Collateral
or Subsidiaries Collateral to be released, dated as of a date not more than 60
calendar days prior to the date of release. Any release of Company Collateral or
Subsidiaries Collateral made in compliance with the provisions of a Company
Security Document or the Subsidiaries Security Agreement, as the case may be,
will be deemed not to impair the Security Interest in contravention of the
provisions of this Indenture.
SECTION 5.04. RELEASE UPON DEFEASANCE OR RELEASE OF COMPANY'S OBLIGATIONS.
In the event that (a) the Company complies with Section 13.01
or (b) the Indenture Obligations have been terminated and there are no other
Indenture Obligations under the Collateral Security Documents that remain
Outstanding, the Trustee will, upon the request of the Company and on behalf of
the Holders of Securities issued hereunder, disclaim and give up any and all
rights it has in or to the Company Collateral and the Subsidiaries Collateral
and any rights it has under the Collateral Security Documents (excluding
unasserted indemnity claims thereunder), and the Trustee will not be deemed to
hold the Security Interest for the benefit of the Holders.
SECTION 5.05. RELIANCE ON OPINION OF COUNSEL.
The Trustee will, before taking any action under this Article V, be entitled to
receive an Opinion of Counsel, stating the legal effect of such action, and that
such action will not be in contravention of the provisions hereof or of the
Collateral Security Documents. Any such opinion will be full protection to the
Trustee for any action taken or omitted to be taken in reliance thereon.
SECTION 5.06. PAYMENT OF EXPENSES.
On demand of the Trustee, the Company forthwith will pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Indenture and all such sums will be a Lien upon the Company
Collateral and will be secured thereby.
SECTION 5.07. TRUSTEE'S DUTIES.
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(a) Subject to Section 5.01 and the provisions of the
Collateral Security Documents, the Trustee will have power to enter into any
agreement or take any action required by the Collateral Security Documents
pursuant to the terms thereof and to institute and to maintain such suits and
proceedings, to the extent permitted under the terms of the Collateral Security
Documents, as it may deem expedient to prevent any impairment of the Company
Collateral or the Subsidiaries Collateral by any acts which may be unlawful or
in violation of the Collateral Security Documents or this Indenture, including
the power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule, or order that may be unconstitutional or otherwise invalid or
if the enforcement of, or compliance with, such enactment, rule or order would
impair the Security Interest in contravention of this Indenture or be
prejudicial to the interests of the Holders of Securities issued hereunder or of
the Trustee.
(b) The powers conferred upon the Trustee by this Article V
are solely to protect the Security Interest and will not impose any duty upon
the Trustee to exercise any such powers except as expressly provided in this
Indenture. The Trustee will be under no duty to the Company or any Subsidiary
whatsoever to make or give any presentment, demand for performance, notice of
nonperformance, protest, notice of protest, notice of dishonor, or other notice
or demand in connection with any Company Collateral or Subsidiaries Collateral
or to take any steps necessary to preserve any rights against prior parties
except as expressly provided in this Indenture. The Trustee will not be liable
to the Company or any Subsidiary for failure to collect or realize upon any or
all of the Company Collateral or the Subsidiaries Collateral, or for any delay
in so doing, nor will the Trustee be under any duty to the Company or any
Subsidiary to take any action, whatsoever with regard thereto. The Trustee has
no duty to the Company or to the Holders to comply with any recording, filing,
or other legal requirements necessary to establish or maintain the validity,
priority, or enforceability of, or the Trustee's rights in or to, any of the
Company Collateral or Subsidiaries Collateral.
ARTICLE VI. DEFEASANCE AND COVENANT DEFEASANCE
SECTION 6.01. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may elect, at its option by Board Resolution at
any time, to have either Section 6.02 or Section 6.03 applied to the Outstanding
Securities of any series designated pursuant to Section 2.01 as being defeasible
pursuant to this Article VI (hereinafter called "Defeasible Series"), upon
compliance with the conditions set forth below in this Article VI, PROVIDED that
Section 6.02 will not apply to any series of Securities that is convertible into
Common Stock pursuant to Section 2.01(b)(xvi) or convertible into or
exchangeable for any other securities pursuant to Section 2.01(b)(xvii).
SECTION 6.02. DEFEASANCE AND DISCHARGE.
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Upon the Company's exercise of the option provided in Section
6.01 to have this Section 6.02 applied to the Outstanding Securities of any
Defeasible Series and subject to the proviso to Section 6.01, the Company will
be deemed to have been discharged from its obligations with respect to the
Outstanding Securities of such series as provided in this Section 6.02 on and
after the date the conditions set forth in Section 6.04 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means that
the Company will be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Securities of such series and to have satisfied
all its other obligations under the Securities of such series and this Indenture
insofar as the Securities of such series are concerned (and the Trustee, at the
expense of the Company, will execute proper instruments acknowledging the same),
subject to the following which will survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Securities of such series to
receive, solely from the trust fund described in Section 6.04 and as more fully
set forth in Section 6.04, payments in respect of the principal of and any
premium and interest on such Securities of such series when payments are due,
(b) the Company's obligations with respect to the Securities of such series
under Sections 2.05, 2.06, 2.07, 7.02, 7.03, and 11.06, (c) the rights, powers,
trusts, duties, and immunities of the Trustee hereunder, and (d) this Article
VI. Subject to compliance with this Article VI, the Company may exercise its
option provided in Section 6.01 to have this Section 6.02 applied to the
Outstanding Securities of any Defeasible Series notwithstanding the prior
exercise of its option provided in Section 6.01 to have Section 6.03 applied to
the Outstanding Securities of such series.
SECTION 6.03. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section
6.01 to have this Section 6.03 applied to the Outstanding Securities of any
Defeasible Series, (a) the Company will be released from its obligations under
Sections 7.04 through 7.06, inclusive, Section 12.01, and such provisions of any
indenture supplemental hereto as may be specified in such indenture supplemental
hereto, and (b) the occurrence of any event specified in Sections 9.01(a)(iii),
9.01(a)(iv) (with respect to any of Sections 7.04 through 7.06, inclusive,
Section 12.01, and such provisions of any Supplemental Indenture as may be
specified in such Supplemental Indenture), Sections 9.01(a)(v), 9.01(a)(vi), and
9.01(a)(ix) will be deemed not to be or result in an Event of Default, in each
case with respect to the Outstanding Securities of such series as provided in
this Section on and after the date the conditions set forth in Section 6.04 are
satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that the Company may omit to comply with and will have
no liability in respect of any term, condition, or limitation set forth in any
such specified Section or provision (to the extent so specified in the case of
Section 9.01(a)(iv)), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or provision or by reason of any reference
in any such Section or provision to any other provision herein or in any other
document, but the remainder of this Indenture and the Securities of such series
will be unaffected thereby.
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SECTION 6.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following will be the conditions to application of either
Section 6.02 or Section 6.03 to the Outstanding Securities of any Defeasible
Series:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 10.08 and agrees to comply with the
provisions of this Article VI applicable to it) as trust funds in trust for the
benefit of the Holders of Outstanding Securities of such series (i) money in an
amount, or (ii) U.S. Government Obligations that through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, without reinvestment, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination thereof, in each case
sufficient to pay and discharge, and which will be applied by the Trustee (or
any such other qualifying trustee) to pay and discharge, the principal of and
any premium and interest on the Securities of such series on the respective
Stated Maturities or on any earlier date or dates on which the Securities of
such series shall be subject to redemption and the Company shall have given the
Trustee irrevocable instructions satisfactory to the Trustee to give notice to
the Holders of the redemption of the Securities of such series, all in
accordance with the terms of this Indenture and the Securities of such series.
(b) In the case of an election under Section 6.02, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a counsel who
shall not be an employee of the Company) to the effect that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of this Indenture there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize gain or loss for federal income tax
purposes as a result of the deposit, Defeasance, and discharge to be effected
with respect to the Securities of such series and will be subject to federal
income tax on the same amount, in the same manner, and at the same times as
would be the case if such deposit, Defeasance, and discharge were not to occur.
(c) In the case of an election under Section 6.03, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a counsel who
shall not be an employee of the Company) to the effect that the Holders of the
Outstanding Securities of such series will not recognize gain or loss for
federal income tax purposes as a result of the deposit and Covenant Defeasance
to be effected with respect to the Securities of such series and will be subject
to federal income tax on the same amount, in the same manner, and at the same
times as would be the case if such deposit and Covenant Defeasance were not to
occur.
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(d) The Company shall have delivered to the Trustee an Opinion
of Counsel (from a counsel who shall not be an employee of the Company) stating
that the defeasance trust does not violate the Investment Company Act of 1940.
(e) The Company shall have delivered to the Trustee the
opinion of a nationally recognized independent public accounting firm certifying
the sufficiency of the amount of the moneys, U.S. Government Obligations, or a
combination thereof, placed on deposit to pay, without regard to any
reinvestment, the principal of and any premium and interest on the Securities on
the Stated Maturity thereof or on any earlier date on which the Securities shall
be subject to redemption as to which the Company has given irrevocable
instructions satisfactory to the Trustee to give notice to the Holders of the
redemption of the Securities of such series, all in accordance with the terms of
this Indenture and the Securities of such series.
(f) The Company shall have delivered to the Trustee an
Officer's Certificate (i) stating that the deposit was not made by the Company
with the intent of preferring the holders of the Securities over the other
creditors of the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others, and (ii) to the effect that the
Securities of such series, if then listed on any securities exchange, will not
be delisted solely as a result of such deposit.
(g) No Default or Event of Default shall have occurred and be
continuing at the time of such deposit or, with regard to any Event of Default
or any such event specified in Sections 9.01(a)(vii) and (viii), at any time on
or prior to the 124th calendar day after the date of such deposit (it being
understood that this condition will not be deemed satisfied until after such
124th calendar day).
(h) Such Defeasance or Covenant Defeasance will not cause the
Trustee to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such Act).
(i) Such Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(j) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant Defeasance have
been complied with.
SECTION 6.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
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(a) Subject to the provisions of Section 7.03(e), all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section
6.05 and Section 6.06, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 6.04 in respect of the
Securities of any Defeasible Series will be held in trust and applied by the
Trustee, in accordance with the provisions of the Securities of such series and
this Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of Securities of such series, of all sums due and to
become due thereon in respect of principal and any premium and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
(b) The Company will pay and indemnify the Trustee against any
tax, fee, or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 6.04 or the principal and interest
received in respect thereof other than any such tax, fee, or other charge that
by law is for the account of the Holders of Outstanding Securities.
(c) Notwithstanding anything in this Article VI to the
contrary, the Trustee will deliver or pay to the Company from time to time upon
a Company Request any money or U.S. Government Obligations held by it as
provided in Section 6.04 with respect to Securities of any Defeasible Series
that are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Defeasance or Covenant Defeasance with respect
to the Securities of such series.
SECTION 6.06. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article VI with respect to the Securities of any
series by reason of any order or judgment of any court or governmental authority
enjoining, restraining, or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities of such series
will be revived and reinstated as though no deposit had occurred pursuant to
this Article VI with respect to Securities of such series until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust pursuant
to Section 6.05 with respect to Securities of such series in accordance with
this Article VI; PROVIDED, HOWEVER, that if the Company makes any payment of
principal of or any premium or interest on any Security of such series following
the reinstatement of its obligations, the Company will be subrogated to the
rights of the Holders of Securities of such series to receive such payment from
the money so held in trust.
ARTICLE VII. PARTICULAR COVENANTS OF THE COMPANY
SECTION 7.01. PAYMENT OF PRINCIPAL, PREMIUM, AND INTEREST ON SECURITIES.
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The Company, for the benefit of each series of Securities,
will duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the Securities and
this Indenture.
SECTION 7.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Company will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices, and demands may be made or served at
the Corporate Trust Office, and the Company hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission will in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of any series for
such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 7.03. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
(a) If the Company shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on or before each due
date of the principal of or any premium or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.
(b) Whenever the Company shall have one or more Paying Agents
for any series of Securities, it will, prior to each due date of the principal
of or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
(c) The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent will agree with the Trustee, subject to
the provisions of this
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Section 7.03, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
(d) The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent will be released from all further liability with
respect to such money.
(e) Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of or any
premium or interest on any Security of any series and remaining unclaimed for
two years after such principal, premium, or interest has become due and payable
will be paid to the Company upon a Company Request (or, if then held by the
Company, will be discharged from such trust); and the Holder of such Security
will 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, will thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which will not
be less than 30 calendar days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 7.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary of
the Company or upon the income, profits, or property of the Company or any
Subsidiary of the Company, and (b) all lawful claims for labor, materials and
supplies, in each case which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary of the Company and would have a
Material Adverse Effect; PROVIDED, HOWEVER, that (x) the Company will not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge, or claim the amount, applicability, or validity of which is
being contested in good faith by appropriate proceedings, and (y) any failure to
pay any such tax, assessment, charge, or claim shall not constitute a
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breach of this Section 7.04 if such failure (i) was not willful and (ii) does
not and will not result in any Material Adverse Effect.
SECTION 7.05. EXISTENCE.
Subject to Article XII, the Company will, and will cause each
of its Subsidiaries to, do or cause to be done all things necessary to preserve
and keep in full force and effect its existence, rights (charter and statutory),
and franchises; PROVIDED, HOWEVER, that, except with respect to the preservation
of the Company's existence, nothing in this Section 7.05 will (i) require the
Company to take any action that it determines in good faith to be contrary to
its best interests, so long as the failure to take such action will not have a
Material Adverse Effect, or (ii) prevent the Company from taking any action that
it determines in good faith to be in its best interests, so long as the taking
of such action will not have a Material Adverse Effect.
SECTION 7.06. COMPLIANCE WITH LAWS.
The Company will, and will cause each of its Subsidiaries to,
comply with all applicable federal, state, local, or foreign laws, rules,
regulations, or ordinances, including without limitation such laws, rules,
regulations, or ordinances relating to pension, environmental, employee, and tax
matters, to the extent that, in the aggregate, the failure so to comply would
have a Material Adverse Effect.
SECTION 7.07. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 calendar
days after the end of each fiscal year of the Company ending after the date
hereof, an officer's certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company
stating whether or not to the knowledge of such person after due inquiry the
Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company is in
default, specifying all such defaults and the nature and status thereof of which
such person may have such knowledge.
SECTION 7.08. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with
any term, provision, or condition set forth in Sections 7.04 and 7.06, and such
provisions of any Supplemental Indenture as may be specified in such
Supplemental Indenture, with respect to the Securities of any series if the
Holders of a majority in principal amount of the Outstanding Securities of such
series shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision, or condition,
but no such waiver will extend to or affect such term, provision, or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision, or condition will remain in full force and
effect.
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SECTION 7.09. CALCULATION OF ORIGINAL ISSUE DISCOUNT.
The Company will, to the extent applicable, file with the
Trustee promptly at the end of each calendar year (i) a written notice
specifying the amount of original issue discount (including daily rates and
accrual periods) accrued on Outstanding Securities as of the end of such year
and (ii) such other specific information relating to such original issue
discount as may then be required under the Internal Revenue Code of 1986, as
amended from time to time.
ARTICLE VIII. SECURITIES HOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 8.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the
Trustee (a) semi-annually, not more than 15 calendar days after the applicable
Regular Record Date, a list for each series of Securities, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of
Securities of such series as of such Regular Record Date and (b) at such other
times as the Trustee may request in writing, within 30 calendar days after the
receipt by the Company of any such request, a list of similar form and content
as of a date not more than 15 calendar 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 8.02. PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.
(a) The Trustee will preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 8.01 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 8.01 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the Trustee, will be
as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them will be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 8.03. REPORTS BY TRUSTEE.
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The Trustee will transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act or any rule or regulation of the Commission promulgated
pursuant thereto at the times and in the manner provided therein. If required by
Section 313(a) of the Trust Indenture Act, the Trustee will, within sixty days
after each May 15 following the date of this Indenture, deliver to Holders a
brief report, dated as of such May 15, which complies with the provisions of
such Section 313(a). A copy of each such report will, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission, and with the Company. The
Company will promptly notify the Trustee when any Securities are listed on any
stock exchange.
SECTION 8.04. REPORTS BY COMPANY.
The Company will file with the Trustee and the Commission, and
transmit to Holders, such information, documents, and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act or any
rule or regulation of the Commission promulgated pursuant thereto at the times
and in the manner provided therein; PROVIDED that any such information,
documents, or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act will be filed with the Trustee within 15
calendar days after the same is so required to be filed with the Commission.
Delivery of such reports, information, and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such will not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
ARTICLE IX. DEFAULT
SECTION 9.01. EVENT OF DEFAULT.
(a) "Event of Default," wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it may 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):
(i) default in the payment of any interest on any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 10 calendar days;
(ii) default in the payment of principal of (or premium,
if any, on) any Security of that series when it becomes due and
payable, whether by redemption, repurchase, or otherwise;
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(iii) default in the making of any sinking fund payment
when and as due by the terms of a Security of that series;
(iv) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty, a default in the performance or breach of which
is elsewhere in this Section 9.01 specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of one
or more series of Securities other than that series), and continuance
of such default or breach for a period of 30 calendar days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder;
(v) any default in the payment at maturity of principal
of any Indebtedness of the Company or any Subsidiary of the Company in
an aggregate principal amount of $10.0 million or more, which, in any
such case, (A) continues beyond any period of grace provided with
respect thereto and (B) results in such Indebtedness becoming due prior
to its stated maturity or occurs at the final maturity of such
Indebtedness; PROVIDED, HOWEVER, that, subject to the provisions of
Section 10.01 and 9.08, the Trustee will not be deemed to have
knowledge of such nonpayment or other default unless either (1) a
Responsible Officer of the Trustee has actual knowledge of nonpayment
or other default or (2) the Trustee has received written notice thereof
from the Company, from any Holder, from the holder of any such
Indebtedness or from the trustee under the agreement or instrument
relating to such Indebtedness;
(vi) the entry of one or more judgments or orders for
the payment of money against the Company, which judgments and orders
create a liability of $25.0 million or more in excess of insured
amounts and have not been stayed (by appeal or otherwise), vacated,
discharged, or otherwise satisfied within 60 calendar days of the entry
of such judgments and orders;
(vii) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or (B) a decree or order adjudging the Company or any
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Company or any Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or other similar official
of the Company or any Subsidiary or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such
other
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decree or order unstayed and in effect for a period of 60 calendar
days;
(viii) the commencement by the Company or any Subsidiary
of a voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company or any Subsidiary in an involuntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief with respect to the Company under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law, or
the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Company or any
Subsidiary or of any substantial part of its property pursuant to any
such law, 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 or any Subsidiary in furtherance of any such
action;
(ix) default in the performance, or breach, of any
covenant or warranty of the Company or any Subsidiary, and the
continuance of such default or breach for a period of time that extends
beyond any applicable grace or cure period provided, in any Collateral
Security Document;
(x) the Subsidiaries Guaranty Agreement or any future
guaranty agreement entered into by a Subsidiary of the Company acquired
or created after the date hereof shall be held in a judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Subsidiary guarantor, or any Person acting
on behalf of any Subsidiary guarantor shall deny or disaffirm its
obligations under its subsidiary guarantee agreement; or
(xi) any other Event of Default provided in an indenture
supplemental hereto with respect to Securities of the series created
thereunder.
(b) If an Event of Default (other than an Event of Default
arising under Section 9.01(a)(vii) or (viii)) with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
any of the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
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by Holders), and upon any such declaration such principal amount (or specified
amount) will become immediately due and payable. If an Event of Default under
Section 9.01(a)(vii) or (viii) occurs, then the principal of, premium, if any,
and accrued interest on the Securities shall become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
(c) At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article IX provided, the Holders of a majority in principal
amount of the outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if (i) the Company has paid or deposited with the Trustee a sum
sufficient to pay (A) all overdue interest on all Securities of that series, (B)
the principal of (and premium, if any, on) any Securities of that series which
have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Securities, and (D)
all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements, and advances of the Trustee and its
agents and counsel and (ii) all Events of Default with respect to Securities of
that series, other than the non-payment of the principal of Securities of that
series that has become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 9.01(d). No such rescission will affect
any subsequent default or impair any right consequent thereon.
(d) The Holders of 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 (i) in the payment of the
principal of or any premium or interest on any Security of such series or (ii)
in respect of a covenant or provision hereof which under Article XI cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected. Upon any such waiver, such default will cease
to exist, and any Event of Default arising therefrom will be deemed to have been
cured, for every purpose of this Indenture, but no such waiver will extend to
any subsequent or other default or impair any right consequent thereon.
SECTION 9.02. COVENANT OF COMPANY TO PAY TO TRUSTEE WHOLE AMOUNT DUE ON
SECURITIES ON DEFAULT IN PAYMENT OF INTEREST OR PRINCIPAL; SUITS
FOR ENFORCEMENT BY TRUSTEE.
(a) The Company covenants that if (i) default is made in the
payment of any interest on any Security when such interest becomes due and
payable and such default continues for a period of 30 calendar days or (ii)
default is made in the payment of the principal of (or premium, if any, on) any
Security when it becomes due and payable, the Company will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Securities, the whole
amount then due and payable on such Securities
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for principal and any premium and interest and, to the extent that payment of
such interest will be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as will be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel.
(b) If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual, including without limitation actions with respect to the Company
Collateral and the Subsidiaries Collateral, 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.
(c) In case of any judicial proceeding relative to the Company
(or any other obligor upon the Securities), its property or its creditors, the
Trustee will be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee will be authorized to collect and receive
any money or other property payable or deliverable on any such claims and to
distribute the same, and any custodian, receiver, assignee, trustee, liquidator,
sequestrator, or other similar official in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee consents to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements, and advances of the Trustee and its
agents and counsel, and any other amounts due the Trustee under Section 10.06.
(d) No provision of this Indenture will be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment, or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding;
PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and be a member of a
creditors' or other similar committee.
(e) All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee will be
brought in its own name as trustee of an express trust, and any recovery of
judgment will, after provision for the payment of the reasonable compensation,
expenses, disbursements, and advances of the Trustee and its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
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SECTION 9.03. APPLICATION OF MONEY COLLECTED BY TRUSTEE.
Any money collected by the Trustee pursuant to this Article IX
will 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 any premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 10.06; and
SECOND: To the payment of the amounts then due and unpaid for
interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably,
without preference or priority of any kind (except as provided
by any subordination provisions provided in an indenture
supplemental with respect to the securities of the series
created thereunder pursuant to Section 2.01(b)(xviii)),
according to the amounts due and payable on such Securities
for interest thereon.
THIRD: To the payment of the amounts then due and unpaid for
principal of and any premium on the Securities in respect of
which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind
(except as provided by any subordination provisions provided
in an indenture supplemental with respect to the securities of
the series created thereunder pursuant to Section
2.01(b)(xviii)), according to the amounts due and payable on
such Securities for principal and any premium, respectively.
SECTION 9.04. LIMITATION ON SUITS BY HOLDERS OF SECURITIES.
No Holder of any Security of any series will 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 (a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities of that
series, (b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder, (c) 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, (d) the Trustee for 60 calendar days
after its receipt of such notice, request, and offer of indemnity has failed to
institute any such proceeding, and (e) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Securities of that
series, it being understood and intended that no one or more of such Holders
will have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb, or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference
over
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any other of such Holders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all of
such Holders.
SECTION 9.05. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF
RIGHTS NOT A WAIVER OF EVENT OF DEFAULT.
(a) Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost, or stolen Securities in
the last paragraph of Section 2.07, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy will, 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, will not
prevent the concurrent assertion or employment of any other appropriate right or
remedy.
(b) No delay or omission of the Trustee or of any Holder of
any Securities to exercise any right or remedy accruing upon any Event of
Default will 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 IX or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 9.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF OUTSTANDING
SECURITIES TO DIRECT TRUSTEE.
The Holders of a majority in principal amount of the
Outstanding Securities of any series will have the right to direct the Trustee
with respect to the time, method, and place of conducting any proceeding for any
remedy available to the Trustee and the exercise of any trust or power conferred
on the Trustee, in each case with respect to the Securities of such series,
PROVIDED that (a) such direction will not be in conflict with any rule of law or
with this Indenture and (b) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 9.07. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS UNDER
THE INDENTURE OR AGAINST THE TRUSTEE.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered, or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs, including legal fees and expenses, against any such party litigant, in
the manner and to the extent provided in the Trust Indenture Act; PROVIDED that
neither this Section 9.07 nor the Trust Indenture Act will be deemed to
authorize any court to require such an undertaking or to make such an assessment
in any suit instituted by the Trustee or by the Company.
SECTION 9.08. NOTICE OF DEFAULTS.
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If a Default occurs hereunder with respect to Securities of
any series, the Trustee will give the Holders of Securities of such series
notice of such Default actually known to it as and to the extent provided by the
Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any Default of the
character specified in Section 9.01(a)(iv) with respect to Securities of such
series no such notice to Holders will be given until at least 30 calendar days
after the occurrence thereof. The Company will give the Trustee notice of any
uncured Event of Default within 10 days after any Responsible Officer of the
Company becomes aware of or receives actual notice of such Event of Default.
SECTION 9.09. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM, AND
INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Security will have the right, which is absolute and unconditional,
to receive payment of the principal of, premium, if any, and (subject to Section
2.09) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights may not
be impaired without the consent of such Holder.
SECTION 9.10. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee, and the Holders will
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders will continue
as though no such proceeding had been instituted.
SECTION 9.11. TRUSTEE MAY FILE PROOFS OF CLAIMS.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceeding relative to the Company or the
Subsidiaries (or any other obligor upon the Securities), their creditors or
their property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claim and to
distribute the same, and any custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay 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 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting
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the Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
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ARTICLE X. CONCERNING THE TRUSTEE
SECTION 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee will be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture will require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee will be subject to the provisions of this Section 10.01.
SECTION 10.02. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 10.01: (a) the Trustee
may conclusively rely and will be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties; (b)
any request or direction of the Company mentioned herein will be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Board
will 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 Officer's
Certificate; (d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel will 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
will be under no obligation to exercise any of the rights or powers vested in it
by this Indenture at the request or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses, and liabilities which might
be incurred by it in compliance with such request or direction; (f) the Trustee
will not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it will be entitled to examine the books, records, and premises
of the Company, personally or by agent or attorney; (g) the Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee will not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it
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hereunder; (h) the Trustee will not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture, unless it shall be proved that the Trustee acted, or failed to
act, in a negligent manner; and (i) the Trustee will not be deemed to have
notice of any Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event or
circumstance which is in fact such a Default or Event of Default is received by
the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities (or the applicable series thereof) and this Indenture.
SECTION 10.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, may be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
or any Authenticating Agent will not be accountable for the use or application
by the Company of Securities or the proceeds thereof.
SECTION 10.04. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar, or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 10.07 and 10.12, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar, or such other agent.
SECTION 10.05. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required herein or by law. The
Trustee will be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company.
SECTION 10.06. COMPENSATION AND REIMBURSEMENT.
(a) The Company will (i) pay to the Trustee from time to time
such compensation as shall be agreed to in writing between the Company and the
Trustee for all services rendered by it hereunder (which compensation will not
be limited to any provision of law in regard to the compensation of a trustee of
an express trust); (ii) except as otherwise expressly provided herein, reimburse
the Trustee upon its request for all reasonable expenses, disbursements, and
advances incurred or made by the Trustee in accordance with provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of agents and counsel), except any such expense, disbursement, or
advance as may be attributable to its negligence or bad
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faith; and (iii) indemnify the Trustee and any predecessor Trustee for, and hold
them harmless against, any and all losses, liabilities, damages, claims and
expenses, including taxes (other than taxes based on the income of the Trustee
or predecessor Trustee and other taxes relating to the Trustee's or predecessor
Trustee's overall business and operations) incurred without negligence or bad
faith on its part arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
(b) The Trustee will have a lien prior to the Securities as to
all property and funds held by it hereunder for any amount owed to it or any
predecessor Trustee pursuant to this Section 10.06, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
(c) When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 9.01(a)(vii) or Section
9.01(a)(viii), such expenses (including the reasonable fees and expenses of its
counsel) and the Trustee's compensation for such services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency, or other similar law.
(d) The provisions of this Section 10.06 will survive the
termination of this Indenture.
SECTION 10.07. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or acquires a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee will either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 10.08. CORPORATE TRUSTEE REQUIRED ELIGIBILITY.
There will at all times be one or more Trustees hereunder with
respect to the Securities of each series, at least one of which will be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $100,000,000 and its Corporate Trust
Office or principal office in New York City, or any other major city in the
United States that is acceptable to the Company. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of a supervising or examining state or federal authority, then for the purposes
of this Section 10.08, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.08, it will resign
immediately in the manner and with the effect hereinafter specified in this
Article X.
SECTION 10.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
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(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article X will become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 10.10.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 10.10 shall not have been delivered to the Trustee within 30 calendar
days after the giving of such notice of resignation, the resigning Trustee may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 10.10 shall not have been delivered to the Trustee within 30 calendar
days after the giving of such notice of removal, the Trustee being removed may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(d) If, at any time, (i) the Trustee fails to comply with
Section 10.07 after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, (ii) the
Trustee ceases to be eligible under Section 10.08 and fails to resign after
written request therefor by the Company or by any such Holder, or (iii) the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property is appointed or any public officer
takes 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,
(A) the Company by a Board Resolution may remove the Trustee with respect to all
Securities or (B) subject to Section 9.07, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee resigns, is removed, or becomes incapable
of acting, or if a vacancy occurs in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company by a Board
Resolution will promptly appoint a successor Trustee or Trustees with respect to
the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there will be only one Trustee with
respect to the Securities of any particular series) and will comply with the
applicable requirements of Section 10.10. If, within one year after such
resignation, removal, or incapability or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series is appointed by
Act of the
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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 will, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 10.10, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 10.10, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company will give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all holders of Securities of such series in the manner provided in Section
14.03. Each notice will include the name of the successor Trustee with respect
to the Securities of such series and the address of its Corporate Trust Office.
SECTION 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed will execute, acknowledge, and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee will become effective and such
successor Trustee, without any further act, deed, or conveyance, will become
vested with all the rights, powers, trusts, and duties of the retiring Trustee,
but, on the request of the Company or the successor Trustee, such retiring
Trustee will, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers, and duties of the
retiring Trustee and will duly assign, transfer, and deliver to such Trustee all
property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee, and each successor Trustee with respect to the
Securities of one or more series will execute and deliver an indenture
supplemental hereto wherein such successor Trustee will accept such appointment
and which (i) will contain such provisions as may be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (ii) if the retiring Trustee is not retiring with respect to
all Securities, will contain such provisions as may be deemed necessary or
desirable to confirm that all the rights, powers, trusts, and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring will continue to be vested in the
retiring Trustee, and (iii) will add to or change any of the provisions of this
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Indenture as may 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 will constitute such Trustees
co-trustees of the same trust and that each such Trustee will be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustees and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
will become effective to the extent provided therein and each such successor
Trustee, without any further act, deed, or conveyance, will become vested with
all the rights, powers, trusts, and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but on request of the Company or any successor
Trustee, such retiring Trustee will duly assign, transfer, and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
will execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all applicable rights, powers, and trusts
referred to in the preceding paragraphs of this Section 10.10.
(d) No successor Trustee will accept its appointment unless at
the time of such acceptance such successor Trustee is qualified and eligible
under this Article X.
SECTION 10.11. MERGER, CONVERSION, CONSOLIDATION, OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion, or consolidation to which the Trustee may be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, will be the successor of the Trustee hereunder,
provided such corporation is otherwise qualified and eligible under this Article
X, 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 10.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee is or becomes a creditor of the
Company (or any other obligor upon the Securities), the Trustee will be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
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SECTION 10.13. APPOINTMENT OF AUTHENTICATING AGENT.
(a) The Trustee may appoint an Authenticating Agent or Agents
with respect to one or more series of Securities which will be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer, or partial
redemption thereof or pursuant to Section 2.07, and Securities so authenticated
will be entitled to the benefits of this Indenture and will 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 will be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any state thereof, or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section 10.13,
the combined capital and surplus of such Authenticating Agent will 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 10.13, such
Authenticating Agent will resign immediately in the manner and with the effect
specified in this Section 10.13.
(b) 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 may be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, will
continue to be an Authenticating Agent, provided such corporation is otherwise
eligible under this Section 10.13, without the execution or filing of any paper
or any further act on the part of the Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and 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 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 this Section 10.13, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and will mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment
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hereunder will 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 will be appointed unless
eligible under the provisions of this Section 10.13.
(d) The Trustee agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this Section
10.13, and the Trustee will be entitled to be reimbursed for such payments,
subject to the provisions of Section 10.06.
(e) If an appointment with respect to one or more series of
Securities is made pursuant to this Section 10.13, the Securities of such series
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative form of 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 XI. SUPPLEMENTAL INDENTURES AND CERTAIN ACTIONS
SECTION 11.01. PURPOSES FOR WHICH SUPPLEMENTAL INDENTURES MAY BE ENTERED INTO
WITHOUT CONSENT OF HOLDERS.
Without the consent of or notice to any Holders, 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:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Securities, all to the extent otherwise permitted hereunder;
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(b) to make any change to the provisions of this Indenture
that would provide any additional rights or benefits to the Holders of the
Securities;
(c) to add to or change any of the provisions of this
Indenture to such extent as may be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form;
(d) to add to, change, or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities, PROVIDED that any
such addition, change, or elimination (i) will neither (A) apply to any Security
of any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such Security with respect to such provision or (ii) will become
effective only when there is no such Security Outstanding;
(e) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 2.02;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as may be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
10.10; or
(g) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or questions
arising under this Indenture, PROVIDED that such action pursuant to this clause
(g) will not adversely affect the interests of the Holders of Securities of any
series in any material respect.
SECTION 11.02. MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS OF AT LEAST A
MAJORITY IN PRINCIPAL AMOUNT OF OUTSTANDING SECURITIES.
(a) With the consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; PROVIDED, HOWEVER,
that no such supplemental indenture will, without the consent of the Holder of
each Outstanding Security affected thereby:
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(i) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that would be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Sections 9.01(b), 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 Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of the Holders of
which is required for any such supplemental indenture, or the consent
of the Holders of which 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
(iii) modify any of the provisions of this Section
11.02, Section 9.01(d) or Section 7.08, except to increase the
percentage in principal amount of Holders required under any such
Section 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, PROVIDED, HOWEVER, that this
clause (c) will not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section 11.02 and Section 7.08, or the deletion of this
proviso, in accordance with the requirements of Sections 10.10 and
11.01(f).
(b) 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, will be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
(c) It will not be necessary for any Act of Holders under this
Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it will be sufficient if such Act approves the substance thereof.
SECTION 11.03. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article XI or the modifications
thereby of the trusts created by this Indenture, the Trustee will be entitled to
receive, and (subject to Section 10.01) will 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 will not be
obligated to, enter into any such
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supplemental indenture which affects the Trustee's own rights, duties, or
immunities under this Indenture or otherwise.
SECTION 11.04. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article XI, this Indenture will be modified in accordance therewith, and such
supplemental indenture will form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder will be bound thereby.
SECTION 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
XI will conform to the requirements of the Trust Indenture Act.
SECTION 11.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article XI may, and
will if required by the Trustee, bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series.
ARTICLE XII. CONSOLIDATION, MERGER, SALE, OR TRANSFER
SECTION 12.01. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES PERMITTED ONLY ON
CERTAIN TERMS.
(a) The Company shall not consolidate with or merge with or
into any other Person, or transfer (by lease, assignment, sale, or otherwise)
its properties and assets substantially as an entirety to another Person unless
(i) either (A) the Company shall be the continuing or surviving Person in such a
consolidation or merger or (B) the Person (if other than the Company) formed by
such consolidation or into which the Company is merged or to which the
properties and assets of the Company are transferred substantially as an
entirety (the Company or such other Person being referred to as the "Surviving
Person") shall be a corporation organized and validly existing under the laws of
the United States, any state thereof, or the District of Columbia, and shall
expressly assume, by an indenture supplement, all the obligations of the Company
under the Securities and the Indenture, (ii) immediately after the transaction
and the incurrence or anticipated incurrence of any Indebtedness to be incurred
in connection therewith, no Default will exist, and (iii) an Officer's
Certificate has been delivered to the Trustee to the effect that the conditions
set forth in the preceding clauses (i) and (ii) have been satisfied and an
Opinion of Counsel (from a
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counsel who shall not be an employee of the Company) has been delivered to the
Trustee to the effect that the conditions set forth in the preceding clause (i)
have been satisfied.
(b) The Surviving Person will succeed to and be substituted
for the Company with the same effect as if it had been named herein as a party
hereto, and thereafter the predecessor corporation (if it is not the Surviving
Person) will be relieved of all obligations and covenants under this Indenture
and the Securities.
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture will upon a Company Request cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense the Company, will execute proper instruments acknowledging satisfaction
and discharge of this Indenture, when: (a) either (i) all Securities theretofore
authenticated and delivered (other than (A) Securities which have been
destroyed, lost, or stolen and which have been replaced or paid as provided in
Section 2.07 and (B) Securities for the payment of which 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 7.03) have been delivered to the Trustee for cancellation or (ii) all
such Securities not theretofore delivered to the Trustee for cancellation (A)
have become due and payable, (B) will become due and payable at their Stated
Maturity within one year, or (C) 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 clause (A), (B), or (C) 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 for cancellation, for
principal and any premium 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; (b) the Company has paid or caused to be
paid all other sums payable hereunder by the Company; and (c) the Company has
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 10.06, the obligations
of the Company to any Authenticating Agent under Section 10.13, and, if money
shall have been deposited with the Trustee pursuant to subclause (ii) of clause
(a) of this Section 13.01, the obligations of the Trustee under Sections 7.03(e)
and 13.02, will survive.
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SECTION 13.02. APPLICATION OF TRUST MONEY.
Subject to provisions of Section 7.03(e), all money deposited
with the Trustee pursuant to Section 13.01 will be held in trust and applied by
it, in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal and any premium and interest for whose
payment such money has been deposited with the Trustee.
ARTICLE XIV. MISCELLANEOUS PROVISIONS
SECTION 14.01. SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE.
All the covenants, stipulations, promises, and agreements in
this Indenture contained by or on behalf of the Company will bind its successors
and assigns, whether so expressed or not.
SECTION 14.02. SERVICE OF REQUIRED NOTICE TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver, Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with (a) the Trustee
by any Holder or by the Company will, upon receipt, be sufficient for every
purpose hereunder if made, given, furnished, or filed in a writing received by
the Trustee at its Corporate Trust Office (addressed to the attention of:
Corporate Trust Trustee Administration) or (b) the Company by the Trustee or by
any Holder will, upon receipt, be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished, or filed in a
writing received by the Company at its principal executive offices (addressed to
the attention of both its Chief Financial Officer and its General Counsel).
SECTION 14.03. SERVICE OF REQUIRED NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice will be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder will affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver will be the equivalent of such notice. Waivers of notice by Holders
will be filed with the Trustee, but such filing will 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
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or by reason of any other cause it will be impracticable to give such notice by
mail, then such notification as may be made with the approval of the Trustee
will constitute a sufficient notification for every purpose hereunder.
SECTION 14.04. INDENTURE AND SECURITIES TO BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
This Indenture and the Securities will be deemed to be a
contract made under the laws of the State of New York, and for all purposes will
be construed in accordance with the laws of said State without giving effect to
principles of conflict of laws of such State.
SECTION 14.05. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
will furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion will be given in
the form of an Officer's Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and will comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Indenture.
SECTION 14.06. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. 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 14.07. PAYMENTS DUE ON NON-BUSINESS DAYS.
In any case where any Interest Payment Date, Redemption Date,
or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of the Securities of any series which
specifically states that such provision will apply in lieu of this Section
14.07)) payment of interest or principal (and premium, if any) need not be made
at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and
no interest shall accrue for the intervening period.
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SECTION 14.08. PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO CONTROL.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed on any Person by Sections 310 through 317 of
the Trust Indenture Act (including provisions automatically deemed included in
this Indenture pursuant to the Trust Indenture Act unless this Indenture
provides that such provisions are excluded), which are deemed to be a part of
and govern this Indenture, whether or not contained herein, then such imposed
duties will control.
SECTION 14.09. INVALIDITY OF PARTICULAR PROVISIONS.
In case any one or more of the provisions contained in this
Indenture or in the Securities is for any reason held to be invalid, illegal, or
unenforceable in any respect, such the validity, illegality, or enforceability
will not affect any other provision of this Indenture or of the Securities, but
this Indenture and such Securities will be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 14.10. INDENTURE MAY BE EXECUTED IN COUNTERPARTS.
This instrument may be executed in any number of counterparts,
each of which will be an original, but such counterparts will together
constitute but one and the same instrument.
SECTION 14.11. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action will become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent will be sufficient for any
purpose of this Indenture and (subject to Section 10.01) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section
14.11.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit will also constitute sufficient proof of
his authority. The fact and date of the execution
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of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities will be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Security will bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange thereof or in lieu thereof
in respect of anything done, omitted, or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(e) The Company may, in the circumstances permitted by the
Trust Indenture Act, set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver,
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series. With regard to any record date set
pursuant to this paragraph, the Holders of Outstanding Securities of the
relevant series on such record date (or their duly appointed agents), and only
such Persons, will be entitled to give or take the relevant action, whether or
not such Holders remain Holders after such record date. With regard to any
action that may be given or taken hereunder only by Holders of a requisite
principal amount of Outstanding Securities of any series (or their duly
appointed agents) and for which a record date is set pursuant to this paragraph,
the Company may, at its option, set an expiration date after which no such
action purported to be given or taken by any Holder will be effective hereunder
unless given or taken on or prior to such expiration date by Holders of the
requisite principal amount of Outstanding Securities of such series on such
record date (or their duly appointed agents). On or prior to any expiration date
set pursuant to this paragraph, the Company may, on one or more occasions at its
option, extend such date to any later date. Nothing in this paragraph will
prevent any Holder (or any duly appointed agent thereof) from giving or taking,
after any such expiration date, any action identical to, or, at any time,
contrary to or different from, the action or purported action to which such
expiration date relates, in which event the Company may set a record date in
respect thereof pursuant to this paragraph. Nothing in this Section 14.11(e)
will be construed to render ineffective any action taken at any time by the
Holders (or their duly appointed agents) of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is so
taken. Notwithstanding the foregoing or the Trust Indenture Act, the Company
will not set a record date for, and the provisions of this Section 14.11(e) will
not apply with respect to, any notice, declaration, or direction referred to in
the next paragraph.
(f) Upon receipt by the Trustee from any Holder of Securities
of a particular series of (a) any notice of default or breach referred to in
Section 9.01(a)(iv) or 9.01(a)(v) with respect to Securities of such series, if
such default or breach has occurred and is continuing and the Trustee shall not
have given such notice to the
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Company, (b) any declaration of acceleration referred to in Section 9.01(b), if
an Event of Default with respect to Securities of such series has occurred and
is continuing and the Trustee shall not have given such a declaration to the
Company, or (c) any direction referred to in Section 9.06 with respect to
Securities of such series, if the Trustee shall not have taken the action
specified in such direction, then a record date will automatically and without
any action by the Company or the Trustee be set for determining the Holders of
Outstanding Securities of such series entitled to join in such notice,
declaration, or direction, which record date will be the close of business on
the tenth calendar day following the day on which the Trustee receives such
notice, declaration, or direction. Promptly after such receipt by the Trustee,
and in any case not later than the fifth calendar day thereafter, the Trustee
will notify the Company and the Holders of Outstanding Securities of such series
of any such record date so fixed. The Holders of Outstanding Securities of such
series on such record date (or their duly appointed agents), and only such
Persons, will be entitled to join in such notice, declaration, or direction,
whether or not such Holders remain Holders after such record date; PROVIDED
that, unless such notice, declaration, or direction shall have become effective
by virtue of Holders of the requisite principal amount of Outstanding Securities
of such series on such record date (or their duly appointed agents) having
joined therein on or prior to the 90th calendar day after such record date, such
notice, declaration, or direction will automatically and without any action by
any Person be canceled and of no further effect. Nothing in this Section
14.11(f) will be construed to prevent a Holder (or a duly appointed agent
thereof) from giving, before or after the expiration of such 90-day period, a
notice, declaration, or direction contrary to or different from, or, after the
expiration of such period, identical to, the notice, declaration, or direction
to which such record date relates, in which event a new record date in respect
thereof will be set pursuant to this Section 14.11(f). Nothing in this Section
14.11(f) will be construed to render ineffective any notice, declaration, or
direction of the type referred to in this Section 14.11(f) given at any time to
the Trustee and the Company by Holders (or their duly appointed agents) of the
requisite principal amount of Outstanding Securities of the relevant series on
the date such notice, declaration, or direction is so given.
(g) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the principal amount of
such Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of such
principal amount.
SECTION 14.12. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and will not affect the construction hereof.
SECTION 14.13. BENEFITS OF INDENTURE.
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Nothing in this Indenture or in the Securities, express or
implied, will give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy, or claim under this Indenture.
--------------------
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
[Seal] MERCURY FINANCE COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Attest:
By:
------------------------
Name:
----------------------
Title:
---------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, AS
TRUSTEE
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Attest:
By:
------------------------
Name:
----------------------
Title:
---------------------
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STATE OF )
-------------
)SS:
COUNTY OF )
------------
On this ____ day of , 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of the
entities described in and which executed the above instrument; that he/she knows
the seal of said entity; that the seal or a facsimile thereof affixed to said
instrument is such seal; that it was so affixed by authority of the Board of
Directors of said entity, and that he/she signed his/her name thereto by like
authority.
------------------------------
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
65
<PAGE>
STATE OF )
-------------
)SS:
COUNTY OF )
------------
On this ____ day of , 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he/she is ___________________ of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that he/she
signed his/her name thereto by like authority.
------------------------------
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
------------------------------
Notary Public
66
<PAGE>
Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
FIRST SUPPLEMENTAL TRUST INDENTURE
Dated as of __________, 1998
Supplementing that certain
INDENTURE
Dated as of __________, 1998
Authorizing the Issuance and Delivery of
Senior Secured Securities
consisting of $___________* aggregate principal amount of
9% Senior Secured Notes Due 2001, Series A
<PAGE>
____________
* In the execution version, the appropriate amount determined in
accordance with __________________________ of the Plan will be
inserted here, in the first paragraph on page 2 and in Section 1.1(b)
hereof.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
[Form of Reverse of Security]. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES . . . . . . . . . . . . . . . . . . . .7
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity . . .7
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest. . . . .8
ARTICLE II. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Payment Restrictions Affecting Subsidiaries. . . . . . . . . . . 16
Section 3.6. Issuance of Subsidiary Preferred Stock . . . . . . . . . . . . . 16
Section 3.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 16
Section 3.9. Change in Business . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2. Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Reference to and Effect on the Indenture . . . . . . . . . . . . 17
Section 6.2. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . 17
Section 6.3. Supplemental Indenture May be Executed in Counterparts.. . . . . 18
</TABLE>
2
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this "First
Supplemental Indenture"), between Mercury Finance Company, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a U.S. national banking
association, as Trustee (the "Trustee"), supplementing that certain Indenture,
dated as of __________, 1998, between the Company and the Trustee (the
"Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its senior secured
notes (the "Securities") to be issued in one or more series as provided for
in the Indenture.
B. The Indenture provides that the Securities of each series shall be
in such form as may be established by or pursuant to a Board Resolution or in
one or more indentures supplemental thereto, 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 the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"9% Senior Secured Notes Due 2001, Series A" (the "Senior Secured Notes")
pursuant to the terms of this First Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this First Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
<PAGE>
[Form of Face of Security]
MERCURY FINANCE COMPANY
9% SENIOR SECURED NOTE DUE 2001, SERIES A
No. R-__________ $________________________
CUSIP No.________________
MERCURY FINANCE COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company," which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to [_______________], or
registered assigns, the principal sum of $__________ on
[the third anniversary of the Effective Date], subject to earlier redemption
or repurchase as described below, and to pay interest thereon from
_______________, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate of 9% per annum,
payable quarterly on ___________ of each year, commencing on __________,
199_, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date shall, as provided in said Indenture, be computed on
the basis of a 360-day year consisting of twelve 30-day months and paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be ________________________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 calendar days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of and any such interest on this Security shall
be made at the office or agency of the Company maintained for such purpose in
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Security Register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE
REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT
AS THOUGH FULLY SET FORTH IN THIS PLACE.
-2-
<PAGE>
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in accordance
with the Indenture.
MERCURY FINANCE COMPANY
By:_____________________________________
Name:___________________________________
Attest: Title:__________________________________
By:______________________
-3-
<PAGE>
[Form of Reverse of Security]
MERCURY FINANCE COMPANY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of __________, 1998 (herein called
the "Indenture"), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $___________.
On the terms and subject to the conditions set forth in the Company
Security Documents, the payment and performance of the obligations of the
Company under the Securities issued under this Indenture, including this
Security, are secured by the Company Collateral and have the benefit of the
Subsidiaries Guaranty Agreement executed by each Subsidiary of the Company.
Payment and performance of the obligations of the Subsidiaries under the
Subsidiaries Guaranty Agreement are secured by the Subsidiaries Collateral.
The Company Collateral and the Subsidiaries Collateral has been pledged to
the Trustee on the terms and subject to the conditions set forth in the
Collateral Security Documents for the equal and ratable benefit of the
Holders of Securities issued under the Indenture. As set forth in the
Indenture, the Subsidiaries Guaranty Agreement and the Subsidiaries Security
Agreement, to the extent a Subsidiary of the Company enters into a Warehouse
Facility, the rights of any party lending money to a Subsidiary of the
Company pursuant to such Warehouse Facility with respect to certain assets
comprising a portion of the Subsidiaries Collateral will be senior to those
rights of the Holders of Securities issued under the Indenture.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company, at any time and from time
to time, in whole or in part, in increments of not less than $5.0 million,
upon not more than 60 nor less than 30 days' notice to the Holders prior to
the Redemption Date, at the principal amount thereof, plus accrued and unpaid
interest thereon to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such method
as the Trustee may deem fair and appropriate. In the event of the redemption
of this Security in part only, a new Security or Securities of this series
and of like tenor for the portion hereof not so redeemed shall be issued in
the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company is required to
repurchase the Securities, at the option of the Holders thereof, at a
purchase price equal to 101% of the
-4-
<PAGE>
outstanding principal amount thereof, plus accrued and unpaid interest
thereon to the Repurchase Date, but interest installments with a Stated
Maturity on or prior to such Repurchase Date shall be payable to the Holders
of such Securities of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof all as provided in the Indenture.
In the event of the repurchase of this Security in part only, a new Security
or Securities of this series of like tenor for the portion hereof not so
repurchased shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder unless (a) such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, (b) the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, (c) the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this series at
the time Outstanding a direction inconsistent with such request and (d) the
Trustee shall have failed to institute such proceeding for 60 calendar days
after receipt of such notice, request, and offer of indemnity. However, the
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates therefor expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay
-5-
<PAGE>
the principal of and any premium or interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering
the same.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this
series and of like tenor, of authorized denominations and for the same
aggregate principal amount, shall be issued to the designated transferee or
transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security that are defined in the Indenture shall
have the respective meanings assigned to them in the Indenture. This
Security, the Indenture and the Collateral Security Documents shall be
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws of such State.
-6-
<PAGE>
D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: Norwest Bank Minnesota, National
Association, as Trustee
By:____________________________________
Authorized Signatory
E. All acts and things necessary to make the Senior Secured Notes,
when the Senior Secured Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture and
this First Supplemental Indenture, the valid, binding and legal obligations
of the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this First
Supplemental Indenture and the issue hereunder of the Senior Secured Notes
have in all respects been duly authorized; and the Company, in the exercise
of the legal right and power in it vested, has executed and delivered the
Indenture and is executing and delivering this First Supplemental Indenture
and proposes to make, execute, issue and deliver the Senior Secured Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Secured Notes are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Senior Secured
Notes by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of the respective Holders from time to time of the
Senior Secured Notes, as follows:
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES.
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity.
(a) On __________, 1998, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Senior Secured Notes substantially
in the form set forth above, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this First Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed
-7-
<PAGE>
thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
(b) The Senior Secured Notes shall be issued in the aggregate principal
amount of $_________ and shall mature on [the third anniversary of the Effective
Date].
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest.
(a) The Senior Secured Notes shall bear interest at the rate of 9% per
annum from [_________________], or, if later, from the most recent Interest
Payment Date to which interest has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name a Senior Secured Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name the Senior Secured Note (or
one or more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of the Senior
Secured Notes not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Senior Secured Notes
may be listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture.
(c) Payment of the principal of and any such interest on the Senior
Secured Notes shall be made at the office or agency of the Company maintained
for such purpose in New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register.
ARTICLE II. CERTAIN DEFINITIONS.
Section 2.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this First Supplemental Indenture
otherwise requires) for all purposes of this First Supplemental Indenture and
of any indenture supplemental hereto have the respective meanings specified
in this Section 2.1. All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP. All other terms used
in this First Supplemental Indenture that are defined in the Indenture or the
Trust Indenture Act, either
-8-
<PAGE>
directly or by reference therein (except as herein otherwise expressly
provided or unless the context of this First Supplemental Indenture otherwise
requires), have the respective meanings assigned to such terms in the
Indenture or the Trust Indenture Act, as the case may be, as in force at the
date of this First Supplemental Indenture as originally executed.
"Affiliate" has the meaning ascribed thereto in Section 3.8.
"Asset Sale" means any sale or other disposition, or series of sales or
other dispositions (including, without limitation, by merger or consolidation
and whether by operation of law or otherwise) of assets by the Company or its
Subsidiaries to any Person except (i) sales of used, worn out or surplus
equipment in the ordinary course of business and (ii) sales, contributions or
transfers of Receivables pursuant to any Warehouse Facility. The definition
of Asset Sale shall include the receipt of funds from any federal or state
income tax refunds.
"Cash Equivalent" means: (a) obligations issued or unconditionally
guaranteed as to principal and interest by the United States of America or by
any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America which are backed by the full
faith and credit of the United States of America; (b) obligations (including,
but not limited to, demand or time deposits, bankers' acceptances and
certificates of deposit) issued by a depository institution or trust company
or a wholly owned subsidiary or branch office of any depository institution
or trust company, provided that (i) such depository institution or trust
company has, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
capital, surplus or undivided profits (as of the date of such institution's
most recently published financial statements) in excess of $100 million and
(ii) the commercial paper of such depository institution or trust company, at
the time of the Company's or any of its Subsidiaries' investment therein or
contractual commitment providing for such investment, is rated at least A1 by
S&P or P-1 by Moody's; (c) debt obligations (including, but not limited to,
commercial paper and medium-term notes) issued or unconditionally guaranteed
as to principal and interest by any corporation, state or municipal
government or agency or instrumentality thereof or foreign sovereignty, if
the commercial paper of such corporation, state or municipal government or
foreign sovereignty, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
is rated at least A1 by S&P or P-1 by Moody's; (d) repurchase obligations
with a term of not more than seven calendar days for underlying securities of
the type described above entered into with a depository institution or trust
company meeting the qualifications described in clause (b) above; and (e)
Investments in money market or mutual funds that invest predominantly in Cash
Equivalents of the type described in clauses (a), (b), (c) and (d) above;
provided, however, that, in the case of clause (a) above, each such
investment has a maturity of one year or less from the date of acquisition
thereof, and, in the case of clauses (b) and (c) above, each such investment
has a maturity of 270 days or less from the date of acquisition thereof.
"Change of Control" means the occurrence of the following event: any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be
-9-
<PAGE>
<PAGE>
deemed to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
voting stock of the Company.
"Effective Date" means ______________, 1998.
"Finance Receivables" means notes and other obligations evidencing
installment loans made to consumers for the purchase of real and personal
property. All Finance Receivables shall be valued in accordance with GAAP.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by any other Person. The
amount of any Investment shall be the original cost thereof, plus the cost of
all additions thereto and minus the amount of all reductions therein in the
nature of repayment of principal or return of capital, without any
adjustments for increases or decreases in value, write-ups, write-downs or
write-offs with respect to such Investment.
"Leverage Ratio" means, at any date of determination, the ratio of the
sum of the Indebtedness and the net worth of the Company and its Subsidiaries
to the Indebtedness of the Company and its Subsidiaries, in each case
calculated on a consolidated basis in accordance with GAAP.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including without limitation
any conditional sale, deferred purchase price or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing, under the Uniform Commercial Code or comparable
law of any jurisdiction, of any financing statement naming the owner of the
asset to which such financing statement relates as debtor.
"Moody's" means Moody's Investors Service, Inc., or any successor to the
rating agency business thereof.
"Permitted Indebtedness" means, without duplication: (a) the Series B
Senior Secured Notes and the Senior Subordinated Notes; (b) Indebtedness
under one or more Warehouse Facilities; (c) Indebtedness between or among the
Company and its wholly owned Subsidiaries; (d) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap agreements, collar
agreements, insurance arrangements, or any similar agreement or arrangement,
in each case designed to provide a BONA FIDE hedge against fluctuations in
interest rates, the cost of currency, or the cost of goods (other than
inventory); (e) other Indebtedness of
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<PAGE>
the Company or its Subsidiaries in outstanding amounts not to exceed $5
million in the aggregate at any particular time; (f) liabilities (other than
for or in connection with borrowed money) incurred in the operation of the
Finance Business in the ordinary course thereof and not more than six months
overdue, unless contested in good faith by appropriate proceedings; (g)
Indebtedness evidenced by letters of credit that are issued in the ordinary
course of the business of the Company and its Subsidiaries to secure workers'
compensation and other insurance coverages; (l) deferred taxes and other
deferred obligations incurred in the ordinary course of business and not
evidenced by notes, bonds, debentures or other evidences of indebtedness; and
(m) Indebtedness incurred in connection with any extension, renewal,
refinancing, replacement, or refunding (including successive extensions,
renewals, refinancings, replacements, or refundings), in whole or in part, of
any Indebtedness of the Company or its Subsidiaries; provided, however, that
the principal amount of the Indebtedness so incurred does not exceed the sum
of the principal amount of the Indebtedness so extended, renewed, refinanced,
replaced, or refunded, plus all interest accrued thereon and all related fees
and expenses.
"Permitted Investments" means, without duplication: (a) Cash
Equivalents; (b) Investments in another Person, if as a result of such
Investment (i) such other Person becomes a Subsidiary of the Company or (ii)
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Subsidiary of the Company; (c) Investments in any Subsidiary of the Company
or Investments in the Company by a Subsidiary of the Company; (d) commissions
and advances to employees of the Company and its Subsidiaries in the ordinary
course of business; (e) Investments representing notes, securities, or other
instruments or obligations acquired in connection with the sale of assets;
(f) Investments represented by that portion of the proceeds from Asset Sales
permitted under Section 3.7 to the extent such Investments are non-cash
proceeds; (g) Investments representing capital stock or obligations issued to
the Company or any Subsidiary of the Company in settlement of claims against
any other Person by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or such Subsidiary; and (h) other
Investments, the aggregate amount of which at any one time does not exceed $5
million.
"Permitted Liens" means, without duplication: (a) Liens arising under
the Collateral Security Documents; (b) Liens on new Receivables securing any
Warehouse Facility; (c) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance, workers'
compensation, unemployment insurance, old-age pensions, and other social
security benefits other than in respect of employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended; (d) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendor's Liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith
by appropriate proceedings; (e) Liens securing the payment of taxes,
assessments, and governmental charges or levies, either (i) not delinquent or
(ii) being contested in good faith by appropriate legal or administrative
proceedings and as to which adequate reserves shall have been established on
the books of the relevant Person in conformity with GAAP; (f) zoning
restrictions, easements, rights of way, reciprocal easement agreements,
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<PAGE>
operating agreements, covenants, conditions, or restrictions on the use of
any parcel of property that are routinely granted in real estate transactions
or do not interfere in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries or the value of such property
for the purpose of such business; (f) Liens on property existing at the time
such property is acquired; (g) purchase money Liens upon or in any property
acquired or held in the ordinary course of business to secure Indebtedness
incurred solely for the purpose of financing the acquisition of such
property; (h) Liens on the assets of any Subsidiary of the Company at the
time such Subsidiary is acquired; (i) Liens with respect to obligations in
outstanding amounts not to exceed $5.0 million at any particular time and
that (i) are not incurred in connection with the borrowing of money or
obtaining advances or credit (other than trade credit in the ordinary course
of business) and (ii) do not in the aggregate interfere in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries; (j) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of the business of the Company and its
Subsidiaries; (k) Liens resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which (i) the Company or a Subsidiary of the Company shall in good
faith be prosecuting an appeal or proceeding for a review, (ii) a stay of
execution pending such appeal or proceeding for review shall be in effect,
and (iii) the Company shall have established on its books adequate reserves
in accordance with GAAP; (l) rights of banks to set off deposits against
Indebtedness owed to such banks; and (m) any extension, renewal or
replacement, in whole or in part, of any Lien described in the foregoing
clauses; provided, however, that any such extension, renewal or replacement
Lien is limited to the property or assets covered by the Lien extended,
renewed or replaced or substitute property or assets, the value of which is
not materially greater than the value of the property or assets for which the
substitute property or assets are substituted.
"Plan" means the Plan of Reorganization of Mercury Finance Company
confirmed by the United States Bankruptcy Court for the District of
_______________ pursuant to an order dated ___________ __, 1998.
"Repurchase Date" has the meaning ascribed thereto in Section 3.4(a).
"Repurchase Price" has the meaning described thereto in Section 3.4(a).
"Restricted Payments" has the meaning ascribed thereto in Section 3.3.
"Senior Subordinated Notes" means the Company's 9% Senior Subordinated
Notes Due 2003 issued under the Indenture dated as of ______________ __, 1998
between the Company and the trustee thereunder.
"Series B Senior Secured Notes" means the Company's Senior Secured Notes,
Series B Due 2001 issued under the Indenture.
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"S&P" means Standard & Poor's Ratings Group., or any successor to the
rating agency business thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is expressly subordinated in right of payment to the senior secured notes
issued or to be issued under this Indenture, including without limitation,
the Series B Senior Secured Notes.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
amended or modified from time to time.
ARTICLE III. CERTAIN COVENANTS.
Section 3.1. Indebtedness.
The Company shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become liable with respect to, any Indebtedness other than Permitted
Indebtedness if immediately after incurring such Indebtedness other than
Permitted Indebtedness, the Company's Leverage Ratio, calculated on a pro
forma basis, would be equal to or greater than 2.00:1.00.
Section 3.2. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of their
respective assets, other than Permitted Liens.
Section 3.3. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
(a) declare or pay any dividend on, or make any other distribution on account
of, the Company's capital stock; (b) purchase, redeem or otherwise acquire or
retire for value any capital stock (including any option, warrant or right to
purchase capital stock) of the Company owned beneficially by a Person other
than a wholly owned Subsidiary of the Company; (c) purchase, redeem or
otherwise acquire or retire for value the principal of any Subordinated
Indebtedness prior to the scheduled maturity thereof other than pursuant to
mandatory scheduled redemptions or repayments; or (d) make any Investment
other than Permitted Investments (all such dividends, distributions,
purchases, redemptions, or Investments being collectively referred to as
"Restricted Payments"). Notwithstanding anything in the foregoing to the
contrary, the Company may take the actions described in CLAUSE (a), (b) or
(d) above if, at the time of such action or after giving effect thereto: (i)
no Event of Default shall have occurred and is continuing; (ii) the Company
could incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness) under Section 3.1; and (iii) the cumulative amount of
Restricted Payments made subsequent to the Effective Date shall not be
greater than the sum of: (A) 50% of the Company's cumulative consolidated
net income (or a negative amount equal to 100% of the Company's cumulative
consolidated net loss, if applicable) from the Effective Date through the end
of the Company's fiscal quarter immediately
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preceding the taking of such action; and (B) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale of capital stock of
the Company (other than redeemable capital stock), including capital stock
issued upon the conversion of convertible Indebtedness issued on or after the
Effective Date, in exchange for outstanding Indebtedness, or from the
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent to
the Effective Date (with the Company being deemed, in the case of capital
stock issued upon conversion or in exchange for Indebtedness, to have
received net cash proceeds equal to the principal amount of the Indebtedness
so converted or exchanged); provided, however, that (1) the payment of any
dividend within 60 calendar days after the date of declaration thereof, if
such declaration complied with the foregoing redemption or other acquisition
provisions on the date of such declaration, (2) the purchase, redemption, or
other acquisition or retirement for value of any shares of capital stock of
the Company in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale (other than to a Subsidiary of the Company) of
other shares of capital stock (other than redeemable capital stock) of the
Company, and (3) any purchase, redemption or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan shall not be
deemed to constitute "Restricted Payments" and shall not be prohibited under
this Section.
Section 3.4. Change of Control.
(a) RIGHT TO REQUIRE REPURCHASE. In the event that there shall occur a
Change of Control, then each Holder shall have the right, at such Holder's
option, to require the Company to repurchase all or any designated part of
such Holder's Senior Secured Notes on the date (the "Repurchase Date")
selected by the Company that is not more than 75 days after the date the
Company gives notice of the Change of Control as contemplated in paragraph
(b) below at a price (the "Repurchase Price") equal to 101% of the
outstanding principal amount thereof, plus accrued and unpaid interest to the
Repurchase Date. Such right to require the repurchase of Senior Secured
Notes shall continue notwithstanding a discharge of the Company from its
obligations with respect to the Senior Secured Notes in accordance with the
provisions of Article VI or Article XIII of the Indenture.
(b) NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT. On or before the
fifteenth day after the Company knows that a Change of Control has occurred,
the Company or, at the request of the Company, the Trustee (in the name of
and at the expense of the Company), shall give notice of the occurrence of
the Change of Control and of the repurchase right set forth herein arising as
a result thereof by first-class mail, postage prepaid, to each Holder of the
Senior Secured Notes at such Holder's address appearing in the Security
Register for the Senior Secured Notes. The Company shall also deliver a copy
of such notice to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
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(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its
repurchase right.
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise its repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change
of Control. To exercise a repurchase right, a Holder shall deliver to the
Company (or to an agent designated by the Company for such purpose in the
notice referred to above) on or before the fifth Business Day prior to the
Repurchase Date (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of
the Senior Secured Note (or portion of the Senior Secured Note) to be
repurchased and a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Senior Secured Note with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the corresponding succeeding
Interest Payment Date, Senior Secured Notes to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date. In the event a repurchase right shall be exercised in
accordance with the terms hereof and the instructions referred to herein, (x)
the Company shall on the Repurchase Date pay or cause to be paid in cash to
the Holder thereof the Repurchase Price for each Senior Secured Note (or any
portion thereof) as to which the repurchase right has been exercised, and (y)
the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Senior Secured Note without
service charge, a new Senior Secured Note or Notes, as applicable, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for any portion of the principal of such
Senior Secured Note as to which the repurchase right has not been exercised.
Any questions as to the compliance by a Holder of Senior Secured Notes with
the requirements for a valid exercise of a repurchase right (including the
timely delivery of an exercise notice in proper form) shall be determined by
the Company in its sole discretion, which in all events shall be exercised in
good faith.
(c) DEPOSIT OF REPURCHASE PRICE. On or prior to the Repurchase 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 7.03 of the Indenture) an amount of money sufficient to
pay the Repurchase Price of the Senior Secured Notes which are to be
repurchased on the Repurchase Date.
(d) SENIOR SECURED NOTES NOT REPURCHASED ON REPURCHASE DATE. If any
Senior Secured Note (or any portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal of such Senior Secured
Note (or such portion thereof) shall, until paid, bear interest from the
Repurchase Date at the rate borne by such Senior Secured Note.
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<PAGE>
(e) COMPLIANCE. The Company shall comply with all tender offer rules,
including but not limited to Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to any repurchase of the Senior Secured
Notes under this Section 3.4.
Section 3.5. Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist any
contractual restriction on the ability of any Subsidiary of the Company to
(a) pay any dividend on, or make any other distribution on account of, its
capital stock or pay any Indebtedness owed to the Company or a Subsidiary of
the Company or (b) make loans or advances to the Company or a Subsidiary of
the Company.
Section 3.6. Issuance of Subsidiary Preferred Stock.
The Company shall not permit any Subsidiary of the Company to issue any
shares of preferred stock.
Section 3.7. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, conduct any Asset Sale unless (i) such Asset Sale is
for fair market value (as evidenced by a resolution by the Company's Board of
Directors, certified by an officer of the Company and delivered to the
Trustee) and (ii) at least 85% of the consideration received by the Company
in such Asset Sale is in the form of cash. All net cash proceeds realized
from any Asset Sale (after taxes, reasonable fees and expenses incurred
directly therewith and any Indebtedness secured hereby) in excess of
$10,000,000 in the aggregate for such Asset Sale and all other Asset Sales
occurring within the immediately preceding 360 day period will be paid to the
Trustee within 60 days of the receipt of the proceeds to redeem Securities
issued under the Indenture in accordance with the terms of the Indenture.
Section 3.8. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any transaction with an Affiliate (other than the Company or a
wholly owned Subsidiary thereof) on terms more favorable to the Affiliate
than would have been obtainable in arm's-length dealing. Solely for purposes
of this Section 3.8, an "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, or any other Person that
has a relationship with such specified Person whereby either of such Persons
holds or beneficially owns 10% or more of the equity interest in the other
or 10% or more of any class of voting securities of the other. 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.
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<PAGE>
Section 3.9. Change in Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any material line of business substantially different from the
Finance Business.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section 4.1. Immediate Events of Default.
Notwithstanding anything in Section 9.01 of the Indenture to the
contrary, if the Company defaults in the performance of, or breaches any,
covenant set forth in Article III (other than SECTION 3.8) of this First
Supplemental Indenture or in Section 7.05 of the Indenture, such default or
breach shall immediately constitute an Event of Default, without giving
effect to any passage of time or notice or both.
ARTICLE V. REDEMPTION OF SECURITIES.
Section 5.1. Right of Redemption.
The Senior Secured Notes may be redeemed in accordance with the form of
note set forth herein.
Section 5.2. Repurchase.
The Company may at any time and from time to time purchase Senior
Secured Notes in the open market or otherwise at any price, and any Senior
Secured Notes so purchased shall be promptly surrendered to the Trustee for
cancellation and shall not be reissued.
ARTICLE VI. MISCELLANEOUS.
Section 6.1. Reference to and Effect on the Indenture.
This First Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this First Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed and
delivered is hereby (i) incorporated by reference in this First Supplemental
Indenture and (ii) ratified, approved and confirmed.
Section 6.2. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article III hereof if the Holders of a
majority in principal amount of the Outstanding Senior Secured Notes shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so
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<PAGE>
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
Section 6.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] MERCURY FINANCE COMPANY
By:_________________________
Name:_______________________
Title:______________________
Attest:
By:_________________________
Name:_______________________
Title:______________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS TRUSTEE
By:_________________________
Name:_______________________
Title:______________________
Attest:
By:_________________________
Name:_______________________
Title:______________________
STATE OF ________)
) SS:
COUNTY OF _______)
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On this ____ day of __________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by authority
of the Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
____________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
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<PAGE>
STATE OF ________)
) SS:
COUNTY OF _______)
On this ____ day of __________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, one of the entities described in and which executed the
above instrument; that he/she knows the seal of said entity; that the seal or
a facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
____________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
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<PAGE>
Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
SECOND SUPPLEMENTAL TRUST INDENTURE
Dated as of __________, 1998
Supplementing that certain
INDENTURE
Dated as of __________, 1998
Authorizing the Issuance and Delivery of
Senior Secured Securities
consisting of $___________* aggregate principal amount of
Senior Secured Notes Due 2001, Series B
<PAGE>
___________
* In the execution version, the appropriate amount determined in
accordance with __________________________ of the Plan will be
inserted here, in the first paragraph on page 2 and in Section 1.1(b)
hereof.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
[Form of Reverse of Security]. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES . . . . . . . . . . . . . . . . . . . .7
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity . . .7
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest. . . . .8
ARTICLE II. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Payment Restrictions Affecting Subsidiaries. . . . . . . . . . . 16
Section 3.6. Issuance of Subsidiary Preferred Stock . . . . . . . . . . . . . 16
Section 3.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 16
Section 3.9. Change in Business . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2. Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Reference to and Effect on the Indenture . . . . . . . . . . . . 17
Section 6.2. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . 18
Section 6.3. Supplemental Indenture May be Executed in Counterparts.. . . . . 18
</TABLE>
2
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this
"Second Supplemental Indenture"), between Mercury Finance Company, a
corporation duly organized and existing under the laws of the State of
Delaware (the "Company"), and Norwest Bank Minnesota, National Association, a
U.S. national banking association, as Trustee (the "Trustee"), supplementing
that certain Indenture, dated as of __________, 1998, between the Company and
the Trustee (the "Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its senior secured
notes (the "Securities") to be issued in one or more series as provided for
in the Indenture.
B. The Indenture provides that the Securities of each series shall be
in such form as may be established by or pursuant to a Board Resolution or in
one or more indentures supplemental thereto, 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 the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"Senior Secured Notes Due 2001, Series B" (the "Senior Secured Notes")
pursuant to the terms of this Second Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this Second Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
<PAGE>
[Form of Face of Security]
MERCURY FINANCE COMPANY
SENIOR SECURED NOTE DUE 2001, SERIES B
No. R-__________ $_____________________
CUSIP No._____________
MERCURY FINANCE COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company," which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to [_______________], or
registered assigns, the principal sum of $__________ on [the third anniversary
of the Effective Date], subject to earlier redemption or repurchase as
described below, and to pay interest thereon from _______________, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, at a floating rate equal to the London interbank offering rate
for three months quoted in THE WALL STREET JOURNAL on the later of
[Effective Date or 91 days thereafter] and the most recently occurring
Interest Payment Date ("LIBOR") PLUS ___%* per annum, payable quarterly on
___________ of each year, commencing on __________, 199_, until the principal
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as
provided in said Indenture, be computed on the basis of a 360-day year
consisting of twelve 30-day months and paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be
________________________ (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall
be given to Holders of Securities of this series not less than 10 calendar
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture.
Payment of the principal of and any such interest on this Security shall
be made at the office or agency of the Company maintained for such purpose in
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Security Register.
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* Percentage rate will be equal to 9% MINUS the percentage rate of LIBOR on
the date of execution of the Indenture MINUS a percentage rate that
represents the cost to the Company of establishing interest rate protection
such that the effective interest rate to the Company of this offering is 9%.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE
REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT
AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in accordance
with the Indenture.
MERCURY FINANCE COMPANY
By:____________________________________
Name:__________________________________
Attest: Title:_________________________________
By:________________________
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[Form of Reverse of Security]
MERCURY FINANCE COMPANY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of __________, 1998 (herein called
the "Indenture"), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $___________.
On the terms and subject to the conditions set forth in the Company
Security Documents, the payment and performance of the obligations of the
Company under the Securities issued under this Indenture, including this
Security, are secured by the Company Collateral and have the benefit of the
Subsidiaries Guaranty Agreement executed by each Subsidiary of the Company.
Payment and performance of the obligations of the Subsidiaries under the
Subsidiaries Guaranty Agreement are secured by the Subsidiaries Collateral.
The Company Collateral and the Subsidiaries Collateral has been pledged to
the Trustee on the terms and subject to the conditions set forth in the
Collateral Security Documents for the equal and ratable benefit of the
Holders of Securities issued under the Indenture. As set forth in the
Indenture, the Subsidiaries Guaranty Agreement and the Subsidiaries Security
Agreement, to the extent a Subsidiary of the Company enters into a Warehouse
Facility, the rights of any party lending money to a Subsidiary of the
Company pursuant to such Warehouse Facility with respect to certain assets
comprising a portion of the Subsidiaries Collateral will be senior to those
rights of the Holders of Securities issued under the Indenture.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company, at any time and from time
to time, in whole or in part, in increments of not less than $5.0 million,
upon not more than 60 nor less than 30 days' notice to the Holders prior to
the Redemption Date, at the principal amount thereof, plus accrued and unpaid
interest thereon to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such method
as the Trustee may deem fair and appropriate. In the event of the redemption
of this Security in part only, a new Security or Securities of this series
and of like tenor for the portion hereof not so redeemed shall be issued in
the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company is required to
repurchase the Securities, at the option of the Holders thereof, at a
purchase price equal to 101% of the
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outstanding principal amount thereof, plus accrued and unpaid interest
thereon to the Repurchase Date, but interest installments with a Stated
Maturity on or prior to such Repurchase Date shall be payable to the Holders
of such Securities of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof all as provided in the Indenture.
In the event of the repurchase of this Security in part only, a new Security
or Securities of this series of like tenor for the portion hereof not so
repurchased shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder unless (a) such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, (b) the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, (c) the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this series at
the time Outstanding a direction inconsistent with such request and (d) the
Trustee shall have failed to institute such proceeding for 60 calendar days
after receipt of such notice, request, and offer of indemnity. However, the
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates therefor expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay
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the principal of and any premium or interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering
the same.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this
series and of like tenor, of authorized denominations and for the same
aggregate principal amount, shall be issued to the designated transferee or
transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security that are defined in the Indenture shall
have the respective meanings assigned to them in the Indenture. This
Security, the Indenture and the Collateral Security Documents shall be
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws of such State.
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<PAGE>
D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: Norwest Bank Minnesota, National
Association, as Trustee
By:___________________________________
Authorized Signatory
E. All acts and things necessary to make the Senior Secured Notes,
when the Senior Secured Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture and
this Second Supplemental Indenture, the valid, binding and legal obligations
of the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this Second
Supplemental Indenture and the issue hereunder of the Senior Secured Notes
have in all respects been duly authorized; and the Company, in the exercise
of the legal right and power in it vested, has executed and delivered the
Indenture and is executing and delivering this Second Supplemental Indenture
and proposes to make, execute, issue and deliver the Senior Secured Notes.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Secured Notes are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Senior Secured
Notes by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of the respective Holders from time to time of the
Senior Secured Notes, as follows:
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES.
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity.
(a) On __________, 1998, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Senior Secured Notes
substantially in the form set forth above, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture and this Second Supplemental Indenture, and with
such
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<PAGE>
letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Senior Secured Notes, as evidenced by their
execution thereof.
(b) The Senior Secured Notes shall be issued in the aggregate principal
amount of $_________ and shall mature on [the third anniversary of the Effective
Date].
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest.
(a) The Senior Secured Notes shall bear interest for each period
preceding any Interest Payment Date at a floating rate equal to the London
interbank offering rate for three months quoted in THE WALL STREET JOURNAL on
the later of [Effective Date or 91 days thereafter] and the preceding
Interest Payment Date ("LIBOR") PLUS ___% per annum from [_________________],
or, if later, from the most recent Interest Payment Date to which interest
has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name a Senior Secured Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name the Senior Secured Note (or
one or more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of the Senior
Secured Notes not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Senior Secured Notes
may be listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture.
(c) Payment of the principal of and any such interest on the Senior
Secured Notes shall be made at the office or agency of the Company maintained
for such purpose in New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register.
ARTICLE II. CERTAIN DEFINITIONS.
Section 2.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this Second Supplemental
Indenture otherwise requires) for all purposes of
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this Second Supplemental Indenture and of any indenture supplemental hereto
have the respective meanings specified in this Section 2.1. All accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP. All other terms used in this Second Supplemental
Indenture that are defined in the Indenture or the Trust Indenture Act,
either directly or by reference therein (except as herein otherwise expressly
provided or unless the context of this Second Supplemental Indenture
otherwise requires), have the respective meanings assigned to such terms in
the Indenture or the Trust Indenture Act, as the case may be, as in force at
the date of this Second Supplemental Indenture as originally executed.
"Affiliate" has the meaning ascribed thereto in Section 3.8.
"Asset Sale" means any sale or other disposition, or series of sales or
other dispositions (including, without limitation, by merger or consolidation
and whether by operation of law or otherwise) of assets by the Company or its
Subsidiaries to any Person except (i) sales of used, worn out or surplus
equipment in the ordinary course of business and (ii) sales, contributions or
transfers of Receivables pursuant to any Warehouse Facility. The definition
of Asset Sale shall include the receipt of funds from any federal or state
income tax refunds.
"Cash Equivalent" means: (a) obligations issued or unconditionally
guaranteed as to principal and interest by the United States of America or by
any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America which are backed by the full
faith and credit of the United States of America; (b) obligations (including,
but not limited to, demand or time deposits, bankers' acceptances and
certificates of deposit) issued by a depository institution or trust company
or a wholly owned subsidiary or branch office of any depository institution
or trust company, provided that (i) such depository institution or trust
company has, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
capital, surplus or undivided profits (as of the date of such institution's
most recently published financial statements) in excess of $100 million and
(ii) the commercial paper of such depository institution or trust company, at
the time of the Company's or any of its Subsidiaries' investment therein or
contractual commitment providing for such investment, is rated at least A1 by
S&P or P-1 by Moody's; (c) debt obligations (including, but not limited to,
commercial paper and medium-term notes) issued or unconditionally guaranteed
as to principal and interest by any corporation, state or municipal
government or agency or instrumentality thereof or foreign sovereignty, if
the commercial paper of such corporation, state or municipal government or
foreign sovereignty, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
is rated at least A1 by S&P or P-1 by Moody's; (d) repurchase obligations
with a term of not more than seven calendar days for underlying securities of
the type described above entered into with a depository institution or trust
company meeting the qualifications described in clause (b) above; and (e)
Investments in money market or mutual funds that invest predominantly in Cash
Equivalents of the type described in clauses (a), (b), (c) and (d) above;
provided, however, that, in the case of clause (a) above, each such
01investment has a maturity of one year or less from the date of acquisition
thereof, and, in the case of clauses (b) and (c) above, each such investment
has a maturity of 270 days or less from the date of acquisition thereof.
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<PAGE>
"Change of Control" means the occurrence of the following event: any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the voting
stock of the Company.
"Effective Date" means ______________, 1998.
"Finance Receivables" means notes and other obligations evidencing
installment loans made to consumers for the purchase of real and personal
property. All Finance Receivables shall be valued in accordance with GAAP.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by any other Person. The
amount of any Investment shall be the original cost thereof, plus the cost of
all additions thereto and minus the amount of all reductions therein in the
nature of repayment of principal or return of capital, without any
adjustments for increases or decreases in value, write-ups, write-downs or
write-offs with respect to such Investment.
"Leverage Ratio" means, at any date of determination, the ratio of the
sum of the Indebtedness and the net worth of the Company and its Subsidiaries
to the Indebtedness of the Company and its Subsidiaries, in each case
calculated on a consolidated basis in accordance with GAAP.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including without limitation
any conditional sale, deferred purchase price or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing, under the Uniform Commercial Code or comparable
law of any jurisdiction, of any financing statement naming the owner of the
asset to which such financing statement relates as debtor.
"Moody's" means Moody's Investors Service, Inc., or any successor to the
rating agency business thereof.
"Permitted Indebtedness" means, without duplication: (a) the Series A
Senior Secured Notes and the Senior Subordinated Notes; (b) Indebtedness
under one or more Warehouse Facilities; (c) Indebtedness between or among the
Company and its wholly owned Subsidiaries; (d) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap
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agreements, collar agreements, insurance arrangements, or any similar
agreement or arrangement, in each case designed to provide a BONA FIDE hedge
against fluctuations in interest rates, the cost of currency, or the cost of
goods (other than inventory); (e) other Indebtedness of the Company or its
Subsidiaries in outstanding amounts not to exceed $5 million in the aggregate
at any particular time; (f) liabilities (other than for or in connection with
borrowed money) incurred in the operation of the Finance Business in the
ordinary course thereof and not more than six months overdue, unless
contested in good faith by appropriate proceedings; (g) Indebtedness
evidenced by letters of credit that are issued in the ordinary course of the
business of the Company and its Subsidiaries to secure workers' compensation
and other insurance coverages; (l) deferred taxes and other deferred
obligations incurred in the ordinary course of business and not evidenced by
notes, bonds, debentures or other evidences of indebtedness; and (m)
Indebtedness incurred in connection with any extension, renewal, refinancing,
replacement, or refunding (including successive extensions, renewals,
refinancings, replacements, or refundings), in whole or in part, of any
Indebtedness of the Company or its Subsidiaries; provided, however, that the
principal amount of the Indebtedness so incurred does not exceed the sum of
the principal amount of the Indebtedness so extended, renewed, refinanced,
replaced, or refunded, plus all interest accrued thereon and all related fees
and expenses.
"Permitted Investments" means, without duplication: (a) Cash
Equivalents; (b) Investments in another Person, if as a result of such
Investment (i) such other Person becomes a Subsidiary of the Company or (ii)
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Subsidiary of the Company; (c) Investments in any Subsidiary of the Company
or Investments in the Company by a Subsidiary of the Company; (d) commissions
and advances to employees of the Company and its Subsidiaries in the ordinary
course of business; (e) Investments representing notes, securities, or other
instruments or obligations acquired in connection with the sale of assets;
(f) Investments represented by that portion of the proceeds from Asset Sales
permitted under Section 3.7 to the extent such Investments are non-cash
proceeds; (g) Investments representing capital stock or obligations issued to
the Company or any Subsidiary of the Company in settlement of claims against
any other Person by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or such Subsidiary; and (h) other
Investments, the aggregate amount of which at any one time does not exceed $5
million.
"Permitted Liens" means, without duplication: (a) Liens arising under
the Collateral Security Documents; (b) Liens on new Receivables securing any
Warehouse Facility; (c) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance, workers'
compensation, unemployment insurance, old-age pensions, and other social
security benefits other than in respect of employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended; (d) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendor's Liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith
by appropriate proceedings; (e) Liens securing the payment of taxes,
assessments, and governmental charges or levies, either (i) not delinquent or
(ii) being contested
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in good faith by appropriate legal or administrative proceedings and as to
which adequate reserves shall have been established on the books of the
relevant Person in conformity with GAAP; (f) zoning restrictions, easements,
rights of way, reciprocal easement agreements, operating agreements,
covenants, conditions, or restrictions on the use of any parcel of property
that are routinely granted in real estate transactions or do not interfere in
any material respect with the ordinary conduct of the business of the Company
and its Subsidiaries or the value of such property for the purpose of such
business; (f) Liens on property existing at the time such property is
acquired; (g) purchase money Liens upon or in any property acquired or held
in the ordinary course of business to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such property; (h) Liens on the
assets of any Subsidiary of the Company at the time such Subsidiary is
acquired; (i) Liens with respect to obligations in outstanding amounts not to
exceed $5.0 million at any particular time and that (i) are not incurred in
connection with the borrowing of money or obtaining advances or credit (other
than trade credit in the ordinary course of business) and (ii) do not in the
aggregate interfere in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries; (j) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of the business
of the Company and its Subsidiaries; (k) Liens resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not
have expired, or in respect of which (i) the Company or a Subsidiary of the
Company shall in good faith be prosecuting an appeal or proceeding for a
review, (ii) a stay of execution pending such appeal or proceeding for review
shall be in effect, and (iii) the Company shall have established on its books
adequate reserves in accordance with GAAP; (l) rights of banks to set off
deposits against Indebtedness owed to such banks; and (m) any extension,
renewal or replacement, in whole or in part, of any Lien described in the
foregoing clauses; provided, however, that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced or substitute property or assets, the value of
which is not materially greater than the value of the property or assets for
which the substitute property or assets are substituted.
"Plan" means the Plan of Reorganization of Mercury Finance Company
confirmed by the United States Bankruptcy Court for the District of
_______________ pursuant to an order dated ___________ __, 1998.
"Repurchase Date" has the meaning ascribed thereto in Section 3.4(a).
"Repurchase Price" has the meaning described thereto in Section 3.4(a).
"Restricted Payments" has the meaning ascribed thereto in Section 3.3.
"Senior Subordinated Notes" means the Company's 9% Senior Subordinated
Notes Due 2003 issued under the Indenture dated as of ______________ __, 1998
between the Company and the trustee thereunder.
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"Series A Senior Secured Notes" means the Company's Senior Secured
Notes, Series A Due 2001 issued under the Indenture.
"S&P" means Standard & Poor's Ratings Group., or any successor to the
rating agency business thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is expressly subordinated in right of payment to the senior secured notes
issued or to be issued under this Indenture, including without limitation,
the Series B Senior Secured Notes.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
amended or modified from time to time.
ARTICLE III. CERTAIN COVENANTS.
Section 3.1. Indebtedness.
The Company shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become liable with respect to, any Indebtedness other than Permitted
Indebtedness if immediately after incurring such Indebtedness other than
Permitted Indebtedness, the Company's Leverage Ratio, calculated on a pro
forma basis, would be equal to or greater than 2.00:1.00.
Section 3.2. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of their
respective assets, other than Permitted Liens.
Section 3.3. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
(a) declare or pay any dividend on, or make any other distribution on account
of, the Company's capital stock; (b) purchase, redeem or otherwise acquire or
retire for value any capital stock (including any option, warrant or right to
purchase capital stock) of the Company owned beneficially by a Person other
than a wholly owned Subsidiary of the Company; (c) purchase, redeem or
otherwise acquire or retire for value the principal of any Subordinated
Indebtedness prior to the scheduled maturity thereof other than pursuant to
mandatory scheduled redemptions or repayments; or (d) make any Investment
other than Permitted Investments (all such dividends, distributions,
purchases, redemptions, or Investments being collectively referred to as
"Restricted Payments"). Notwithstanding anything in the foregoing to the
contrary, the Company may take the actions described in CLAUSE (a), (b) or
(d) above if, at the time of such action or after giving effect thereto: (i)
no Event of Default shall have occurred and is continuing; (ii) the Company
could incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness) under Section 3.1; and (iii) the cumulative amount of
Restricted Payments made subsequent to the Effective Date shall
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not be greater than the sum of: (A) 50% of the Company's cumulative
consolidated net income (or a negative amount equal to 100% of the Company's
cumulative consolidated net loss, if applicable) from the Effective Date
through the end of the Company's fiscal quarter immediately preceding the
taking of such action; and (B) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of capital stock of the
Company (other than redeemable capital stock), including capital stock issued
upon the conversion of convertible Indebtedness issued on or after the
Effective Date, in exchange for outstanding Indebtedness, or from the
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent to
the Effective Date (with the Company being deemed, in the case of capital
stock issued upon conversion or in exchange for Indebtedness, to have
received net cash proceeds equal to the principal amount of the Indebtedness
so converted or exchanged); provided, however, that (1) the payment of any
dividend within 60 calendar days after the date of declaration thereof, if
such declaration complied with the foregoing redemption or other acquisition
provisions on the date of such declaration, (2) the purchase, redemption, or
other acquisition or retirement for value of any shares of capital stock of
the Company in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale (other than to a Subsidiary of the Company) of
other shares of capital stock (other than redeemable capital stock) of the
Company, and (3) any purchase, redemption or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan shall not be
deemed to constitute "Restricted Payments" and shall not be prohibited under
this Section.
Section 3.4. Change of Control.
(a) RIGHT TO REQUIRE REPURCHASE. In the event that there shall occur a
Change of Control, then each Holder shall have the right, at such Holder's
option, to require the Company to repurchase all or any designated part of
such Holder's Senior Secured Notes on the date (the "Repurchase Date")
selected by the Company that is not more than 75 days after the date the
Company gives notice of the Change of Control as contemplated in paragraph
(b) below at a price (the "Repurchase Price") equal to 101% of the
outstanding principal amount thereof, plus accrued and unpaid interest to the
Repurchase Date. Such right to require the repurchase of Senior Secured
Notes shall continue notwithstanding a discharge of the Company from its
obligations with respect to the Senior Secured Notes in accordance with the
provisions of Article VI or Article XIII of the Indenture.
(b) NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT. On or before the
fifteenth day after the Company knows that a Change of Control has occurred,
the Company or, at the request of the Company, the Trustee (in the name of
and at the expense of the Company), shall give notice of the occurrence of
the Change of Control and of the repurchase right set forth herein arising as
a result thereof by first-class mail, postage prepaid, to each Holder of the
Senior Secured Notes at such Holder's address appearing in the Security
Register for the Senior Secured Notes. The Company shall also deliver a copy
of such notice to the Trustee.
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<PAGE>
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its
repurchase right.
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise its repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change
of Control. To exercise a repurchase right, a Holder shall deliver to the
Company (or to an agent designated by the Company for such purpose in the
notice referred to above) on or before the fifth Business Day prior to the
Repurchase Date (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of
the Senior Secured Note (or portion of the Senior Secured Note) to be
repurchased and a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Senior Secured Note with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the corresponding succeeding
Interest Payment Date, Senior Secured Notes to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date. In the event a repurchase right shall be exercised in
accordance with the terms hereof and the instructions referred to herein, (x)
the Company shall on the Repurchase Date pay or cause to be paid in cash to
the Holder thereof the Repurchase Price for each Senior Secured Note (or any
portion thereof) as to which the repurchase right has been exercised, and (y)
the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Senior Secured Note without
service charge, a new Senior Secured Note or Notes, as applicable, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for any portion of the principal of such
Senior Secured Note as to which the repurchase right has not been exercised.
Any questions as to the compliance by a Holder of Senior Secured Notes with
the requirements for a valid exercise of a repurchase right (including the
timely delivery of an exercise notice in proper form) shall be determined by
the Company in its sole discretion, which in all events shall be exercised in
good faith.
(c) DEPOSIT OF REPURCHASE PRICE. On or prior to the Repurchase 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 7.03 of the Indenture) an amount of money sufficient to
pay the Repurchase Price of the Senior Secured Notes which are to be
repurchased on the Repurchase Date.
-15-
<PAGE>
(d) SENIOR SECURED NOTES NOT REPURCHASED ON REPURCHASE DATE. If any
Senior Secured Note (or any portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal of such Senior Secured
Note (or such portion thereof) shall, until paid, bear interest from the
Repurchase Date at the rate borne by such Senior Secured Note.
(e) COMPLIANCE. The Company shall comply with all tender offer rules,
including but not limited to Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to any repurchase of the Senior Secured
Notes under this Section 3.4.
Section 3.5. Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist any
contractual restriction on the ability of any Subsidiary of the Company to
(a) pay any dividend on, or make any other distribution on account of, its
capital stock or pay any Indebtedness owed to the Company or a Subsidiary of
the Company or (b) make loans or advances to the Company or a Subsidiary of
the Company.
Section 3.6. Issuance of Subsidiary Preferred Stock.
The Company shall not permit any Subsidiary of the Company to issue any
shares of preferred stock.
Section 3.7. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, conduct any Asset Sale unless (i) such Asset Sale is
for fair market value (as evidenced by a resolution by the Company's Board of
Directors, certified by an officer of the Company and delivered to the
Trustee) and (ii) at least 85% of the consideration received by the Company
in such Asset Sale is in the form of cash. All net cash proceeds realized
from any Asset Sale (after taxes, reasonable fees and expenses incurred
directly therewith and any Indebtedness secured hereby) in excess of
$10,000,000 in the aggregate for such Asset Sale and all other Asset Sales
occurring within the immediately preceding 360 day period will be paid to the
Trustee within 60 days of the receipt of the proceeds to redeem Securities
issued under the Indenture in accordance with the terms of the Indenture.
Section 3.8. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any transaction with an Affiliate (other than the Company or a
wholly owned Subsidiary thereof) on terms more favorable to the Affiliate
than would have been obtainable in arm's-length dealing. Solely for purposes
of this Section 3.8, an "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, or any other Person that
has a relationship with such specified Person whereby either of such Persons
holds or beneficially owns 10% or more of the equity interest in the other
or 10% or more of any class of voting securities of the other. For the
-16-
<PAGE>
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.
Section 3.9. Change in Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any material line of business substantially different from the
Finance Business.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section 4.1. Immediate Events of Default.
Notwithstanding anything in Section 9.01 of the Indenture to the
contrary, if the Company defaults in the performance of, or breaches any,
covenant set forth in Article III (other than SECTION 3.8) of this Second
Supplemental Indenture or in Section 7.05 of the Indenture, such default or
breach shall immediately constitute an Event of Default, without giving
effect to any passage of time or notice or both.
ARTICLE V. REDEMPTION OF SECURITIES.
Section 5.1. Right of Redemption.
The Senior Secured Notes may be redeemed in accordance with the form of
note set forth herein.
Section 5.2. Repurchase.
The Company may at any time and from time to time purchase Senior
Secured Notes in the open market or otherwise at any price, and any Senior
Secured Notes so purchased shall be promptly surrendered to the Trustee for
cancellation and shall not be reissued.
ARTICLE VI. MISCELLANEOUS.
Section 6.1. Reference to and Effect on the Indenture.
This Second Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this Second Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed and
delivered is hereby (i) incorporated by reference in this Second Supplemental
Indenture and (ii) ratified, approved and confirmed.
Section 6.2. Waiver of Certain Covenants.
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<PAGE>
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article III hereof if the Holders of a
majority in principal amount of the Outstanding Senior Secured Notes shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force
and effect.
Section 6.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] MERCURY FINANCE COMPANY
By:___________________________
Name:_________________________
Title:________________________
Attest:
By:___________________________
Name:_________________________
Title:________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
By:___________________________
Name:_________________________
Title:________________________
Attest:
By:___________________________
Name:_________________________
Title:________________________
-18-
<PAGE>
STATE OF __________)
) SS:
COUNTY OF _________)
On this ____ day of ______________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by authority
of the Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
___________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
___________________________
Notary Public
-19-
<PAGE>
STATE OF __________)
) SS.:
COUNTY OF _________)
On this ____ day of ________________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, one of the entities described in and which executed the
above instrument; that he/she knows the seal of said entity; that the seal or
a facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
___________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
___________________________
Notary Public
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<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
_____________________________
___ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
_____________________________
MERCURY FINANCE COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 36-3627010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 FIELD DRIVE
LAKE FORREST, IL 60045
(Address of principal executive offices) (Zip code)
_____________________________
9% SERIES A AND B SENIOR SECURED NOTES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor
is not in default as provided under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility.
Norwest Bank incorporates by reference into this
Form T-1 the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to
The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis and
The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
<PAGE>
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25 filed with
registration statement number 33-66026.
** Incorporated by reference to exhibit number 25 filed with registration
statement number 333-62999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 29th day of September 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Jane Y. Schweiger
__________________________
Jane Y. Schweiger
Corporate Trust Officer
<PAGE>
EXHIBIT 6
September 29, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Jane Y. Schweiger
_________________________
Jane Y. Schweiger
Corporate Trust Officer
<PAGE>
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN THE MATTER OF ) Chapter 11
)
MERCURY FINANCE COMPANY, ) 98 B 20763
)
Debtor. )
) Hon. Erwin I. Katz
)
ORDER GOVERNING PLAN CONFIRMATION HEARING
IT IS HEREBY ORDERED that all discovery relating to confirmation of
First Amended Plan of Reorganization filed by Mercury Finance Company, debtor
and debtor in possession herein (the "Debtor"), on October 15, 1998
("Debtor's Plan") may be commenced on OCTOBER 15, 1998 and all such discovery
shall be completed and closed by DECEMBER 11, 1998 ("Discovery Cut-Off
Date"). Any discovery shall not require any response thereto after the
Discovery Cut-Off Date. The Court hereby adopts Rule 7016 of the Federal
Rules of Bankruptcy Procedure for the hearing on confirmation of the Debtor's
Plan.
A. With respect to the time periods for production of documents,
responses to interrogatories and responses to requests for admission
as set forth in Federal Rules of Civil Procedure 33, 34 and 36,
counsel shall work together in good faith, pursuant to Federal Rule of
Civil Procedure 29, to shorten those respective time periods in order
to insure adherence with the time schedules set forth herein.
Approval of this Court shall not be necessary for shortening any of
those respective time periods.
B. With respect to production of documents, any production of documents
otherwise subject to the attorney-client privilege or work product
doctrine shall not constitute a waiver of the attorney-client
privilege or work product doctrine with respect to any other documents
of similar or related subject matter.
C. Counsel for the Debtor, the Creditors' Committee, the Equity
Security Holders' Committee, the Securities Claimants' Committee
and any other party in interest desiring to be heard on the issue
of plan confirmation (as disclosed in writing to counsel for the
Debtor no later than NOVEMBER 4, 1998) are directed to meet in
order to (1) reach agreement on any possible stipulations narrowing
the issues of law and fact; (2) deal with non-stipulated issues in
the manner stated
(1) Any reference to "Counsel" herein shall apply equally to any person
unrepresented by counsel.
<PAGE>
in this paragraph; and (3) exchange copies of documents that will
be offered in evidence at the confirmation hearing. It shall be
the duty of all counsel to offer their full cooperation and
assistance to fulfill both the substance and spirit of this Order
Governing Plan Confirmation Hearing. Proposed stipulated facts
shall be stated in neutral language without argumentative comments.
If parties object to some, but not all of the proposed facts,
counsel shall attempt to adjust the language, if possible.
D. Counsel's meeting shall be held sufficiently in advance of the date
set forth below for submission of a final pretrial order ("Final
Pre-Trial Submission Date"), so that counsel for the Debtor,
Creditors' Committee, the Equity Security Holders' Committee, the
Securities Claimants' Committee and any other party desiring to be
heard on Plan confirmation issues can furnish all other counsel
with a statement ("Statement") of the issues that any such party in
interest will offer evidence to support. The Statement will (1)
eliminate any issues raised by the Debtor's Plan, any party's
objection thereto or any other pleading relating to confirmation
about which there is no controversy and (2) include all issues of
law as well as ultimate issues of fact from the standpoint of each
party.
E. It is the obligation of counsel for Debtor to prepare from the
Statements a draft Final Pretrial Order Governing Confirmation
Hearing (based on the form attached hereto) ("Final Pretrial
Order") for submission to counsel for the Creditors' Committee, the
Equity Security Holders' Committee, the Securities Claimants'
Committee and any other party desiring to be heard on Plan
confirmation issues. Included in the Debtor's obligation for
preparation of the Final Pretrial Order is submission of it to the
aforementioned counsel in ample time for revision and timely
filing. Full cooperation and assistance of all such counsel are
required to ensure proper preparation of the Final Pretrial Order
and fulfill both the substance and spirit of this Order Governing
Plan Confirmation Hearing. Two days before the Final Pretrial
Submission Date, counsel for the Debtor shall submit a final draft
of the Final Pretrial Order to the Judge's chambers. Debtor's
counsel will jointly submit the executed original signed by counsel
for the Creditors' Committee, Equity Security Holders' Committee,
the Securities Claimants' Committee and any other party desiring to
be heard on the Plan confirmation issues, together with one copy
thereof, in open court on the Final Pretrial Submission Date set
forth below.
F. All instructions and footnotes contained within the Final Pretrial
Order form promulgated with this Order Governing Plan Confirmation
Hearing must be substantially followed. They will be binding on
all parties at the Plan confirmation hearing in the same
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<PAGE>
manner as though repeated in the Final Pretrial Order. If any
counsel believes that any of the instructions and/or footnotes
allow for any part of the Final Pretrial Order to be deferred until
after the Final Pretrial Order itself is filed, that counsel shall
file a motion seeking leave of court for such deferral on or before
NOVEMBER 18, 1998.
G. Any pending motions requiring determination in advance of the Plan
confirmation hearing (including, without limitation, motions in
limine, dispositive motions, partially dispositive motions, and
disputes over the admissibility of any evidence at trial upon which
the parties desire to present authorities and argument to the
court) shall be specifically called to the court's attention not
later than the Final Pretrial Submission Date set forth below.
H. Counsel must consider the following matters during the conference
referred to in paragraph B above:
1. Jurisdiction (if any question exists in this respect, it must be
identified in the Final Pretrial Order);
2. Propriety and standing of parties; correctness of identity of
legal entities; necessity for appointment of guardian,
administrator, executor or other fiduciary (or validity of
such appointment if already made); and correctness of the
designation of any party as a partnership, corporation,
voluntary association , unofficial committee or individual
d/b/a trade name;
3. Objections to the qualification of experts to be offered
pursuant to Rule 702 of the Federal Rules of Evidence.
FINAL PRETRIAL SUBMISSION DATE
At the Final Pretrial Submission Date set forth below, the Debtor,
the Creditors' Committee, the Equity Security Holders' Committee, the
Securities Claimants' Committee and any other party desiring to be heard on
Plan confirmation issues shall be represented by the attorneys who will act
as lead trial counsel at the Plan confirmation hearing (unless before the
conference the court grants permission otherwise). All attending attorneys
will familiarize themselves with the pretrial rules and will come to the
conference with full authority to accomplish the purposes of Federal Rule of
Bankruptcy Procedure 7016 (including simplifying the issues, expediting the
confirmation hearing and saving expense to litigants). Counsel shall be
prepared to discuss settlement possibilities at the pretrial conference
without the necessity of obtaining confirmatory authorization from their
respective clients.
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<PAGE>
It is essential that parties adhere to the dates set forth herein,
for the Final Pretrial Submission Date governs the case's priority for trial.
Because of the scarcity of Pretrial Submission Dates, courtesy to counsel in
other cases also mandates no late changes in scheduling. Accordingly, NO
extensions will be granted without good cause, and no request for extension
should be made less than fourteen (14) days before any of the dates set forth
herein.
DOCUMENTS PROMULGATED WITH THIS ORDER
Appended to this Order are the following:
A. a form of pretrial order;
B. a form for use as "Schedule (c)," the schedule of exhibits for
the Final Pretrial Order; and
C. guidelines for preparing proposed findings of fact and
conclusions of law.
If, after reasonable effort, the Debtor, the Creditors' Committee,
the Equity Security Holders' Committee, the Securities Claimants' Committee
and any other party in interest desiring to be heard on Plan confirmation
issues cannot obtain the cooperation of counsel for any party in interest, it
shall be the duty of the party who cannot obtain the requested cooperation to
advise the court of this fact on notice to the Debtor, the Creditors'
Committee, the Equity Securities Holders' Committee and the Securities
Claimants Committee. Any party in interest or governmental entity desiring
to participate in the Plan confirmation hearing who has not participated in
good faith in the proceedings set forth herein may be subject to sanctions,
and, in addition, may have any objection to Plan confirmation or any of its
other pleadings stricken and be barred from participation in the Plan
confirmation hearing.
All motions or other pleadings filed by the Debtor relating to
solicitation of acceptances of the Debtor's Plan after approval of a
disclosure statement and/or relating to balloting procedures shall adhere to
and be consistent with the procedures and scheduling set forth herein.
The Final Pretrial Submission Date is DECEMBER 16, 1998, with the
conference on the Final Pretrial Order to commence at 11:00 a.m. on that
date.
ENTER:
_____________________________________
Honorable Erwin I. Katz
United States Bankruptcy Judge
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<PAGE>
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN THE MATTER OF ) Chapter 11
)
MERCURY FINANCE COMPANY, ) 98 B 20763
)
Debtor. ) Hon. Erwin I. Katz
FINAL PRETRIAL ORDER GOVERNING CONFIRMATION HEARING
This matter having come before the court pursuant to Fed. R. Bankr. P.
("Rule") 7016, and ____________________(list name, address, telephone number,
client representation) having appeared as counsel for Debtor(s), and
____________________, representing ____________________ having appeared in
support of the Plan; and ____________________(list name, address, telephone
number) having appeared as counsel for Objector(s), the following actions
were taken:
(List name, address, telephone number and client representation)
This Order shall control the hearing on Plan Confirmation
Jurisdiction is not disputed.
The following stipulations and statements are submitted and are attached
to and made a part of this Order: (1)
(a) a comprehensive stipulation or statement of all uncontested
facts, which will become a part of the evidentiary record in the case.
(2)
(b) an agreed statement or statements by each party of the contested
issues of fact and law;
____________________
(1) Singular forms are used throughout this document. Plural forms
should be used as appropriate.
(2) Counsel for Debtor has the responsibility to prepare the initial
draft of a proposed stipulation dealing with allegations in the complaint.
Counsel for any objectors has the same responsibility to prepare a
stipulation dealing with allegations in the party's pleadings. If the
admissibility of any uncontested fact is challenged, the party objecting and
the grounds for objection must be stated.
<PAGE>
(c) (3) except for rebuttal exhibits, schedules in the form set out in
the attached Schedule of --
(1) all exhibits (all exhibits shall be marked for
identification before trial), including documents, summaries,
charts and other items expected to be offered in evidence,
(2) any demonstrative evidence and experiments to be offered
during trial;
(d) a list or lists of names of the potential witnesses to be called
by each party, with a statement of any objections to calling, or to the
qualifications of, any witness identified on the list and a summary of the
testimony of each of them; (4)
(e) stipulations or statements setting forth the qualifications of
each expert witness; (5)
(f) a list of all depositions, or portions thereof, to be read into
evidence and statements of any objections thereto; (6)
(g) waivers of any claims or defenses that have been abandoned by
any party;
____________________
(3) Items not listed will not be admitted unless good cause is shown.
Cumulative documents shall be omitted. Duplicate exhibits shall not be
scheduled by different parties, but may be offered as joint exhibits. All
parties shall stipulate to the authenticity of exhibits whenever possible,
and this Order shall identify any exhibits whose authenticity has not been
stipulated to and specific reasons for the party's failure so to stipulate.
As the attached Schedule (c) form indicates, non-objected to exhibits are
received in evidence by operation of this Order, without any need for further
foundation testimony. Copies of exhibits shall be made available to opposing
counsel and two copies of a bench book of individually tabbed exhibits shall
be prepared and delivered to the court two days before trial unless excused
by the court.
(4) Each party shall indicate which witnesses will be called in the
absence of reasonable notice to opposing counsel to the contrary, and which
may be called as a possibility only. Any witness not listed will be precluded
from testifying absent good cause shown, except that each party reserves the
right to call such rebuttal witnesses, who are not presently identifiable, as
may be necessary, without prior notice to the opposing party.
(5) Only one expert witness on each subject for each party will be
permitted to testify absent good cause shown. If more than one expert witness
is listed, the subject matter of each expert's testimony shall be specified.
(6) If any party objects to the admissibility of any portion, both the
name of the party objecting and the grounds shall be stated. Additionally,
the parties shall be prepared to present to the court, at such time as
directed to do so, a copy of all relevant portions of any deposition
transcript to assist the court, at such time as directed to do so, a copy of
all relevant portions of any deposition transcript to assist the court in
ruling in limine on the objection. All irrelevant and redundant material
including all colloguy between counsel shall be eliminated when the
deposition is read at trial. If a video deposition is proposed to be used,
opposing counsel must be so advised sufficiently before trial to permit any
objections to be made and ruled on by the court, to allow objectionable
material to be edited out of the film before trial.
<PAGE>
(h) each party shall provide proposed FINDINGS OF FACT AND
CONCLUSIONS OF LAW in duplicate;
(i) all motions IN LIMINE shall be filed on or before the time for
the filing of this Order.
(3) Trial of this case is expected to take ____________________ court
half-days.
(4) This Order will control the course of the trial and may not be amended
except by consent of the parties and the court, or by order of the court to
prevent manifest injustice.
ENTER:
Dated _______________________________________
Honorable Erwin I. Katz
United States Bankruptcy Judge
___________________________________ ___________________________________
Attorney for Debtor Attorney for
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
____________________
(7) These shall be separately stated in separately numbered
paragraphs. Findings of Fact should contain a detailed listing of the
relevant material facts the party intends to prove. They should not be in
formal language, but should be in simple narrative form. Conclusions of law
should contain concise statements of the meaning or intent of the legal
theories set forth by counsel, with supporting argument and authority
following each proposed conclusion relating to a contested issue of law.
<PAGE>
GUIDELINES FOR PROPOSED FINDINGS OF FACT
AND CONCLUSIONS OF LAW
(1) Debtor shall first serve and file proposed findings and conclusions.
Each objector shall then serve and file answering proposals.
(2) Debtor's proposals shall include (a) a narrative statement of ALL
FACTS, with a separate paragraph for each fact, on a separate page, proposed
to be proved and (b) a concise statement of plaintiff's legal contentions and
the authorities supporting them.
(a) Debtor's narrative statement of facts shall set forth in simple
declarative sentences all the facts relied upon in support of
confirmation. It shall be complete in itself and shall contain
no recitation of any witness' testimony or what any party
stated or admitted in these or other proceedings, and no
reference to the pleadings or other documents or schedules as
such. It may contain references in parentheses to the names of
witnesses, depositions, pleadings, exhibits or other documents,
but no party shall be required to admit or deny the accuracy
of such references. It shall, so far as possible, contain no
pejoratives, labels or legal conclusions. It shall be so
constructed, in consecutively numbered paragraphs (though where
appropriate a paragraph may contain more than one sentence),
that each of the opposing parties will be able to admit or deny
each separate sentence of the statement.
(b) Debtor's statement of legal contentions shall set forth all
contentions necessary to demonstrate that the plan should be
confirmed. Such contentions shall be separately, clearly and
concisely stated in separately numbered paragraphs. Each
paragraph shall be followed by citations of authorities in
support thereof.
(3) Each corresponding proposal shall correspond to Debtor's proposals:
(a) Each objector's factual statement shall admit or deny each
separate sentence contained in the narrative statement of fact
of Debtor, except in instances where a portion of a sentence
can be admitted and a portion denied. In those instances, each
objector shall state clearly the portion admitted and the
portion denied. Each separate sentence of objector's response
shall bear the same number as the corresponding sentence in the
Debtor's narrative statement of fact. In a separate portion of
each objector's narrative statement of facts such objector
shall set forth all affirmative matter of a factual nature
relied upon by such objector constructed in the same
<PAGE>
manner as the Debtor's narrative statement of facts.
(b) Each objector's separate statement of proposed conclusions of
law shall respond directly to Debtor's separate legal
contentions and shall contain such additional contentions of
the objector as may be necessary to demonstrate why the plan
should not be confirmed. Each objector's defendant's statement
of legal contentions shall be constructed in the same manner as
is provided for the similar statement of each plaintiff.
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re )
) Case No. 98-B-20763
MERCURY FINANCE COMPANY, )
a Delaware Corporation, ) Chapter 11
)
Debtor. ) Honorable Erwin I. Katz
)
NOTICE OF LAST DATE FOR FILING PROOFS OF CLAIM
PLEASE TAKE NOTICE that the United States Bankruptcy Court for the
Northern District of Illinois (the "Bankruptcy Court") entered an order
fixing DECEMBER 7, 1998, at 4:00 p.m. EST (the "Bar Date"), as the deadline
for filing proofs of claim against Mercury Finance Company, debtor and debtor
in possession in the above-captioned bankruptcy case (the "Debtor").
1. WHO MUST FILE A PROOF OF CLAIM: Except as otherwise set forth
herein, all persons, creditors, individuals, partnerships, corporations,
associations, estates, trusts, or other entities that wish to assert a claim
("Claim") against the Debtor arising or existing, or which may be deemed to
have arisen or existed, prior to July 15, 1998 ("Petition Date") as defined
in Section 101(5) of the United States Bankruptcy Code (the "Bankruptcy
Code"). Except as otherwise specifically provided, the Bar Date applies to
any "Claim" against the Debtor arising from any event occurring during the
Debtor's operation of its business before and until the Debtor's Petition
Date including, without limitation: (a) indemnification claims or
contribution claims against the Debtor under various principles or provisions
of applicable state law; (b) consumer action claims, including such claims
that have been asserted in litigation; (c) any administrative agency claims
or similar kinds of private enforcement claims, including, but not limited
to, wage and hour claims, wrongful termination claims, employment
discrimination claims, and other employment related claims; and (d) claims
generally arising from the Debtor's announcement of accounting
irregularities, including alleged violations of federal and state securities
laws and regulations ("Securities Fraud Claims").
2. WHO NEED NOT FILE A PROOF OF CLAIM: Creditors need not file a
proof of claim if: (a) they have previously filed a proof of claim in this
case, (b) they agree in all respects with the information contained in the
Schedules regarding the amount of their claim and such claim is NOT listed as
contingent, unliquidated, or disputed, (c) they have a claim arising on or
after July 15, 1998, (d) their claim has already been satisfied by a prior
order or authorization of the Bankruptcy Court, or (e) they were stock
holders of record on February 17, 1997 and have a claim for declared but
unpaid dividends ("Equity Claim").
3. EQUITY INTERESTS: Holders of the Debtor's common stock and stock
options need not file proofs of interest with respect to the interests
represented by such equity securities. In addition, any current or former
holder of the Debtor's common stock who has an Equity Claim against the
Debtor may, but need not, file a proof of claim on or before the Bar Date.
However, any equity security holder who has, may have, or may assert a
Securities Fraud Claim against the Debtor must file a proof of claim on or
before the Bar Date.
4. WHERE AND WHEN TO FILE: Proofs of claim must be filed and
received NO LATER THAN 4:00 P.M. EST ON THE BAR DATE by Logan & Company,
Inc., the Claims Agent, at the following address:
CLAIMS CENTER - Mercury Finance Company
c/o Logan & Company
615 Washington Street
Hoboken, NJ 07030
(201) 798-1031
Proofs of claim will be treated as filed only when actually received by the
Claims Agent. Creditors are advised not to file or send copies of proofs of
claim to the Bankruptcy Court, the Debtor, counsel for the Debtor, counsel for
the
<PAGE>
Creditors' Committee, counsel to the Equity Committee, or counsel to the
Securities Claimants Committee. If a creditor wishes to receive an
acknowledgement of receipt of its proof of claim, the creditor must provide
the Claims Agent with an additional copy of the proof of claim with a
self-addressed, postage-paid return envelope. Facsimile transmissions or
electronic transfer of proofs of claim will not be accepted.
5. ACCESS TO SCHEDULES: The Debtor has filed its Schedules of Assets
and Liabilities and any amendments thereto (the "Schedules") with the Clerk
of the Bankruptcy Court, setting forth claim amounts for all creditors as
they appear on the Debtor's books and records. ALL CREDITORS ARE ADVISED TO
REVIEW THE SCHEDULES, WHICH ARE AVAILABLE AT THE OFFICE OF THE CLERK, UNITED
STATES BANKRUPTCY COURT, LOCATED AT 219 SOUTH DEARBORN STREET, 7TH FLOOR,
CHICAGO, ILLINOIS 60604 DURING NORMAL BUSINESS HOURS OR MAY BE OBTAINED AT
THE EXPENSE OF THE REQUESTING PARTY BY CONTACTING THE CLAIMS AGENT AT THE
ABOVE-REFERENCED ADDRESS AND TELEPHONE NUMBER.
6. GOVERNMENTAL ENTITIES: Governmental units, agencies or entities
shall have the 180-day period set forth in section 502(b)(9) of the
Bankruptcy Code to file proofs of claim against the Debtor.
7. EXECUTORY CONTRACT AND UNEXPIRED LEASE CLAIMS: Any claims arising out
of, or otherwise related to, the Debtor's rejection of executory contracts and
unexpired leases under section 365 of Bankruptcy Code on or before October 30,
1998 must be filed on or before the Bar Date. Any claims arising out of, or
otherwise related to, the Debtor's rejection of executory contracts or unexpired
leases after October 30, 1998 must be filed on or before the earlier of: (a)
thirty (30) days following the entry of the order of the Court approving such
rejection, provided the effectiveness of such order has not been stayed; and (b)
thirty (30) days following the effective date of the Plan of Reorganization
confirmed by the Bankruptcy Court in the Debtor's Chapter 11 case.
8. STOCKBROKERS AND OTHER CLAIMS AGENTS: Stockbrokers or other agents of
commercial paper holders, stockholders or option holders (including record
holders or depository agents) that hold debt or equity securities of the Debtor
as trustee or nominee, in street name or otherwise, should immediately transmit
a copy of this notice to each beneficial holder of any such security.
Beneficial holders of debt or equity securities have the right under the Federal
Rules of Bankruptcy Procedure to file a statement setting forth facts that
entitle them to be treated as record holders.
9. REQUIREMENT OF PROOF OF CLAIM FORM: In filing their proofs of claim,
all creditors must use the proof of claim form attached hereto or a form
conforming with Official Form No. 10. Proofs of claim forms can be obtained at
any Bankruptcy Court.
10. FAILURE TO FILE PROOF OF CLAIM: ANY HOLDER OF A CLAIM THAT FAILS TO
FILE A PROOF OF CLAIM ON OR BEFORE THE BAR DATE AS REQUIRED BY ORDER OF THE
BANKRUPTCY COURT IS FOREVER BARRED, ESTOPPED AND ENJOINED FROM (a) ASSERTING ANY
SUCH CLAIM AGAINST THE DEBTOR OR ITS RESPECTIVE SUCCESSORS AND ASSIGNS AND (b)
RECEIVING ANY DISTRIBUTION UNDER ANY PLAN OF REORGANIZATION ON ACCOUNT OF SUCH
CLAIM.
Lewis S. Rosenbloom (Reg. No. 02386321)
David D. Cleary (Reg. No. 06202970)
Debra A. Riley (Reg. No. 06212193)
McDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, IL 60606-5096
(312) 372-2000
Dated: October ___, 1998
<PAGE>
<TABLE>
<CAPTION>
*FILE ORIGINAL FOR CHAPTERS 7 and 11, IN DUPLICATE FOR CHAPTER 13, FOR DATE-STAMPED COPY, SEE #9 BELOW
UNITED STATES BANKRUPTCY COURT CH 7 CH 13 XX CH 11
<S> <C>
NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION PLEASE CHECK CHAPTER
Name of Debtor Case Number PROOF OF CLAIM
MERCURY FINANCE COMPANY 98-B-20673
NOTE: This form should not be used to make a claim File Claim Form With:
for an administrative expense arising after the
commencement of the case. A "request" for payment Claims Center --
of an administrative expense may be filed pursuant Mercury Finance Co.
to 11 U.S.C. Section 503. c/o Logan & Company,
Inc.
615 Washington Street
Hoboken, New Jersey
07030
Creditor # _________________________
Name of Creditor (The person ___ Check box if you
or entity to whom the debtor are aware that anyone
owes money or property) else has filed a proof
of claim relating to
your claim. Attach copy
of statement giving
particulars.
___ Check box if you
have never received any
notices from the
bankruptcy court in
this case.
___ Check box if the
address differs from
the address on the
envelope sent to you by
the court.
Name and Addresses Where
Notices Should be Sent
Telephone No.
Account or other number by Check here if this claim:
which creditor identifies
debtor: ___ amends replaces a previously filed claim,
dated: ____________________________________
1. BASIS FOR CLAIM: Security Fraud Claim (fill out below)
___Goods sold ___Services No. Shares of Common Stock Owned at 1/28/97 _______________
performed Date and Price of Shares Purchased _____ $ _______________
Date and Price of Shares Sold __________ $ _______________
___Money loaned ___Wages, If shares are held by Broker, please provide
Salaries & Compensation name and address:
___Taxes ___Other __________________________
</TABLE>
___Retiree benefits as defined
in 11 U.S.C. Section 1114(a)
2. DATE DEBT WAS INCURRED: 3. IF COURT JUDGMENT, DATE OBTAINED:
4. Total Amount of Claim at Time Case Filed: $_______________________
If all or part of your claim is secured or entitled to priority, also complete
Item 5 or 6 below.
___Check this box if claim includes interest or other charges in addition to the
principal amount of the claim. Attach itemized statement of all interest or
additional charges.
5. Secured claim 5. Unsecured Priority Claim
___Check this box if your claim ___Check this box if you have an unsecured
is secured by collateral priority claimAmount entitled to priority $
(including a right of setoff). Specify the priority of the claim:
____Wages, salaries or commissions (up to
Brief Description of $4,300), *earned within 90 days before
Collateral: filing of the bankruptcy petition or
cessation of the debtor's business,
_____ Real Estate whichever is earlier-11 U.S.C. Section
_____ Motor Vehicle 507(a)(3)
_____ Other
___Contributions to an employee benefit
plan-11 U.S.C. Section 507(a)(4)
Value of collateral: $ ___________
__Up to $1,950* of deposits toward
purchase, lease, or rental of property or
services for personal, family, or
Amount of arrearage and household use - 11 U.S.C. Section
other charges AT TIME CASE 507(a)(6)
FILED included in
__Alimony, maintenance, or support owed to
a spouse, former spouse, or child - 11
secured claim above, if any: U.S.C. Section 507(a)(7)
$ ________________________________
__Taxes or penalties owed to governmental
units 11 U.S.C. Section 507(a)(8)
__Other--Specify applicable paragraph of
11 U.S.C. Section 507(a) ___________
*AMOUNTS ARE SUBJECT TO ADJUSTMENT ON 4/1/98
AND EVERY 3 YEARS THEREAFTER WITH RESPECT TO
CASES COMMENCED ON OR AFTER THE DATE OF
ADJUSTMENT.
7. CREDITS: The amount of all payments on this claim THIS SPACE IS FOR
has been credited and deducted for the purpose of COURT USE ONLY
making this proof of claim.
8. SUPPORTING DOCUMENTS: ATTACH COPIES OF SUPPORTING
DOCUMENTS, such as promissory notes, purchase orders,
invoices, itemized statements of running accounts,
contracts, court judgments, mortgages, security
agreements, and evidence of perfection of lien. DO NOT
SEND ORIGINAL DOCUMENTS. If the documents are not
available, explain. If the documents are voluminous,
attach a summary. ANY ATTACHMENT MUST BE 8-1/2" BY 11"
9. DATE-STAMPED COPY: To receive an acknowledgment
of the filing of your claim, enclose a stamped, self-
addressed envelope and an additional copy of this proof
of claim.
Date: Sign and print the name and title, if any, of
the creditor or other person authorized to
file this claim (attach copy of power of
attorney, if any)
PENALTY FOR PRESENTING FRAUDULENT CLAIM: Fine of up to $500,000 or
imprisonment for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
<PAGE>
INSTRUCTIONS FOR FILING PROOF OF CLAIM FORM
THE INSTRUCTIONS AND DEFINITIONS BELOW ARE GENERAL EXPLANATIONS OF THE LAW. IN
PARTICULAR TYPES OF CASES OR CIRCUMSTANCES, SUCH AS BANKRUPTCY CASES THAT ARE
NOT FILED VOLUNTARILY BY A DEBTOR, THERE MAY BE EXCEPTIONS TO THE GENERAL RULES
DEFINITIONS
DEBTOR
The person, corporation, or other entity that has filed a bankruptcy case is
called the debtor.
CREDITOR
A creditor is any person, corporation, or other entity to whom the debtor owed a
debt on the date that the bankruptcy case was filed.
PROOF OF CLAIM
A form telling the bankruptcy court how much the debtor owed a creditor at the
time the bankruptcy case was filed (the amount of the creditor's claim). This
form must be filed with the clerk of the bankruptcy court where the bankruptcy
case was filed.
SECURED CLAIM
A claim is a secured claim to the extent that the creditor has a lien on
property of the debtor (collateral) that gives the creditor the right to be paid
from that property before creditors who do not have liens on the property.
Examples of liens are a mortgage on real estate and a security interest in a
car, truck, boat, television set, or other item of property. A lien may have
been obtained through a court proceeding before the bankruptcy case began; in
some states a court judgment is a lien. In addition to the extent a creditor
also owes money to the debtor (has a right of setoff), the creditors claim may
be a secured claim. (See also UNSECURED CLAIM.)
UNSECURED CLAIM
If a claim is not a secured claim it is an unsecured claim. A claim may be
partly secured and partly unsecured if the property on which a creditor has a
lien is not worth enough to pay the creditor in full.
UNSECURED PRIORITY CLIAM
Certain types of unsecured claims are given priority, so they are to be paid in
bankruptcy cases before most other unsecured claims (if there is sufficient
money or property available to pay these claims). The most common types of
priority claims are listed on the proof of claim form. Unsecured claims that
are not specifically given priority status by the bankruptcy laws are classified
as UNSECURED NONPRIORITY CLAIMS.
ITEMS TO BE COMPLETED IN PROOF OF CLAIM FORM (IF NOT ALREADY FILLED IN)
COURT, NAME OF DEBTOR, AND CASE NUMBER:
Fill in name of the federal judicial district where the bankruptcy case was
filed (for example, Eastern District of Virginia), the name of the debtor in the
bankruptcy case, and the bankruptcy case number. If you received a notice of
the case from the court, all of this information is near the top of the notice.
INFORMATION ABOUT CREDITOR:
Complete the section giving the name, address, and telephone number of the
creditor to whom the debtor owes money or property, and the debtor's account
number, if any. If anyone else has already filed a proof of claim relating to
this debt, if you never received notices from the bankruptcy court about this
case, if your address differs from that to which the court sent notice, or if
this proof of claim replaces or changes a proof of claim that was already filed,
check the appropriate box on the form.
1. BASIS FOR CLAIM:
Check the type of debt for which the proof of claim is being filed. If the type
of debt is not listed, check "Other" and briefly describe the type of debt. If
you were an employee of the debtor, fill in your social security number and the
dates of work for which you were not paid.
2. DATE DEBT INCURRED:
Fill in the date when the debt first was owed by the debtor.
3. COURT JUDGMENTS:
If you have a court judgment for this debt, state the date the court entered the
judgment.
4. TOTAL AMOUNT OF CLAIM AT TIME CASE FILED: Fill in the total amount of the
entire claim. If interest or other charges in addition to the principal amount
of the claim are included, check the appropriate place on the form and attach an
itemization of the interest and charges.
5. SECURED CLAIM:
Check the appropriate place if the claim is a secured claim. You must state the
type and value of property that is collateral for the claim, attach copies of
the documentation of your lien, and state the amount past due on the claim as of
the date the bankruptcy case was filed. A claim may be partly secured and
partly unsecured (See DEFINITIONS, above).
6. UNSECURED PRIORITY CLAIM:
Check the appropriate place if you have an unsecured priority claim, and state
the amount entitled to priority. (See DEFINITIONS, above). A claim may be
partly priority and partly nonpriority if, for example, the claim is for more
than the amount given priority by the law. Check the appropriate place to
specify the type of priority claim.
7. CREDITS:
By signing this proof of claim, you are stating under oath that in calculating
the amount of your claim you have given the debtor credit for all payments
received from the debtor.
8. SUPPORTING DOCUMENTS:
You must attach to this proof of claim form copies of documents that show the
debtor owes the debt claimed or, if the documents are too lengthy, a summary of
those documents. If documents are not available you must attach an explanation
of why they are not available.
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
)
In re: ) Case No. 98-B-20763
)
MERCURY FINANCE COMPANY, ) Chapter 11
a Delaware Corporation, )
) Honorable Erwin I. Katz
Debtor. )
)
NOTICE OF HEARING TO CONSIDER
CONFIRMATION OF THE DEBTOR'S FIRST AMENDED
PLAN OF REORGANIZATION AND DEADLINE FOR FILING
OBJECTIONS AND CONDUCTING RELATED DISCOVERY THERETO
NOTICE IS HEREBY GIVEN THAT:
1. On October 15, 1998, Mercury Finance Company ("Mercury") filed
with the United States Bankruptcy Court for the Northern District of Illinois
(the "Bankruptcy Court") a proposed First Amended Plan of Reorganization (the
"Plan") and a proposed first amended disclosure statement relating to the
Plan (the "Disclosure Statement"). Copies of the Plan and Disclosure
Statement are on file with the Clerk of the Bankruptcy Court, 219 South
Dearborn Street, 7th Floor, and Chicago, Illinois 60604 and may be reviewed
during the Court's regular business hours.
2. On October 15, 1998, the Bankruptcy Court entered an order
("Disclosure Statement Order") (i) approving the Disclosure Statement as
containing "adequate information" pursuant to section 1125 of the United
States Bankruptcy Code, (ii) approving the procedures for solicitation of
votes to accept or reject the Plan, (iii) fixing December 7, 1998 at 4:00
p.m. (Eastern Standard Time) as the date and time by which all votes to
accept or reject the Plan must be received ("Voting Deadline"), (iv) fixing
December 7, 1998 as the last date for filing objections to confirmation of
the Plan, and (v) fixing December 11, 1998 as the last date for conducting
discovery related to confirmation of the Plan.
3. Pursuant to the Disclosure Statement Order, holders of
impaired Claims against Mercury in Classes 4 through 6 under the Plan shall
have the right to vote to accept or reject the Plan by using the enclosed
Ballot. FOR YOUR VOTE TO COUNT, THE BALLOT MUST BE RETURNED TO THE BALLOTING
AGENT BY DECEMBER 7, 1998. If you received a return envelope addressed to a
Bank, Broker or Investment Institution, you must return your Ballot to your
Bank or Broker early enough for your vote to be processed and then forwarded
to the Balloting Agent. Current and former holders of Mercury's common stock
who may have Claims against Mercury (i) for declared but unpaid dividends or
(ii) under federal and state securities laws arising from the Debtor's
announcement of accounting irregularities have been deemed to reject the
Plan; and therefore, are not entitled to vote on account of such claims. In
addition, current holders of Mercury's common stock and stock options have
also been deemed to reject the Plan; and therefore, are not entitled to vote
on account of such equity interests.
<PAGE>
4. A hearing to consider confirmation of the Plan, any objections
that may be interposed and any other matter that may properly come before the
Bankruptcy Court will commence before the Honorable Erwin I. Katz, in the
United States Bankruptcy Court for the Northern District of Illinois, 219
South Dearborn Street, Room 680, Chicago, Illinois, on December 21, 1998 at
2:00 p.m. (Central Standard Time) or as soon thereafter as counsel may be
heard (the "Confirmation Hearing"). You may, but are not required to, attend
the Confirmation Hearing. The Confirmation Hearing may be adjourned from
time to time without further notice other than an announcement of the
adjourned date or dates at the Confirmation Hearing.
5. Objections, if any, to confirmation of the Plan must be in
writing and must (a) state the name and address of the objector, (b) the
objector's interest in the Chapter 11 case, (c) if appropriate, the amount
and nature of the objector's claim or interest, (d) the grounds for the
objection and the legal basis therefor, and (e) be filed with the Clerk of
the Bankruptcy Court, with one (1) copy to chambers, and served upon and
received by the parties listed below on or before December 7, 1998 at 4:00
p.m. (Central Standard Time):
Counsel to Debtor and Counsel for the
Debtor in Possession: United States Trustee:
_____________________ ______________________
McDermott, Will & Emery United States Trustee's Office
227 West Monroe Street U.S. Department of Justice
Chicago, IL 60606-5096 227 West Monroe Street, Suite 3350
Attn: Lewis S. Rosenbloom Chicago, IL 60606
David D. Cleary Attn: Ira Bodenstein
Debra A. Riley Kathryn M. Gleason
Facsimile No.: (312) 984-7700 Facsimile No.: (312) 886-5794
Co-Counsel to Co-Counsel to
Creditors' Committee: Creditors' Committee:
____________________ _________________________________
Cleary, Gottlieb, Steen Jones, Day, Reavis & Pogue
& Hamilton 77 West Wacker Drive
One Liberty Plaza Chicago, IL 60601-1692
New York, NY 10006 Attn: David S. Kurtz
Attn: James E. Millstein Jeffrey W. Linstrom
Lindsee P. Granfield Facsimile No.: (312) 782-8585
Facsimile No.: (212) 225-3999
-2-
<PAGE>
Co-Counsel to Co-Counsel to
_____________________________ _____________________________
Security Claimants' Committee: Security Claimants' Committee:
Barbakoff, Zazove & Glick Holper Welsh & Mitchell
20 North Clark Street - Suite 1000 Esplanade III, Suite 700
Chicago, Illinois 60602 2415 East Camelback Road
Attn: Daniel A. Zazove Phoenix, AZ 85016
Facsimile No. (312) 641-5017 Attn: Richard D. Holper
Facsimile No. (602) 508-6036
Co-Counsel to Co-Counsel to
_____________________________ _____________________________
Equity Committee Equity Committee
Goldberg, Kohn Bell Black Gordon Glickman & Flesch
Rosenbloom & Moritz Ltd. 140 South LaSalle Street
55 East Monroe Street, Suite 3700 Chicago, Illinois 60603
Chicago, Illinois 60603 Attn: James S. Gordon
Attn: Gerald F. Munitz Facsimile No. (312) 346-3708
Randall Klein
Facsimile No. (312) 332-2196
Debtor: Debtor's Interim Management:
_____________________________ _____________________________
Mercury Finance Company Development Specialists, Inc.
100 Field Drive, Suite 340 Three First National Plaza
Lake Forest, IL 60045 Chicago, IL 60602-4205
Attn: Mark E. Dapier Attn: William A. Brandt, Jr.
Facsimile No.: (847)295-8699 Fred C. Caruso
Patrick J. O'Malley
Facsimile No.: (312)263-1180
6. On October 15, 1998, the Court entered an Order Governing Plan
Confirmation Hearing, which sets forth a procedure for litigating objections to
the Plan and contains certain additional deadlines relating to any such
litigation. Any party filing objections to the Plan must comply with the
Court's Order Governing Plan Confirmation Hearing. A copy of the Order
Governing Plan Confirmation Hearing is included in the Solicitation Package
provided herewith.
7. Due to the voluminous nature of the Disclosure Statement and
certain Exhibits to the Disclosure Statement, only a summary of the Disclosure
Statement and/or summaries of the Exhibits may have been provided to you. Those
parties interested in receiving the complete Disclosure Statement and Exhibits
should contact Heidi Heidlauf of McDermott, Will & Emery at (312) 984-3261 and
they will be provided.
Dated: October __, 1998
Lewis S. Rosenbloom (Reg. No. 02386321)
David D. Cleary (Reg. No. 06202970)
Debra A. Riley (Reg. No. 06212193)
McDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, IL 60606-5096
(312) 372-2000
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re: )
)
MERCURY FINANCE COMPANY, ) Case No. 98 B 20763
a Delaware corporation, ) Honorable Erwin I. Katz
) Chapter 11
Debtor. )
FIRST AMENDED DISCLOSURE STATEMENT
PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE
WITH RESPECT TO FIRST AMENDED PLAN OF REORGANIZATION
OF MERCURY FINANCE COMPANY
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Lewis S. Rosenbloom, Esq.
David D. Cleary, Esq.
MCDERMOTT, WILL & EMERY
227 W. Monroe Street
Chicago, Illinois 60606
(312) 372-2000
COUNSEL FOR
MERCURY FINANCE COMPANY
<PAGE>
SOLICITATION OF VOTES WITH RESPECT
TO PLAN OF REORGANIZATION
OF
MERCURY FINANCE COMPANY
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
This Disclosure Statement solicits acceptances of the Plan from holders
of certain Claims in classes 4, 5 and 6. For purposes of voting only, and
with specific reservation of rights by all parties as to all other issues,
Classes 7A, 7B and 7C, in addition to Class 8, are deemed to have rejected
the Plan and will not be solicited for acceptances or rejections of the Plan.
Because Classes 7A, 7B, 7C and 8 are deemed to have rejected the Plan, the
Debtor intends to seek confirmation of the Plan, notwithstanding such
rejection, pursuant to the cramdown provisions of Section 1129(b) of the
Bankruptcy Code.
THE DEBTOR BELIEVES THAT CONFIRMATION OF THE PLAN IS IN THE BEST
INTERESTS OF CREDITORS AND EQUITY HOLDERS. ACCORDINGLY, HOLDERS OF CLAIMS
SOLICITED ARE ENCOURAGED TO VOTE IN FAVOR OF THE PLAN. VOTING INSTRUCTIONS
ARE SET FORTH AT PAGES 59 TO 60 OF THIS DISCLOSURE STATEMENT. TO BE COUNTED,
YOUR BALLOT MUST BE DULY COMPLETED, EXECUTED AND ACTUALLY RECEIVED NO LATER
THAN 4:00 P.M., EASTERN STANDARD TIME, ON DECEMBER 7, 1998. HOLDERS OF
CLAIMS AND INTERESTS ARE ENCOURAGED TO READ AND CONSIDER CAREFULLY THIS
ENTIRE DISCLOSURE STATEMENT, INCLUDING THE PLAN ATTACHED HERETO AS EXHIBIT A.
HOLDERS OF CLAIMS AND HOLDERS OF INTERESTS SHOULD NOT CONSTRUE THE
CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS,
FINANCIAL OR TAX ADVICE. EACH HOLDER SHOULD CONSULT WITH ITS OWN LEGAL,
BUSINESS, FINANCIAL AND TAX ADVISORS WITH RESPECT TO ANY SUCH MATTERS
CONCERNING THIS DISCLOSURE STATEMENT, THE SOLICITATION, THE PLAN AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
On October 15, 1998, this Disclosure Statement was approved by the Court
as containing adequate information, as required by Section 1125 of the
Bankruptcy Code, to permit holders of Claims and Interests to make an
informed judgment in exercising their right to vote to accept or reject the
Plan. The Court, however, has not conducted an independent review or
investigation of the factual and financial matters described herein, nor has
the Court approved or ruled on the merits of the Plan.
The Debtor and the Creditors' Committee endorse the Plan and this
Disclosure Statement. The Securities Claimants' Committee has not endorsed
the Plan or this Disclosure Statement and has advised the Debtor and other
parties in interest that it will oppose confirmation of the Plan. The
Securities Claimants' Committee also has advised the Debtor that it does not
agree with significant portions of the characterization of events and facts
set forth by the Debtor in this Disclosure Statement.
NEITHER THE SECURITIES OFFERED NOR THE PLAN HAVE BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION APPROVED OR DISAPPROVED OF THIS DISCLOSURE STATEMENT OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. IN ADDITION, THE
BANKRUPTCY COURT HAS APPROVED THIS DISCLOSURE STATEMENT AS CONTAINING
"ADEQUATE INFORMATION" AS PROVIDED IN 11 U.S.C. Section 1125, BUT THE
BANKRUPTCY COURT MAY NOT AND HAS NOT EITHER ENDORSED OR NOT ENDORSED THE PLAN.
The Plan provides for, among other things, (a) the issuance and
distribution of Excess Cash, New Senior Secured Notes, and New Common Stock,
and, (b) consistent with the Debtor's valuation, upon which the Plan is
based, the voluntary allocation of value, otherwise distributable to holders
of Senior Debt Claims, to holders of other Claims and Interests in the form
of: (i) the issuance and distribution of New Junior Subordinated Notes to the
Debtor's Subordinated Noteholders; (ii) the issuance and distribution of New
Warrants to certain holders of Equity Interests, Securities Fraud Claims and
Dividend Claims; and (iii) the funding of the Settlement Contribution and
Indemnification Fund. Pursuant to the terms of the Consent Agreement, each
of the holders of the Senior Debt Claims which is a party to the Consent
Agreement has agreed to accept in satisfaction of its Net Senior Debt Claim
<PAGE>
an amount in cash equal to 98.5% of its Net Senior Debt Claim (the "Claim
Purchase"). The Creditors' Committee has informed the Debtor that the
signatories to the Consent Agreements are prepared to permit any Person to
effectuate the Claims Purchase subject to the condition that any Person
seeking to acquire more than 15% of the Net Senior Debt Claims shall commit
to acquire all the Net Senior Debt Claims. Accordingly, any offer to acquire
more than 15% of the Net Senior Debt Claims shall be treated as null and void
unless such Person offers to acquire all of the Net Senior Debt Claims. To
the extent that the Claims Purchase is oversubscribed, the offers received
shall be adjusted downwards on a ratable basis.
Any Person desiring to participate in the Claims Purchase must give
written notice thereof to the Debtor prior to the Expiration Date specifying
therein the amount of Net Senior Debt Claims it desires to purchase and
providing the Debtor with reasonable evidence of its financial ability to
close the purchase. Any Claims Purchase transaction must be consummated by
the commencement of the confirmation hearing in this Reorganization Case.
All Claims Purchases shall be documented and completed in accordance with
Rule 3001(e) of the Bankruptcy Rules.
Any requests for assistance in contacting the holders of Senior Debt
Claims should be directed to Heidi Heidlauf in writing at McDermott, Will &
Emery, 227 W. Monroe St., Chicago, Illinois 60606 or by facsimile at (312)
984-3651. It is presently anticipated that the confirmation Expiration Date
will be 4:00 p.m. eastern standard time on December 7, 1998 and that the
confirmation hearing will occur on December 21, 1998.
The confirmation and effectiveness of the Plan are subject to material
conditions precedent, some of which may not be satisfied. There can be no
assurance that those conditions will be satisfied. The Debtor presently
intends to consummate the Plan and to cause the Effective Date to occur.
There can be no assurance, however, as to whether or when the Effective Date
actually will occur. Procedures for the distribution of cash and securities
pursuant to the Plan, including matters that are expected to affect the
timing of the receipt of distributions by holders of Claims and Interests in
certain classes and that could affect the amount of distributions ultimately
received by such holders, are described in Section VII.
The Disclosure Statement contains projected financial information
regarding the Debtor, the Reorganized Debtor and certain other
forward-looking statements, all of which are based on various estimates and
assumptions and will not be updated to reflect events occurring after the
date hereof. Such information and statements are subject to inherent
uncertainties and to a wide variety of significant business, economic and
competitive risks, including, among others, those described herein.
Consequently, actual events, circumstances, effects and results may vary
significantly from those included in or contemplated by such projected
financial information and such other forward-looking statements. The
projected financial information contained herein is therefore not necessarily
indicative of the future financial condition or results of operations of the
Debtor or the Reorganized Debtor, which may vary significantly from those set
forth in such projected financial information. Consequently, the projected
financial information and other forward-looking statements contained herein
should not be regarded as representations by the Debtor, the Debtor's
advisors, or any other person that the projected financial condition or
results can or will be achieved. All creditors are encouraged to read and
carefully consider the entire Disclosure Statement, including the Plan
attached as Exhibit A, prior to submitting Ballots pursuant to this
solicitation.
No person is authorized by the Debtor in connection with the Plan or the
solicitation of votes for the Plan to give any information or to make any
representation other than as contained in this Disclosure Statement and the
Exhibits attached hereto or incorporated by reference or referred to herein,
and, if given or made, such information or representation may not be relied
upon as having been authorized by the Debtor.
The delivery of this Disclosure Statement will not under any
circumstances imply that the information herein is correct as of any time
subsequent to the date hereof. Any estimates of Claims or Interests set
forth in this Disclosure Statement may vary from the final amounts of Claims
or Interests allowed by the Court.
The summaries of the Plan and other documents contained in this
Disclosure Statement are qualified in their entirety by reference to the Plan
itself, the Exhibits and all documents described therein. The information
contained in this Disclosure Statement, including the information regarding
the history, businesses and operations of the Debtor, the historical and
projected financial information of the Debtor (including the projected
results of operations of the Reorganized Debtor), and the liquidation
analysis relating to the Debtor, is included herein for
<PAGE>
purposes of soliciting acceptance of the Plan. As to contested matters,
however, such information is not to be construed as admissions or
stipulations, but rather as statements made in settlement negotiations.
All capitalized terms used in this Disclosure Statement and not
otherwise defined herein have the meanings ascribed thereto in the Plan.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
I. INTRODUCTION AND SUMMARY OF PLAN OF REORGANIZATION. . . . . . . . . . . 1
A. INTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. SUMMARY OF CLASSIFICATION CLAIMS.. . . . . . . . . . . . . . . . . 2
C. SUMMARY OF DISTRIBUTIONS UNDER THE PLAN. . . . . . . . . . . . . . 2
Administrative Claims. . . . . . . . . . . . . . . . . . . . . . . 2
Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
D. PRINCIPAL ATTRIBUTES OF THE NEW SECURITIES . . . . . . . . . . . . 5
1. New Senior Secured Notes. . . . . . . . . . . . . . . . . . . 5
a. General. . . . . . . . . . . . . . . . . . . . . . . . . 5
b. Security For The New Senior Secured Notes. . . . . . . . 6
2. New Junior Subordinated Notes . . . . . . . . . . . . . . . . 7
3. New Collateral Documents. . . . . . . . . . . . . . . . . . . 7
4. Registration Rights--New Senior Secured Notes . . . . . . . . 7
5. Registration Rights--New Common Stock . . . . . . . . . . . . 7
6. New Warrants and the New Warrant Agreement. . . . . . . . . . 7
E. SUMMARY OF THE CLAIMS PURCHASE . . . . . . . . . . . . . . . . . . 9
F. SUMMARY OF THE AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . . . . .10
G. MANAGEMENT INCENTIVE PLANS . . . . . . . . . . . . . . . . . . . .10
H. VALUATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
I. ALLOCATION OF CONSIDERATION BY HOLDERS OF SENIOR
DEBT CLAIMS OR, ALTERNATIVELY, Cramdown. . . . . . . . . . . . . .11
J. INDEMNIFICATION CLAIMS . . . . . . . . . . . . . . . . . . . . . .12
K. MODIFICATION OR REVOCATION OF THE PLAN; SEVERABILITY . . . . . . .12
II. DESCRIPTION OF THE DEBTOR AND PAST OPERATIONS . . . . . . . . . . . . .13
A. CORPORATE STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . .13
1. Branch Office Network/Operation . . . . . . . . . . . . . . .13
2. Loan and Contract Origination and Marketing . . . . . . . . .14
3. Insurance Operations. . . . . . . . . . . . . . . . . . . . .15
4. Changes in Accounting Treatment and Methodology . . . . . . .15
a. Allowance and Provision For Finance Credit Losses . . .15
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PAGE
b. Nonrefundable Dealer Reserves. . . . . . . . . . . . . .16
5. Source of Funds . . . . . . . . . . . . . . . . . . . . . . .16
6. Competition . . . . . . . . . . . . . . . . . . . . . . . . .17
7. Employees . . . . . . . . . . . . . . . . . . . . . . . . . .17
8. Government Regulation . . . . . . . . . . . . . . . . . . . .17
B. ANNOUNCEMENT OF ACCOUNTING IRREGULARITIES AND
SUBSEQUENT EVENTS. . . . . . . . . . . . . . . . . . . . . . . . .17
C. PREPETITION LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . .20
D. STABILIZATION AND PREPETITION PLAN NEGOTIATIONS. . . . . . . . . .20
E. POST-PETITION ACTIVITIES OF THE DEBTOR.. . . . . . . . . . . . . .23
III. DEBT AND EQUITY STRUCTURE OF THE DEBTOR . . . . . . . . . . . . . . . .27
A. DESCRIPTION OF DEBT STRUCTURE OF THE DEBTOR. . . . . . . . . . . .27
B. EQUITY STRUCTURE OF THE DEBTOR . . . . . . . . . . . . . . . . . .28
IV. THE REORGANIZED DEBTOR. . . . . . . . . . . . . . . . . . . . . . . . .28
A. BUSINESS OF THE REORGANIZED DEBTOR . . . . . . . . . . . . . . . .28
B. MANAGEMENT OF THE REORGANIZED DEBTOR . . . . . . . . . . . . . . .28
V. IMPLEMENTATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . .29
A. NEW SECURITIES AND NEW COLLATERAL DOCUMENTS. . . . . . . . . . . .29
B. CANCELLATION OF SECURITIES AND AGREEMENTS. . . . . . . . . . . . .29
C. MARKET AND TRADING INFORMATION . . . . . . . . . . . . . . . . . .29
1. Market Information. . . . . . . . . . . . . . . . . . . . . .29
2. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .29
D. APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS . . . . . . . .29
E. BANKRUPTCY CODE EXEMPTIONS FROM REGISTRATION REQUIREMENTS AND T
RANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . .29
1. Initial Offer and Sale of Securities. . . . . . . . . . . . .29
2. Subsequent Transfers Under Federal Securities Laws. . . . . .30
3. Subsequent Transfers Under State Law. . . . . . . . . . . . .31
F. CERTAIN TRANSACTIONS BY STOCKBROKERS . . . . . . . . . . . . . . .32
VI. CONDITIONS PRECEDENT TO THE PLAN. . . . . . . . . . . . . . . . . . . .32
A. CONDITIONS TO CONFIRMATION . . . . . . . . . . . . . . . . . . . .32
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B. CONDITIONS TO THE EFFECTIVE DATE . . . . . . . . . . . . . . . . .32
C. WAIVER OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . .32
VII. DISTRIBUTIONS UNDER THE PLAN. . . . . . . . . . . . . . . . . . . . . .33
A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
1. Distribution Date . . . . . . . . . . . . . . . . . . . . . .33
2. Distribution Record Date--Senior Debt Claims and Subordinated
Noteholder Claims . . . . . . . . . . . . . . . . . . . . . .33
3. Exchange Agent. . . . . . . . . . . . . . . . . . . . . . . .33
4. Surrender of Instruments and Receipt of Distributions-Senior
Debt Claims and Subordinated Noteholder Claims. . . . . . . .33
5. Distribution Record Date--Old Common Stock. . . . . . . . . .33
6. Accrual of Interest . . . . . . . . . . . . . . . . . . . . .33
7. Unclaimed Distributions . . . . . . . . . . . . . . . . . . .34
8. Tax Provisions. . . . . . . . . . . . . . . . . . . . . . . .34
9. Setoffs . . . . . . . . . . . . . . . . . . . . . . . . .34
B. PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT
AND UNLIQUIDATED CLAIMS AND ADMINISTRATIVE
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
1. Characterization of Disputed Claims . . . . . . . . . . . . .34
2. Resolution of Contested Claims and Interests. . . . . . . . .34
VIII. ACCEPTANCE OR REJECTION OF THE PLAN. . . . . . . . . . . . . . . .35
A. PRESUMED ACCEPTANCE OF PLAN. . . . . . . . . . . . . . . . . . . .35
B. DEEMED NON-ACCEPTANCE OF PLAN. . . . . . . . . . . . . . . . . . .35
C. VOTING CLASSES . . . . . . . . . . . . . . . . . . . . . . . . . .35
D. ACCEPTANCE BY IMPAIRED CLASSES . . . . . . . . . . . . . . . . . .35
E. NON-CONSENSUAL CONFIRMATION. . . . . . . . . . . . . . . . . . . .35
IX. EFFECTS OF PLAN CONFIRMATION. . . . . . . . . . . . . . . . . . . . . .35
A. DISCHARGE AND RELEASE. . . . . . . . . . . . . . . . . . . . . . .35
B. LIMITED RELEASE BY THE DEBTOR OF DIRECTORS, OFFICERS
AND EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . .36
C. TERM OF INJUNCTIONS OR STAYS . . . . . . . . . . . . . . . . . . .36
D. EXCULPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
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E. REVESTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
F. RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS. . . . . . . .37
G. POST-CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR
INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
X. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . .37
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED
LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS
OR UNEXPIRED LEASES. . . . . . . . . . . . . . . . . . . . . . . .38
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
A. RETENTION OF JURISDICTION. . . . . . . . . . . . . . . . . . . . .38
B. FAILURE OF COURT TO EXERCISE JURISDICTION. . . . . . . . . . . . .38
C. RETIREE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . .38
D. MODIFICATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . .40
E. WITHDRAWAL OF PLAN . . . . . . . . . . . . . . . . . . . . . . . .40
XII. HISTORICAL FINANCIAL STATEMENTS OF THE DEBTOR AND
FINANCIAL PROJECTIONS OF THE REORGANIZED DEBTOR . . . . . . . . . . . .40
XIII.SUMMARY OF CERTAIN RISK FACTORS RELATING TO THE PLAN . . . . . . . . .40
1. Risks Relating to the Projections. . . . . . . . . . . . . . . . .40
2. Assumptions Regarding Value of Debtor's Assets . . . . . . . . . .41
3. Noncomparability of Historical Financial Information . . . . . . .41
4. Certain Risks Associated with the Reorganization Case. . . . . . .41
5. Capital Requirements . . . . . . . . . . . . . . . . . . . . . . .41
6. Certain Risks Associated With the Warrants . . . . . . . . . . . .41
7. Lack of Trading Market; Volatility . . . . . . . . . . . . . . . .42
a. The New Securities. . . . . . . . . . . . . . . . . . . . . .42
8. Restricted Resale of Securities Distributed Under the Plan . . . .42
9. Dividend Restrictions. . . . . . . . . . . . . . . . . . . . . . .42
10. Certain U.S. Federal Income Tax Considerations . . . . . . . . . .42
11. Certain Risks of Non-Confirmation. . . . . . . . . . . . . . . . .42
12. Disruption of Operations Relating to Bankruptcy Filing . . . . . .43
13. Business and Competition . . . . . . . . . . . . . . . . . . . . .43
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XIV. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . .43
XV. VOTING AND CONFIRMATION OF THE PLAN . . . . . . . . . . . . . . . . . .52
A. CLASSIFICATION OF CLAIMS AND INTERESTS UNDER THE
BANKRUPTCY CODE. . . . . . . . . . . . . . . . . . . . . . . . . .52
B. IMPAIRMENT OF CLAIMS AND INTERESTS: IMPAIRED CLASSES . . . . . . .53
C. SOLICITATION OF IMPAIRED CLASSES AND VOTING REQUIREMENTS . . . . .54
D. POSSIBLE POST-SOLICITATION, PRE-CONFIRMATION EVENTS. . . . . . . .55
E. CONFIRMATION PROCEDURES AND REQUIREMENTS . . . . . . . . . . . . .55
1. Confirmation Where Sufficient Acceptances Are Obtained. . . .55
2. Chapter 7 Liquidation Analysis and "Best Interest of Creditors"
Test . . . . . . . . . . . . . . . . . . . . . . . . . .55
3. Feasibility Test. . . . . . . . . . . . . . . . . . . . . . .56
4. "Cram Down"--Fair and Equitable Test; Unfair Discrimination .56
F. BAR DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
G. LETTERS OF TRANSMITTAL AND BOOK-ENTRY
CONFIRMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .58
XVI. ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .61
XVII.RECOMMENDATION AND CONCLUSION . . . . . . . . . . . . . . . . . . . . .62
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<TABLE>
<CAPTION>
TABLE OF EXHIBITS
<S> <C>
Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
New Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . Exhibit B
New Senior Secured Notes Indenture . . . . . . . . . . . . . . . . . Exhibit C
New Collateral Documents . . . . . . . . . . . . . . . . . . . . . . Exhibit D
Includes Company Security Agreement,
Company Pledge Agreement,
Subsidiaries Guaranty Agreement, and
Subsidiaries Security Agreement
New Junior Subordinated Note . . . . . . . . . . . . . . . . . . . . Exhibit E
New Junior Subordinated Note Indenture . . . . . . . . . . . . . . . Exhibit F
Registration Rights Agreement. . . . . . . . . . . . . . . . . . . . Exhibit G
New Warrant Agreement. . . . . . . . . . . . . . . . . . . . . . . . Exhibit H
Amended and Restated Certificate of Incorporation and Bylaws . . . . Exhibit I
List of Directors of Reorganized Debtor. . . . . . . . . . . . . . . Exhibit J
Fairness Opinion of Salomon Smith Barney . . . . . . . . . . . . . . Exhibit K
Consent Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit L
Projected Financial Information. . . . . . . . . . . . . . . . . . . Exhibit M
Historical Financial Statements. . . . . . . . . . . . . . . . . . . Exhibit N
Liquidation Analysis . . . . . . . . . . . . . . . . . . . . . . . . Exhibit O
Financial Analysis by Certain Claimants. . . . . . . . . . . . . . . Exhibit P
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . Exhibit Q
Indemnification Agreements . . . . . . . . . . . . . . . . . . . . . Exhibit R
Operating Report . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit S
</TABLE>
<PAGE>
I.
INTRODUCTION AND SUMMARY OF PLAN OF REORGANIZATION
A. INTRODUCTION.
This Disclosure Statement relates to the Plan for the Debtor. THE
DEBTOR'S NONDEBTOR SUBSIDIARIES HAVE NOT COMMENCED REORGANIZATION CASES AND
ARE NOT IN BANKRUPTCY. BECAUSE THE NONDEBTOR SUBSIDIARIES HAVE NOT COMMENCED
REORGANIZATION CASES, THE SECURITIES CLAIMANTS' COMMITTEE WILL OPPOSE
CONFIRMATION OF THE PLAN. IT IS THE DEBTOR'S OPINION THAT THE FILING OF
REORGANIZATION CASES FOR THE NONDEBTOR SUBSIDIARIES WOULD MATERIALLY AFFECT
THE BUSINESS OPERATIONS. CREDITORS OF THE DEBTOR'S NONDEBTOR SUBSIDIARIES
ARE NOT AFFECTED BY THE DEBTOR'S REORGANIZATION CASE.
The overall purpose of the Plan is to provide for the restructuring of
the Debtor's liabilities in a manner designed to maximize recoveries to all
stakeholders and to enhance the financial viability of the Reorganized
Debtor. In general, the Plan provides for, among other things, (a) issuance
and distribution of Excess Cash, New Senior Secured Notes and New Common
Stock to the holders of Allowed Senior Debt Claims, and, (b) consistent with
the Debtor's valuation, upon which the Plan is based, the voluntary
allocation of value, otherwise distributable to holders of Senior Debt
Claims, to holders of other Claims and Interests in the form of: (i) the
issuance and distribution of New Junior Subordinated Notes to the Debtor's
Subordinated Noteholders; (ii) the issuance and distribution of New Warrants
to holders of Equity Interests, Securities Fraud Claims and Dividend Claims;
and (iii) the funding of the Settlement Contribution and Indemnification
Fund. The Plan also provides for the right of any Person to participate in a
Claims Purchase.
The Debtor intends to continue operating its businesses in the
Reorganization Case in the ordinary course and to pay its employees, trade
and other ordinary course creditors in full and on time. The claims of the
Debtor's employees (other than Indemnification Claims), holders of Trade
Claims, Benefits Claims and Unsecured Claims are not impaired under the Plan.
Therefore, as such claims are not impaired, the votes of the holders of such
claims shall not be solicited with respect to the Plan.
The Bankruptcy Code provides that only holders who vote on the Plan will
be counted for purposes of determining whether the requisite acceptances of
the classes of Claims and Interests have been received. Failure by a holder
of a Claim or Interest to deliver a duly completed and signed Ballot by the
Expiration Date will constitute an abstention by such holder with respect to
a vote on the Plan. Abstentions will not be counted as votes to accept or
reject the Plan and, therefore, will have no effect on the voting with
respect to the Plan. The requirements for confirmation of the Plan,
including the vote of creditors and equity security holders to accept the
Plan and certain of the statutory findings that must be made by the Court,
are described below under the caption "Voting and Confirmation of the Plan."
The Debtor has been advised that it is the position of the Securities
Claimants' Committee and the Equity Holders' Committee that the Plan is not
confirmable on its face and that there is a likelihood that both committees
may file objections to confirmation. The Debtor disagrees and is proceeding
to seek confirmation of the Plan.
If the Debtor does not receive the requisite acceptances by the
Expiration Date or if the Court declines to confirm the Plan, the Debtor will
evaluate other available options.
Confirmation of the Plan and the occurrence of the Effective Date are
subject to a number of material conditions precedent, which are summarized in
Section VI. There can be no assurance that these conditions will be
satisfied or waived.
THE DEBTOR BELIEVES THAT THE PLAN IS IN THE BEST INTERESTS OF ALL
CREDITORS AND EQUITY SECURITY HOLDERS. ALL HOLDERS OF CLASSES 4, 5 AND 6
CLAIMS ENTITLED TO VOTE IN CONNECTION WITH THIS SOLICITATION ARE URGED TO
VOTE IN FAVOR OF THE PLAN NOT LATER THAN THE VOTING DEADLINE OF 4:00 P.M.
EASTERN STANDARD TIME, DECEMBER 7, 1998.
The following is an overview of certain material provisions of the Plan.
The following summaries of the material provisions of the Plan do not purport
to be complete and are qualified in their entirety by reference to all the
provisions of the Plan, including all exhibits and documents described
therein and the definitions therein of certain
terms used below. WHEREVER DEFINED TERMS OF THE PLAN NOT OTHERWISE DEFINED
IN THIS DISCLOSURE STATEMENT ARE USED, SUCH DEFINED TERMS SHALL HAVE THE
MEANINGS ASCRIBED THERETO IN THE PLAN.
B. SUMMARY OF CLASSIFICATION CLAIMS.
<TABLE>
<CAPTION>
CLASS DESCRIPTION STATUS
<S> <C> <C>
Class 1 Priority Claims Unimpaired; deemed to have accepted the
Plan
Class 2 Secured Claims Unimpaired; deemed to have accepted the
Plan
Class 3 Trade Claims, Consumer Unimpaired; deemed to have accepted the
Litigation Claims, Plan
Benefits Claims and
Unsecured Claims
Class 4 Senior Debt Claims Impaired; entitled to vote
Class 5 Subordinated Noteholder Impaired; entitled to vote
Claims
Class 6 Indemnification Claims Impaired; entitled to vote
Class 7A Equity Interests Impaired; deemed to have rejected the
Plan
Class 7B Securities Fraud Claims Impaired; deemed to have rejected the
Plan
Class 7C Dividend Claims Impaired; deemed to have rejected the
Plan
Class 8 Old Options Impaired; deemed to have rejected the
Plan
</TABLE>
C. SUMMARY OF DISTRIBUTIONS UNDER THE PLAN.
In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Tax Claims, as described below, have not been
classified.
ADMINISTRATIVE CLAIMS. Unless otherwise agreed to by the parties, each
holder of an Allowed Administrative Claim shall receive Cash equal to the
unpaid portion of such Allowed Administrative Claim on the later of (a) the
Effective Date and (b) the date on which such Claim becomes an Allowed
Administrative Claim; provided, however, that the Administrative Claims that
represent liabilities incurred by the Debtor in the ordinary course of its
business during the Reorganization Case shall be paid in the ordinary course
of business and in accordance with any terms and conditions of any agreements
relating thereto. Other than ordinary course of business expenses, including
the fees of William A. Brandt, Jr. and Development Specialists, Inc., the
Debtor's interim management, the Debtor believes that Administrative Claims
consist of professional fees for the Debtor and the various committees
appointed in the Reorganization Case. Such fees are difficult to estimate
and will vary depending on the length of the Reorganization Case and the
litigation, or lack thereof, of the parties involved. The Debtor has
budgeted approximately $5.1 million.
TAX CLAIMS. Unless otherwise agreed to by the parties, each holder of a
Tax Claim will receive cash equal to the unpaid portion of such Tax Claim on
or as soon as practical after the later of (i) the Effective Date, and (ii)
the date on which such Claim becomes an Allowed Claim; provided, however,
that at the option of the Reorganized Debtor, the Reorganized Debtor may pay
Tax Claims over a period not exceeding six (6) years after the date of
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assessment of the Tax Claims as provided in subsection 1129(a)(9)(C) of the
Bankruptcy Code. If the Reorganized Debtor elects this option as to any Tax
Claim, then the payment of such Tax Claim shall be made in equal semiannual
installments with the first installment due on the latest of: (i) the
Effective Date, (ii) 30 calendar days after the date on which an order
allowing such Tax Claim becomes a Final Order, and (iii) such other time as
may be agreed to by the holder of such Tax Claim and the Reorganized Debtor.
Each installment shall include simple interest on the unpaid portion of such
Tax Claim, without penalty of any kind, at the statutory rate. The
Reorganized Debtor reserves the right to pay any Tax Claim, or any remaining
balance of such Tax Claim in full at any time on or after the Effective Date,
without premium or penalty. The Debtor is not aware of any Tax Claims and
instead expects a refund, subject to filing amended tax returns, audit of
such returns and potential litigation relating thereto. Schedule E of the
Debtor's Schedules lists a disputed and unliquidated claim that arose from a
Department of Labor investigation relating to wage disputes. The Debtor does
not believe it has any liability as such claim arises from activities of a
Nondebtor Subsidiary.
The following is a brief summary of each class of Claims and Interests
under the Plan and of the distributions to be made under the Plan to holders
of Claims and Interests.
CLASS 1 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF PRIORITY CLAIMS.
Under the Plan, Class 1 consists of all Priority Claims not otherwise
treated as unclassified. Unless otherwise agreed to by the parties, each
holder of an Allowed Claim in Class 1 will be paid the allowed amount of such
Claim in full in Cash on the later of (a) the Effective Date, or (b) the date
such Claim becomes an Allowed Claim. Pursuant to an order dated July 17,
1998, the Court authorized payment of certain debts, which qualified as
Priority Claims, to be paid in the ordinary course of business. The Debtor
therefore believes that there will no Allowed Priority Claims.
CLASS 2 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF SECURED CLAIMS.
Under the Plan, Class 2 consists of all holders of Secured Claims. Each
Class 2 Claimant shall retain, unaltered, the legal, equitable and
contractual right, including, without limitation, any liens that secure such
Allowed Claims, to which such Allowed Claim entitles Claimant; provided
however, that each Claimant holding an Allowed Claim may only exercise such
rights and remedies with respect to the assets and property that secure such
Allowed Claim, without recourse of any kind against the Debtor. Any Allowed
Claim based on any deficiency claim by a Class 2 Claimant shall become, and
shall be treated for purposes under the Plan as an Allowed Trade Claim and
shall be classified as a Class 3 Claim. The Debtor is aware of only one
Secured Claim which is held by NationsBank, N.A. NationsBank, N.A.'s claim
arises from a check clearing agreement with the Debtor under which
NationsBank, N.A. honors payment of nondepository checks payable to the
Debtor's customers and dealers. In connection with the agreement, the Debtor
has pledged $130,000 in the form of two certificates of deposits. In the
ordinary course, there is no outstanding balance owed to NationsBank, N.A.
CLASS 3 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF TRADE CLAIMS, CONSUMER
LITIGATION CLAIMS, BENEFITS CLAIMS AND UNSECURED CLAIMS.
Under the Plan, Class 3 consists of all holders of Trade Claims,
Consumer Litigation Claims, Benefits Claims and Unsecured Claims. Allowed
Claims in Class 3 will not be affected by the Reorganization Case. Holders
of Allowed Claims in Class 3 shall be entitled to payment of the full amount
of their Allowed Claims in complete settlement, satisfaction and discharge of
their Class 3 Claims. The Trade Claims, Benefits Claims, Claims arising from
rejection of executory contracts and unexpired leases, Consumer Litigation
Claims and Other Unsecured Claims are unliquidated, contingent and subject to
dispute and, therefore, the Debtor cannot estimate the value of such Claims
as of the Petition Date. There are approximately fifty (50) holders of Class
3 Claims. Due to the nature of these claims, the Debtor is unable to state
with certainty the aggregate amount of these Claims. There are no Trade
Claims in the usual sense of the term trade claim. There are two Claims
aggregating approximately $10,000 asserted by two banks for fees associated
with a prepetition line of credit. In February 1997, a consortium of banks,
including the banks referenced above, terminated the Debtor's use of the line
of credit after learning of the accounting irregularities. The Debtor
disputes any amounts are owed the banks. Also included in Class 3 is the
Claim of Progressive Insurance Company for approximately $7,000,000. This
Claim represents a reserve on the Debtor's books for premiums for
forced-placed insurance. Under the contract with Progressive, the reserve
amount
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varies from month to month and would only be due upon termination of the
contract. The Debtor intends to assume the contract with Progressive. In
addition, the officers and directors of the Debtor hold Class 3 Claims
aggregating $342,000 for accrued but unpaid director and board meeting fees.
Class 3 Claims also include thirty-three (33) Consumer Litigation Claims
arising from lawsuits in which the Debtor is a defendant. In most, if not
all, of these lawsuits, the plaintiffs have also sued a Nondebtor Subsidiary.
The Nondebtor Subsidiaries are defending these lawsuits. There are also the
Claims of two former employees alleging EEOC violations within Class 3.
These Claims are currently pending before an administrative agency of the
U.S. government. Again, the Debtor disputes any amounts are due. Finally,
Class 3 Claims include the Claim, if any, of KPMG Peat Marwick. KPMG was the
Debtor's accountants during the period of the accounting irregularities. To
the extent any Claim is asserted by KPMG, the Debtor intends to dispute it.
Pursuant to the Order authorizing the Debtor to continue to utilize its
cash management and intercompany system entered on July 17, 1998, there are
no Claims of Nondebtor Subsidiaries. Also, pursuant to the Order authorizing
the payment of prepetition employee Benefit Claims, there are no Benefit
Claims. To the extent the Debtor rejects any of its executory contracts or
unexpired leases, the Claims associated with such rejections would be treated
as Class 3 Claims.
CLASS 4 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF SENIOR DEBT CLAIMS.
Under the Plan, Class 4 consists of all holders of Senior Debt Claims.
Each holder of an Allowed Claim in Class 4 will receive: (i) its pro rata
share of Excess Cash, (ii) New Senior Secured Notes in an amount of 75% of
the amount of the Net Senior Debt Claims; (iii) its pro rata share of 100% of
the New Common Stock. In addition, the acceptance of the Plan by Class 4
will constitute the authorization and direction by each holder of a Senior
Debt Claim to the Exchange Agent to pay its pro rata share of 13 million
dollars ($13,000,000) from the distribution of Excess Cash to the Settlement
Contribution and Indemnification Fund. The Debtor estimates that Senior Debt
Claims total approximately $678,000,000 as of the Petition Date and that
Excess Cash will total approximately $95,000,000, as outlined in the
financial projections attached as Exhibit M to the Disclosure Statement.
CLASS 5 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF SUBORDINATED NOTEHOLDER
CLAIMS.
Under the Plan, Class 5 consists of all Subordinated Noteholder Claims.
Each holder of an Allowed Claim in Class 5 will receive its pro rata share of
the New Junior Subordinated Notes. The Debtor estimates that Subordinated
Noteholder Claims, including principal and accrued interest, total
approximately $24,574,000 as of the Petition Date.
CLASS 6 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF INDEMNIFICATION CLAIMS.
Under the Plan, Class 6 consists of all holders of Indemnification
Claims. Each holder of an Allowed Claim in Class 6 will (i) retain its rights
and claims against the Reliance Policies and the proceeds therefrom, and (ii)
receive from the Debtor a release of any and all rights and Claims the Debtor
may have against, and cooperation in aiding Class 6 Claimants in obtaining
the right to, the Reliance Policies and the proceeds therefrom. In addition,
each holder of an Allowed Claim that is a Beneficiary shall also receive (a)
the Limited Release contained in Section 11.03 of the Plan; and (b) their
rights to and claims against the Settlement Contribution and Indemnification
Fund. The Indemnification Claims are unliquidated, contingent, subject to
dispute and subordination and, therefore, the Debtor cannot estimate the
value of such Claims as of the Petition Date. There are currently over 40
lawsuits pending against the holders of Indemnification Claims which demand
in excess of two billion dollars ($2,000,000,000) in damages.
CLASS 7A - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF EQUITY INTERESTS.
Under the Plan, Class 7A consists of all holders of Equity Interests.
Each holder of an Equity Interest will receive its pro rata distribution of
New Warrants from the New Warrant Escrow, subject to the terms and conditions
of the New Warrant Agreement. On the Effective Date, the New Warrants shall
be placed in escrow as further set forth in Section I.D. The Equity Holders'
Committee and Securities Claimants' Committee shall each choose one trustee.
The two trustees shall direct the New Warrant Escrow Agent and adopt and
implement procedures for the
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liquidation and allowance of Claims and Equity Interests and allocation and
distribution of the New Warrants among holders of Claims and Equity Interests
in Classes 7A, 7B and 7C. To the extent that the trustees cannot agree on a
distribution scheme with which to instruct the New Warrant Escrow Agent, then
either or both of such trustees may seek the instructions of the Court after
the Effective Date on such distribution scheme after notice and a hearing.
The Debtor currently has 172,497,714 outstanding shares of Old Common Stock.
CLASS 7B - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF SECURITIES FRAUD CLAIMS.
Under the Plan, Class 7B consists of all holders of Securities Fraud
Claims. Each holder of a Claim in Class 7B will receive its pro rata
distribution of the New Warrants from the New Warrant Escrow, subject to the
terms and conditions of the New Warrant Agreement as fully set forth in
Section I.D. The Equity Holders' Committee and the Securities Claimants'
Committee shall each choose one trustee. The two trustees shall direct the
New Warrant Escrow Agent and adopt and implement procedures for the
liquidation and allowance of Claims and Equity Interests and allocation and
distribution of the New Warrants among holders of Claims and Equity Interests
in Classes 7A, 7B and 7C. To the extent that the trustees cannot agree on a
distribution scheme with which to instruct the New Warrant Escrow Agent, then
either or both of such trustees may seek the instructions of the Court after
the Effective Date on such distribution scheme after notice and a hearing.
The Securities Fraud Claims are unliquidated, contingent, and subject to
dispute and, therefore, the Debtor cannot estimate the value of such Claims
as of the Petition Date. There are currently over 40 lawsuits pending
against the Debtor which demand in excess of two billion dollars
($2,000,000,000) in damages in the aggregate.
CLASS 7C - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF DIVIDEND CLAIMS.
Under the Plan, Class 7C consists of all holders of Dividend Claims.
Each holder of a Claim in Class 7C will receive its pro rata distribution of
the New Warrants from the New Warrant Escrow, subject to the terms and
conditions of the New Warrant Agreement as fully set forth in Section I.D.
The Equity Holders' Committee and the Securities Claimants' Committee shall
each choose one trustee. The two trustees shall direct the New Warrant Escrow
Agent and adopt and implement procedures for the purpose of liquidation and
allowance of Claims and Equity Interests and allocation and distribution of
the New Warrants among the holders of Claims and Equity Interests in Classes
7A, 7B and 7C. To the extent the trustees cannot agree on a distribution
scheme with which to instruct the New Warrant Escrow Agent, either or both of
such trustees may seek the instruction of the Court after the Effective Date
on such distribution scheme after notice and a hearing. The Dividend Claims
total approximately $11,000,000.
CLASS 8 - SUMMARY OF DISTRIBUTIONS TO HOLDERS OF OLD OPTIONS.
Under the Plan, Class 8 consists of all holders of Old Options. Holders
of Old Options shall receive no distribution under the Plan. On the
Effective Date, all of the Old Options shall be cancelled and extinguished
pursuant to the Plan.
D. PRINCIPAL ATTRIBUTES OF THE NEW SECURITIES.
As previously described, the Plan provides for a capital structure of
the Reorganized Debtor comprised of New Senior Secured Notes, New Junior
Subordinated Notes, New Common Stock and New Warrants. The principal
features of the New Securities are summarized below.
1. NEW SENIOR SECURED NOTES.
a. GENERAL.
The New Senior Secured Notes will be issued to holders of Class 4
Claims in an amount of 75% of the Allowed Senior Debt Claims, after giving
effect to the payment of Excess Cash to the Senior Debt Claims. A copy of
the New Senior Secured Note is attached to the Disclosure Statement as
Exhibit B. The New Senior Secured Notes will be issued under the New Senior
Secured Note Indenture between the Reorganized Debtor and a trustee to be
selected by the Reorganized Debtor. A copy of the New Senior Secured Note
Indenture is attached to the Disclosure Statement as Exhibit C. The New
Senior Secured Note Indenture shall meet the requirements of the
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Trust Indenture Act of 1939, as amended, but the New Senior Secured Notes
need not be registered securities. The New Senior Secured Notes will be
secured senior obligations of the Reorganized Debtor.
There is approximately $678,000,000 of Senior Debt Claims (commercial
paper and senior notes) including accrued interest as of the Petition Date.
Under the Plan, the holders of Senior Debt Claims have waived certain claims
to, INTER ALIA, additional interest payments or fees and make-whole payments
against the Debtor for enforcement and collection, but such holders have
reserved the right to include the amounts of such claims in connection with
calculation of their claims for purposes of allocation and distribution by
and between the holders of Class 4 Claims. The limited reservation does not
impact the Debtor or effect any distribution to other Classes.
Under the Plan, the holders of Senior Debt Claims will receive (i) a
payment of their pro rata share of the Excess Cash accumulated throughout the
case ($13 million of which shall be paid into the Settlement Contribution and
Indemnification Fund); (ii) New Senior Secured Notes in the amount of 75% of
the Net Senior Debt Claims; and (iii) one hundred percent of the New Common
Stock of the Reorganized Debtor.
The New Senior Secured Notes will mature three years after the Effective
Date of the Plan and be issued in two series. Holders of the Senior Debt
Claims will have the option to receive a combination of Series A or Series B
Secured Notes. The New Senior Secured Notes Series A will have a 9 percent
annual fixed rate of interest payable quarterly. The New Senior Secured
Notes Series B will have a floating rate of interest based on 3 month LIBOR
and will be payable quarterly. The initial rate on the New Senior Secured
Notes Series B will equal 3 month LIBOR as of the Effective Date plus the
spread over 3 month LIBOR which will equate to 9 percent less the cost of a
three year interest rate cap agreement which will be entered into by the
Reorganized Debtor. By deducting the cost of the interest rate cap from the
initial interest rate spread, the Reorganized Debtor will insure that the
highest all in rate it will pay on the New Senior Secured Notes Series B will
be 9 percent. For example, 3 month LIBOR is currently approximately 5.3
percent which would result in a rate of LIBOR + 370 basis points to equate to
9 percent. If the three year interest rate cap costs 30 basis points
depending on the size of the Series B issue, then the rate on the Series B
Notes would be LIBOR + 340 basis points for the life of the Series B Notes
with the 9 percent maximum rate insured by the interest rate cap. Depending
on the interest rate environment during the life of these notes it is
possible that the Reorganized Debtor will be incurring a lower cost on these
notes if rates go down. A series of floating rate notes will allow the
Reorganized Debtor to benefit in a lower interest rate environment, increase
the market for the New Senior Secured Notes, and not provide any additional
cost to the Reorganized Debtor in excess of the 9 percent fixed rate.
In the event the New Senior Secured Notes are not paid when due, the
holders thereof will be entitled to exercise their rights and remedies
pursuant to the New Senior Secured Note Indenture, the New Collateral
Documents, and applicable law.
b. SECURITY FOR THE NEW SENIOR SECURED NOTES.
In order to recapitalize the Debtor and permit it to return to the
marketplace, the holders of Senior Debt Claims have agreed to a distribution
of seventy five percent (75%) of their Net Senior Debt Claims in the form of
New Senior Secured Notes and a pro rata share of New Common Stock. As a
result of arms length negotiations and recognizing the holders of Senior Debt
Claim's risk of converting their debt and voluntarily allocating value to
other constituents, the Debtor has agreed to provide security for the
instruments in order to assure payment of the New Senior Secured Notes, and,
therefore, the New Senior Secured Notes shall be secured on a first priority
basis pursuant to the New Collateral Documents. The Securities Claimants'
Committee does not agree with the Debtor's factual statement regarding the
negotiations of the New Collateral Documents. Copies of the New Collateral
Documents, which include the Company Security Agreement, Company Pledge
Agreement, Subsidiaries Guaranty Agreement and Subsidiaries Security
Agreement are attached to the Disclosure Statement as Group Exhibit O.
On October 2, 1998, the Securities Claimants' Committee filed a
complaint against certain current and former holders of Senior Debt Claims,
and the Debtor's board of directors, in which, INTER ALIA, it challenges the
validity and priority of the defendant's claims. The Debtor does not believe
the plaintiff has meritorious claims against the defendants.
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2. NEW JUNIOR SUBORDINATED NOTES.
The New Junior Subordinated Notes in the amount of $22.5 million shall
be issued to holders of Class 5 Claims. A copy of the New Junior
Subordinated Note is attached to the Disclosure Statement as Exhibit E. The
New Junior Subordinated Notes will be issued under the New Junior
Subordinated Note Indenture. The New Junior Subordinated Note Indenture
shall meet the requirements of the Trust Indenture Act of 1939. A copy of
the New Junior Subordinated Note Indenture is attached to the Disclosure
Statement as Exhibit F. The New Junior Subordinated Notes will bear
interest, payable quarterly, at the rate per annum of 9% until maturity.
Payment of interest is subject to the subordination provisions set forth in
the New Junior Subordinated Note Indenture. The New Junior Subordinated
Notes are unsecured. The New Junior Subordinated Notes will mature on the
fifth anniversary of the Effective Date. The New Junior Subordinated Notes
shall be paid through a combination of cash flow from business operations,
refinancing of indebtedness and other sources of cash available to the
Reorganized Debtor. In the event that the New Junior Subordinated Notes are
not paid when due, the holders thereof will be entitled to exercise their
rights and remedies pursuant to the New Junior Subordinated Note Indenture
and applicable law.
3. NEW COLLATERAL DOCUMENTS.
The New Senior Secured Notes shall have a first lien on the assets of
the Reorganized Debtor and will be guaranteed by the Nondebtor Subsidiaries
under the New Collateral Documents. The Nondebtor Subsidiaries will secure
their guarantees through a pledge of their assets. The New Junior
Subordinated Notes will be unsecured.
4. REGISTRATION RIGHTS--NEW SENIOR SECURED NOTES.
The Debtor shall use its reasonable best efforts to register the New
Senior Secured Notes pursuant to the Registration Rights Agreement attached
as Exhibit G to the Disclosure Statement.
5. REGISTRATION RIGHTS--NEW COMMON STOCK.
The Debtor shall use its reasonable best efforts to register the New
Common Stock pursuant to the Registration Rights Agreement attached as
Exhibit G to the Disclosure Statement.
6. NEW WARRANTS AND THE NEW WARRANT AGREEMENT.
New Warrants will be issued to holders of Claims and Interests in
Classes 7A, 7B and 7C. The New Warrants will be issued under the New Warrant
Agreement. A copy of the New Warrant Agreement is attached to the Disclosure
Statement as Exhibit H.
Three series of Warrants (the "Series A Warrants", the "Series B
Warrants" and "Series C Warrants" and collectively, the "New Warrants") will
be issued to holders of Equity Interests and Securities Fraud Claims,
pursuant to a Warrant Agreement (the "New Warrant Agreement") between the
Debtor and the Warrant Agent (as defined below). Each series of New Warrants
shall have identical terms except that each series will have a different
exercise price and Warrant Exercise Period (as defined below). The following
summary of the New Warrants does not purport to be complete and is qualified
in its entirety by reference to the New Warrant Agreement.
The three series of warrants will each represent the right to purchase
an aggregate of 500,000 shares of the New Common Stock, which are subject to
dilution. As a result of arms length negotiations between the Debtor and the
holders of Senior Debt Claims, which the Securities Claimants' Committee
disputes, the following exercise prices have been established and, in part,
reflect one component of the total value distributable to holders of Claims
in Class 4. The exercise price of the Series A Warrants will be established
at a price which translates into the value of the New Common Stock which,
when added to the face value of the New Senior Secured Notes, results in the
holders of the Senior Debt Claims realizing 100% on such claims. The
exercise price of the Series B Warrants will likewise be set at the price at
which Senior Debt Claims would receive 110%, and the exercise price of the
Series C Warrants will likewise be set at the price where Senior Debt Claims
would receive 120%. The respective exercise prices of the different series
of Warrants will be set on the Effective Date and will fluctuate based upon
the amount of Excess Cash that the holders of Senior Debt Claims receive on
such date, and upon other variables. To the extent
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that on the Effective Date the following assumptions are true: (i) 10,000,000
shares of New Common Stock representing 100% of the New Common Stock as of
the Effective Date are issued to holders of Senior Debt Claims, (ii) Excess
Cash accumulated during the Reorganization Case is in accordance with the
projections attached as Exhibit M, and (iii) the Senior Debt Claims do not
include any additional claims other than debt evidenced by Senior Note
Agreements, commercial paper and other short-term notes, then each Series A
Warrant will have an exercise price of $14.78 per share (which implies a 100%
recovery on the Senior Debt Claims), each Series B Warrant will have an
exercise price of $21.81 per share (which implies a 110% recovery on the
Senior Debt Claims), and each Series C Warrant will have an exercise price of
$28.84 per share (which implies a 120% recovery on the Senior Debt Claims).
The actual strike prices of the New Warrants will be set on the Effective
Date, however, based upon the variables as they actually exist on such date.
The exercise period for each series of the New Warrants shall begin at 9:00
a.m., central standard time, on the Effective Date, and shall expire at 5:00
p.m., central standard time, on the date which is three, four and five years
from the Effective Date for the Series A Warrants, the Series B Warrants and
the Series C Warrants, respectively (the "Warrant Exercise Period"). Each
New Warrant not exercised prior to the expiration of the applicable Warrant
Exercise Period will become void, and all rights thereunder will terminate.
Pursuant to the Plan, the Debtor has agreed to use its reasonable best
efforts to have each series of the Warrants listed for trading on the Nasdaq
National Market. Listing criteria of the Nasdaq National Market will not be
satisfied and it is unlikely that such listing will initially be authorized.
In addition, the New Warrant Agreement requires the Reorganized Debtor to use
commercially reasonable efforts to quote and to maintain the quotation of
each series of the New Warrants on the Nasdaq National Market, and requires
the Reorganized Debtor to use such efforts to cause each series of the New
Warrants to be quoted on alternative exchanges or to include them in
alternative quotation systems if quotation on the Nasdaq National Market is
not (or is no longer) available.
The number and kind of securities purchasable upon the exercise of the
New Warrants and the exercise price therefor will be subject to adjustment
upon the occurrence of certain events as set forth in the New Warrant
Agreement, including, without limitation, the issuance of capital stock as a
dividend or distribution on the New Common Stock; subdivisions,
reclassifications and combinations of the New Common Stock; the distribution
to holders of New Common Stock of indebtedness or assets of the Reorganized
Debtor or any entity controlled by the Reorganized Debtor (excluding cash
dividends or cash distributions from consolidated earnings or surplus legally
available for such dividends or distributions) or shares of capital stock of
any entity controlled by the Reorganized Debtor; the issuance of shares of
New Common Stock, or other securities convertible into or exchangeable or
exercisable for shares of New Common Stock, for a consideration that is less
than the then-current market price of the New Common Stock. Although the
Plan provides for issuance of three series of New Warrants, each in the
amount of 5% of the Reorganized Debtor on the Effective Date, the New
Warrants are subject to dilution, along with the New Common Stock. For
instance, the issuance of options under the Management Incentive Plan
described in Section I. G. may dilute the New Warrants. Accordingly, on the
Effective Date, if fully exercised, the New Warrants will represent 15% of
the Reorganized Debtor. The New Warrants can be reduced to 6% of the
Reorganized Debtor if all authorized shares of the Reorganized Debtor are
issued.
No adjustment in such shares or exercise price will be required in
connection with the issuance of New Common Stock, rights, warrants or other
securities pursuant to: the Plan; any plan adopted by the Reorganized Debtor
or any entity controlled by the Reorganized Debtor for the benefit of its
employees or directors; an underwritten public offering satisfying specified
criteria; a plan adopted by the Reorganized Debtor for the reinvestment of
dividends or interest; the issuance of shares of New Common Stock to
shareholders of any corporation which is acquired by, merged into or made a
part or subsidiary of, the Reorganized Debtor in an arm's-length transaction;
or, a change in the par value of the New Common Stock. In addition, no
adjustment will be required, (a) if in connection with any of the events
otherwise giving rise to an adjustment the holders of the New Warrants
receive such rights, securities or assets as such holders would have been
entitled had the New Warrants been exercised immediately prior to such event;
or (b) unless such adjustment would require at least a 1% change in the
aggregate number of shares of New Common Stock issuable upon the hypothetical
exercise of a New Warrant (but any adjustment requiring a change of less than
1% will be carried forward and taken into account in any subsequent
adjustment).
The Reorganized Debtor may at its option, at any time during the term of
the New Warrant, reduce the then current exercise price of such New Warrant to
any amount deemed appropriate by the Board of Directors of the
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Reorganized Debtor. The Reorganized Debtor and the New Warrant Agent may
from time to time supplement or amend the New Warrant Agreement without
approval of any holder to cure, among other things, any ambiguity or to
correct or supplement any provision, or to comply with the requirements of
The Nasdaq National Market or any national securities exchange, if
applicable. Any other supplement or amendment to the New Warrant Agreement
will require the approval of the holders of a majority of the outstanding
New Warrants of each series, with the series voting separately as three
classes; PROVIDED, HOWEVER, that any such amendment or supplement which (i)
increases the exercise price; (ii) decreases the number of shares of New
Common Stock issuable upon exercise of a New Warrant; or (iii) shortens the
period during which the New Warrants may be exercised, requires the consent
of the holder of the New Warrant affected thereby.
Under the New Warrant Agreement, the Reorganized Debtor is not obligated
to furnish any holders of the New Warrants with quarterly, annual or other
reports regarding the Reorganized Debtor, although it intends to do so to the
extent required by applicable law or any securities exchange on which the New
Warrants may be listed or any quotation system in which they may be included.
The Debtor expects that Harris Trust & Savings Bank will serve as
registrar and New Warrant Escrow Agent. To the Debtor's knowledge, Harris
Trust & Savings Bank is not a holder of any indebtedness of the Debtor and is
not an affiliate of any such holder. If such firm is unwilling or
unavailable to serve or if otherwise determined by the Reorganized Debtor, an
alternative firm satisfactory to the Reorganized Debtor will be selected as
New Warrant Escrow Agent.
On the Effective Date, the New Warrants shall be held in escrow. The
Securities Claimants' Committee and Equity Holders' Committee shall each
choose one trustee. Such trustees shall direct the New Warrant Escrow Agent
and adopt and implement procedures for the liquidation and allowance of
claims and interests and allocation and distribution of the New Warrants
among holders of Claims and Interests in Class 7A, 7B and 7C. The Debtor
shall deposit with the New Warrant Escrow Agent a reasonable amount necessary
for administration of the liquidation, allocation and distribution process as
allowed by the Court. The Court shall retain jurisdiction over all disputes
concerning the New Warrants.
E. SUMMARY OF THE CLAIMS PURCHASE.
Pursuant to the terms of the Consent Agreement, each of the holders of
the Senior Debt Claims which is a party to the Consent Agreement has agreed
to accept in satisfaction of its Net Senior Debt Claim an amount in cash
equal to 98.5% of its Net Senior Debt Claim (the "Claims Purchase"). The
Creditors' Committee has informed the Debtor that the signatories to the
Consent Agreements are prepared to permit any Person to effectuate the Claims
Purchase subject to the condition that any Person seeking to acquire more
than 15% of the Net Senior Debt Claims shall commit to acquire all the Net
Senior Debt Claims. Accordingly, any offer to acquire more than 15% of the
Net Senior Debt Claims shall be treated as null and void unless such Person
offers to acquire all of the Net Senior Debt Claims. To the extent that the
Claims Purchase is oversubscribed, the offers received shall be adjusted
downwards on a ratable basis.
Any Person desiring to participate in the Claims Purchase must give
written notice thereof to the Debtor prior to the Expiration Date specifying
therein the amount of Net Senior Debt Claims it desires to purchase and
providing the Debtor with reasonable evidence of its financial ability to
close the purchase. Any Claims Purchase transaction must be consummated by
the commencement of the confirmation hearing in this Reorganization Case.
All Claims Purchase shall be documented and completed in accordance with Rule
3001(e) of the Bankruptcy Rules.
The inclusion of the Claims Purchase in the Plan should not be construed
as a recommendation by the Debtor or its advisors or the Board of Directors
of the Debtor to the holders of Old Common Stock or any other Person to
participate in the Claims Purchase. Rather, the Debtor and the Board of
Directors urge any Person participating in the Claims Purchase to carefully
review the valuation information contained in the Disclosure Statement and to
consult with its own financial or investment advisor as to the advisability
of participating in the Claims Purchase before doing so.
If any Person is interested in contacting the holders of Senior Debt
Claims, the Debtor will facilitate any inquiries. Any requests for assistance
in contacting the holders of Senior Debt Claims should be directed to Heidi
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Heidlauf in writing at McDermott, Will & Emery, 227 W. Monroe Street, Chicago,
Illinois 60606 or by facsimile at (312) 984-3651.
F. SUMMARY OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND
BYLAWS.
A copy of the Amended and Restated Certificate of Incorporation and
Bylaws are attached to the Disclosure Statement as Exhibit I. The following
is a brief summary of the principal provisions of the Amended and Restated
Certificate of Incorporation and Bylaws.
The Reorganized Debtor will be authorized to issue 25 million shares of
New Common Stock. On the Effective Date, approximately 10 million shares of
New Common Stock are expected to be issued and outstanding. Each share of New
Common Stock held of record as of the record date of any meeting shall be
entitled to vote on each matter submitted to a vote of the stockholders.
The Amended and Restated Certificate of Incorporation provides that all
dividends, whether cash, property or stock, shall be shared ratably among all
holders of New Common Stock. Similarly, in the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Reorganized Debtor,
the holders of New Common Stock shall be entitled to share in all of the
remaining assets of the Reorganized Debtor of whatever kind available for
distribution to stockholders. The Amended and Restated Certificate of
Incorporation will among other things, provide (to the extent necessary to
effect the terms of the Plan) for (i) the prohibition of the issuance of
non-voting equity securities, and (ii) the authorization of 25,000,000 shares
of the New Common Stock, which allows sufficient shares to be issued if all
of the New Warrants are exercised.
The board of directors of the Reorganized Debtor will be comprised of
seven directors which shall include a newly appointed Chief Executive
Officer. Such board members are being nominated by the Creditors' Committee
(which includes the Steering Committee members). The individuals listed on
Exhibit J to the Disclosure Statement, which shall be provided prior to the
confirmation hearing, as directors of the Reorganized Debtor shall serve as
directors of the Reorganized Debtor and their elections to the board of
directors shall be deemed to have occurred and be effective on and after the
Effective Date without any requirement of further action by stockholders of
the Debtor or the Reorganized Debtor. All directors shall receive director's
fees as determined by the board of directors of the Reorganized Debtor. The
members of the board of directors of the Reorganized Debtor were chosen to
provide representation to senior management of the Reorganized Debtor, the
holders of the New Senior Secured Notes and New Common Stock.
The Amended and Restated Certificate of Incorporation and Bylaws shall be
adopted and effected in accordance with Section 109 of the Delaware General
Corporation Law.
G. MANAGEMENT INCENTIVE PLANS.
The board of directors of the Reorganized Debtor shall implement a
management incentive plan with a portion of the plan designed to grant stock
options in the Reorganized Debtor to senior management. The parameters of
such plan shall be determined by the Reorganized Debtor's board of directors
after the Effective Date.
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H. VALUATION.
The Debtor, based on management's business plan and its consultations
with its financial advisor, estimates that the treatment of the Senior Debt
Claims under Class 4 are valued at less than 100% of the claim amount. It is
the Debtor's opinion that the Debtor's Market Exploration process, which is
discussed at pages 20-23, further validates that Debtor's valuation. The
Market Exploration failed to produce an offer which would pay the Senior Debt
Claims in full in cash and/or equity. The Securities Claimants' Committee
disagrees with the position of the Debtor.
Other parties in the Reorganization Case have taken the position that
the Debtor was not insolvent, and, therefore, dispute the Debtor's estimation
of value. One such party has developed a valuation which is attached as
Exhibit P to the Disclosure Statement. The Debtor disagrees with the
analysis and conclusions contained in that exhibit.
I. ALLOCATION OF CONSIDERATION BY HOLDERS OF SENIOR DEBT CLAIMS OR,
ALTERNATIVELY, CRAMDOWN.
In connection with the evaluation of all potential restructuring, sale
and/or refinancing alternatives, the Debtor engaged Salomon Smith Barney
("Salomon") to provide financial advisory and investment banking services.
At the request of the Debtor's board of directors, Salomon issued a written
fairness opinion dated as of May 13, 1998. The fairness opinion states
Salomon's opinion that, as of the date of the fairness opinion, the
consideration to be received by the holders of the Old Common Stock under the
Plan is fair to such holders from a financial point of view. The full text
of Salomon's opinion, which sets forth the assumptions made, matters
considered and limits on the review undertaken by Salomon, is attached as
Exhibit K to the Disclosure Statement. The Debtor submits the Salomon
fairness opinion in support of its position that the Debtor was insolvent as
of the date of the opinion. The Securities Claimants' Committee disagrees
with the position of the Debtor. If the Debtor's position is correct and the
priority scheme of the Bankruptcy Code is followed, holders of Claims and
Interest in Classes 5, 6, 7A, 7B, 7C and 8 are not entitled to any
distribution without the consent of holders of Senior Debt Claims. However,
the holders of Senior Debt Claims have agreed, under the Consent Agreement
attached as Exhibit L to the Disclosure Statement, and consistent with the
Debtors' valuation, upon which the Plan is based, to allocate distributions
of value to junior classes.
The so-called "cramdown" provisions of section 1129(b) of the Bankruptcy
Code permit confirmation of a chapter 11 plan of reorganization in certain
circumstances even if the Plan is not accepted by all impaired classes of
claims and interests. For purposes of voting only, and with specific
reservation of rights by all parties as to all other issues, Classes 7A, 7B
and 7C are deemed to have rejected the Plan. Because holders of Class 8
Interests will not receive or retain any property on account of such
Interests, they are deemed not to have accepted the Plan pursuant to section
1126(a) of the Bankruptcy Code. The Debtor will seek confirmation of the Plan
under section 1129(b) of the Bankruptcy Code in view of the deemed
non-acceptance by Classes 7A, 7B, 7C and 8 and the possible non-acceptance by
other classes in connection with this solicitation. THE PLAN, AS PROPOSED,
PROVIDES DISTRIBUTIONS TO CLASSES 5 THROUGH 7C BECAUSE THE HOLDERS OF SENIOR
DEBT CLAIMS HAVE AGREED UNDER THE TERMS OF THE CONSENT AGREEMENT AND
CONSISTENT WITH THE DEBTOR'S VALUATION, UPON WHICH THE PLAN IS BASED, TO
ALLOCATE DISTRIBUTIONS OF VALUE OTHERWISE ATTRIBUTABLE TO HOLDERS OF CLASS 4
CLAIMS. HOWEVER, BECAUSE THE DISCLOSURE STATEMENT WAS NOT APPROVED BY
SEPTEMBER 15, 1998, AND BECAUSE THE PLAN WILL NOT BE CONFIRMED BY
MID-NOVEMBER, THE CONSENT AGREEMENT IS TERMINABLE BY THE HOLDERS OF THE
SENIOR DEBT CLAIMS AND THERE CAN BE NO ASSURANCES THAT THE HOLDERS OF THE
SENIOR DEBT CLAIMS WILL CONSENT TO ANY DISTRIBUTIONS TO CLASSES 5 THROUGH 7C
UNDER ANY PLAN THAT THEREAFTER MAY BE PROPOSED. THE DEBTOR, THEREFORE, HOPES
TO OBTAIN TIMELY ACCEPTANCE OF THE PLAN BY CLASSES 5 AND 6 SO AS TO ENSURE
THAT SUCH CLASSES RECEIVE THE DISTRIBUTIONS UNDER THE PLAN TO WHICH THEY
WOULD OTHERWISE NOT BE ENTITLED IN THE ABSENCE OF THE CONSENT AGREEMENT AND
ACCEPTANCE OF THE PLAN BY CLASS 4.
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<PAGE>
J. INDEMNIFICATION CLAIMS.
Under the Plan, the holders of Indemnification Claims which have been
allowed and not subject to subordination shall receive a pro rata share of
the proceeds from the Reliance Policies, which have a face amount of $10
million, and sole and exclusive right to the Reliance Policies and proceeds
therefrom. The Reliance Policies are directors' and officers' liability
policies purchased for the Debtor's directors and officers, and specifically
identifies them as beneficiaries of the policies. Generally, the
Indemnification Claims arise from the indemnification provisions contained in
the Debtor's Certificate of Incorporation, which is attached as Exhibit Q to
the Disclosure Statement, and the General Corporation Laws of the State of
Delaware. The Certificate of Incorporation sets forth both the standard for
entitlement to indemnification and limitations thereon. To the extent such
limitations apply, the directors, officers and employees who have received
reimbursement for indemnification obligations have also executed undertaking
agreements which provide for, INTER ALIA, the repayment to the Debtor of all
reimbursed amounts to the extent such party is found not to be entitled to
indemnification. Additionally, three officers and directors, John N.
Brincat, Steve Gould and John Pratt, have written indemnification agreements.
Copies of the agreements are attached as Group Exhibit R to the Disclosure
Statement. The Debtor disputes John N. Brincat's entitlement to
indemnification.
Furthermore, upon confirmation, pursuant to the Plan, $13 million
otherwise distributable as Excess Cash to holders of Claims in Class 4 shall
be deposited in a Settlement Contribution and Indemnity Fund for the benefit
of the Beneficiaries in partial satisfaction of the Indemnification Claims.
The Settlement Contribution and Indemnification Fund shall be governed by a
trust agreement which shall provide for the mechanism under which the
Beneficiaries shall make claims against the fund. In addition, the
Beneficiaries will receive the benefit of the release by the Debtor set forth
in section 11.03 of the Plan.
In exchange for the treatment provided, the Debtor is extinguishing
potential claims against it in excess of $2 billion, which Class 6 Claimants
would assert against the Debtor if liquidated through a judgment entered in
or settlement of the actions set forth in section II.C. As of the Petition
Date, the Debtor had made indemnification payments to the officers and
directors in the amount of approximately $600,000.00. As of the Petition
Date, the Debtor had made indemnification payments to employees in the
approximate amount of $450,000.00.
K. MODIFICATION OR REVOCATION OF THE PLAN; SEVERABILITY.
Subject to the restrictions on modifications set forth in section 1127
of the Bankruptcy Code and any applicable notice requirements, the Debtor
reserves the right to alter, amend or modify the Plan before its substantial
consummation or to revoke or withdraw the Plan prior to the Confirmation
Date. If the Debtor revokes or withdraws the Plan, or if confirmation does
not occur, then the Plan will be null and void in all respects, and nothing
contained in the Plan will (a) constitute a waiver or release of any Claims
by or against, or any Interests in the Debtor; or (b) prejudice in any manner
the rights of the Debtor. If the Debtor modifies the Plan in any material
respect and does not obtain the consent of the holders of the Senior Debt
Claims to such modification, the Consent Agreement may be terminated by the
holders of the Senior Debt Claims, who will no longer be bound to support the
Plan and the distributions to Classes 5 through 7C. The Consent Agreement
may also be terminated for other reasons.
If, prior to confirmation, any term or provision of the Plan is held by
the Court to be invalid, void or unenforceable, the Court will have the
power, solely upon the request of the Debtor, to alter and interpret such
term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision
held to be invalid, void or unenforceable, and such term or provision will
then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and
provisions of the Plan will remain in full force and effect and will in no
way be affected, impaired or invalidated by such holding, alteration or
interpretation. The Confirmation Order will constitute a judicial
determination and will provide that each term and provision of the Plan, as
it may have been altered or interpreted in accordance with the foregoing, is
valid and enforceable pursuant to its terms.
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II.
DESCRIPTION OF THE DEBTOR AND PAST OPERATIONS
A. CORPORATE STRUCTURE.
The Debtor is a consumer finance concern engaged, through its wholly
owned operating subsidiaries or Nondebtor Subsidiaries, in the business of
acquiring installment sales finance contracts from automobile dealers and
retail vendors, extending short-term installment loans directly to consumers
and selling credit insurance and other related products. The Nondebtor
Subsidiaries' borrowers represent a broad cross section of the consumer
market. Approximately 6% of the borrowers are military personnel. The loans
and acquired retail installment contracts generally have terms of 3 months to
48 months at annual interest rates ranging, with minor exception, from 18% to
40%. Generally, all loans and acquired retail installment contracts are
repayable in monthly installments.
The Debtor was organized in 1988, as a wholly-owned subsidiary of First
Illinois Corporation (an Evanston, Illinois based bank holding company). On
April 24, 1989, First Illinois Corporation distributed to its stockholders
one share of Debtor's stock for each two shares of First Illinois Corporation
stock held.
The Debtor's Nondebtor Subsidiaries commenced operations in February
1984 for the purpose of penetrating the market for small dollar amount
consumer loans (average of $3,000 or less). The initial focus was toward
small, short term, direct installment loans made to U.S. military servicemen.
Building from this direct lending niche, the Debtor has also built a
substantial, diversified consumer finance portfolio by purchasing, through
the Nondebtor Subsidiaries, individual installment sales finance contracts
from retail vendors and automobile dealers. Substantially all of the
borrowers are "non-prime" borrowers. These are borrowers which generally
would not be expected to qualify for traditional financing such as that
provided by commercial banks or automobile manufacturers' captive finance
companies.
The Debtor, through the operating subsidiaries, had 173 operating
branches at August 31, 1998 versus 287 at December 31, 1996. The Debtor
closed 28 branches during 1997 which were considered to be duplicative or
underperforming. The costs related to the closings, consisting primarily of
lease settlements and write off of leasehold improvements, aggregated at
$325,000. In December 1997, the Debtor announced the implementation of a
business plan that included the closing of approximately 70 additional
operating branches. The number of additional branch closings was
subsequently increased to 86. The branches are being closed because they are
either unprofitable or considered redundant in view of the location of nearby
branches. The closings are estimated to result in a decrease in the
outstanding portfolio of approximately $250 million over the next twelve to
eighteen months. The closings will not be treated as discontinued
operations, however, a provision was recorded in the fourth quarter of 1997
to cover the costs of the closings which are estimated to be $3.4 million.
1. BRANCH OFFICE NETWORK/OPERATION.
In December 1997, the Debtor announced the implementation of its
business plan for 1998 which provided for the exit of non-profitable market
areas and the closing of branches as described above. The existing
portfolios of the 86 branches to be closed have either been transferred to
nearby continuing branches or will remain in 5 branches that will continue to
exist for up to eighteen months in order to collect the existing portfolio.
The continuing branch operations are divided into 21 geographically
organized districts, with each district headed by a regional director. A
regional director is generally responsible for six to twelve offices
(depending on size and geographical dispersion). Regional directors report
to four Group Vice Presidents. A summary of the projected operating branches
by state after giving effect to the planned closures is as follows:
<TABLE>
<CAPTION>
STATE OFFICE STATE OFFICE
LOCATIONS LOCATIONS
<S> <C> <C> <C>
Alabama 1 Nevada 2
Arizona 3 New Mexico 1
Colorado 1 New York 2
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Delaware 1 North Carolina 8
Florida 20 Ohio 11
Georgia 6 Oklahoma 1
Illinois 14 Pennsylvania 5
Indiana 5 South Carolina 4
Kansas 1 Tennessee 2
Kentucky 2 Texas 15
Louisiana 33 Virginia 11
Michigan 4 Washington 2
Mississippi 11 Wisconsin 4
Missouri 3 ----
TOTAL 173
----
</TABLE>
In addition, Midland Finance Co. has one operating office located in
Chicago, Illinois.
Management has developed its workforce by attempting to train
experienced consumer lending professionals. The training program includes
actual training at branch offices and personal interviews by senior operating
management. The training program which is called the "Pride Program" is
administered by the branch managers and regional directors and is a
requirement for all branch personnel. In addition, the Debtor also conducts
a Manager's Qualification Program for prospective managers.
Beginning in 1994, the Nondebtor Subsidiaries began to experience a
significant level of turnover in their branch staff as a result of increased
demand for experienced personnel by competitors. After the announcement of
the accounting irregularities discussed in Section II.B., the Nondebtor
Subsidiaries experienced further difficulty in retaining and hiring qualified
consumer lending professionals. The rate of turnover in management positions
has declined and, although still a cause for concern, management believes
that the turnover rate is no greater than that experienced by the Nondebtor
Subsidiaries prior to discovery of the accounting irregularities.
The business mix of Debtor's branch office network between sales finance
receivables (which constitutes 86% of total gross receivables) and direct
consumer loans (which constitutes 14% of total gross receivables) is
generally consistent within the 21 supervisory districts of the country
(except for Mississippi, Louisiana and East Texas which reflect a business
mix of 50/50). With the exception of Gulfco, the business mix in any one
branch office is dependent upon the location of the office and the background
of an office's loan personnel.
2. LOAN AND CONTRACT ORIGINATION AND MARKETING.
Historically, the Nondebtor Subsidiaries originated loans and acquired
individual sales finance contracts through their office network based upon a
decentralized approval process tailored to the market in which their specific
offices operated. All credit extensions were reviewed and approved at the
branch level with extensions of credit in excess of preset limits requiring
approval by a regional director.
In 1998, the Debtor initiated 16 regional centralized purchasing offices
("CPO's") that review and approve the acquisitions of sales finance contracts
for a majority of the Nondebtor Subsidiaries' volume. Through this process,
management believes that underwriting criteria will be applied more
consistently while still allowing for flexibility to be responsive to local
market conditions. In addition, the realignment will release branch
personnel from making credit decisions and will allow for greater emphasis to
be placed on cash collections and expanding dealer relationships.
Installment sales finance receivables which originate with local dealers
(household goods, appliance and automobile) are subjected to the same credit
review and credit worthiness policies as direct consumer loans. A specific
installment sales finance contract is acquired only after objective
investigations of the credit worthiness of the borrower and a determination
of the underlying value of the asset through use of industry publications,
combined with the subjective assessment by underwriters. Every sales finance
contract is reviewed individually and extensions of credit are made based
upon the credit worthiness of each contract.
Individual sales finance contracts are acquired pursuant to formal
agreements with local merchants. The Nondebtor Subsidiaries acquire sales
finance contracts from local franchised and independent used car dealers with
which the Nondebtor Subsidiaries have established ongoing relationships. A
relationship with a dealer begins only
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after analysis of the soundness of their business is completed. The
Nondebtor Subsidiaries acquire a majority of their sales finance contracts
from dealers at a discount. The Nondebtor Subsidiaries negotiate the amount
of the discounts with the dealers based upon various criteria, one of which
is the credit risk associated with the sales finance contracts being acquired.
The Debtor encourages a decentralized marketing approach which allows
each office to pursue and develop business leads which are unique to
individual markets. The Debtor and its Nondebtor Subsidiaries does no
national advertising. Branch offices may advertise in local publications and
most branch offices rely on the endorsements of customers to build a client
base. The Debtor believes that client service in the form of local access to
dealers and quick turnaround of the application process to dealers is the
most cost-effective primary marketing tool.
3. INSURANCE OPERATIONS.
In conjunction with their lending practices, the consumer finance
subsidiaries offer credit life, accident and health and property insurance to
borrowers who obtain financing directly from the consumer finance
subsidiaries, and to borrowers under sales finance contracts and financing
contracts acquired from merchants and automobile dealers.
Throughout 1997, the Debtor attempted to maximize value by divesting
non-core assets and refocusing on core business units. Divestiture of
certain assets also provided the Debtor with cash necessary to fund
operations and make payments to senior and subordinated noteholders.
On March 28, 1997, Debtor entered into a Stock Purchase Agreement with
Frontier Insurance Group, Inc. to sell the stock of Lyndon for $92 million in
cash. Lyndon was acquired by the Debtor in October, 1995, from ITT for $72.5
million and the assumption of their net liabilities. Since then, other
smaller insurance operations of the Debtor had been combined with Lyndon. In
1997, the state of Missouri had placed Lyndon under administrative
supervision, thereby, reducing, if not eliminating, the potential value of
Lyndon if a sale was not achieved. The sale which closed on June 3, 1997,
resulted in a loss to Debtor of approximately $30 million that was recorded
in the first quarter of 1997. In addition, the earnings of Lyndon from the
date of the agreement through the date of sale aggregating approximately $2
million accrued to the benefit of the buyer. As the Lyndon subsidiary had
been operated on a stand-alone basis, its divestiture did not have a
significant effect on the Debtor's ability to operate the Debtor's core
consumer finance business and to continue to offer insurance products to its
consumer finance customers. Management has determined that it is in the best
interest of the Debtor to remain in the insurance business and formed a new
captive insurance subsidiary during 1997, MFN Insurance Company. As a result,
the sale of Lyndon is not considered the discontinuation of a business. The
loss associated with the sale of Lyndon will not be tax deductible to the
Debtor as a loss on the sale of a consolidated subsidiary is, under certain
circumstances, not deductible for tax purposes.
4. CHANGES IN ACCOUNTING TREATMENT AND METHODOLOGY.
a. ALLOWANCE AND PROVISION FOR FINANCE CREDIT LOSSES.
The operating subsidiaries originate direct consumer loans, acquires
individual sales finance contracts from third party dealers and provides
revolving credit to individuals through a Visa affiliated program. The
Debtor continues to maintain an allowance for the direct and credit card
receivables to cover finance credit losses that are expected to be incurred
on receivables that have demonstrated a risk of loss based upon delinquency
or bankruptcy status.
The sales finance contracts are generally acquired at a discount from
the principal amount. This discount is normally referred to as a
non-refundable dealer reserve. The amount of the discount is based upon the
credit risk of the borrower, the note rate of the contract and competitive
factors. In 1994 and prior, the non-refundable dealer reserve was considered
to be adequate to absorb the majority of losses on the acquired receivables.
However, as the sub-prime market has evolved and become more competitive, the
dealer reserve has proven to be inadequate to absorb all of the credit
losses. In 1995 and prior, the Debtor maintained a balance of the combined
non-refundable dealer reserves and allowance for finance credit losses in an
amount sufficient to cover losses that were expected to be incurred on
receivables that had demonstrated a risk of loss based upon delinquency or
bankruptcy status.
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The provision for finance credit losses in the income statement results
from the combination of a) an estimate by management of loan losses that
occurred during the current period and b) the ongoing adjustment of prior
estimates of losses occurring in prior periods. As the specific borrower and
amount of a loan loss is confirmed by gathering additional information,
taking collateral in full or partial settlement of the loan, bankruptcy of
the borrower, etc., the loan is charged off, reducing the allowance for
finance credit losses. If, subsequent to a charge off, the Debtor is able to
collect additional amounts from the borrower or obtain control of collateral
worth more than earlier estimated, a recovery is recorded, decreasing current
period charge offs.
In the third quarter of 1996, the Debtor adopted a loss reserving
methodology commonly referred to as "static pooling." The static pooling
methodology provides that the company stratify the components of its sales
finance receivable portfolio (i.e. dealer reserve, principal loan balances
and related chargeoffs) into separately identified pools based upon the
period the loans were acquired. The Debtor defines a pool as loans acquired
within a given month. The application of the static pooling methodology as
described above increased the 1996 provision for credit losses by $89 million.
Reserve requirements for sales finance, direct and credit card
receivables are calculated based on the estimated losses inherent in each
category of delinquency (i.e. 30, 60, 90 and 120 days past due). These
assumed losses are utilized to determine the projected cash flows from each
impaired category. The projected cash flow is then discounted at the loan's
original yield to estimate the net present value of the impaired loans. A
reserve is established in an amount sufficient to reduce the book value of
the impaired receivable to its net present value. Repossessed collateral is
valued at an estimate of its net realizable value.
b. NONREFUNDABLE DEALER RESERVES.
The operating subsidiaries acquire a majority of its sales finance
contracts from dealers at a discount. The Nondebtor Subsidiaries negotiate
the amount of the discount with the dealers based on various criteria, one of
which is the credit risk associated with the sales finance contracts being
acquired.
Under the static pooling methodology utilized in 1996 and 1997, the
balances of nonrefundable dealer reserves are not available to offset current
finance credit losses, but are amortized and made available to absorb credit
losses over the life of the corresponding pool of receivables. The balance
of nonrefundable dealer reserves at December 31, 1995 was computed under the
previous reserving methodology wherein nonrefundable dealer reserves acquired
were available to offset current losses.
The discount acquired on new volume decreased in 1997 from 1996 as a
result of lower volume levels. The discount acquired on new volume decreased
in 1996 versus 1995 as a result of both lower volume and lower percentage of
discount on new volume.
5. SOURCE OF FUNDS.
The Debtor funds the Nondebtor Subsidiaries' operations primarily
through the sale of debt securities and the repayment of advances to the
Nondebtor Subsidiaries through collections of principal and interest from
finance receivables of the Nondebtor Subsidiaries. At May 31, 1998, the
Debtor had total debt of approximately $700 million. Of this total, 48.6%
was in commercial paper and notes, 48.2% was in fixed rate senior term notes
and 3.29% was in fixed rate subordinated term notes. The Debtor filed its
statements and schedules on August 14, 1998, including Schedule F, which
lists, INTER ALIA, the holders as of the Petition Date of the Senior Debt
Claims as set forth in the Debtor's books and records. Certain assignments
of the Senior Debt Claims have occurred both before and after the Petition
Date and may continue to occur through the Effective Date of the Plan,
including pursuant to the Claims Purchase. As far as the Debtor is aware,
the holders of the Debtor's Senior Debt Claims, which are principally
financial institutions, investment funds, and an insurance company, hold such
claims for investment purposes and will continue to make decisions regarding
their Senior Debt Claims and the New Senior Secured Notes and New Common
Stock they receive under the Plan as investments in the future. In 1989,
shortly after the Debtor became a public company, the Debtor issued
Subordinated Notes to several insurance companies in the principal amount of
$35 million. In accordance with the terms of the debt, the Debtor paid $12.5
million. The outstanding principal balance as of the Petition Date was
$22,500,000. Subsequent to issuance, the Subordinated Notes have
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been sold by the original holder. As of the Petition Date, the Debtor
believes the holder of the Subordinated Notes was Franklin Mutual Advisors,
Inc. or one or more of the funds it advises. The Debtor knows of no
agreement by the Subordinated Noteholders to dispose of such claims and
believes the Subordinated Notes to be held for investment purposes. In
addition, the Debtor previously had a $50 million credit facility which
expired by its own terms in January 1998, with no amounts then outstanding
thereunder.
As indicated below, as a result of the accounting irregularities, the
Debtor's credit rating has been downgraded and, consequently, the Debtor does
not have access to the commercial paper markets and is not now obtaining
additional financing. Proceeds from the collection of existing sales finance
contracts have provided and are expected to continue to provide sufficient
working capital for operation, since collections exceed originations. Lower
amounts are being spent on new sales finance contracts due to the reduction
in the number of operating branches and the stricter underwriting criteria.
Reductions in the sale finance portfolio have funded operating losses.
6. COMPETITION.
The consumer finance business is intensely competitive. The Debtor's
operating subsidiaries compete with other consumer finance companies,
personal loan departments of commercial banks, federally insured credit
unions, industrial banks, credit card issuers and companies which finance the
sales of their own merchandise or the merchandise of others.
In recent months, a number of the Debtor's competitors have announced
that they have exited the sub-prime sales finance industry, have no funds
available to acquire additional sales finance contracts or have tightened
credit standards resulting in lower volumes. While this may be a sign that
competitive pressures should be easing, there still appears to be no shortage
of alternatives for auto dealers attempting to sell sales finance contracts.
7. EMPLOYEES.
As of May 31, 1998, Debtor, and on behalf of its Nondebtor Subsidiaries,
had approximately 1,300 employees. Approximately 1,250 employees work at
branch offices maintained by the Nondebtor Subsidiaries, and 50 employees
work for the Debtor at its corporate headquarters. The employees are paid
every two weeks. The Debtor is responsible for processing the payroll for all
employees. The Debtor, however, allocates the expense associated with
payroll to the respective Nondebtor Subsidiaries. None of the employees are
represented by a collective bargaining agreement.
8. GOVERNMENT REGULATION.
All consumer finance operations are subject to federal and state
regulations. Personal loan lending laws generally require licensing of the
lender, limitations on the amount, duration and charges for various
categories of loans, adequate disclosure of certain contract terms and
limitations on certain collection policies and creditor remedies. Federal
consumer credit statutes primarily require disclosure of credit terms in
consumer finance transactions. In general, the business is conducted under
licenses issued by individual states. Each licensed office is subject to
periodic examination by state regulatory authorities. The state licenses are
revocable for cause. The Debtor believes that its current operations comply
in all material respects with these regulations. The Debtor is also subject
to the provisions of the Federal Consumer Credit Protection Act and its
related regulations.
Credit insurance offered in connection with the direct lending and sales
finance activities of the Debtor and the premiums by credit customers and
commissions payable by insurers to the originators of such insurance are also
subject to state laws and regulations.
B. ANNOUNCEMENT OF ACCOUNTING IRREGULARITIES AND SUBSEQUENT EVENTS.
On January 29, 1997, the Debtor announced the discovery of accounting
irregularities which caused a material overstatement of the previously
released earnings for 1995 and 1996. The accounting irregularities were the
result of unauthorized entries being made to the accounting records of the
Debtor by its Chief Financial Officer. Immediately following the discovery
of the accounting irregularities, the board of directors established a
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Special Committee for the purpose of investigating the circumstances
surrounding these activities. The investigation was undertaken with the
assistance of special legal counsel and forensic accounting experts.
Shortly after the announcement of the accounting irregularities, the
Debtor's board of directors named William A. Brandt, Jr., the President and
Chief Executive Officer of the Debtor. Mr. Brandt is the President and Chief
Executive Officer of Development Specialists, Inc. ("DSI"), a firm
specializing in providing management, consulting and turnaround assistance to
reorganizing businesses. Fred C. Caruso is Acting Chief Operating Officer
and Patrick J. O'Malley is Acting Chief Accounting Officer, both of DSI. The
Debtor's former President and Chief Executive Officer, John N. Brincat,
resigned from both positions in February 1997. Mr. Brincat also resigned as
a director of the Debtor as of December 1, 1997. The Debtor's Chief
Financial Officer before the Debtor's announcement of the accounting
irregularities, James A. Doyle, was relieved of his duties in January 1997.
Mr. Doyle subsequently died in June, 1997.
In February, 1997, the Debtor entered into an Employment Agreement with
Mr. Brandt, employing Mr. Brandt as President and Chief Executive Officer of
the Debtor. The annual salary under the employment contract is $750,000. At
the same time, the consulting firm of DSI, owned by Mr. Brandt, was engaged
to fill certain positions of executive management, including Chief Operating
Officer, Chief Accounting Officer and Chief Credit Officer. In addition, DSI
staff members have provided additional support in the accounting and finance
area. These services are being provided based upon time spent performing such
functions at the individuals' customary hourly billing rates. For the year
ended December 31, 1997, the Debtor paid $2,400,000 of fees relating to
services rendered by DSI.
Brandt's amended employment agreement provides for a $1.0 million dollar
bonus payable upon confirmation of the Plan and in accordance with section
1129(a)(4) of the Bankruptcy Code. The Debtor's amended retention agreement
with DSI also provides for a fee totaling $1.6 million dollars payable by the
Nondebtor Subsidiaries for a noncompetition agreement and transition
services, including continued availability during the transition, in addition
to fees and expenses. The fee is to be paid by the Nondebtor Subsidiaries
upon the Debtor's retention of DSI and approval by the Court. An objection
to the fee is currently before the Court. Motions to assume both amended
retention agreements have been continued pending resolution of the matter.
The Securities and Exchange Commission is investigating the events
giving rise to the accounting irregularities. These same events are also
under investigation by the United States Attorney for the Northern District
of Illinois and the Federal Bureau of Investigation. The Debtor is
cooperating fully in those investigations. The Debtor cannot predict the
outcome of any of the investigations, the potential for sanctions or fines
imposed, or the impact on the Debtor or its operating subsidiaries, if any.
As a result of the accounting irregularities, the Debtor violated and
was in default of its senior note and subordinated debt agreements. In
addition, the Debtor did not have access to commercial paper or other public
debt markets, which historically provided a significant portion of the
Debtor's financing. Consequently, the Debtor was unable to repay maturing
debt and has not repaid the principal of any debt subsequent to announcement
of the accounting irregularities, except as described below. The Debtor is
now current on all interest payments, other than certain portions deferred by
agreement, and is not now obtaining additional financing.
In order to conduct a complete investigation of the Debtor's operations,
the prospects of rehabilitation and the value of the Debtor, the Debtor
endeavored to obtain alternative interim financing. On February 7, 1997, the
Debtor and all of its subsidiaries, other than its insurance subsidiaries
(the "Subsidiary Borrowers") entered into a Loan and Security Agreement (the
"Loan Agreement") with certain financial institutions, including BankAmerica
Business Credit, Inc. ("Bank America"), which provided the Debtor with a $50
million secured credit facility. Amounts outstanding under the Loan
Agreement were secured by substantially all of the property and assets of the
Debtor and its Subsidiary Borrowers other than equipment and real estate. In
addition, the Debtor pledged to BankAmerica all of the capital stock of each
Subsidiary Borrower. This facility, combined with daily cash flows, provided
the Debtor with sufficient working capital to operate the business, discharge
significant expenses resulting from the accounting irregularities, and pay
interest on its debt obligations. The facility terminated according to its
terms on January 6, 1998, at which time no amounts were due thereunder. In
connection with the Loan Agreement, the Debtor received covenant waivers from
its other lenders permitting the Debtor to pledge its Assets as collateral as
required by the Loan Agreement.
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On February 18, 1997, the Debtor advised KPMG Peat Marwick LLP ("KPMG"),
its independent accountants, that the Debtor was discontinuing KPMG's
services. The Debtor then engaged Arthur Andersen LLP as the Debtor's new
independent accountants. Arthur Andersen LLP was also engaged by the Special
Committee of the Board of Directors to investigate the circumstances
surrounding the discovery of the accounting irregularities.
The Debtor continued its stabilization of business operations, analysis
of operations, determination of value, and market exploration process which,
if successful, would provide the mechanism best suited for obtaining maximum
value for the Debtor. In order to assure its ability to complete these
processes, the Debtor requested formal forbearance from the senior lenders.
Certain holders of Senior Debt Claims agreed to extend the covenant waivers
in order to continue the process, in exchange for a formal forbearance
agreement. Thus, effective July 11, 1997, the Debtor and a number of its
holders of Senior Debt Claims signed a Forbearance Agreement (the
"Forbearance Agreement") and Waivers (the "Waivers"). Under the Forbearance
Agreement, the Senior Lenders (as defined in the Forbearance Agreement)
agreed not to take actions against the Debtor for defaults under the
applicable debt agreements prior to October 1, 1997, subject to certain
termination events enumerated in the Forbearance Agreement. The Forbearance
Agreement also provided for certain interest payments and principal payments
based on excess cash flow on the amount due under the existing agreements
based on the Senior Lenders' rights under such agreements or if a liquidation
was conducted. See Section III.A. The Debtor made a $70 million payment,
principally from the sale of Lyndon, to reduce principal and brought its
interest payments current. Subsequent interest payments (at the greater of 7
percent per annum or the stated non-default rate) were made on the last
business day of July, August and September of 1997, with a $6 million escrow
established to insure payment of the September 30th interest payment. The
Debtor also agreed to make additional cash payments to reduce principal to
its lenders (i) on July 16, 1997, August 5, 1997, September 4, 1997, and
October 3, 1997, if the Debtor's cash balances exceeded certain threshold
amounts, and (ii) at such other times from the proceeds of an asset sale with
a book value in excess of $5 million or from tax refunds received. The
additional principal payments aggregated $31 million under this agreement.
The Debtor also paid default interest subject to a cap of 9% on September 30,
1997. The Securities Claimants' Committee does not agree with the Debtor's
factual statement regarding the circumstances and negotiations of the
forbearance agreement.
On November 6, 1997, the Forbearance Agreement was amended (the "Amended
Forbearance Agreement") such that the Senior Lenders agreed to not take
action against the Debtor prior to March 2, 1998, unless the Forbearance
Agreement was breached or otherwise terminated early. The Amended
Forbearance Agreement provided for principal repayments based on excess cash
balances at each month end during the duration of the agreement, a $7.0
million escrow fund to be used to pay any due and unpaid interest at the end
of the forbearance period and payment of principal and interest from cash
proceeds arising from the occurrence of certain significant events. Pursuant
to the Amended Forbearance Agreement, the Debtor paid additional principal
payments aggregating $151 million through March 3, 1998, bringing total
principal repayments to $252 million since the Debtor entered into the
forbearance agreements.
Effective March 2, 1998, the Debtor and its Senior Lenders agreed to
extend the Amended Forbearance Agreement until June 3, 1998 (the "Second
Amended Forbearance Agreement"). Under the Second Amended Forbearance
Agreement, the Debtor agreed to continue to keep interest current and make
periodic payments to reduce the principal of the outstanding debt as cash
flow permitted. The holders of the subordinated debt did not participate in
the Second Amended Forbearance Agreement.
On May 14, 1998, the Debtor entered into an agreement with substantially
all of the holders of its Senior Debt Claims and with its subordinated debt
holder providing for the financial restructuring and recapitalization of the
Debtor embodied in the Plan. SEE Subsection D below. The Debtor and its
holders of Senior Debt also entered into a Third Amendment to Forbearance
Agreement extending the Forbearance Agreement until July 15, 1998 and made a
forbearance payment in the amount of approximately $14.5 million. In
addition, the Debtor entered into a Subordinated Debt Forbearance Agreement
with its subordinated debt holder as of May 14, 1998, also effective until
July 15, 1998.
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C. PREPETITION LEGAL PROCEEDINGS.
During 1997 and 1998, a number of lawsuits were filed against the Debtor
and its subsidiaries. The Debtor has been named as a defendant in a variety
of lawsuits generally arising from the Debtor's announcement on January 29,
1997 that it would restate its earnings for certain prior periods as a result
of accounting irregularities. A list of such actions is attached as Exhibit
B to the Plan. To date, forty-five actions against the Debtor are pending in
the United States District Court for the Northern District of Illinois, six
cases are pending against the Debtor in Illinois Chancery Court, and nine
cases are pending in Delaware Chancery Court. The complaints seek
compensatory damages, attorneys' fees and costs in excess of two billion
dollars ($2,000,000,000).
Forty-one of the lawsuits pending in the Northern District of Illinois
are class actions which generally allege claims under Sections 10 and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
These lawsuits name one or more officers or directors of the Debtor as
additional defendants. One case pending in the Northern District of Illinois
alleges derivative claims seeking to recover damages on behalf of the Debtor
from certain of the Debtor's officers and directors. Thirty-nine of the
non-derivative cases pending in the Northern District of Illinois were
consolidated pursuant to a Stipulation entered on April 30, 1997. In
November 1997, the Minnesota State Board of Investment was appointed as lead
plaintiff in the federal class cases. One of the cases pending in the
Northern District of Illinois seeks to represent a class of participants in
Debtor's employee retirement plan and alleges ERISA violations arising out of
the plan's investment in Debtor's allegedly overvalued stock. Participants
in the proposed class may include certain officers and former officers of the
Debtor. Two cases pending in the Northern District of Illinois allege
non-class securities fraud and common law claims. The ERISA action and the
two non-class securities fraud cases were consolidated in February 1998, with
the cases in which the Minnesota State Board of Investment is lead plaintiff.
Three of the Illinois state court actions are class actions alleging claims
under the Illinois Securities Act, the Illinois Consumer Fraud and Deceptive
Business Practices Act and common law claims of fraud and negligent
misrepresentation. The other Illinois state court actions are derivative
actions which seek to recover damages on behalf of the Debtor from certain of
the Debtor's officers and directors. One of the derivative actions was
amended to include allegations of RICO violations. Each of the Delaware
state court actions is a derivative action which seeks to recover damages on
behalf of the Debtor from certain of the Debtor's officers and directors.
The United States District for the Northern District of Illinois has
formed a global settlement negotiation committee composed of representatives
of all pending litigation, except Consumer Litigation. Settlement
negotiations are continuing.
On January 10, 1997, the Debtor entered into an agreement (the
"Agreement") with BankBoston Corporation ("BankBoston") pursuant to which the
Debtor was to acquire all of the outstanding stock of Fidelity Acceptance
Corporation, a subsidiary of BankBoston, in return for the issuance of
approximately 32.7 million shares of the Debtor's common stock. On January
30, 1997, BankBoston notified the Debtor that it was terminating the
Agreement as a result of breaches of the Agreement resulting from the
accounting irregularities described above. On July 10, 1997, BankBoston
notified the Debtor that BankBoston intended to seek appropriate compensation
for its damages resulting from such breaches. Such claims were settled for a
cash payment of $1,600,000 in January 1998 which sum was accrued and reserved
in December 1997.
In the normal course of its business, the Debtor and its subsidiaries
are named as defendants in legal proceedings. A number of such actions,
including fifteen cases which have been brought as putative class actions,
are pending in the various states in which subsidiaries of the Debtor do
business (the "Consumer Claims"). Such Claims are contingent, unliquidated,
and subject to dispute and are listed on Exhibit A to the Plan. These Claims
are not being affected by the Plan, but shall be resolved pursuant to
applicable non-bankruptcy law and procedures.
D. STABILIZATION AND PREPETITION PLAN NEGOTIATIONS.
The terms of the Plan result in part from an analysis of the Debtor's
financial condition and operations conducted by the Debtor. The Debtor
initially concluded that to return to viability, it would have to emerge from
any restructuring with a reduced debt structure to service. The Debtor
explored various possible out-of-court restructuring alternatives and
concluded that the best vehicle to achieve a restructuring of its
indebtedness was through a prestructured chapter 11 process.
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The Debtor initially assessed the total enterprise value of the
Reorganized Debtor, and concluded that the obligations to the holders of
Senior Debt Claims could not be satisfied in full even if the Debtor offered
such creditors 100% of the equity of a Reorganized Debtor. Moreover, the
Debtor continued to experience a significant downturn in new business and the
burdens of the pending litigation described above. Under these
circumstances, the Debtor concluded that to maximize the recovery to
creditors and stockholders it must explore opportunities for the sale or
refinancing of the Debtor, as well as continue restructuring negotiations
with the holders of its Senior Debt Claims.
In January 1997, the Debtor decided to canvass the market in search of a
viable purchase offer by a strategic or financial buyer. The Debtor began
this process by retaining Salomon in January, 1997, and Salomon immediately
began soliciting prospective purchasers and lenders informally. Salomon did
not limit the solicitation to an all cash refinancing and/or payment, but
rather, solicited any form of transaction which would provide for at least a
par recovery to the holders of Senior Debt Claims. Formal market
solicitations began on or about July 15, 1997, by which time much of the
Debtor's debt was in default.
The Debtor's market exploration process was a continuous one which took
place in three general phases which generally occurred in the following three
time periods:
1. July to September, 1997,
2. November, 1997 to February, 1998 and
3. July to August, 1998.
Following is a general summary of each of these three phases of the Debtor's
market exploration process.
1. JANUARY TO SEPTEMBER, 1997
Salomon advised the Debtor that a public auction of either the company
itself or the refinancing of the company's debt would tend to depress the
Debtor's value. Thus, Salomon and the Debtor elected to pursue a "targeted"
solicitation of potential purchasers and lenders.
Initially, the Debtor and Salomon identified and contacted approximately
40 institutions which might be interested in purchasing Mercury or its assets
or refinancing its debt. This took place from January to July 1997. After
the initial contact was made, if a party expressed serious interest, it was
asked to sign a confidentiality agreement. Of the 40 institutions initially
contacted, six executed confidentiality agreements. From July 17 to 30,
1997, the Debtor provided all six institutions which signed confidentiality
agreements with confidential information regarding the Debtor's operations.
This information included confidential financial and operating information
about the Debtor, and was followed by management interviews.
Thereafter, in or about August, 1997, four of those six parties
submitted expression of interest letters to the Debtor, which entitled them
to do further due diligence regarding a possible transaction. These
expression of interest letters did not contain formal offers to purchase the
Debtor or its assets or refinance its debt, but merely expressed heightened
interest in the possibility of a transaction generally, and a specific
interest in conducting additional due diligence.
After sending the expression of interest letters, the four interested
parties conducted management and branch due diligence and reviewed documents
in data rooms established at the Company and its counsel's office in August
and September, 1997.
On September 15, 1997, two additional parties executed confidentiality
agreements. Shortly thereafter, the parties received the confidential
information and conducted management interviews. Neither of those parties
submitted an expression of interest or conducted further due diligence.
As a result of this phase of solicitation, the Debtor received one
conditional offer on September 19, 1997. That offer was withdrawn
approximately one week later, before either the Debtor or the pre-petition
Creditors
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Steering Committee considered the offer. That offer provided for
approximately 87% recovery to holders of Senior Debt Claims and no value for
equity.
2. NOVEMBER, 1997 TO FEBRUARY, 1998
The second phase of the market exploration process took place from
approximately November 1997 through February, 1998. This resulted in two
parties being sent confidentiality agreements by the Debtor, one of which was
executed and returned in December, 1997.
The party that executed the confidentiality agreement conducted due
diligence in January, 1998. That party submitted an offer in February, 1998
which was rejected by both the Debtor and the pre-petition Steering
Committee. That offer failed to pay senior debt in full or preserve any
equity value for the in the Debtor.
In early 1998, after evaluating the terms of the proposals submitted to
date pursuant to the foregoing process, the Debtor's board of directors
determined that the proposals were not in the best interests of the Debtor
and recommended that the Debtor pursue further restructuring negotiations
with the holders of Senior Debt Claims. The holders of Senior Debt Claims
include the holders of Claims arising from or with respect to amounts due
under the Debtor's commercial paper, short-term loans or senior term notes
against the Debtor. The Debtor filed its statements and schedules on August
14, 1998, including Schedule F, which lists, INTER ALIA, the holders as of
the Petition Date of the Senior Debt Claims as set forth in the Debtor's
books and records. Certain assignments of the Senior Debt Claims have
occurred both before and after the Petition Date and may continue to occur
through the Effective Date of the Plan, including pursuant to the Claims
Purchase. As far as the Debtor is aware, the holders of the Debtor's Senior
Debt Claims, which are principally financial institutions, investment funds,
and an insurance company, hold such claims for investment purposes and will
continue to make decisions regarding their Senior Debt Claims and the New
Senior Secured Notes and New Common Stock they receive under the Plan as
investments in the future.
Based on results of substantial analysis of Debtor's operations and
development of the business plan, the Debtor's board of directors determined
that the Debtor had to restructure its balance sheet in order to compete in
the marketplace in the absence of a sale. The Securities Claimants'
Committee disagrees.
3. MAY TO AUGUST, 1998
On May 14, 1998, the Debtor executed a forbearance and consent agreement
with the holders of substantially all of its Senior Debt Claims. In that
document, which was made public in a Form 8-K, the Debtor set a floor or base
above which Mercury was interested in negotiating with third parties. It was
Debtor's hope and intent that the forbearance and consent agreement would
regenerate interest in Debtor by third parties. In May, 1998, after the
forbearance and consent agreement was filed, another third party expressed an
interest in pursuing negotiation with Mercury.
The party did not submit a formal letter of interest, but expressed
interest in a transaction which would provide for a par recovery for senior
debt and a $20 million allocation for equity. The party then conducted
extensive due diligence in June and July, 1998. In July, 1998, the party
submitted an offer that was not in accord with its original expression of
interest. The offer provided for non-par recovery for senior debt at
approximately 80 to 92% and an approximate $20 million allocation for equity
in the form of equity. This offer was rejected by both the Debtor and the
Creditors' Committee.
Failing in its efforts to sell assets to satisfy debt or refinance its
Senior Debt on terms which would satisfy and pay Senior Debt Claims in full
or on other terms acceptable to holders of Senior Debt Claims, on May 14,
1998, the Debtor and a substantial majority of the holders of Senior Debt
Claims executed a Consent Agreement which incorporates terms of the
restructuring to be implemented in the Plan. A copy of the Consent Agreement
is attached to the Disclosure Statement as Exhibit L. The Securities
Claimants' Committee disagrees with the Debtor's statement of events leading
to the execution of the Consent Agreement.
The terms of the Consent Agreement incorporate a term sheet for the
Debtor's financial restructuring. Based on the enterprise value of the Debtor
and strict adherence to the priority scheme of the Bankruptcy Code,
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holders of Senior Debt Claims in Class 4 would not receive distributions
sufficient to satisfy their Claims in full. Yet, in order to facilitate an
orderly restructuring and consistent with the Debtor's valuation, upon which
the Plan is based, the holders of Senior Debt Claims have voluntarily
allocated value to other creditors and interest holders and provided the
opportunity for the holders of Old Common Stock and Securities Fraud Claims
to share in any potential of a successful restructuring by receiving the New
Warrants. In addition, any Person shall have the right to participate in the
Claims Purchase. Equally important, the Debtor has received the right to
terminate the Consent Agreement upon receipt of a binding commitment for new
debt and/or equity financing from a credit worthy entity in amounts
sufficient to repay all amounts due to the holders of Senior Debt Claims
under their credit agreements in cash in full.
The Debtor and the holders of Senior Debt Claims believed that there was
a compelling need to recapitalize the Debtor and return the Debtor to the
marketplace, thus the holders of Senior Debt Claims required that, as
consideration for agreement to compromise their claims and provide value to
other holders of Claims and Interests in connection with a restructuring, the
restructuring must be completed in an efficient and timely fashion. The
Plan, as proposed, provides distributions to Classes 5 through 7C because the
holders of Senior Debt Claims have agreed under the terms of the Consent
Agreement to allocate value otherwise attributable to holders of Class 4
Claims if the Plan is confirmed by Mid-November. HOWEVER, BECAUSE THE
DISCLOSURE STATEMENT WAS NOT APPROVED BY SEPTEMBER 15, 1998, AND BECAUSE THE
PLAN WILL NOT BE CONFIRMED BY MID-NOVEMBER, THE CONSENT AGREEMENT IS
TERMINABLE BY THE HOLDERS OF THE SENIOR DEBT CLAIMS AND THERE CAN BE NO
ASSURANCES THAT THE HOLDERS OF THE SENIOR DEBT CLAIMS WILL CONSENT TO ANY
DISTRIBUTIONS TO CLASSES 5 THROUGH 7C UNDER ANY PLAN THAT THEREAFTER MAY BE
PROPOSED.
On July 15, 1998, the Debtor filed a voluntary petition for relief under
the Bankruptcy Code.(1) With its petition, the Debtor filed its Plan which
incorporates the terms of the Consent Agreement. Although other parties in
the Reorganization Case assert that the Plan could be structured to provide
different treatment to the holders of Senior Debt Claims, the Debtor believes
that the Plan adheres to the requirements of the Bankruptcy Code and is a
result of extended arms length negotiations.
E. POST-PETITION ACTIVITIES OF THE DEBTOR.
1. MOTIONS
On or after the Petition Date, the Debtor filed several motions relating
to the ordinary course operations of its business and the business of its
Nondebtor Subsidiaries. The Court has entered orders granting the Debtor's
motion either as requested or modified to some extent, but in either event
permitting the Debtor to continue operations during the Case. Additionally,
the Debtor sought to retain the law firm of McDermott, Will & Emery. This
application was also granted. As discussed in Section II.B., the Debtor is
seeking to assume the employment agreements of Brandt and DSI. These motions
are pending.
There are also currently proceedings pending in the United States
District Court for the Northern District of Illinois which were commenced by
a Securities Fraud Claimant. These proceedings challenge the
constitutionality of Section 510(b) of the Bankruptcy Code. They also seek
to withdraw the reference of the Reorganization Case from the Court to the
federal district court. If this relief is granted, the Plan and the
proceedings may be affected. The Debtor disputes this position and does not
believe it will be sustained by the federal district court. The federal
district court has requested briefs from the parties. If the Section 510(b)
constitutional challenge is sustained, the Plan as currently proposed may not
be confirmable. The Debtor also disputes this position and does not believe
it will be sustained by the federal district court.
2. APPOINTMENT OF COMMITTEES
______________________
(1)
On July 6, 1998, certain plaintiffs (the "Petitioning Plaintiffs") in the
litigation arising from the announcement of the accounting irregularities
filed an involuntary chapter 11 petition against the Debtor (the "Involuntary
Petition"). On July 15, 1998, the Debtor filed with the Court a voluntary
petition for relief under chapter 11 of the Bankruptcy Code. The Court
ordered that the two cases be consolidated under Case No. 20763 and an order
for relief was entered on July 15, 1998.
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The Court has appointed the following three committees in the Case:
(1) The Official Committee of Unsecured Creditors, whose members include:
Franklin Mutual Advisers
c/o Jeffrey A. Altman
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Principal Life Insurance Co.
c/o Thomas E. Luther
711 High Street
Des Moines, IA 50392-0800
Nomura Holdings America, Inc.
c/o Michael Embler
Two World Financial Center
17th Floor
New York, NY 10281
PPM Special Investments
225 W. Wacker Drive
Chicago, Illinois 60606
c/o Bradley Scher
PPM America, Inc.
590 Madison Avenue, 26th Floor
New York, NY 10022
Cerberus Partners
c/o Joyce C. Johnson-Miller
450 Park Avenue, 28th Floor
New York, NY 10022
The Creditors' Committee has retained as co-counsel the law firms of Jones, Day,
Reavis & Pogue and Cleary, Gottlieb, Steen & Hamilton. The Creditors' Committee
also has retained Houlihan, Lokey, Howard & Zukin Capital as its financial
advisor.
(2) The Official Committee of Securities Claimants includes the following
members:
Jay Fleisher
Shriners Hospitals For Children
P.O. Bo 31356
Tampa, FL 33631-3356
Minnesota State Board of Investment
c/o Lois Buermann
Room 105, M.E.A. Building
55 Sherburne Ave.
St. Paul, MN 55155
Joseph Danielle
1131 Meadowcrest Rd.
LaGrange Pr, IL 60526
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T. Rowe Price, et al.
c/o Laura Chasney and Herb Stiles
100 East Pratt Street
Baltimore, MD 21202
Michael Dloogatch
6048 N. Lawndale
Chicago, IL 60659
James Ferree
c/o Sussman & Watkins
Two First National Plaza #600
Chicago, IL 60603
David J. Isaak
600 Seventeenth Street
#2610
South Tower
Denver, CO 80202
The Securities Claimants' Committee has retained as co-counsel the law firms
of Holper, Welsh and Mitchell and Barbakoff, Zazove & Glick Chtd. The
Securities Claimants' Committee has also retained the Barrington Consulting
Group, Inc. as its financial advisor.
(3) The Official Committee of Equity Holders includes the following
members:
Thomas J. Hill
Co-Chairman
New Generation Advisers Inc.
400 E. Jefferson
Charlottesville, VA 22902
Robert Lentz
Co-Chairman
U.S. Financial Credit Corp.
2113 Chels Way
Old Hickory, TN 37138
David Himick
1905 Newman Drive
Trenton, MI 48183
Paul Davner
Jordan Capital
One Pickwick Plaza #250
Greenwich, CT 06830
Thomas Gooding
First Community Bank of Hillsboro
400 South Main Street
Hillsboro, IL 62049
John W. Damisch
161 North Clark Street #4950
Chicago, IL 60601
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<PAGE>
Norman Louie
94-11 69th Avenue
Forest Hills, NY 11375
Bruce Lemishow
147-20 76 Avenue
Flushing, NY 11367
Clement Malki
1212 Ben Franklin Drive
Sarasota, Florida 34236
The Equity Holders' Committee has retained as co-counsel the law firms of
Gordon, Glickman & Flesch and Goldberg Kohn Bell Black Rosenbloom & Moritz
Ltd. The Equity Holders' Committee has also retained Chanin, Kirkland Messina
as its financial advisor.
3. OPERATIONS
Since filing the Case, the Debtor has experienced a negative impact
on employee morale and their concern over the Debtor's long-term viability.
Although the Debtor is achieving its business plan objectives in terms of
yield and projected annual loss rate on 1998 loan originations, the Debtor
continues to struggle in its efforts to increase overall loan originations to
forecasted levels. From June 1998 through August 1998, monthly loan
originations (excluding credit card operations) have averaged $45.7 million.
The Debtor had originally forecasted loan originations to average $50.5
million during this same time frame. The Debtor's five-year forecast
included in this Disclosure Statement projects loan originations to average
$57.1 million per month in 1999. If the Debtor is unable to achieve this
level of loan originations, it will not achieve its forecasted level of
profitability in 1999 and beyond, even if it achieves its yield and loss rate
goals. A copy of the Debtor's post-petition operating report is attached as
Exhibit S.
The following is a summary of actual 1998 operating results through
August 31, 1998:
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Interest and late Fees on Loans 116,190,580
Interest on Deposits in Banks 1,759,294
Gulfco Life Equity Income 0
Insurance Co. Equity Income 1,885,190
Twin Insurance Co. Equity Income 0
Midland Equity Income 22,837
Lyndon Equity Income 0
Insurance Commissions 2,992,061
Auto Club Commissions 457,497
Dealer Reserve Discount 4,646
Fees on Loans 716,221
Other 2,383,396
Total Revenue 126,411,721
EXPENSES:
Interest on Notes Payable 44,300,713
Provision for Credit Losses 36,703,590
Salaries 23,234,535
Employee Benefits 7,231,616
Occupancy 2,877,763
Equipment 2,188,442
Amortization Goodwill Gulfco 349,511
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Amortization Goodwill Midland 223,244
Data processing 1,255,135
Other Operating Expenses 14,315,427
Total Expenses 132,679,975
OPERATING INCOME (6,288,254)
Loss on Sale of Lyndon 0
Restructuring Expenses (11,188,271)
Restructuring Fee (14,480,148)
Proceeds from Life Insurance 1,964,878
Closed Office Expense 0
Income before Income taxes (29,971,795)
Income Tax 0
Net Income (29,971,795)
</TABLE>
III.
DEBT AND EQUITY STRUCTURE OF THE DEBTOR
A. DESCRIPTION OF DEBT STRUCTURE OF THE DEBTOR.
The following is a summary of the approximate outstanding debt of the
Debtor under (i) the Long-Term Senior Debt evidenced by Senior Note
Agreements; (ii) Commercial Paper and other short term notes; and (iii)
Long-Term Subordinated Debt evidenced by Subordinated Note Agreements, and
the Indentures related thereto (in millions) as of the Petition Date:
<TABLE>
<CAPTION>
DEBT (2) PRINCIPAL INTEREST TOTAL
<S> <C> <C> <C>
Commercial Paper $ 305.0 $ 1.7 $ 306.6
Term Notes $ 369.5 $ 1.9 $ 371.4
Subordinated Debt $ 22.5 $ 2.1 $ 24.6
----------------- -------- ------ ----------
Total $ 697.0 $ 5.6 $ 702.6
-------- ------ ----------
</TABLE>
As a result of the 1996 net loss, accounting irregularities, and related
matters, the Debtor violated its debt and financial covenants permitting the
holders of its senior term notes, short-term notes and subordinated debt to
accelerate all such debt, which would result in all of such debt becoming
immediately due and payable. In addition, all of the Debtor's commercial
paper has matured and is due and payable. The senior term notes, commercial
paper and the subordinated debt are unsecured. The Debtor has been accruing
interest at default rates since February 10, 1997 and pursuant to forbearance
agreements has paid interest since that date at default rates subject to a
cap of 9% through May 31, 1998. Non-default interest payments under the
Forbearance Agreement were made through June 30, 1998. The Debtor's
schedules include non-default interest for the period of July 1-July 15, 1998
and additional 2% default interest for the period of June 1-July 15, 1998.
As described previously, the Debtor has a forbearance agreement and
several amendments thereto (collectively, the "Forbearance Agreements") with
its creditors which, including extensions, expired July 15, 1998. Under the
terms of the Forbearance Agreements, the Debtor made interest payments to the
Senior Term Noteholders and holders of commercial paper at default rates of
interest, subject to a maximum rate of nine percent (9.0%) and
- ----------------------------
(2) Discrepancies in addition in this table are due to rounding factors.
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<PAGE>
Subordinated Noteholders received interest at a rate of five and one-half
percent (5.5%) for the period February 10, 1997 through June 30, 1998.
Certain interest accrued, but was not paid, between July 1, 1998 and the
Petition Date. In addition, the Forbearance Agreements required the periodic
payment of excess cash to be applied as reduction of outstanding principal.
In connection with the extension of the Forbearance Agreements until July 15,
1998, the Debtor paid a forbearance fee to those creditors who executed the
last extension. The forbearance fee totaled approximately $15 million
dollars. Approximately $307 million of principal has been paid to creditors
under the Forbearance Agreements through June 3, 1998. No principal payments
were made after June 3, 1998.
B. EQUITY STRUCTURE OF THE DEBTOR.
The Debtor presently has authorized and issued 172,497,714 shares of Old
Common Stock, par value $1.00 per share. The Debtor also granted options to
purchase the Old Common Stock to various employees, which remain unexercised.
The New York Stock Exchange ("NYSE") has certain listing criteria
applicable to companies listed on such exchanges. The Debtor does not meet
the financial listing criteria for the NYSE and the Old Common Stock has been
delisted. Currently, the Old Common Stock has developed a market and is
trading in the "pink sheets."
IV.
THE REORGANIZED DEBTOR
A. BUSINESS OF THE REORGANIZED DEBTOR.
Following the Effective Date, the Reorganized Debtor will continue to
operate the core businesses presently operated by the Debtor. It is
contemplated that, following implementation of the Plan, the Reorganized
Debtor will continue to implement its Business Plan and to create
opportunities for cost reductions and synergies in the business operations of
the Reorganized Debtor. The Debtor believes that the Reorganized Debtor will
be able to compete more effectively in the highly competitive marketplaces in
which the Debtor conducts business than could the Debtor. In particular, the
Debtor believes that its business can be returned to profitability and
long-term stability and growth under the Reorganized Debtor's proposed
capital structure. Implementation of the Business Plan and any consequent
degree of success will be dependent upon market forces and the Reorganized
Debtor's ability to implement the Business Plan.
B. MANAGEMENT OF THE REORGANIZED DEBTOR.
The Debtor conducted an active search for a permanent Chief Executive
Officer ("CEO") and management team through the executive search firm of
Heidrick and Struggles (the "Search"). In connection with the Search, three
members of the Creditors' Committee have been designated to participate in
discussions with the Debtor concerning the selection of a new CEO. The
Search has produced a candidate who is currently negotiating the terms of a
contract with the Debtor.
Until the Search is completed, it is expected that William A. Brandt,
Jr., Fred C. Caruso, Patrick J. O'Malley and the balance of the management
team from DSI, as described in Sections II. A and B has been, and will
continue to provide for the management of the Debtor and, to the extent
necessary, the Reorganized Debtor.
In addition, the Creditors' Committee will nominate the other six
members of the board of directors of the Reorganized Debtor, who with the new
CEO will constitute the board of directors of the Reorganized Debtor. The
nominees will be disclosed prior to the Confirmation Date.
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<PAGE>
V.
IMPLEMENTATION OF THE PLAN
A. NEW SECURITIES AND NEW COLLATERAL DOCUMENTS.
On the Effective Date, the Reorganized Debtor (i) shall issue in
accordance with the provisions of Article V and Section 8.05 of the Plan, the
New Senior Secured Notes, the New Junior Subordinated Notes, the New Common
Stock and the New Warrants, and (ii) shall execute and deliver the New
Collateral Documents, the New Indentures and the New Warrant Agreement. The
Nondebtor Subsidiaries will issue the Subsidiaries Guaranty and the
Subsidiaries Security Agreement.
B. CANCELLATION OF SECURITIES AND AGREEMENTS.
Except as expressly provided for in the Plan or in the Confirmation
Order, on the Effective Date, the Debtor's commercial paper, short-term
notes, senior notes, common stock, options, any shareholder's rights plans
and any and all documentation relating thereto and all obligations of the
Debtor under any of the foregoing shall be terminated and cancelled.
C. MARKET AND TRADING INFORMATION.
1. Market Information.
Under the Plan, the Debtor has agreed to use its reasonable best efforts
to cause the New Common Stock and the New Warrants to be approved for listing
on a national securities exchange or NASDAQ NMS. It is not expected that the
New Common Stock or the New Warrants will initially be authorized for
listing; an unlisted market may develop.
2. DIVIDENDS.
It is not anticipated that dividends will be paid at any time in the
foreseeable future with respect to the New Common Stock. Dividends are not
payable on the New Warrants.
D. APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS.
No registration statement will be filed under the Securities Act or any
state securities laws with respect to the offer and distribution under the
Plan of the New Senior Secured Notes, New Junior Subordinated Notes, New
Common Stock, New Warrants, the Subsidiaries Guaranty and the Subsidiaries
Security Agreement. The Debtor believes that the provisions of section
1145(a)(1) of the Bankruptcy Code exempt the offer and distribution of such
securities under the Plan from federal and state securities registration
requirements.
Similarly, no registration statement will be filed under the Securities
Act or any state securities laws with respect to the offer and sale of the
New Common Stock pursuant to the New Warrants. The Debtor believes that the
provisions in section 1145(a)(2) of the Bankruptcy Code exempt the offer and
sale of such securities pursuant to the New Warrants from federal and state
securities registration requirements.
E. BANKRUPTCY CODE EXEMPTIONS FROM REGISTRATION REQUIREMENTS AND TRANSFER
RESTRICTIONS.
1. INITIAL OFFER AND SALE OF SECURITIES.
Section 1145(a)(1) of the Bankruptcy Code exempts the offer and sale of
securities under a plan of reorganization from registration under the
Securities Act and under state securities laws if three principal
requirements are satisfied: (i) the securities must be offered and sold
"under a plan" of reorganization and must be securities of the debtor, of an
affiliate "participating in a joint plan" with the debtor or of a successor
to the debtor under the plan; (ii) the recipients of the securities must hold
a prepetition or administrative expense claim against the debtor or an
interest in the debtor or such affiliate; and (iii) the securities must be
issued entirely in exchange for the
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<PAGE>
recipient's claim against or interest in the debtor, or "principally" in such
exchange and "partly" for cash or property. The Debtor believes that the
offer and sale of the New Senior Secured Notes, New Junior Subordinated
Notes, New Common Stock, and New Warrants under the Plan satisfy the
requirements of section 1145(a)(1) of the Bankruptcy Code and are, therefore,
exempt from registration under the Securities Act and state securities laws.
Section 1145(a)(2) of the Bankruptcy Code exempts the offer of a
security through any warrant, option or right to subscribe that was sold in
the manner specified in section 1145(a)(1) of the Bankruptcy Code and the
sale of a security upon the exercise of such a warrant, option or right to
subscribe. The Debtor believes that the offer and sale of the New Common
Stock pursuant to the New Warrants satisfy the requirements of section
1145(a)(2) of the Bankruptcy Code and are, therefore, exempt from
registration under the Securities Act and state securities laws.
In connection with the confirmation of the Plan, the Debtor will seek to
obtain from the Court an order (the "Section 1145 Order") to the effect that
(i) the offer and sale of the New Senior Secured Notes, New Junior
Subordinated Notes, New Common Stock and New Warrants under the Plan is
exempt from registration under the Securities Act and state securities laws
pursuant to section 1145(a)(1) of the Bankruptcy Code and (ii) the offer and
sale of the securities included in the New Warrants are exempt from
registration under the Securities Act and state securities laws pursuant to
section 1145(a)(2) of the Bankruptcy Code.
2. SUBSEQUENT TRANSFERS UNDER FEDERAL SECURITIES LAWS.
The New Common Stock and the New Warrants distributed under the Plan
will not be "restricted securities" within the meaning of Rule 144 under the
Securities Act.
In general, all resales and subsequent transactions in the New Common
Stock and the New Warrants offered and sold under the Plan or upon the
exercise of the New Warrants will be exempt from registration under the
Securities Act pursuant to Section 4(1) of the Securities Act, unless the
holder thereof is deemed to be an "underwriter" with respect to such
securities, an "affiliate" of the issuer of such securities or a "dealer."
Section 1145(b)(i) of the Bankruptcy Code defines four types of
"underwriters":
(i) persons who purchase a claim against, an interest in, or a claim
for administrative expense against the debtor with a view to
distributing any security received or to be received in exchange
for such a claim or interest ("accumulators");
(ii) persons who offer to sell securities offered or sold under a plan
for the holders of such securities ("distributors");
(iii) persons who offer to buy securities offered or sold under a plan
from the holders of such securities, if the offer to buy is (a)
with a view to distributing such securities and (b) made under an
agreement in connection with the plan or with the offer or sale of
securities under the plan; and
(iv) a person who is an "issuer" with respect to the securities, as the
term "issuer" is defined in Section 2(11) of the Securities Act.
Under section 2(l1) of the Securities Act, an "issuer" includes any
"affiliate" of the issuer, which means any person directly or indirectly
controlling or, controlled by the issuer or any person under direct or
indirect common control with the issuer. Under section 2(12) of the
Securities Act, a "dealer" is any person who engages either for all or part
of his time, directly or indirectly, as agent, broker or principal, in the
business of offering, buying, selling or otherwise dealing or trading in
securities issued by another person. Whether or not any particular person
would be deemed to be an "underwriter" or an "affiliate" with respect to any
security to be issued pursuant to the Plan or to be a "dealer" would depend
upon various facts and circumstances applicable to that person. Accordingly,
the Debtor expresses no view as to whether any person would be an
"underwriter" or an "affiliate" with respect to any security to be issued
pursuant to the Plan or to be a "dealer."
In connection with prior bankruptcy cases, the staff of the Commission
has taken the position that resales by accumulators and distributors of
securities distributed under a plan of reorganization are exempt from the
registration under the Securities Act if effected in "ordinary trading
transactions." The staff of the Commission has
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<PAGE>
indicated in this context that a transaction may be considered an "ordinary
trading transaction" if it is made on an exchange or in the over-the-counter
market at a time when the issuer of the security is a reporting company under
the Exchange Act and does not involve any of the following factors:
(i) (a) concerted action by the recipients of securities issued under a
plan in connection with the sale of such securities, or (b)
concerted action by distributors on behalf of one or more such
recipients in connection with such sales, or (c) both;
(ii) use of informational documents concerning the offering of the
securities prepared or used to assist in the resale of such
securities, other than a disclosure statement and supplements
thereto and documents filed with the Commission pursuant to the
Exchange Act; or
(iii) special compensation to brokers and dealers in connection with the
sale of such securities designed as a special incentive to the
resale of such securities (other than the compensation that would
be paid pursuant to arm's-length negotiations between a seller and
a broker or dealer each acting unilaterally, and not greater than
the compensation that would be paid for a routine similar-sized
sale of similar securities of a similar issuer).
THE VIEWS OF THE COMMISSION ON THESE MATTERS HAVE NOT BEEN SOUGHT BY THE
DEBTOR AND, THEREFORE, NO ASSURANCE CAN BE GIVEN REGARDING THE PROPER
APPLICATION OF THE "ORDINARY TRADING TRANSACTION" EXEMPTION DESCRIBED ABOVE.
ANY PERSON INTENDING TO RELY ON SUCH EXEMPTION IS URGED TO CONSULT HIS OR HER
OWN COUNSEL AS TO THE APPLICABILITY THEREOF TO HIS OR HER CIRCUMSTANCES.
In addition, Rule 144 provides an exemption from registration under the
Securities Act for certain limited public resales of securities by
"affiliates" of the issuer of such securities. Rule 144 allows a holder of
securities that is an affiliate of the issuer of such securities to sell,
without registration, within any three month period a number of shares of
such securities that does not exceed the greater of 1% of the number of
outstanding securities in question or the average weekly trading volume in
the securities in question during the four calendar weeks preceding the date
on which notice of such sale was filed pursuant to Rule 144, subject to the
satisfaction of certain other requirements of Rule 144 regarding the manner
of sale, notice requirements and the availability of current public
information regarding the issuer.
The holders of Class 4 Claims that become holders of a specified
percentage of the New Common Stock and the New Senior Secured Notes will be
entitled to demand that the Reorganized Debtor register the sale of their New
Common Stock and/or New Senior Secured Notes under the Securities Act, and
such holders of the New Common Stock and New Senior Secured Notes will be
permitted to obtain registration of the sale of their New Common Stock in
certain circumstances in connection with certain offerings of the New Common
Stock by the Reorganized Debtor that are registered under the Securities Act.
GIVEN THE COMPLEX NATURE OF THE QUESTION OF WHETHER A PARTICULAR PERSON
MAY BE AN UNDERWRITER, THE DEBTOR MAKES NO REPRESENTATIONS CONCERNING THE
RIGHT OF ANY PERSON TO TRADE IN THE NEW COMMON STOCK OR THE NEW WARRANTS TO
BE DISTRIBUTED PURSUANT TO THE PLAN. THE DEBTOR RECOMMENDS THAT HOLDERS OF
CLASS 4 CLAIMS AND HOLDERS OF CLASSES 7A AND 7B INTERESTS CONSULT THEIR OWN
COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES OR INTERESTS.
3. SUBSEQUENT TRANSFERS UNDER STATE LAW.
The state securities laws generally provide registration exemptions for
subsequent transfers by a bona fide owner for his or her own account and
subsequent transfers to institutional or accredited investors. Such
exemptions are generally expected to be available for subsequent transfers of
New Common Stock and the New Warrants.
Any person intending to rely on such exemption is urged to consult his
or her own counsel as to the applicability thereof to his or her
circumstances.
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<PAGE>
F. CERTAIN TRANSACTIONS BY STOCKBROKERS.
Under section 1145(a)(4) of the Bankruptcy Code, stockbrokers are
required to deliver a copy of this Disclosure Statement (and supplements
hereto, if any, if ordered by the Court) at or before the time of delivery of
securities issued under the Plan to their customers for the first 40 days
after the Effective Date. This requirement specifically applies to trading
and other aftermarket transactions in such securities.
VI.
CONDITIONS PRECEDENT TO THE PLAN
A. CONDITIONS TO CONFIRMATION.
It is a condition to confirmation of the Plan that the Confirmation Order
include provisions:
(a) authorizing the Reorganized Debtor to adopt and file the Amended and
Restated Certificate of Incorporation and Bylaws;
(b) authorizing the issuance of the New Common Stock and New Warrants;
(c) authorizing the Claims Purchase;
(d) authorizing the issuance of the New Senior Secured Notes and the New
Junior Subordinated Notes;
(e) authorizing all of the other transactions contemplated by the Plan in
order to effectuate the Plan;
(f) exempting the New Senior Secured Notes, the New Junior Subordinated
Notes, the New Common Stock and the New Warrants from registration
under the Securities Act and state and local laws pursuant to Section
1145; and
(g) making the provisions of the Confirmation Order non-severable and
mutually dependent.
B. CONDITIONS TO THE EFFECTIVE DATE.
The Confirmation Order shall contain the provisions set forth in Section
10.01 of the Plan and the Confirmation Order shall be in full force and
effect and shall not have been reversed, stayed, modified or amended.
C. WAIVER OF CONDITIONS.
The Debtor, with the consent of the Creditors' Committee, may waive any
condition set forth in Article X of the Plan at any time, without notice,
without leave of the Court, and without any formal action other than
proceeding to consummate the Plan.
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<PAGE>
VII.
DISTRIBUTIONS UNDER THE PLAN
A. GENERAL.
1. DISTRIBUTION DATE.
Except as otherwise provided in the Plan, property to be distributed
under the Plan to an Impaired Class (a) shall be distributed on or as soon as
practicable after the Effective Date to each holder of an Allowed Claim of
that Class that is an Allowed Claim as of the Effective Date, and (b) shall
be distributed to each holder of an Allowed Claim of that Class that is
allowed after the Effective Date, to the extent allowed, as soon as
practicable after the order of the Court allowing the Claim becomes a Final
Order. Property to be distributed under the Plan to a Class that is not
impaired or on account of an Administrative Claim shall be distributed on the
latest of (i) the later of the two dates specified in the preceding sentence,
and (ii) the date on which the distribution to the holder of the Claim would
have been due and payable in the ordinary course of business or under the
terms of the Claim in the absence of the Reorganization Case.
2. DISTRIBUTION RECORD DATE--SENIOR DEBT CLAIMS AND SUBORDINATED
NOTEHOLDER CLAIMS.
As of the close of business on the Distribution Record Date, the
respective transfer registers for the Senior Debt Claims and Subordinated
Noteholder Claims as maintained by the Debtor, or their respective agents,
shall be closed.
3. EXCHANGE AGENT.
The Debtor may designate an entity or entities to serve as Exchange
Agent to distribute all the property to be distributed under the Plan or may
itself serve as Exchange Agent, including, without limitation the payment of
Excess Cash, the delivery of the New Common Stock, the New Senior Secured
Notes, the New Junior Subordinated Notes and the New Warrants.
4. SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTIONS-SENIOR DEBT
CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS.
As a condition to participation under the Plan, each holder of a Senior
Debt Claim or Subordinated Noteholder Claim is required to complete the
book-entry confirmation procedure or provide a Letter of Tran-SM-ittal
described in Section XV.G.
5. DISTRIBUTION RECORD DATE--OLD COMMON STOCK.
The distributions under the Plan on account of an Allowed Claim under or
evidenced by the Old Common Stock shall be distributed to holders of record
as of the Distribution Record Date. At the close of business on the
Distribution Record Date, the transfer ledgers for the Old Common Stock shall
be closed, and there shall be no further changes in the record holders of the
Old Common Stock. The Debtor shall have no obligation to recognize any
transfer of the Old Common Stock occurring on or after the Distribution
Record Date. The Debtor shall be entitled instead to recognize and deal for
all purposes hereunder with only those record holders stated on the transfer
ledgers of the transfer agent as of the close of business on the Distribution
Record Date.
6. ACCRUAL OF INTEREST.
Interest on the New Senior Secured Notes shall begin to accrue, but not
paid, at the respective rates set forth in the New Senior Secured Notes,
payable quarterly, ninety-one (91) days following the Petition Date. It is
the Debtor's position that the accrual of interest is not a payment for the
use of money borrowed, but rather, reflects one component of the formula or
analysis used to set the value of consideration to be received by the holders
of Senior Debt Claims as is set forth in Section I.C.
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<PAGE>
7. UNCLAIMED DISTRIBUTIONS.
If any holder of a Claim or Interest entitled to a distribution directly
from the Exchange Agent under the Plan cannot be located on the Effective
Date, such securities shall be set aside and maintained by the Exchange
Agent. If such person is located within two years of the Effective Date,
such securities shall be distributed to such person. If such person cannot
be located within two years of the Effective Date, any such securities shall
become the property of and shall be released to the Reorganized Debtor;
PROVIDED, HOWEVER, that nothing contained in this Plan shall require the
Reorganized Debtor to attempt to locate such person.
8. TAX PROVISIONS.
Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer or other exchange of a security, or the making or delivery of an
instrument of transfer under the Plan shall not be taxed under any state or
local law imposing a stamp tax, transfer tax or similar tax or fee.
9. SETOFFS.
Except with respect to Senior Debt Claims (3), the Debtor may, but shall
not be required to, setoff against any Claim (for purposes of determining the
allowed amount of such Claim on which distribution shall be made), any claims
of any nature whatsoever the Debtor may have against the claimant, but
neither the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Debtor, of any such claim the Debtor
may have against such claimant.
B. PROVISIONS FOR TREA-TM-ENT OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS
AND ADMINISTRATIVE EXPENSES.
1. CHARACTERIZATION OF DISPUTED CLAIMS.
Pursuant to subsection 1111(a) of the Bankruptcy Code, proof of a Claim
is deemed filed under section 501 of the Bankruptcy Code if that Claim is
included in the schedules filed under section 1106(a)(2) of the Bankruptcy
Code, except if the Claim is scheduled as disputed, contingent, or
unliquidated. Such a disputed, contingent, or unliquidated claim must be
asserted by its holder, or an indenture trustee representing such holder, by
the timely filing of a proof of claim. If a proof of claim is not filed in a
timely manner, the Claim may be deemed to be disallowed.
2. RESOLUTION OF CONTESTED CLAIMS AND INTERESTS.
The Debtor shall have the right to object to and contest the allowance
of any Claim or Interest Filed or deemed Filed with the Court, whether or not
such Claim was scheduled as disputed, contingent or unliquidated. The Senior
Debt Claims, as defined under the Plan, shall be deemed Allowed by the Plan.
- --------------------
3 The Senior Debt Claims were incurred in the ordinary course of the
Debtor's business as a mechanism to obtain capital and the Debtor made
prepetition payments to holders of Senior Debt Claims to repay that debt.
The Debtor does not believe any setoff against holders of the Senior Debt
Claims exists and, as part of the conversion of their debt and the voluntary
allocation of their value to other creditors and equity holders, the holders
of Senior Debt Claims require an acknowledgment of the validity of their
claims and release of any actions.
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<PAGE>
VIII.
ACCEPTANCE OR REJECTION OF THE PLAN
A. PRESUMED ACCEPTANCE OF PLAN.
Classes 1, 2 and 3 are unimpaired under the Plan, and, therefore,
conclusively are presumed to have accepted the Plan in accordance with
section 1126(f) of the Bankruptcy Code.
B. DEEMED NON-ACCEPTANCE OF PLAN.
For voting purposes only, and with specific reservation of rights by all
parties as to all other issues, Classes 7A, 7B and 7C, in addition to Class
8, are deemed to have rejected the Plan and will not be solicited for
acceptances or rejections to the Plan.
C. VOTING CLASSES.
Each holder of an Allowed Claim in Classes 4, 5, and 6 shall be entitled
to vote to accept or reject the Plan.
D. ACCEPTANCE BY IMPAIRED CLASSES.
An Impaired Class of Claims shall have accepted the Plan if (i) the
holders (other than those designated under section 1126(e) of the Bankruptcy
Code) of at least two-thirds in amount of the Allowed Claims actually voting
in such Class have voted to accept the Plan and (ii) the holders (other than
those designated under section 1126(e) of the Bankruptcy Code) of more than
one-half in number of the Allowed Claims actually voting in such Class have
voted to accept the Plan. An Impaired Class of Interests shall have accepted
the Plan if the holders (other than those designated under section 1126(e)
of the Bankruptcy Code) of at least two-thirds in amount of the Allowed
Interests actually voting in such Class have voted to accept the Plan.
E. NON-CONSENSUAL CONFIRMATION.
The Debtor will seek confirmation of the Plan under section 1129(b) of
the Bankruptcy Code in view of the deemed non-acceptance by Classes 7A, 7B,
7C and 8. In the event that any other Impaired Class of Claims or Interests
does not accept the Plan in accordance with section 1126 of the Bankruptcy
Code, the Debtor hereby requests that the Court confirm the Plan in
accordance with section 1129(b) of the Bankruptcy Code. Subject to Section
1127 of the Bankruptcy Code the Debtor reserves the right to modify the Plan
to the extent that confirmation pursuant to section 1129(b) of the Bankruptcy
Code requires modification.
IX.
EFFECTS OF PLAN CONFIRMATION
A. DISCHARGE AND RELEASE.
1. Except as otherwise expressly provided in the Plan or Confirmation
Order, as of the Effective Date, the Debtor shall be discharged forthwith
from, and the Confirmation Order shall operate as an injunction against, the
commencement or continuation of an action, the employment of process, or an
act to collect, recover or offset, any Claim and any "debt" (as that term is
defined in section 101(12) of the Bankruptcy Code), and any interest (or
claims or debt related thereto) and the Debtor's liability in respect thereof
is extinguished completely, whether reduced to judgment or not, liquidated or
unliquidated, contingent or noncontingent, asserted or unasserted, fixed or
not, matured or unmatured, disputed or undisputed, legal or equitable, known
or unknown, that arose from any agreement that the Debtor entered into or
obligation of any kind of the Debtor incurred by the Debtor before the
Confirmation Date, or from any conduct of the Debtor prior to the
Confirmation Date or that otherwise arose before the Confirmation Date,
including, without limitation, all interest, if any, on any such debts,
whether such interest accrued before or after the date of commencement of the
applicable Reorganization Case, and from any liability of a kind specified in
Sections 502(g), 502(h) and 502(i) of the Bankruptcy Code, whether or not a
proof of claim is filed
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or deemed filed under section 501 of the Bankruptcy Code, such Claim is
allowed under section 502 of the Bankruptcy Code, or the holder of such Claim
has accepted the Plan.
2. On the Effective Date, in consideration for, or as part of, the
trea-TM-ent accorded to the holders of Claims and Interests under the Plan,
each holder of a Claim or Interest against or in the Debtor shall be deemed
to have released the Debtor from any and all causes of action and claims, in
law or in equity, whether based on tort, fraud, contract or otherwise, which
arose prior to the Petition Date.
B. LIMITED RELEASE BY THE DEBTOR OF DIRECTORS, OFFICERS AND EMPLOYEES.
Except for the estate of James A. Doyle and John N. Brincat, as of the
Effective Date, the Debtor shall be deemed to have waived and released its
present and former directors, officers and employees from any and all claims
of the Debtor or Debtor in Possession (including claims which the Debtor in
Possession otherwise has legal power to assert, compromise or settle in
connection with its Reorganization Case) against such present and former
directors, officers and employees arising on or prior to the Effective Date.
C. TERM OF INJUNCTIONS OR STAYS.
Unless otherwise provided in the Plan, all injunctions or stays provided
for in the Reorganization Case pursuant to Section 105 or 362 of the
Bankruptcy Code or otherwise in effect on the Confirmation Date shall remain
in full force and effective until the Effective Date.
D. EXCULPATION.
Except with respect to KPMG Peat Marwick, neither the Debtor, the
Reorganized Debtor, nor any of their respective officers, directors,
employees, advisors, agents professionals or representatives, benefit plan
administrators or trustees nor the members of the Steering Committee and
their principals, advisors, professionals and agents nor the members of the
Creditors' Committee, Equity Holders' Committee, Securities Claimants'
Committee and their members, advisors, professionals and agents shall have or
incur any liability to any holder of a Claim or Interest for any act or
omission in connection with or arising out of actions taken or omitted to be
taken in good faith in connection with the Debtor's restructuring, the Plan,
the Reorganization Case, including all prepetition activities leading to the
promulgation and confirmation of the Plan and the administration of the Plan
or the property to be distributed under the Plan.
E. REVESTING.
Except as otherwise expressly provided in the Plan or in the New
Collateral Documents, on the Effective Date, the Debtor will be vested with
all of the property of its Estate free and clear of all Claims, liens,
encumbrances, charges and other interests of creditors and equity security
holders, and may operate its business free of any restrictions imposed by the
Bankruptcy Code or by the Court. The Debtor shall continue as debtor in
possession under the Bankruptcy Code until the Effective Date and,
thereafter, the Reorganized Debtor may operate its business free of any
restrictions imposed by the Bankruptcy Code or the Court except as
specifically authorized by the Plan.
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F. RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS.
1. Except as set forth in section IX. B and D, above and in section 3
below, nothing contained in the Plan or the Confirmation Order shall be
deemed to be a waiver or relinquishment of any rights or causes of action
that the Debtor, the Debtor in Possession or the Reorganized Debtor may have
or which the Reorganized Debtor may choose to assert on behalf of the Estate
under any provision of the Bankruptcy Code or any applicable non-bankruptcy
law, including, without limitation, (i) any and all Claims against any
entity, including but not limited to KPMG Peat Marwick, to the extent such
entity asserts a crossclaim, counterclaim and/or Claim for setoff which seeks
affirmative relief against the Debtor, the Reorganized Debtor, their
officers, directors or representatives, (ii) the avoidance of any transfer by
or obligation of the Debtor or the Reorganized Debtor, or (iii) the turnover
of any property to the Estate, all of which are expressly reserved by the
Plan, or (iv) derivative actions currently pending on behalf of the Debtor.
2. Nothing contained in the Plan or the Confirmation Order shall be
deemed to be a waiver or relinquishment of any claim, cause of action, right
of setoff, or other legal or equitable defense which the Debtor had
immediately prior to the Petition Date, against or with respect to any
defense which the Debtor had immediately prior to the Petition Date, against
or with respect to any Claim left unaltered or Unimpaired by the Plan. The
Reorganized Debtor shall have, retain, reserve and be entitled to assert all
such claims, causes of action, rights of setoff and other legal or equitable
defenses which it had immediately prior to the Petition Date fully as if the
Reorganization Case had not been commenced; and all of the Reorganized
Debtor's legal and equitable rights respecting any Claim left unaltered or
Unimpaired by the Plan may be asserted after the Confirmation Date to the
same extent as if the Reorganization Case had not been commenced.
3. Under the Plan, except for the estate of James A. Doyle, John N.
Brincat and KPMG Peat Marwick, the Debtor waives and releases any rights or
causes of action for the recovery of preferential payments or fraudulent
conveyances it may have against any party. Such a waiver and release is
validated by the Debtor's prepetition practices of timely payment in the
ordinary course of business, including payment under the debt instruments
and/or forbearance agreements in existence. Further, with respect to the
holders of Senior Debt Claims, the Debtor does not believe any claims exist
against such Claimants and, as part of the voluntary allocation of their
value to other creditors and equity holders, the holders of Senior Debt
Claims require an acknowledgement of the validity of their claims and release
of actions, if any.
On July 31, 1998, a committee of equity holders and securities
claimants made demand on the Debtor to pursue certain alleged fraudulent
conveyances as well as other alleged actions against holders of Senior Debt
Claims. The committee was subsequently disbanded by the Court. On October
2, 1998, the Securities Claimants' Committee filed a complaint against
certain current and former holders of Senior Debt Claims and the Debtor's
board of directors in which, INTER ALIA, it challenges the validity and
priority of the defendants' claims. The Debtor does not believe the
Securities Claimants' Committee has meritorious claims against the defendants.
G. POST-CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS.
Outstanding notes, stock certificates and other evidences of Claims
against or Interests in the Debtor in Classes 4, 5, 6, 7A, 7B, 7C and 8 under
the Plan shall, effective upon the Effective Date, represent only the right
to participate in the distributions contemplated by the Plan.
X.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
On the Effective Date, and to the extent permitted by applicable law,
all executory contracts and unexpired leases of the Debtor set forth on
Exhibit C to the Plan shall be assumed in accordance with the provisions of
section 365 and section 1123 of the Bankruptcy Code, unless such executory
contracts or unexpired leases are rejected by the Debtor's motion prior to
confirmation or in connection with the confirmation hearing.
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Contracts or leases entered into after the Petition Date will be
performed by the Reorganized Debtor in the ordinary course of business.
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES.
Any Claims arising out of the rejection of contracts or leases must be
filed with the Court within the time set by any Final Order rejecting an
executory contract or unexpired lease or 30 days after the Effective Date.
Any Claims not filed within such time will be forever barred from assertion
against the Debtor or Reorganized Debtor, its estate and property. Unless
otherwise ordered by the Bankruptcy Court or provided in this Plan, all such
Claims for which proofs of Claim are required to be filed will be treated as
Class 3 Claims.
The Debtor is a party, along with Nondebtor Subsidiaries, to several
unexpired leases which are the primary responsibility of, and paid in the
ordinary course by, the Nondebtor Subsidiaries. Although the Debtor does not
expect to reject many of the unexpired leases, any such leases which are
rejected shall remain the obligation of the relevant Nondebtor Subsidiary.
Further, Claims arising from the rejection of such leases shall be permitted
against the Debtor only to the extent of the amount of the Claimant's Allowed
Claim.
XI.
MISCELLANEOUS
A. RETENTION OF JURISDICTION.
Notwithstanding the entry of the Confirmation Order or the Effective
Date having occurred, the Court shall retain original and exclusive
jurisdiction to (a) determine any disputed Claims, (b) determine requests for
payment of Claims entitled to priority under section 507(a)(1) of the
Bankruptcy Code, including compensation of and reimbursement of expenses of
professionals and other parties entitled thereto, (c) resolve controversies
and disputes regarding interpretation and implementation of the Plan, (d)
enter orders in aid of the Plan, including, without limitation, appropriate
orders (which may include contempt or other sanctions) to protect the Debtor
and the Reorganized Debtor in accordance with Sections 524 and 1141 of the
Bankruptcy Code and the terms and conditions of the Confirmation Order, (e)
modify the Plan pursuant to Section 14.02 of the Plan, (f) determine any and
all applications, adversary proceedings and contested or litigated matters
pending on the Effective Date, (g) allow, disallow, estimate, liquidate or
determine any Claim or Interest and to enter or enforce any order requiring
the filing of any such Claim before a particular date, (h) determine any and
all pending applications for the rejection of executory contracts or
unexpired leases, or for the assignment of assumed executory contracts or
unexpired leases, and to hear and determine, and if need be, liquidate any
and all Claims arising from any such rejections, assumption and/or
assignment, (i) determine any actions or other controversies arising under or
in connection with the Plan, the Confirmation Order, or any contract,
instrument, release, or other agreement created in connection with the Plan,
(j) enter and implement orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated, and (k) enter a final decree closing the Reorganization Case, and
(l) determine any actions or controversies related to or asserted against the
Exchange Agent.
B. FAILURE OF COURT TO EXERCISE JURISDICTION.
If the Court abstains from exercising or declines to exercise
jurisdiction, or determines that it is without jurisdiction over any matter
or proceeding arising out of, related to, or otherwise connected with the
Reorganization Case, including the matters set forth in this Article XI, the
exercise of jurisdiction by any other court having competent jurisdiction
with respect to such matter shall not be limited or otherwise affected by the
Plan.
C. RETIREE BENEFITS.
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The Debtor, and on behalf of the Nondebtor Subsidiaries, currently
employs 1300 employees.(4) The Debtor offers no post-retirement medical
benefit plans for its employees. The Debtor, however, has three pension
plans from which its employees may be entitled to benefits upon retirement.
The three plans are described below.
The Debtor is the contributing sponsor of the Mercury Finance Company,
Inc. Retirement Plan (the "Mercury Plan") and a controlled group member of
the contributing sponsor of the Retirement Plan for Employees of Gulfco
Investment, Inc. and its subsidiaries (the "Gulfco Plan", together, the
"Pension Plans"). The contributing sponsor of the Gulfco Plan, Gulfco
Investment, Inc. is not in bankruptcy. The Pension Plans are covered by
Title IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Debtor understands that it and all members of its controlled
group are obligated to contribute to the Pension Plans at least the amounts
necessary to satisfy ERISA's minimum funding standards, ERISA Section 302;
Internal Revenue Code of 1996 ("IRC") Section 412. In addition, in the event
of a termination of either or both of the Pension Plans, the Debtor and all
members of its controlled group may be jointly and severally liable for the
unfunded benefit liabilities of the Pension Plans. SEE 29 U.S.C. Section
1362(a). The Debtor understands that the Pension Plans may be terminated
only if the statutory requirements of either ERISA Section 4041, 29 U.S.C.
Section 1341, or ERISA Section 4042, 29 U.S.C. Section 1342, are met.
The PBGC (5) estimates that, using PBGC assumptions, the Mercury Plan is
currently underfunded on a termination basis for all benefit liabilities by
approximately $1,885,000, and that the Gulfco Plan is borderline sufficient
for all benefit liabilities. The Debtor, however, has made no independent
calculation of this potential liability because it has no intention to
terminate the Pension Plans and the Pension Plans will remain on-going after
confirmation of the Plan. All required contributions have been made to the
Pension Plans and all PBGC premiums have been paid to date. Nevertheless,
the Debtor understands that as a precautionary measure, once a Bar Date is
established, PBGC will file claims for minimum funding contributions,
unfunded benefit liabilities and PBGC premiums, if any, in connection with
the Pension Plans. The Debtor reserves its right to object to any claims
filed by the PBGC and understands that if the Pension Plans do in fact remain
on-going after confirmation of the Plan, PBGC will withdraw its claims.
Nothing in the Plan shall be construed to effect PBGC's claim upon
termination of the Pension Plans.
In addition to the Pension Plans, the Debtor sponsors a 401(k) plan.
Full-time and certain part-time employees are eligible to participate
following six months of employment. Approximately 650 employees actively
participate in the 401(k) Plan. For every one dollar each participant
contributes to the 401(k) Plan, up to 6% of base pay, the Debtor makes a
matching contribution of $1.00. With respect to employees hired prior to July
1, 1995, the Debtor's 401(k) Plan match plan vests immediately. For
employees hired after July 1, 1995, the Debtor's 401(k) match payment vests
20% per year over 5 years of continual employment. The Debtor is current
with all payments under the 401(k) Plan.
On and after the Effective Date, pursuant to section 1129(a)(13) of the
Bankruptcy Code or applicable nonbankruptcy law, the Reorganized Debtor shall
continue to be obligated to pay all retiree benefits, as that term is defined
in section 1114 of the Bankruptcy Code, and shall continue to pay such
retiree benefits as they become due at the level established at any time
prior to confirmation of the Plan pursuant to subsection (e)(1)(B) or (g) of
section 1114, for the duration of the period the Debtor has obligated itself
to provide such benefits; provided, however, that nothing herein shall extend
or otherwise prohibit the Debtor's ability or the Reorganized Debtor's
ability to modify the duration of such period or otherwise modify the terms
and conditions of such retiree benefits as otherwise permitted by such plans
and applicable nonbankruptcy law.
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4 Because the Debtor files its tax return on a consolidated basis with
its operating subsidiaries, the Debtor reports all employees under its federal
tax identification number. However, the direct expense of the employees is
allocated among the Debtor and its operating subsidiaries.
5 The Pension Benefit Guaranty Corporation or PBGC is a wholly-owned
United States government corporation created by Title IV of ERISA to
administer the mandatory pension plan termination insurance program
established under Title IV of ERISA. The PBGC guarantees the payment
of certain pension benefits upon termination of a pension plan covered
by Title IV of ERISA.
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D. MODIFICATION OF PLAN.
The Debtor reserves the sole right, in accordance with the Bankruptcy Code
and the Bankruptcy Rules, to amend or modify the Plan prior to the entry of the
Confirmation Order. After the entry of the Confirmation Order, the Reorganized
Debtor may, upon order of the Court, amend or modify the Plan in accordance with
section 1127(b) of the Bankruptcy Code and the Bankruptcy Rules, or remedy any
defect or omission or reconcile any inconsistency in the Plan in such manner as
may be necessary to carry out the purpose and intent of the Plan. However, any
modification or amendment inconsistent with the terms of the Consent Agreement
shall constitute an "Agreement Termination Event" under the Consent Agreement.
E. WITHDRAWAL OF PLAN.
The Debtor reserves the right, at any time prior to the entry of the
Confirmation Order, to revoke and withdraw the Plan. If the Debtor revokes
or withdraws the Plan under this section, or if entry of the Confirmation
Order does not occur, then the Plan shall be deemed null and void. In that
event, nothing contained in the Plan shall be deemed to constitute a waiver
or release of any Claims by or against, or any Interests in, the Debtor, to
prejudice in any manner the rights of the Debtor in any further proceedings
involving the Debtor, constitute an admission against interest by the Debtor
or any other party in interest.
XII.
HISTORICAL FINANCIAL STATEMENTS OF THE DEBTOR AND
FINANCIAL PROJECTIONS OF THE REORGANIZED DEBTOR
At June 30, 1998 the assets of the Debtor consisted of cash on hand of
$35.8 million, income tax refunds receivable of $52.4 million, net credit
card receivables of $52.2 million, fixed assets with net book value of $2.3
million, other assets of $4.9 million, and equity interest in 37 subsidiary
finance companies. As of June 30, 1998, the equity interest in subsidiaries
had a book value of $644.5 million for total assets of $792.0 million.
The Debtor's liabilities include short term notes payable and commercial
paper of $339.3 million, long term notes payable of $335.1 million and long
term subordinated notes payable of $22.5 million. The Debtor is obligated
for other liabilities of $36.5 million for total liabilities as of June 30,
1998 of $733.5 million.
Historical financial statements of the Debtor are attached to the
Disclosure Statement as Exhibit N. Financial projections of the Reorganized
Debtor are attached to the Disclosure Statement as Exhibit M. The projected
financial information gives affect to the proposed restructuring.
Although the Debtor believes its valuation is accurate, other parties in
the Reorganization Case disagree with the Debtor's valuation, see Section I.H.
XIII.
SUMMARY OF CERTAIN RISK FACTORS RELATING TO THE PLAN
The securities to be issued or transferred pursuant to the Plan are
subject to a number of material risks, including those enumerated below. The
risk factors enumerated below assume confirmation and the consummation of the
Plan and all transactions contemplated therein, and do not include matters
that could prevent or delay confirmation. Prior to deciding whether and how
to vote on the Plan, holders of Claims and Interests should carefully
consider all of the information contained in this Disclosure Statement,
especially the factors mentioned in the following paragraphs.
1. RISKS RELATING TO THE PROJECTIONS.
The management of the Debtor has prepared the projected financial
information contained in this Disclosure Statement relating to the
Reorganized Debtor and contained in the attached as Exhibit M hereto (the
"Reorganized Debtor Projections") in connection with the development of the
Plan to present the projected effects of the Plan. The Reorganized Debtor
Projections assume the Plan and the transactions contemplated thereby will be
implemented in accordance with their terms. The assumptions and estimates
underlying such Reorganized Debtor
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Projections are inherently uncertain and are subject to significant business,
economic and competitive risks and uncertainties that could cause actual
results to differ materially from those projected. Such uncertainties and
other factors include approval by the Court of the Plan, objections of third
parties as well as the Debtor's ability to acquire finance receivables,
trends in the automobile and finance industries, and general economic
conditions. Accordingly, the Reorganized Debtor Projections are not
necessarily indicative of the future financial condition or results of
operations of the Reorganized Debtor, which may vary significantly from those
set forth in the Reorganized Debtor Projections. Consequently, the projected
financial information contained herein or in Exhibit M should not be regarded
as a representation by the Debtor, the Debtor's advisors, or any other person
that the Reorganized Debtor Projections can or will be achieved. The Debtor
is currently engaged in a search for a new Chief Executive Officer. There
can be no assurance that the new Chief Executive Officer will operate the
Debtor in accordance with the projections as presented.
2. ASSUMPTIONS REGARDING VALUE OF DEBTOR'S ASSETS.
It has been determined in the preparation of the projected financial
information included elsewhere in this Disclosure Statement that the
historical book value of the Debtor's assets generally approximates the fair
value thereof, except for specific adjus-TM-ents discussed in the notes to
unaudited pro forma financial information. For financial reporting purposes
the fair value of the assets of the Debtor (including deferred tax assets)
must be determined as of the Effective Date. Although such valuation is not
presently expected to result in values that are materially greater or less
than the values assumed in the preparation of such unaudited pro forma
financial information and the projected financial information, there can be
no assurance with respect thereto.
3. NONCOMPARABILITY OF HISTORICAL FINANCIAL INFORMATION.
As a result of the consummation of the Plan and the transactions
contemplated thereby, the financial condition and results of operations of
the Reorganized Debtor from and after the Effective Date will not be
comparable to the financial condition or results of operations reflected in
the historical financial statements of Debtor contained herein in the
Exhibits attached hereto.
4. CERTAIN RISKS ASSOCIATED WITH THE REORGANIZATION CASE.
The Debtor is a party to various contractual arrangements under which
the commencement of the Reorganization Case and the other transactions
contemplated by the Plan could, subject to the Debtor's rights and powers
under sections 362 and 365 of the Bankruptcy Code, (i) result in a breach,
violation, default or conflict, (ii) give other parties thereto rights of
termination or cancellation, or (iii) have other adverse consequences for the
Debtor or the Reorganized Debtor. The magnitude of any such adverse
consequences may depend upon, among other factors, the diligence and vigor
with which other parties to such contracts may seek to assert any such rights
and pursue any such remedies in respect of such matters, and the ability of
the Debtor or Reorganized Debtor to resolve such matters on acceptable terms
through negotiations with such other parties or otherwise. The Debtor does
not believe that any enforceable breach of or default under any such
agreement has occurred. Although the Debtor presently believes that none of
the foregoing matters will have a material adverse affect on the businesses,
financial condition or results of operations of the Reorganized Debtor, there
can be no assurance with respect thereto.
5. CAPITAL REQUIREMENTS.
The Reorganized Debtor's businesses are expected to require certain
amounts of working capital. While the Reorganized Debtor Projections assume
that the Reorganized Debtor will generate sufficient funds to meet its
working capital needs for the foreseeable future, the ability of the
Reorganized Debtor to gain access to additional capital, if needed, cannot be
assured, particularly in view of competitive factors and industry conditions.
6. CERTAIN RISKS ASSOCIATED WITH THE WARRANTS.
The New Warrants are speculative securities. Under their terms, they
are exercisable at specified exercise prices and will expire at 5:00 p.m.
central standard time on the date that is three years, four years, and five
years, respectively, after the Effective Date of the Plan. There can be no
assurance that the market value of the New
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Common Stock will exceed the exercise price of the New Warrants at any time
prior to the expiration of the New Warrants. The New Warrants will have no
voting rights and no right to share in dividends, if any, paid with respect
to the New Common Stock and would have no rights on liquidation of the
Reorganized Debtor. There can be no assurance that the New Warrants will
have access to a liquid trading market.
7. LACK OF TRADING MARKET; VOLATILITY.
There can be no assurance that a market will develop for the securities
issued pursuant to the Plan.
A. THE NEW SECURITIES.
Although the Debtor will use reasonable best efforts to cause the New
Common Stock and the New Warrants to be listed on a national securities
exchange or NASDAQ NMS, it is unlikely that initial listing requirements will
be satisfied at the time of the Effective Date. Even if such securities are
subsequently listed, there is no assurance that an active market for such
securities will develop or, if any such market does develop, that it will
continue to exist, or as to the degree of price volatility in any such market
that does develop. Accordingly, no assurance can be given as to the
liquidity of the market for any of the New Securities or the price at which
any sales may occur. In addition, the availability of the New Common Stock
and New Warrants for future sale or the perception that such sales can occur
could act to depress the market price for such securities.
8. RESTRICTED RESALE OF SECURITIES DISTRIBUTED UNDER THE PLAN.
The New Common Stock and the New Warrants will be distributed pursuant
to the Plan without registration under the Securities Act or any state
securities laws pursuant to exemptions from such registration contained in
section 1145(a) of the Bankruptcy Code. With certain exceptions for
"ordinary trading transactions" by certain persons, in the event that a
holder of securities offered and sold under the Plan is deemed to be an
"underwriter" with respect to such securities or an "affiliate" of the issuer
of such securities, resales of such securities by such holder would not be
exempt from the registration requirements under the Securities Act and
securities laws pursuant to Section 1145 of the Bankruptcy Code and,
accordingly, could be effected only pursuant to an effective registration
statement or in reliance on another applicable exemption from such
registration requirements.
9. DIVIDEND RESTRICTIONS.
It is not anticipated that any cash dividends will be paid on the New
Common Stock for the foreseeable future.
10. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS.
The U.S. federal income tax consequences of consummation of the
Plan to creditors and equityholders are complex and subject to uncertainty.
For example, the exchange by holders of Senior Debt Claims of their Claims
for Excess Cash, New Senior Secured Notes and New Common Stock may result in
partial or full recognition of tax gain or loss depending on whether the
Senior Debt Claims and New Senior Secured Notes constitute "securities" for
U.S. federal income tax purposes, a determination that depends on certain
facts and circumstances. The exchange by equityholders of Old Common Stock
for New Warrants appears to cause recognition of tax gain or, subject to the
"wash sale" rules of the Code, loss, but this result is uncertain. In both
cases, the determination of whether recognized gain or loss is ordinary or
capital in nature depends on additional circumstances. The Debtor does not
anticipate that there will be a net operating loss carryover ("NOL")
following the Effective Date. See "Certain U.S. Federal Income Tax
Considerations" below for additional discussion of the U.S. federal income
tax consequences for creditors, equityholders and the Debtor on the
consummation of the Plan.
11. CERTAIN RISKS OF NON-CONFIRMATION.
There can be no assurance that the requisite acceptances to confirm the
Plan will be received. Even if the requisite acceptances are received, there
can be no assurance that the Court will confirm the Plan. A non-accepting
creditor or equity security holder of the Debtor might challenge the adequacy
of the Disclosure Statement or the
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balloting procedures and results as not being in compliance with the
Bankruptcy Code and/or Bankruptcy Rules. Even if the Court were to determine
that the Disclosure Statement and the balloting procedures and results were
appropriate, the Court could still decline to confirm the Plan if it were to
find that any of the statutory requirements for confirmation had not been
met. Section 1129 of the Bankruptcy Code sets forth the requirements for
confirmation and requires, among other things, a finding by the Court that
the confirmation of the Plan is not likely to be followed by a liquidation or
a need for further financial reorganization and that the value of
distributions to non-accepting holders of claims and interests within a
particular class under the Plan will not be less than the value of
distributions such holders would receive if the Debtor were liquidated under
chapter 7 of the Bankruptcy Code. While there can be no assurance that the
Court will conclude that these requirements have been met, the Debtor
believes that the Plan will not be followed by a need for further financial
reorganization and that non-accepting holders within each class under the
Plan will receive distributions at least as great as would be received
following a liquidation pursuant to chapter 7 of the Bankruptcy Code when
taking into consideration all administrative claims and costs associated with
any such Chapter 7 case.
The confirmation and consummation of the Plan are also subject to
certain conditions. If the Plan, or a plan determined not to require
resolicitation of any Classes of Claims or Interests by the Court, were not
to be confirmed, it is unclear whether the restructuring could be implemented
and what distribution holders of Claims and Interests ultimately would
receive with respect to their Claims and Interests. If an alternative
reorganization could not be agreed to, it is possible the that Debtor would
have to liquidate its assets, in which case it is likely that holders of
Claims and Interests would receive substantially less than the treatment
they will receive pursuant to the Plan.
12. DISRUPTION OF OPERATIONS RELATING TO BANKRUPTCY FILING.
The Debtor's commencement of the Reorganization Case, even in connection
with the Plan, could adversely affect the Debtor's subsidiaries'
relationships with their customers, suppliers, dealers and employees.
Employees of the Debtor and its subsidiaries generally are not parties to
employment contracts. The Debtor believes that, due to uncertainty about its
financial condition, it may be difficult to retain or attract high quality
employees. If the Debtor's relationships with its customers, suppliers,
dealers and employees are adversely affected, the Debtor's subsidiaries'
operations could be materially affected.
13. BUSINESS AND COMPETITION.
The consumer finance business is intensely competitive. The Debtor
competes with other consumer finance companies, personal loan departments
of commercial banks, federally insured credit unions, industrial banks,
credit card issuers and companies which finance the sales of their own
merchandise or the merchandise of others. In recent months, a number of the
Debtor's competitors have announced that they have exited the sub-prime sales
finance industry, have no funds available to acquire additional sales finance
contracts or have tightened credit standards resulting in lower volumes.
While this may be a sign that competitive pressures should be easing, there
still appears to be no shortage of alternatives for auto dealers attempting
to sell sales finance contracts.
XIV.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following description sets forth material U.S. federal income tax
consequences to prospective participants participating in the Plan and of the
ownership and disposition of the New Senior Secured Notes, New Junior
Subordinated Notes, New Common Stock and New Warrants. Such description is
based on the provisions of the Internal Revenue Code (the "Code"), final,
temporary and proposed Treasury Regulations thereunder and administrative and
judicial interpretations thereof, all as in effect as of the day hereof and
all of which are subject to change, possibly on a retroactive basis.
Prospective participants in the Plan should be aware that many of such tax
consequences are unclear under existing law and, as a result, many
alternative tax results are possible. There can be no assurance that the
Internal Revenue Service (the "Service") will not challenge one or more of
the tax consequences of the Plan described herein. No ruling or advisory
opinion as to the U.S. federal income tax consequences of the Plan is being
requested from the Service.
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The following discussion does not include all matters that may be
relevant to any particular holder of Claims or Interests in light of such
holder's particular facts and circumstances. Certain holders, including
financial institutions, broker-dealers, tax-exempt entities, insurance
companies, foreign persons and stockholders who acquired their stock through
the exercise of an employee stock option or otherwise as compensation, may be
subject to special rules not addressed below.
This discussion assumes that holders hold their Old Securities (as
defined below), Old Common Stock, New Senior Secured Notes, New Junior
Subordinated Notes, New Common Stock and New Warrants as "capital assets"
within the meaning of Code Section 1221. Any gain or loss recognized by such
a holder on the disposition of any Old Securities, Old Common Stock, New
Senior Secured Notes, New Junior Subordinated Notes, New Common Stock or New
Warrants would, except as specifically noted below, be a capital gain or
loss. Such gain or loss would be long-term capital gain or loss if the
holding period with respect to such Old Securities, Old Common Stock, New
Senior Secured Notes, New Junior Subordinated Notes, New Common Stock or New
Warrants exceeds one year, and otherwise would be short-term capital gain or
loss. The use of capital losses to offset other income is subject to
significant limitations.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. ALL
HOLDERS OF THE OLD SECURITIES AND OLD COMMON STOCK SHOULD CONSULT WITH THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE PLAN
AND THE OWNERSHIP AND DISPOSITION OF THE REORGANIZED DEBTOR SECURITIES ISSUED
PURSUANT TO THE PLAN, INCLUDING THE APPLICATION AND EFFECT OF ANY STATE,
LOCAL AND FOREIGN TAX LAWS, REGULATIONS OR ADVISORY OPINIONS.
A. TAX CONSEQUENCES TO CREDITORS
1. GENERAL
The Plan contemplates the distribution of New Common Stock, New Senior
Secured Notes and Excess Cash in exchange for the Senior Debt Claims. The
Senior Debt Claims consist of commercial paper, short-term loans ("Short Term
Loans") and senior term notes ("Senior Term Notes"). In addition, the Plan
involves the distribution of New Junior Subordinated Notes in exchange for
Mercury's subordinated notes (the "Subordinated Notes").
The U.S. federal income tax consequences to the holders of the Senior
Debt Claims and the Subordinated Noteholders depend on whether the New Senior
Secured Notes and New Junior Subordinated Notes are obligations that
constitute "securities" for U.S. federal income tax purposes (a "Tax
Security"). The tax consequences also depend on whether the Senior Debt
Claims and the Subordinated Notes (the "Old Securities") constitute Tax
Securities. Tax Securities are not defined in the Code or the Treasury
Regulations. Whether an obligation constitutes a Tax Security is based on
the facts and circumstances surrounding the origin and nature of the
obligation and its maturity date. Generally, stock, and bonds or debentures
with an original term of at least ten years have been considered to be Tax
Securities. In contrast, instruments with terms of five years or less rarely
qualify as Tax Securities.
The U.S. federal income tax consequences to the holders of the Old Securities
also depend on whether the Old Securities, the New Senior Secured Notes and
the New Junior Subordinated Notes are considered traded on an established
market for U.S. federal income tax purposes ("publicly traded"). It is not
clear whether the Old Securities, the New Senior Secured Notes and the New
Junior Subordinated Notes are publicly traded for tax purposes. The
discussion in the "Holders of Senior Debt Claims" and "Subordinated
Noteholders" sections below assumes that the Old Securities, the New Senior
Secured Notes and the New Junior Subordinated Notes are not publicly traded
for tax purposes. The consequences if the Old Securities, the New Senior
Secured Notes or the New Junior Subordinated Notes are publicly traded for
tax purposes are set forth below under "Publicly Traded Status; Original
Issue Discount".
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Because the New Senior Secured Notes and the New Junior Subordinated
Notes provide for payments in future years, any gain, but not loss,
recognized by the holders of Old Securities may, under certain circumstances,
be reportable under the installment sale rules pursuant to Code Section 453
(see "Installment Sales" below).
2. HOLDERS OF SENIOR DEBT CLAIMS
Based on their maturity dates, it appears that the commercial paper, the
Short Term Loans, the Senior Term Notes, and the New Senior Secured Notes
will not constitute Tax Securities. It will be assumed for the remainder of
this discussion that the New Senior Secured Notes will not constitute Tax
Securities.
In general, the amount of gain or loss realized by a holder of a Senior
Debt Claim as a result of participating in the Plan should equal the
difference of (a) the sum of (i) the fair market value of the New Common
Stock received, (ii) the face amount of the New Senior Secured Notes
received, and (iii) the amount of cash received, if any (other than amounts
listed in this clause (a) that are attributable to accrued interest which
will be taxable as such), less (b) the holder's adjusted tax basis in the
Senior Debt Claims exchanged.
CONSEQUENCES IF THE SENIOR DEBT CLAIMS DO NOT CONSTITUTE TAX SECURITIES.
If the Senior Debt Claims exchanged by the holder do not constitute Tax
Securities, the exchange will be a taxable event. Accordingly, the holder
will recognize gain or loss upon the exchange measured with reference to the
holder's adjusted tax basis in the Senior Debt Claims and the sum of the face
amount of the New Senior Secured Notes and the fair market value of the New
Common Stock and cash received in exchange therefor (other than amounts
received attributable to accrued interest which will be taxable as such).
Such gain, if any, may be reportable under the installment method (see
"Installment Sales" below). A portion of any such gain may be taxable as
ordinary income (see "Market Discount" below). The tax basis of the property
received by the holder will be the face amount of the New Senior Secured
Notes and the fair market value of the New Common Stock and cash received
(other than amounts attributable to accrued interest). The holding period
for such property will begin on the day after the Effective Date.
CONSEQUENCES IF THE SENIOR DEBT CLAIMS CONSTITUTE TAX SECURITIES. If
the Senior Debt Claims exchanged by the holder do constitute Tax Securities,
the exchange should qualify as a recapitalization to such holder under Code
Section 368. As a result, the holder (a) should not recognize any loss
realized on such exchange, except to the extent that the holder allocates
part of the distribution to accrued but unpaid interest, if any, on a Senior
Debt Claim, which was previously included in income by such holder, and such
allocation is less than the amount of such accrued but unpaid interest, and
(b) should recognize gain realized on the exchange to the extent of the
lesser of (a) the sum of the face amount of the New Senior Secured Notes and
the amount of cash, if any, received in the distribution, and (b) the amount
of such realized gain. A portion of such gain, if any, may be reportable
under the installment method (See "Installment Sales" below). A portion of
any such gain may be taxable as ordinary income under the market discount
rules (see "Market Discount" below). The tax basis in the New Senior Secured
Notes should equal their face amount and the holding period for such property
should begin the day after the Effective Date. The tax basis in the New
Common Stock received should equal the tax basis in the Tax Securities
exchanged, decreased by the face amount of the New Senior Secured Notes and
any cash received, and increased by any recognized gain. The holding period
of the New Common Stock received should include that of the Tax Securities
exchanged.
3. SUBORDINATED NOTEHOLDERS
It appears that the New Junior Subordinated Notes do not constitute Tax
Securities because the term of the New Junior Subordinated Notes is five
years. It is unclear whether the Subordinated Notes constitute Tax Securities.
CONSEQUENCES IF EITHER THE SUBORDINATED NOTES OR THE NEW JUNIOR
SUBORDINATED NOTES DO NOT CONSTITUTE TAX SECURITIES. If either the New Junior
Subordinated Notes or the Subordinated Notes do not constitute Tax Securities,
the exchange will be a taxable event. If the exchange results in a recognized
gain, it is possible that a Subordinated Noteholder may be able to report such
exchange under the installment method (see "Installment Sales" below). If,
however, the exchange does not qualify for trea-TM-ent under the installment
sale rules, the Subordinated
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Noteholders will recognize gain or loss upon the exchange measured with
reference to the Subordinated Noteholder's adjusted tax basis in the
Subordinated Notes and the face amount of the New Junior Subordinated Notes
received therefor (other than amounts received attributable to accrued
interest which will be taxable as such). A portion of any such gain may be
taxable as ordinary income (see "Market Discount", below). The tax basis of
the New Junior Subordinated Notes received by the Subordinated Noteholders
will equal the fair market value thereof. The holding period for such
property will begin on the day after the Effective Date.
CONSEQUENCES IF BOTH THE SUBORDINATED NOTES AND THE NEW JUNIOR
SUBORDINATED NOTES CONSTITUTE TAX SECURITIES. If both the Subordinated Notes
and the New Junior Subordinated Notes do constitute Tax Securities, the
exchange will qualify as a recapitalization to the Subordinated Noteholders
under Code Section 368. As a result, the Subordinated Noteholders (a) will
not recognize any loss realized on such exchange, except to the extent that
part of its distribution is allocated to accrued but unpaid interest, if any,
on the Subordinated Notes, which was previously included in income by such
Subordinated Noteholder, and such allocation is less than the amount of such
accrued but unpaid interest, and (b) will recognize gain realized on the
exchange to the extent, if any, the principal amount of New Junior
Subordinated Notes exceeds the principal amount of the Subordinated Notes
exchanged. Such gain, if any, may be reportable under the installment method
(See "Installment Sales" below). The amount of gain or loss realized by a
Subordinated Noteholder will equal the difference between the face amount of
the New Junior Subordinated Notes received (other than amounts received
attributable to accrued interest which will be taxable as such) and the
holder's adjusted basis in the Subordinated Notes surrendered. A
Subordinated Noteholder's tax basis in the New Junior Subordinated Notes
received will equal the Subordinated Noteholder's tax basis in the
Subordinated Notes surrendered, increased by any recognized gain. The
holding period for the New Junior Subordinated Notes will include the holding
period of the Subordinated Notes.
4. INSTALLMENT SALE RULES
If the Old Securities holders exchange their claims in an exchange that
is wholly or partially taxable, the installment sale rules may apply to defer
all or a portion of recognized gains. If the installment rules apply, the
tax consequences to the holders of the Old Securities may be different than
described above.
The installment rules should apply to any gains recognized by the
holders of Senior Debt Claims unless the New Senior Secured Notes or the
Senior Debt Claims are readily tradeable. It is not clear whether the New
Senior Secured Notes or Senior Debt Claims are readily tradeable for tax
purposes. The installment sale rules should apply to any gains recognized by
the Subordinated Noteholders unless the New Junior Subordinated Notes or the
Subordinated Notes are readily tradeable. The New Junior Subordinated Notes
and Subordinated Notes probably are not readily tradeable for tax purposes.
In addition, the Old Securities holders can affirmatively elect not to be
subject to the installment sale rules.
If the installment sale rules apply to a holder, the benefit to that
holder will be limited by rules that require taxpayers other than dealers who
hold installment obligations exceeding five million dollars to pay interest
on the tax liability deferred by application of the installment sale rules.
If the Old Securities holders recognize gain that is reportable under
the installment sale rules, such gain is recognized as such holders receive
payments. In general, the holder of the obligation recognizes gain in an
amount equal to the payment received multiplied by a fraction, the numerator
of which is the total amount of gain to be recognized on the exchange and the
denominator is the total amount to be paid under the obligations.
5. MARKET DISCOUNT ON AN EXCHANGE OF OLD SECURITIES
Gain recognized by holders of Old Securities who exchange claims
pursuant to the Plan may be treated as ordinary income pursuant to provisions
of the Code relating to "market discount." In general, if a holder acquires
a debt instrument at a market discount and thereafter realizes gain on
disposition of the instrument (including by gift), the holder must recognize,
as ordinary income at the time of such disposition, the lesser of such gain
(or appreciation in the case of a gift) on the portion of the market discount
that accrued while the debt instrument was held by such holder. A debt
instrument is acquired at a market discount if, subject to a
statutorily-defined DE MINIMIS exception,
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the purchase price is less than the stated redemption price at maturity of
the debt instrument (or, if the debt instrument was issued with original
issue discount, its revised issue price).
6. TREATMENT OF INITIAL INTEREST ON NEW SENIOR SECURED NOTES
Interest begins to accrue on the New Senior Secured Notes on the 91st
day after the Petition Date, and the New Senior Secured Notes may be issued
after the 91st day after the Petition Date. The portion of the first
interest payment that is computed by reference to the period from the 91st
day after the Petition Date until the date the New Senior Secured Notes are
issued constitutes "pre-issuance accrued interest" under section 1.1273-2(m)
of the Treasury Regulations. This pre-issuance accrued interest need not
result in recognition of original issue discount under the regulations, but
can be treated as part of the principal of the New Senior Secured Notes that
is nontaxable when paid as part of the first interest payment. The
pre-issuance accrued interest must be taken into account in determining gain
or loss, if any, on the exchange of the Senior Debt Claims for New Senior
Secured Notes and New Common Stock.
7. DISPOSITION OF THE NEW COMMON STOCK
In general, any gain or loss recognized on a subsequent sale or exchange
of the New Common Stock received pursuant to the Plan should be a capital
gain or loss. However, a creditor that receives stock in exchange for Tax
Securities (as defined above) is required, to the extent that gain is
recognized upon a subsequent disposition of such stock, to "recapture" as
ordinary income any bad debt deductions taken by the creditor with respect to
such debt and any ordinary loss claimed by the creditor upon the receipt of
the stock in satisfaction of such debt, reduced by any amount included in
income upon the receipt of the stock.
8. PUBLICLY TRADED STATUS; ORIGINAL ISSUE DISCOUNT
If the Senior Debt Claims or the New Senior Secured Notes or if the
Subordinated Notes or New Junior Subordinated Notes are considered publicly
traded for tax purposes, the tax consequences to the holders of Old
Securities will differ from the above discussion as follows. If either the
New Senior Secured Notes or the New Junior Subordinated Notes are considered
publicly traded, the issue price of the New Senior Secured Notes or New
Junior Subordinated Notes, as the case may be, will be determined based on
their fair market value. If only the Senior Debt Claims are considered
publicly traded, the issue price of the New Senior Secured Notes will be
determined by reference to an allocation of the fair market value of the
Senior Debt Claims to cash, accrued interest, New Common Stock and New Senior
Secured Notes. If only the Subordinated Notes are considered publicly
traded, the issue price of the New Junior Subordinated Notes will equal the
fair market value of the Subordinated Notes exchanged therefor. Where the
above discussion indicates that an exchange will be taxable to the holder and
that the gain will be determined by reference to the face amount of the New
Senior Secured Notes or New Junior Subordinated Notes, the gain will be
instead determined by reference to the fair market value of the New Senior
Secured Notes or New Junior Subordinated Notes (other than amounts received
attributable to accrued interest which will be taxable as such). Where the
above discussion indicates that the basis of the New Senior Secured Notes or
New Junior Subordinated Notes will be determined by reference to the face
amount of the New Senior Secured Notes or New Junior Subordinated Notes, the
basis will be instead determined by reference to the fair market value of the
New Senior Secured Notes or New Junior Subordinated Notes (other than amounts
received attributable to accrued interest which will be taxable as such).
If either the Senior Debt Claims or the New Senior Secured Notes or if
either the Subordinated Notes or New Junior Subordinated Notes are publicly
traded for tax purposes and the issue price (as determined above) of the New
Senior Secured Notes or New Junior Subordinated Notes, as the case may be, is
less than the face amount thereof by more than a de minimis amount, the New
Senior Secured Notes or New Junior Subordinated Notes, as the case may be,
will be treated as issued with original issue discount. Original issue
discount generally is recognized as interest income to the holder under rules
that cause the sum of original issue discount and stated interest (other than
"qualified stated interest") to be recognized over the term of the debt
instrument on an economic accrual basis, regardless of whether such holder
uses the cash or the accrual method of tax accounting. As a result of this
economic accrual method of including original issue discount in income, the
amounts includible in income by a
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holder of New Senior Secured Notes or New Junior Subordinated Notes generally
are lesser in the early years and greater in the later years than the amounts
that would be includible on a straight-line basis.
If, however, the New Senior Secured Notes and New Junior Subordinated
Noes are not issued with original issue discount, interest on these notes
will be taxable to the holders of these notes as ordinary income at the time
it is received or accrued, depending on the holder's usual method of
accounting for tax purposes.
9. SALE, EXCHANGE OR OTHER DISPOSITION OF NEW SENIOR SECURED NOTES OR NEW
JUNIOR SUBORDINATED NOTES
The sale, exchange, redemption or other taxable disposition of a New
Senior Secured Note or New Junior Subordinated Note will result in
recognition of taxable gain or loss to a holder of such notes in an amount
equal to the difference between (a) the amount of cash and the fair market
value of property received in exchange therefor (other than amounts
attributable to accrued interest which will be taxable as such) and (b) such
holder's adjusted tax basis in such note. Except as discussed below with
respect to market discount, such gain or loss generally will be long-term
capital gain or loss if the holder has held the note for more than one year
at the time of disposition.
An exception to the capital gain treatment described above may apply
to a holder who purchased either the New Senior Secured Notes or New Junior
Subordinated Notes at a "market discount." In general, unless a holder
acquired a note upon the note's original issuance at the original "issue
price" for the notes, market discount is, in the case of notes without
original issue discount, the excess, if any, of the principal amount of a
note over the holder's tax basis therein at the time of the acquisition and,
in the case of notes with original issue discount, is the excess if any, of
the "revised issue price" of such note over the holder's tax basis therein at
the time of acquisition (unless, in either case, the amount of such excess is
less than a specified de minimis amount, in which case market discount is
considered zero). A holder who acquires a debt instrument at a market
discount (and who does not elect to include such market discount in income on
a current basis, as described below) may be required to defer a portion of
the interest expense on any indebtedness incurred or continued to purchase or
carry such debt instrument until the holder disposes of the debt instrument
in a taxable transaction. A holder of a debt instrument acquired at a market
discount may elect to include the market discount in income as the discount
accrues, either on a straight-line basis or, if elected as to such
instrument, on a constant interest rate basis. The current inclusion
election, once made, applies to all market discount obligations acquired by
such holder on or after the first day of the first taxable year to which the
election applies, and may not be revoked without the consent of the Service.
If a holder makes a current inclusion election, the foregoing rules with
respect to the recognition of ordinary income on a sale or other disposition
of such debt instrument, and the deferral of interest expense on indebtedness
related thereto, should not apply.
B. TAX CONSEQUENCES TO EQUITYHOLDERS
1. RECEIPT OF NEW WARRANTS
The Plan contemplates the distribution of New Warrants in exchange for
the Old Common Stock. Based on a literal reading of the Code and recently
finalized Treasury Regulations, the exchange of the Old Common Stock for New
Warrants should constitute a taxable exchange. Accordingly, the holders of
Old Common Stock should recognize gain or, subject to the "wash sale" rules
of the Code, loss on the exchange. The gain or loss recognized on the
exchange should be measured with reference to an Old Common Stock holder's
adjusted tax basis in the Old Common Stock surrendered and the fair market
value of the New Warrants received in the exchange. To the extent a loss
would otherwise be recognized on the exchange, such loss will be disallowed,
either in whole or in part, under Code Section 1091 (the "wash sale" rules).
The extent to which such loss would be disallowed is unclear. The basis and
holding period that a holder will have in the New Warrants will depend on
whether the receipt of the New Warrants causes the holder of Old Common Stock
to recognize a loss and the extent to which such loss is disallowed under the
wash sale rules. To the extent New Warrants received do not cause the
disallowance of a loss, the holder will have a tax basis in such New Warrants
equal to the fair market value thereof, and a holding period beginning on the
day after the Effective Date. To the extent the New Warrants received cause
the disallowance of a holder's loss, the holder will have a tax basis in such
New Warrants equal to the fair market value thereof, increased by the amount
of disallowed loss. The holding period for such New Warrants received will
include the holding period for
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the Old Common Stock. Holders of Old Common Stock should consult their tax
advisors regarding the tax consequences resulting from the Reorganization.
If, contrary to the treatment indicated by the Code and Regulations
described above, the exchange of the Old Common Stock for New Warrants is
treated as a reorganization under Code Section 368, the exchange would not be
treated as a taxable exchange to the holders of Old Common Stock. As a
result, the holders of Old Common Stock would not recognize gain or loss on
the exchange. The Old Common Stock holder's tax basis in the New Warrants
should equal the adjusted tax basis in the Old Common Stock surrendered in
the exchange. The holding period for the New Warrants should include the
holding period for the Old Common Stock.
2. EXERCISE, DISPOSITION OR LAPSE OF NEW WARRANTS
Holders of the New Warrants should not recognize gain or loss upon
exercise of the New Warrants, but their basis therein, together with amounts
paid to exercise the New Warrants, should be included in their basis in the
property acquired as a result of such exercise. The holding period for the
property acquired upon exercise should begin on the day after the date of
exercise of such rights.
Holders of New Warrants should recognize gain or loss upon the
disposition or lapse of the rights in an amount equal to the difference
between their basis in the New Warrants, if any, and the amount, if any,
received in exchange therefor. Such gain or loss generally will be capital
gain or loss, and will be long-term capital gain or loss if the holding
period of the New Warrants exceeds one year.
C. TAX CONSEQUENCES TO SECURITIES FRAUD CLAIM HOLDERS
Pursuant to the Plan, the Securities Fraud Claim holders will receive
New Warrants. To the extent holders receive New Warrants in respect of
claims relating to Old Common Stock disposed of in a taxable transaction
occurring in a year prior to the year in which the New Warrants are received
(or, for accrual basis taxpayers, prior to the year in which the Plan is
confirmed), the Debtor believes such holders will recognize gain in the year
of such receipt (or year of confirmation of the Plan for accrual basis
taxpayers) equal to the fair market value of the New Warrants of the same
character as the loss incurred in the prior year. To the extent holders
receive New Warrants in respect of claims relating to Old Common Stock
disposed of during the same taxable year in which the New Warrants are
received (or year of confirmation of the Plan for accrual basis taxpayers),
but prior to such receipt (or confirmation), the Debtor believes such holders
will reduce the loss on such disposition by an amount equal to the fair
market value of the New Warrants. The Debtor believes a holder receiving New
Warrants in respect of Old Common Stock disposed of prior to the receipt of
such New Warrants (or confirmation of the plan for accrual basis taxpayers)
will have a tax basis in the New Warrants equal to the fair market value
thereof.
To the extent holders receive New Warrants in respect of claims relating to
Old Common Stock cancelled pursuant to the Plan, such New Warrants will be
combined with the New Warrants received in respect of the Old Common Stock,
and the tax treatment will be as set forth above under "Tax Consequences to
Equityholders." Holders of Securities Fraud Claims should consult their tax
advisors regarding the tax consequences resulting from the Reorganization.
D. TAX CONSEQUENCES TO DIVIDEND CLAIM HOLDERS
Pursuant to the Plan, Dividend Claim holders will receive New Warrants.
The holders will recognize ordinary income equal to the fair market value of
the New Warrants in the year of receipt (or, for accrual basis taxpayers, in
the year in which the Plan is confirmed). The holders will receive a tax
basis in the New Warrants equal to the fair market value thereof.
E. BACKUP WITHHOLDING
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Holders of Subordinated Notes, Senior Debt Claims and Old Common Stock
may, under certain circumstances, be subject to backup withholding on
reportable payments made pursuant to the Plan (or on a distribution with
respect to the New Common Stock, on interest with respect to the New Senior
Secured Notes or the New Junior Subordinated Notes, or on property received
upon exercise of the New Warrants), unless either the holder provides the
correct taxpayer identification number to the Debtor and certifies in the
manner required that the holder is not subject to backup withholding, or the
holder demonstrates when required that it is a corporation otherwise exempt
from backup withholding. A holder of New Senior Secured Notes, New Junior
Subordinated Notes, New Common Stock, or New Warrants that does not provide
the Debtor with the correct taxpayer identification number also may be
subject to penalties imposed by the Service. Amounts withheld under these
rules are creditable against the holder's U.S. federal income tax liability.
F. TAX CONSEQUENCES TO THE DEBTOR
1. CANCELLATION OF INDEBTEDNESS INCOME
A taxpayer generally must include in gross income the amount of any
cancelled indebtedness realized during the taxable year, except to the extent
payment of such indebtedness would have given rise to a deduction. Such
amounts, however, are not included in income where the cancellation of
indebtedness is accomplished pursuant to a plan approved by the court in a
case under the Bankruptcy Code (the "Bankruptcy Exception"). Instead, the
amount of cancelled indebtedness that would otherwise have been required to
be included in income reduces certain tax attributes of the taxpayer in the
following order: net operating loss carryforwards ("NOLs"), general business
credit carryovers, minimum tax credits, capital loss carryovers, the
taxpayer's basis in property and foreign tax credit carryovers. A reduction
in the basis of taxpayer's property is limited, however, to the excess of the
aggregate bases of the property held by taxpayer immediately after the
discharge over the aggregate of the liabilities of taxpayer immediately after
the discharge.
Under the Plan, satisfaction of the Claims would give rise to
cancellation of indebtedness income to the Debtor in an amount equal to the
difference between (i) the adjusted issue price of Claims and (ii) the sum of
(a) the amount of Excess Cash, if any, paid by the Debtor in partial
satisfaction of such Claims, and (b) the issue price of any debt instrument
and the fair market value on the Effective Date of stock and other
consideration issued in satisfaction of such Claims, except to the extent
that the discharged Claims would have given rise to a deduction had they been
paid in full and a deduction for such amount has not already been claimed.
Based on the estimate of the value of the New Common Stock available on the
date of the Disclosure Statement, the Debtor estimates that satisfaction of
the Claims will give rise to approximately $70 million in cancellation of
indebtedness income that will not be recognized under the Bankruptcy
Exception.
2. POTENTIAL AVAILABILITY OF NET OPERATING LOSS CARRYOVERS
The Debtor estimates that as of the Effective Date, and based on the
assumptions on which the Reorganized Debtor projections are based, the Debtor
will have approximately $27 million of NOLs, prior to taking into account any
reductions for cancellation of indebtedness as discussed above (see
"Cancellation of Indebtedness Income"). Because the amount of cancellation
of indebtedness income is expected to be greater than the NOL as of the
Effective Date, the Debtor anticipates that the entire NOL will be
eliminated. Whether the NOL is entirely eliminated due to the exclusion of
cancellation of indebtedness will depend on the taxable income or loss
generated by the Debtor up to the Effective Date and the fair market value of
the New Common Stock received by the holders of the Claims. These factors
may change between the date of this Disclosure Statement and the Effective
Date. If, due to these factors, there is an NOL after the reduction of tax
attributes as of the Effective Date, the NOL may be subject to annual
limitations under Code Section 382 (the "Section 382 Limitation").
CODE SECTION 382 - IN GENERAL. Code Section 382 provides that corporations
that undergo an "ownership change" may be limited in the amount of existing tax
attributes, including NOLs, that can be used to offset income generated by the
corporation after the date of the ownership change, unless an exception under
Code Section 382(l)(5) applies (as described below). Stated simply, an
ownership change occurs when aggregate changes in stock ownership by 5 percent
shareholders exceed 50 percentage points by value over a three-year "testing
period."
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Following an ownership change, the annual amount of income that may be offset
by the corporation's tax attributes after the ownership change generally will
be limited to an amount equal to the sum of the equity value of the
corporation immediately before the ownership change (but including any
increase in value resulting from any surrender or cancellation of
indebtedness under the Chapter 11 case), multiplied by the long-term
tax-exempt rate then in effect. This Section 382 Limitation may be increased
by certain "recognized built-in gains" triggered during a five year
"recognition period" beginning on the ownership change date. Moreover,
certain "recognized built-in losses" triggered during the recognition period
may be limited in the same manner as if such loss were an NOL existing as of
the ownership change.
CODE SECTION 382(l)(5). Code Section 382(l)(5) applies to certain
ownership changes occurring in connection with Chapter 11 cases, unless the
corporation affirmatively elects not to have such provision apply. Code
Section 382(l)(5) applies to ownership changes if (i) the corporation is
under the jurisdiction of a Bankruptcy Court under Chapter 11, and (ii) the
shareholders and "qualified creditors" of the corporation (determined
immediately before the ownership change) own, after the ownership change,
stock of the corporation having at least 50 percent of the value and voting
power of the corporation. "Qualified creditors" are defined to include
creditors that held their indebtedness for at least 18 months prior to the
date of the filing of the Chapter 11 Case and creditors whose indebtedness
arose in the ordinary course of the corporation's trade or business and was
held by the person who at all times held the beneficial interest in such
indebtedness. If the exception under Code Section 382(l)(5) applies, the
general Section 382 Limitation does not apply. Instead, any existing NOLs are
reduced by a portion of the interest that the corporation claimed as a
deduction on indebtedness that was converted into stock of the corporation as
a result of the Chapter 11 proceedings. The amount of disallowed interest
equals the amount of deductions the corporation claimed on such indebtedness
during the portion of the tax year in which the ownership change occurred and
the three preceding tax years.
APPLICATION OF CODE SECTION 382 TO DEBTOR. Debtor anticipates that there
will be no NOL existing after taking into account the attribute reduction as
of the Effective Date. If, however, there is an NOL existing subsequent to
the Effective Date, it appears that the Debtor could elect to have the Code
Section 382(l)(5) exception apply. Under the exception, the general Section
382 Limitation would not apply. Instead, any NOL existing on the Effective
Date (after the reduction of tax attributes) would be reduced by a portion of
the interest deducted by the Debtor with respect to the Claims that were
converted into New Common Stock pursuant to the Plan. The NOL would be
reduced by the interest deducted on such claims during the taxable year that
includes the Effective Date and the three prior years.
If the Code Section 382(l)(5) exception does not apply to the Debtor (or
the Debtor affirmatively elects out of the exception), any existing NOL would
be subject to the general Section 382 Limitation. As a result, annual usage
of the NOL would be limited to the equity value of Debtor immediately prior
to the Effective Date, (including any increase in value resulting from the
cancellation of any Claims under the Plan), multiplied by the long-term
tax-exempt rate in effect as of the Effective Date. Debtor may be allowed to
increase such limitation by certain built-in gains realized during the five
year recognition period following the change date. Certain recognized
built-in losses realized during the recognition period may be subject to
Debtor's Code Section 382 limitation as if they were NOLs.
3. REDUCTION IN ASSET BASIS
To the extent the Debtor's cancellation of indebtedness income exceeds
its NOL and capital loss and tax credit carryforwards as of the Effective
Date, the Debtor may be required to reduce the basis of its assets. The
reduction in the basis of Debtor's property would be limited, however, to the
excess of the aggregate bases of the property held by Debtor immediately
after the discharge over the aggregate of the liabilities of Debtor
immediately after the discharge. Despite this limitation, asset basis
reduction could result in a significant future tax cost to Debtor when such
assets are realized or disposed of.
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XV.
VOTING AND CONFIRMATION OF THE PLAN
A. CLASSIFICATION OF CLAIMS AND INTERESTS UNDER THE BANKRUPTCY CODE
The Plan divides the Claims against and Interests in the Debtor into ten
(10) classes and sets forth the treatment offered each class. Section
101(5) of the Bankruptcy Code defines "claim" broadly as a "right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured" or a "right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, disputed, undisputed, secured, or
unsecured."
In order for the holder of a claim to participate in a plan and receive the
treatment offered to the class in which it is classified, the claim must be
"allowed." A claim is allowed under the Bankruptcy Code if such claim or a
portion thereof either:
(i) has been scheduled by the Debtor in its bankruptcy filing, is
not scheduled as disputed, contingent or unliquidated, and is
not subject to any pending objection timely filed by any
party-in-interest, or
(ii) has been timely filed by way of a proof of claim with the
court and
(A) is not subject to an objection filed within any period
for objections fixed by the Bankruptcy Code, the
Bankruptcy Rules, or an order of the court, or
(B) the court has allowed the claim despite an objection.
Pursuant to Section 1122 of the Bankruptcy Code, claims and interests
must be grouped into classes or "classified" under a plan of reorganization.
All claims or interests within a particular class must be substantially
similar to each other, and must in general receive the same treatment as
each other, except to the extent that a particular holder agrees to a less
favorable treatment. The Debtor believes that the classification of Claims
and Interests under the Plan is proper under the Bankruptcy Code.
Modifications or amendments to a plan's classification system may be
made with the Court's approval and may, under certain circumstances, be
approved by the Court at the confirmation hearing without re-solicitation of
holders of Claims and Interests who are not materially and adversely affected
by any such modification or amendment. In the event that re-solicitation is
required, which would be the case in the event that the modification
adversely changes the treatment of the claim of any creditor who has not
accepted in writing the modification and whose claim is in a class which must
accept the plan in order for it to be confirmed, the plan proponent must make
disclosure to holders of claims or interests of such additional adequate
information as is necessary to make an informed judgment about the Plan as
modified.
It is the present intention of the Debtor to use, to the extent
permitted by the Court and the Bankruptcy Code, each acceptance received by
the Debtor pursuant to this solicitation for the purpose of obtaining the
acceptance of the Class of which a holder of Claims or Interests is
ultimately deemed to be a member, in the event of an amendment or
modification of the classification scheme under the Plan. It is possible
that reclassification of Claims or Interests could affect the Classes in
which such Claims or Interests were initially classified, or another Class
under the Plan, by changing the composition of such Classes and the votes of
the members thereof required for acceptance of the Plan by such Classes. A
reclassification of Claims or Interests after this solicitation could
necessitate a re-solicitation of acceptances.
TO THE EXTENT PERMITTED BY THE COURT, THE BANKRUPTCY CODE AND THE
BANKRUPTCY RULES, ACCEPTANCE BY ANY HOLDER OF CLAIMS OR INTERESTS OF THE PLAN
PURSUANT TO THIS SOLICITATION WILL BE DEEMED TO BE THE ACCEPTANCE OF THE PLAN'S
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TREATMENT OF ANY SUCH CLAIM OR INTEREST, REGARDLESS OF POSSIBLE
RECLASSIFICATION OF THE CLAIM OR INTEREST.
B. IMPAIRMENT OF CLAIMS AND INTERESTS: IMPAIRED CLASSES.
The Bankruptcy Code requires that, in order to be confirmed, a plan of
reorganization must specify whether a class of claims or interests is "impaired"
by its treatment under the Plan. A claim or interest is "impaired" unless the
plan:
(i) leaves unaltered the legal, equitable and contractual rights
to which the claim or interest entitles the holder thereof; or
(ii) with certain exceptions, cures any default which occurred
before or after the commencement of the chapter 11 case,
reinstates the original maturity of the claim or interest,
compensates the holder for any damages resulting from any
reasonable reliance by the holder on a contractual provision
or applicable law that permits acceleration of the debt and
does not otherwise alter the legal, equitable or contractual
rights to which such claim or interest entitles the holder of
such claim or interest.
Under the Plan, Classes 1, 2 and 3 are not impaired, and Classes 4, 5, 6,
7A, 7B, 7C and 8 are impaired.
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C. SOLICITATION OF IMPAIRED CLASSES AND VOTING REQUIREMENTS.
A class of claims or interests that is not impaired under a plan of
reorganization is deemed under the Bankruptcy Code to have accepted the plan,
and, therefore, solicitation of acceptances with respect to such class is not
required. A class that does not receive or retain any property under the
Plan is deemed to have rejected the plan.
With the transmittal of the Disclosure Statement, the Plan and the
Ballots, the Debtor is soliciting acceptances from the holders of Claims in
Classes 4, 5 and 6 because each such Class of Claims is impaired under the
Plan, and are, therefore, entitled to vote on the Plan. For purposes of
voting only, and with specific reservation of rights by all parties as to all
other issues, Class 7A, 7B and 7C, in addition to Class 8, are deemed to have
rejected the Plan and will not be solicited for acceptances or rejections of
the Plan.
Section 1125 of the Bankruptcy Code requires that disclosure of
"adequate information" be made to all impaired creditors and interest holders
at the time of or before solicitation of acceptances of a plan of
reorganization. "Adequate information" means "information of a kind, and in
sufficient detail, as far as is reasonably practicable in light of the nature
and history of the debtor and the condition of the debtor's books and
records, that would enable a hypothetical, reasonable investor typical of
holders of the claims or interests of the relevant class to make an informed
judgment about the plan, but adequate information need not include such
information about any other possible or proposed plan." An "investor typical
of holders of claims or interests of the relevant class" means an investor
having, among other things, "such ability to obtain such information from
sources other than the disclosure required by section 1125 as holders of
claims or interests in such class generally have."
The Debtor believes that it is tran-SM-itting the Plan to substantially all
holders of Impaired Claims and Interests in connection with this solicitation,
and that the Disclosure Statement satisfies the requirements of section 1125
with regard to "adequate information" provided by a disclosure statement under
the Bankruptcy Code.
For an impaired class of claims to be determined to have accepted a plan
of reorganization, the holders of at least two-thirds in amount and more than
one-half in number of the claims of the holders within such class who
actually vote must accept the plan. With respect to an impaired class of
interests, the holders of at least two-thirds in amount of the interests of
holders who actually vote in such class must vote to accept the plan.
As described above, the Bankruptcy Code does not require that each holder
of a claim or interest vote in favor of a plan in order for the Court to confirm
the plan under Section 1129 of the Bankruptcy Code, as long as the requisite
number and amount of votes are obtained to constitute acceptance by each
impaired class. In addition, the Bankruptcy Code does not require that every
impaired class accept a plan. If one or more impaired classes of claims exists,
the plan must be accepted by at least one class of impaired claims to be
confirmed, without considering the votes of "insiders" as defined by the
Bankruptcy Code. If certain requirements are met, the Court can confirm the
plan notwithstanding the nonacceptance by a class of impaired claims or
interests. This is generally referred to as the "cramdown" power as provided
for in Section 1129(b) of the Bankruptcy Code. The cramdown power is described
further in Subsection E.4 below.
Because Classes 7A, 7B, 7C and 8 are deemed to have rejected the Plan,
the Debtor will seek confirmation pursuant to Section 1129(b) of the
Bankruptcy Code. In addition, the Debtor shall ask the Court to confirm the
Plan notwithstanding the rejection by one or more Classes of Impaired Claims
or Interests other than Classes 7A, 7B, 7C and 8 in the event that any such
Impaired Classes of Claims or Interests rejects the Plan.
Finally, it is possible that even if all Classes of Claims and Interests
accept the Plan, the Court may not confirm the Plan if it finds that certain
other requirements for confirmation have not been met.
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D. POSSIBLE POST-SOLICITATION, PRE-CONFIRMATION EVENTS.
The Debtor reserves the sole right, in accordance with the Bankruptcy
Code, to amend or modify the Plan as the result of substantive or technical
objections to the Plan filed by holders of Claims or Interests, or as a
result of any other matter that may affect the Debtor's ability to obtain
confirmation of the Plan, or, if for any other reason such amendment or
modification is determined by the Debtor to be in its best interest. Such an
amendment or modification may occur before or after objections to the Plan
are filed, if any, or even after confirmation of the Plan.
The Debtor reserves the right to use the Ballots of holders of Claims
and Interests to obtain confirmation with respect to any modified Plan so
long as the amendment does not materially and adversely affect the
trea-TM-ent of the Class of Claims and Interests under the Plan whose votes
the Debtor seeks to use. If the Plan is so amended or modified, only for
cause shown and pursuant to a request made within the time fixed for
acceptance or objection may a holder of Claims or Interest change or withdraw
its ballot.
E. CONFIRMATION PROCEDURES AND REQUIREMENTS.
1. CONFIRMATION WHERE SUFFICIENT ACCEPTANCES ARE OBTAINED.
The Bankruptcy Code contains specific requirements for confirmation
of a plan in section 1129. For example, the Court must find that a plan is
proposed in "good faith" and not by any means forbidden by law, that it makes
certain specified disclosures, and that it provides that any payment made to
any person in connection with such plan and incident to the reorganization
case be reasonable and subject to the Court's approval. In addition, both
the plan and the plan proponent must comply with the provisions of the
Bankruptcy Code, and the plan must satisfy the "best interest of creditors"
test and the plan must be feasible.
2. CHAPTER 7 LIQUIDATION ANALYSIS AND "BEST INTEREST OF CREDITORS" TEST.
Before a plan can be confirmed, the Court must determine under
section 1129(a)(7) (with certain exceptions) that the plan provides, with
respect to each impaired class of claims or interests, that each holder of a
claim or interest in such class either:
(i) has accepted the plan, or
(ii) will receive or retain under the plan property of a value, as
of the effective date of the plan, that is not less than such
person would receive or retain if the debtor were liquidated
on such date under chapter 7 of the Bankruptcy Code. A
detailed analysis of this requirement as it relates to the
Plan and the Debtor is provided in Exhibit O to the Disclosure
Statement. As indicated in the Liquidation Analysis, Senior
Debt Claims would receive approximately 88% of their claim
amounts on a present value basis in a liquidation; whereas,
the Debtor's Plan provides for a less than 100% recovery for
Senior Debt Claims, in addition to the value allocated by
holders of Senior Debt Claims to other classes. THE DEBTOR
URGES EACH HOLDER OF CLAIMS AND INTERESTS TO EXAMINE EXHIBIT O
CAREFULLY IN EVALUATING THE PLAN.
Because the Debtor owns 100% of the stock in the Nondebtor Subsidiaries,
the liquidation scenario focuses on liquidation of the assets of the
Nondebtor Subsidiaries, the net value of which, when liquidated, shall equal
the value of the Debtor's stock interest in the Nondebtor Subsidiaries on a
liquidation basis. The liquidation scenario is assumed to commence on
November 1, 1998. Under the liquidation scenario, the Debtor ceases the
acquisition of new loans immediately and collects its loan portfolio through
its branch network for approximately 14 months. The number of branches and
employees would decline as the portfolio shrinks. At the end of 1999, it is
assumed that the remaining portfolio is sold for 80% (based upon net finance
receivables net of the bad debt allowance). Employees would be offered a
stay bonus to induce them to remain with the Debtor until their services are
no longer required. This stay bonus is based upon the same successful
compensation plan used when the Debtor downsized its operations from 260 to
185 branches in late 1997. A brief summary of the Debtor's operating
structure through the course of the liquidation is as follows:
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<TABLE>
<CAPTION>
Actual Quarter Beginning
8/31/98 11/1/98 1/1/99 4/1/99 7/1/99 10/1/99 1/1/2000
<S> <C> <C> <C> <C> <C> <C> <C>
# of 184 176 153 133 132 112 92
Branches
# of 1,352 1,155 1,015 905 905 785 100
Employees
</TABLE>
Midland Finance Company ("Midland"), the Debtor's wholly owned
subsidiary, is not included in the above summary. Midland is a $38 million
consumer loan company and operates from two facilities in Chicago. It is
assumed that Midland would be liquidated in the same manner as the Debtor,
i.e., it would cease new loan originations immediately, collect its portfolio
through a downsized operation through December, 1999 and the remaining
portfolio would be sold at that time.
The Debtor also owns a $59 million unsecured credit card portfolio,
which is administered and serviced by a third party vendor. In order to
minimize the substantial termination damage provisions associated with this
service contract, it is assumed that the credit card portfolio continues to
operate until December, 1999 and then is sold for 40% of its forecasted
December, 1999 gross balance.
Once the Debtor's various loan portfolios are sold by December, 1999, it
is assumed that a core staff of employees would continue to market and sell
repossessions that were in the "pipeline" at December, 1999, prepare final
financial statements, tax and payroll reports, exit all facilities, pay final
bills and wind down all administrative affairs of the Debtor. It is assumed
that all functions would cease by March 31, 2000.
In summary, the Debtor believes that the provisions of section
1129(a)(7) will be satisfied with respect to the Plan. In particular with
respect to Classes 5, 6, 7A, 7B, and 7C, the Debtor believes such holders
will receive property with at least as much value as the creditors or equity
holders in such Classes would be entitled to receive in a chapter 7
liquidation. Other parties in the Case take the position that a liquidation
analysis of the Debtor would involve a sale of stock of the Nondebtor
Subsidiaries, not the liquidation of the assets of the Nondebtor
Subsidiaries, and that the ongoing value underlying that stock would be
greater than the value to be realized upon a liquidation of nondebtor assets.
The Debtor disagrees. As set forth in Section II.D., the Debtor has
conducted a market exploration process since February, 1997, which sought
offers for the Debtor's assets, including primarily its stock ownership
interest in the Nondebtor Subsidiaries. There have been no offers which
would enable the Debtor to confirm a plan of reorganization with adherence to
the Bankruptcy Code.
3. FEASIBILITY TEST.
Pursuant to the Bankruptcy Code, the Court must determine the
confirmation of a plan is not likely to be followed by the liquidation or
need for further financial reorganization of the debtor. The Debtor believes
the Plan meets this requirement.
To reach this conclusion the Debtor has analyzed the ability of the
Reorganized Debtor to meet its obligations while retaining a sufficient
amount of cash to carry on its operations. The feasibility of the Plan can be
analyzed when the Plan is considered in light of the Debtor's operating
results and the Debtor's projections for the next five years.
In assessing the Plan's feasibility, certain matters which
constitute important risk factors have been set forth in Section XIII. THE
DEBTOR URGES EACH HOLDER OF CLAIMS AND INTERESTS TO EXAMINE CAREFULLY THE
ENTIRE DISCLOSURE STATEMENT, SPECIFICALLY INCLUDING SECTION XIII IN
EVALUATING THE PLAN.
4. "CRAM DOWN"--FAIR AND EQUITABLE TEST; UNFAIR DISCRIMINATION.
If all of the requirements of section 1129(a) of the Bankruptcy Code are
met other than the acceptance of the plan by each class of impaired claims or
interests, the Court, on the request of a plan proponent, shall confirm a
plan pursuant to section 1129(b) of the Bankruptcy Code if the plan does not
discriminate unfairly and is fair and equitable with respect to each impaired
class that has not accepted the plan. This ability of the Court to confirm a
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plan notwithstanding the existence of one or more dissenting impaired classes
of claims or interests has periodically been referred to as the "cram-down"
power. In addition to a determination that the plan does not discriminate
unfairly and is fair and equitable with respect to each dissenting impaired
class, exercise of the cram down power requires that at least one impaired
class of claims accept the plan. The determination of whether at least one
class has accepted the plan must be made without including the acceptance of
an insider of the debtor, which is defined so as to include, if the debtor is
a corporation, a director, officer or person in control of the debtor and
certain other persons.
The requirement that a plan not "discriminate unfairly" means, among
other things, that a dissenting class must be treated substantially equally
with respect to other classes of equal rank. The Debtors believe that the
Plan does not unfairly discriminate against any Class that may not accept or
otherwise consent to the Plan.
Tests for defining the term "fair and equitable" are contained in
section 1129(b)(2) of the Bankruptcy Code. A plan is deemed fair and
equitable with respect to an impaired class of unsecured claims if each
member of the class receives or retains on account of his claim property of a
value, as of the effective date of the plan, equal to the allowed amount of
the claim, or alternatively, no holder of a claim or interest that is junior
to the claims of the rejecting class of unsecured creditors will receive or
retain any value under the plan on account of such junior claims or
interests. This test is sometimes referred as the "absolute priority" rule
because it entitles any rejecting class to have its claims satisfied in full
before junior classes receive or to retain any value under the plan of
reorganization.
In the event that one or more of Classes 5, 6, 7A, 7B and 7C do not
accept the Plan, the Debtor believes that the Plan could be confirmed under
section 1129(b) of the Bankruptcy Code because no Class of Claims or
Interests junior to Class 4 would receive or retain any property in the event
of a chapter 7 liquidation of the Debtor. In the event that it is deemed
necessary to invoke the Court's cram down power with regard to any of Classes
5, 6, 7A, 7B, 7C and 8, the Plan may be deemed not to comply strictly with
the absolute priority rule because it provides for distributions to Classes
5, 6, 7A, 7B and 7C notwithstanding the fact that Class 4 may not be
satisfied in full. However, the Debtor anticipates that Class 4 will accept
the Plan, therefore relieving the Debtor from compliance with the absolute
priority rule with respect to Class 4.
F. BAR DATE.
Pursuant to an order dated October 15, 1998, the Court established
December 7, 1998, as the last date by which all Persons, creditors,
individuals, partnerships, corporations, associations, estates, trusts, or
other entities that wish to assert a Claim against the Debtor arising or
existing, or which may be deemed to have arisen or existed, prior to July 15,
1998 as defined in Section 101(5) of the Bankruptcy Code (the "Bar Date").
Except as otherwise specifically provided, the Bar Date applies to any
"Claim" against the Debtor arising from any event occurring during the
Debtor's operation of its business before and until the Debtor's Petition
Date including, without limitation: (a) indemnification claims or
contribution claims against the Debtor under various principles or provisions
of applicable state law; (b) consumer action claims, including such claims
that have been asserted in litigation; (c) any administrative agency claims
or similar kinds of private enforcement claims, including, but not limited
to, wage and hour claims, wrongful termination claims, employment
discrimination claims, and other employment related claims, and (d) claims
generally arising from the Debtor's announcement of accounting
irregularities, including alleged violations of federal and state securities
laws and regulations ("Securities Fraud Claims").
Proofs of claim must be filed and received NO LATER THAN 4:00 P.M. EST
ON THE BAR DATE by Logan & Company, Inc., the Claims Agent, at the following
address:
CLAIMS CENTER - Mercury Finance Company
c/o Logan & Company
615 Washington Street
Hoboken, NJ 07030
(201) 798-1031
Proofs of claim will be treated as filed only when actually received by the
Claims Agent. Facsimile transmissions or electronic transfer of proofs of
claim will not be accepted. In filing their proofs of claim, all
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creditors must use the Proof of Claim form attached to the Notice Of Last
Date for Filing Proof of Claim ("Notice of Bar Date") or a form conforming
with Official Form No. 10. Proofs of Claim forms can be obtained at any
Bankruptcy Court.
The Debtor has filed its Schedules of Assets and Liabilities and
amendments thereto, (the "Schedules") with the Clerk of the Bankruptcy
Court, setting forth claim amounts for all creditors as they appear on the
Debtor's books and records. ALL CREDITORS ARE ADVISED TO REVIEW THE
SCHEDULES, WHICH ARE AVAILABLE AT THE OFFICE OF THE CLERK, UNITED STATES
BANKRUPTCY COURT, LOCATED AT 219 SOUTH DEARBORN STREET, 7TH FLOOR, CHICAGO,
ILLINOIS 60604 DURING NORMAL BUSINESS HOURS OR MAY BE OBTAINED AT THE EXPENSE
OF THE REQUESTING PARTY BY CONTACTING THE CLAIMS AGENT AT THE
ABOVE-REFERENCED ADDRESS AND TELEPHONE NUMBER.
Creditors need not file a proof of claim if: (a) they have previously
filed a proof of claim in this chapter 11 case, (b) they agree in all
respects with the information contained in the Schedules regarding the amount
of their claim and such claim is NOT listed as contingent, unliquidated, or
disputed, (c) they have a claim arising on or after July 15, 1998, (d) their
claim has already been satisfied by a prior order or authorization of the
Bankruptcy Court, and (e) they were stock holders of record on February 17,
1997 and have a Dividend Claim.
Any person or entity asserting a Claim against the Debtor arising from
the rejection of executory contracts or unexpired leases pursuant to
Bankruptcy Code section 502(g) must, to have such Claim allowed against the
Debtor, file a proof of claim by the later of : (i) thirty days after the
date the claim first arises under section 502(g) of the Bankruptcy Code, or
(ii) the Bar Date.
Holders of the Debtor's common stock and stock options need not file
proofs of interest with respect to the interests represented by such equity
securities. In addition, any current or former holder of the Debtor's common
stock who has a Dividend Claim against the Debtor may, but need not, file a
proof of claim on or before the Bar Date. However, any equity security
holder who has, may have, or may assert a Securities Fraud Claim against the
Debtor must file a proof of claim on or before the Bar Date.
ANY HOLDER OF A CLAIM THAT FAILS TO FILE A PROOF OF CLAIM ON OR BEFORE THE
BAR DATE AS REQUIRED BY ORDER OF THE BANKRUPTCY COURT IS FOREVER BARRED,
ESTOPPEL AND ENJOINED FROM (a) ASSERTING ANY SUCH CLAIM AGAINST THE DEBTOR OR
ITS RESPECTIVE SUCCESSORS AND ASSIGNS AND (b) RECEIVING ANY DISTRIBUTION
UNDER ANY PLAN OF REORGANIZATION ON ACCOUNT OF SUCH CLAIM. FURTHER, ANY
HOLDER OF A SECURITIES FRAUD CLAIM THAT FAILS TO FILE A PROOF OF CLAIM ON OR
BEFORE THE BAR DATE AS REQUIRED BY ORDER OF THE BANKRUPTCY COURT IS FOREVER
BARRED, ESTOPPED AND ENJOINED FROM (a) ASSERTING ANY SUCH CLAIM AGAINST THE
NEW WARRANT ESCROW AND (b) RECEIVING ANY DISTRIBUTION FROM THE NEW WARRANT
ESCROW.
The Debtor or its agent will mail copies of the Notice of Bar Date by
prepaid U.S. Mail more than 20 days prior to the Bar Date, to all known
pre-petition creditors, record holders of the Debtor's Common Stock on
January 28, 1997, February 17, 1997 and the Record Date, and other interested
parties. Beneficial Holders of the Debtor's Common Stock will receive the
Notice of the Bar Date in connection with the plan solicitation materials.
The Debtor will also publish the Notice of Bar Date in the WALL STREET
JOURNAL (National Edition), the CHICAGO TRIBUNE and the NEW YORK TIMES, not
less than 10 days nor more than 30 days prior to the Bar Date and if
possible, once in the AUTOMOTIVE NEWS, a trade magazine.
G. LETTERS OF TRANSMITTAL AND BOOK-ENTRY CONFIRMATION.
SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTIONS-SENIOR DEBT CLAIMS
AND SUBORDINATED NOTEHOLDER CLAIMS. As a condition to participation under
the Plan, each holder of a Senior Debt Claim or a Subordinated Noteholder
Claim is required to provide evidence of the securities evidencing the Senior
Debt Claims and Subordinated Noteholders Claims ("Old Securities") by (i)
completing and returning a Letter of Tran-SM-ittal to the Exchange Agent,
together with certificates representing their Old Securities (the "Tendered
Certificates"), or (ii) completing the book-entry confirmation procedure,
promptly after the Confirmation Date. Promptly following the Effective Date,
the Exchange Agent will mail to those persons who have properly completed and
returned Letters of Transmittal and Tendered Certificates or completed the
book-entry confirmation procedure, certificates representing the New Senior
Secured Notes, the New Junior Subordinated Notes and/or the New Common Stock
to be issued in accordance with the Plan. HOLDERS OF OLD SECURITIES WHO
HAVE NOT PROPERLY
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COMPLETED AND RETURNED TO THE EXCHANGE AGENT LETTERS OF TRANSMITTAL TOGETHER
WITH THE TENDERED CERTIFICATES OR COMPLETED THE BOOK-ENTRY CONFIRMATION
PROCEDURE WITHIN ONE YEAR OF THE EFFECTIVE DATE WILL NOT RECEIVE THE
CERTIFICATES OR CASH TO WHICH THEY ARE OTHERWISE ENTITLED PURSUANT TO THE
PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION UNDER THE PLAN. The
Debtor selected one year as opposed to the five year period permitted (but
not required) under section 1143 of the Bankruptcy Code because the
securities mature in less than five years and the Debtor believes that the
cost and expense of establishing an escrow fund for delinquent tenders
outweighs the risk that substantial holders of Old Securities will fail to
surrender their certificates within one year.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Securities at DTC. Any tendering financial institution
that is a participant in DTC's book-entry transfer facility system must make
a book-entry delivery of the Old Securities by causing DTC to transfer such
Old Securities into the Exchange Agent's account at DTC in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures for transfers. Such
holder of Old Securities using ATOP should transmit its acceptance to DTC
on or prior to the Expiration Date (or comply with the guaranteed delivery
procedures set forth below), DTC will verify such acceptance, execute a
book-entry transfer of the tendered Old Securities Notes into the Exchange
Agent's account at DTC and then send to the Exchange Agent confirmation of
such book-entry transfer, including an agent's message confirming that DTC
has received an express acknowledgment from such holder that such holder has
received and agrees to be bound by the Letter of Transmittal and that the
company may enforce the Letter of Transmittal against such holder (a
"book-entry confirmation").
A beneficial owner of Old Securities that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial owner
wishes to participate.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
LETTERS OF TRANSMITTAL. Signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution (as defined below), unless the Old
Securities tendered pursuant thereto are tendered for the account of an
Eligible Institution. If signatures on a Letter of Tran-SM-ittal are
required to be guaranteed, such guarantees must be by a member firm of a
registered national securities exchange in the United States, a member of the
National Association of Securities Dealers, Inc., or by a commercial bank or
trust company having an office or a correspondent in the United States (each
of which is an "Eligible Institution"). If Old Securities are registered in
the name of a person other than the person signing the Letter of Transmittal,
in order to be validly tendered, the Old Securities must be endorsed or
accompanied by properly completed power of authority, with signature
guaranteed by an Eligible Institution.
Holders of Old Securities who are not holders of record should:
(i) obtain a properly completed Letter of Transmittal (or
facsimile thereof) from the record holder,
(ii) obtain and include with the Letter of Transmittal a properly
competed stock or bond power, as the case may be, from the
record holder, or
(iii) effect a record transfer of their Old Securities prior to
delivery of the Letter of Transmittal.
If a holder desires to tender Old Securities pursuant to the Letter of
Transmittal but is unable to locate the Tendered Certificates, such holder
should write to or telephone the Exchange Agent about procedures for obtaining
replacement certificates for Old Securities or arranging for indemnification.
ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
RECEIPT), AND ACCEPTANCE OF BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED
CERTIFICATES WILL BE RESOLVED BY THE DEBTOR, WHOSE DETERMINATION WILL BE FINAL
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AND BINDING, SUBJECT ONLY TO REVIEW BY THE COURT UPON APPLICATION WITH DUE
NOTICE TO ANY AFFECTED PARTIES IN INTEREST. THE DEBTOR RESERVES THE RIGHT TO
REJECT ANY AND ALL BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES
NOT IN PROPER FORM, OR LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES, THE
DEBTORS ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF THE DEBTOR OR ITS COUNSEL,
BE UNLAWFUL.
H. VOTING PROCEDURES, BALLOTING AND CONFIRMATION HEARING
The following Classes of Claims are impaired under the Plan and are
entitled to vote to accept or reject the Plan:
Class 4 Senior Debt Claims
Class 5 Subordinated Noteholder Claims
Class 6 Indemnification Claims
In accordance with the provisions of Bankruptcy Rule 3018 and an order of the
Court, the holders of Classes 4 and 5 Claims shall not be entitled to accept or
reject the Plan unless the holder is the holder of record of such claim on
October 21, 1998.
Holders of Claims in Classes 4 through 6 are requested to complete an
appropriate color-coded Ballot, and when appropriate, Master Ballot, in
accordance with the instructions set forth thereon. Holders of claims should
take care to use the correct Ballot(s) in voting on the Plan. If any Ballots
are damaged or lost, or if a holder has any questions concerning the voting
instructions, it may contact the Balloting Agent at the address or telephone
number indicated below or the Debtor's counsel. Each holder which holds
Claims in more than one Class is required to vote separately with respect to
each Class in which such holder holds Claims. A holder may not split its
vote within a Class of Claims. Incomplete and unsigned Ballots will be
returned to the holder of such Claim.
All votes to accept or reject the Plan must be cast by using the Ballot
or, if applicable, Master Ballot enclosed with the Disclosure Statement. No
other votes will be counted. A properly completed and executed Ballot must
be received no later than 4:00 p.m. EST on December 7, 1998 by Logan &
Company, Inc., the Balloting Agent, at the following address:
BALLOT CENTER - MERCURY FINANCE COMPANY
C/O LOGAN & COMPANY, INC.
615 WASHINGTON STREET
HOBOKEN, NEW JERSEY 07030
Ballots and Master Ballots must be returned by U.S. mail, hand delivery or
overnight mail. Facsimile tran-SM-ission will only be allowed for Master
Ballots. A return envelope will be provided for your convenience. If you
receive a return envelope addressed to a Bank or Broker, you must return your
Ballot to your Bank or Broker early enough for your vote to be processed and
then forwarded to the Balloting Agent.
A hearing to consider confirmation of the Plan, any objections that may
be interposed and any other matter that may properly come before the
Bankruptcy Court will commence before the Honorable Erwin I. Katz, in the
United States Bankruptcy Court for the Northern District of Illinois, 219
South Dearborn Street, Room 680, Chicago, Illinois, on December 21, 1998 at
2:00 p.m. (Central Standard Time) or as soon thereafter as counsel may be
heard (the "Confirmation Hearing"). You may, but are not required to, attend
the Confirmation Hearing. The Confirmation Hearing may be adjourned from time
to time without further notice other than an announcement of the adjourned
date or dates at the Confirmation Hearing.
Objections, if any, to confirmation of the Plan must be in writing and
must (a) state the name and address of the objector, (b) the objector's
interest in the Chapter 11 case, (c) if appropriate, the amount and nature
of the objector's claim or interest, (d) the grounds for the objection and
the legal basis therefor, and (e) be filed with the Clerk of the Bankruptcy
Court, with one (1) copy to chambers, and served upon and received by the
parties listed below on or before December 7, 1998 at 4:00 p.m. (Central
Standard Time):
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<TABLE>
<CAPTION>
<S> <C>
Counsel to Debtor and Counsel for the
DEBTOR IN POSSESSION: UNITED STATES TRUSTEE:
McDermott, Will & Emery United States Trustee's Office
227 West Monroe Street U.S. Department of Justice
Chicago, IL 60606-5096 227 West Monroe Street, Suite 3350
Attn: Lewis S. Rosenbloom Chicago, IL 60606
David D. Cleary Attn: Ira Bodenstein
Debra A. Riley Kathryn M. Gleason
Facsimile No.: (312) 984-7700 Facsimile No.: (312) 886-5794
Co-Counsel to Co-Counsel to
CREDITORS' COMMITTEE: CREDITORS' COMMITTEE:
Cleary, Gottlieb, Steen Jones, Day, Reavis & Pogue
& Hamilton 77 West Wacker Drive
One Liberty Plaza Chicago, IL 60601-1692
New York, NY 10006 Attn: David S. Kurtz
Attn: James E. Millstein Jeffrey W. Linstrom
Lindsee P. Granfield Facsimile No.: (312) 782-8585
Facsimile No.: (212) 225-3999
Co-Counsel to Co-Counsel to
SECURITY CLAIMANTS' COMMITTEE: SECURITY CLAIMANTS' COMMITTEE:
Barbakoff, Zazove & Glick Holper Welsh & Mitchell
20 North Clark Street - Suite 1000 Esplanade III, Suite 700
Chicago, Illinois 60602 2415 East Camelback Road
Attn: Daniel A. Zazove Phoenix, AZ 85016
Facsimile No. (312) 641-5017 Attn: Richard D. Holper
Facsimile No. (602) 508-6036
Co-Counsel to
EQUITY COMMITTEE Co-Counsel to
Goldberg, Kohn Bell Black EQUITY COMMITTEE
Rosenbloom & Moritz Ltd. Gordon Glickman & Flesch
55 East Monroe Street, Suite 3700 140 South LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
Attn: Gerald F. Munitz Attn: James S. Gordon
Randall Klein Facsimile No. (312) 346-3708
Facsimile No. (312) 332-2196
DEBTOR: DEBTOR'S INTERIM MANAGEMENT:
Mercury Finance Company Development Specialists, Inc.
100 Field Drive, Suite 340 Three First National Plaza
Lake Forest, IL 60045 Chicago, IL 60602-4205
Attn: Mark E. Dapier Attn: William A. Brandt, Jr.
Facsimile No.: (847)295-8699 Fred C. Caruso
Patrick J. O'Malley
Facsimile No.: (312)263-1180
</TABLE>
Any party filing objections to the Plan must comply with all orders of the
Court governing the confirmation hearing.
XVI.
ADDITIONAL INFORMATION
The Debtor is subject to the information requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Securities and Exchange Commission. Any statements contained herein
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concerning the provisions of any document are not necessarily complete, and
in each instance reference is made to the copy of such document for the full
text thereof. Each such statement is qualified in its entirety by such
reference. Certain documents referred to herein have not been attached as
exhibits because of the impracticability of furnishing copies thereof to all
of the Debtor's creditors and equity security holders. All of the Exhibits
to the Plan and to this Disclosure Statement are available for inspection at
McDermott, Will & Emery, 227 West Monroe Street, Chicago, Illinois 6066-5096.
To review such Exhibits, contact Heidi Hidlauf at (312) 372-2000.
XVII.
RECOMMENDATION AND CONCLUSION
For all of the reasons set forth in this Disclosure Statement, the Debtor
believes that the confirmation and consummation of the Plan is preferable to all
other alternatives. Consequently, the Debtor urges all holders of Classes 4, 5,
and 6 Claims to vote to ACCEPT the Plan, and to duly complete and return their
ballots so that they will be ACTUALLY RECEIVED on or before 4:00 p.m. eastern
standard time on December 7, 1998.
Dated: October 15, 1998 Respectfully submitted,
MERCURY FINANCE COMPANY,
a Delaware corporation
By
----------------------------
William A. Brandt, Jr.
Prepared By:
Lewis S. Rosenbloom, Esq.
David D. Cleary, Esq.
MCDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, Illinois 60606
(312) 372-2000
COUNSEL FOR
MERCURY FINANCE COMPANY
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re: )
)
MERCURY FINANCE COMPANY, ) Case No. 98 B 20763
)
a Delaware corporation, ) Chapter 11
)
Debtor. ) Honorable Erwin I. Katz
FIRST AMENDED PLAN OF REORGANIZATION
OF
MERCURY FINANCE COMPANY
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Lewis S. Rosenbloom
David D. Cleary
McDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, Illinois 60606-5096
(312) 372-2000
COUNSEL FOR
MERCURY FINANCE COMPANY
<PAGE>
INTRODUCTION
MERCURY FINANCE COMPANY, A DELAWARE CORPORATION ("MERCURY" OR THE
"DEBTOR"), PROPOSES THE FOLLOWING PLAN OF REORGANIZATION (THE "PLAN") FOR THE
RESOLUTION OF ALL CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR.
REFERENCE IS MADE TO THE DEBTOR'S DISCLOSURE STATEMENT FILED
CONTEMPORANEOUSLY WITH THE PLAN (THE "DISCLOSURE STATEMENT"), FOR A
DISCUSSION OF THE DEBTOR'S HISTORY, BUSINESSES, PROPERTIES, RESULTS OF
OPERATIONS AND PROJECTIONS FOR FUTURE OPERATIONS, AND FOR A SUMMARY AND
ANALYSIS OF THE PLAN AND CERTAIN RELATED MATTERS. THE DEBTOR IS THE
PROPONENT OF THE PLAN WITHIN THE MEANING OF SECTION 1129 OF THE BANKRUPTCY
CODE, 11 U.S.C. SECTION 1129. ALL HOLDERS OF CLAIMS AGAINST AND INTERESTS
IN THE DEBTOR ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ THE PLAN
AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR
REJECT THE PLAN. SUBJECT TO CERTAIN RESTRICTIONS AND REQUIREMENTS SET FORTH
IN THE PLAN, THE DEBTOR RESERVES THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE OR
WITHDRAW THE PLAN PRIOR TO ITS CONSUMMATION.
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. DEFINITIONS.
Certain capitalized terms used throughout the Plan are defined in this
Article I. Other capitalized terms found in the Plan shall have the meaning
ascribed to such terms in the Bankruptcy Code or the Bankruptcy Rules (and
shall be construed in accordance with the rules of construction thereunder).
ADMINISTRATIVE CLAIM means a Claim for payment of an administrative
expense of a kind specified in section 503(b) of the Bankruptcy Code and
referred to in section 507(a)(1) of the Bankruptcy Code, including, without
limitation, the actual, necessary costs and expenses incurred after the
Petition Date of preserving the Estate and operating the business of the
Debtor, including wages, salaries or commissions for services, compensation
for legal, financial advisory, accounting and other services and
reimbursement of expenses awarded or allowed under sections 330(a) or 331 of
the Bankruptcy Code, and all fees and charges assessed against the Estate
under chapter 123 of title 28, United States Code.
ALLOWED ADMINISTRATIVE CLAIM means all or that portion of an
Administrative Claim which either (a) has been allowed by a Final Order as an
Administrative Claim, or (b) was incurred by the Debtor in the ordinary
course of business during its Reorganization Case and is determined to be
due, owing, valid and enforceable by the Debtor.
ALLOWED CLAIM or ALLOWED UNSECURED CLAIM means that portion of any
Claim, other than an Administrative Claim, (a) as to which (x) no proof of
claim has been filed with the Court and (y) the liquidated and noncontigent
amount of which is scheduled by the Debtor pursuant to the Bankruptcy Code as
undisputed, or (b) as to which a proof of claim has been timely filed in a
liquidated amount with the Court pursuant to the Bankruptcy Code or any order
of the Court, or late filed with leave of the Court after notice and a
hearing, provided that (x) no objection to the allowance of such Claim or
motion to expunge such claim has been interposed before any final date for
the filing of such objections or motions set forth in the Confirmation Order
or other Court order or (y) if such objection or motion has been filed, such
objection or motion has been overruled by a Final Order (but only to the
extent such objection or motion has been overruled), or (c) as to which a
Final Order has been entered allowing such Claim; except with respect to
Claims in Class 7B which shall be liquidated and allowed in accordance with
the procedures established by the trustees appointed to direct the New
Warrant Escrow Agent.
ALLOWED EQUITY INTEREST means an Equity Interest: (a) that is of
record as of the Distribution Record Date in a stock register that is
maintained by or on behalf of the Debtor; and (b) has been allowed in
accordance with the procedures established by the trustees appointed to
direct the New Warrant Escrow Agent.
AMENDED AND RESTATED BYLAWS means the Amended and Restated Bylaws of
the Reorganized Debtor which shall be substantially in the form set forth in
Exhibit I attached to the Disclosure Statement.
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AMENDED AND RESTATED CERTIFICATE OF INCORPORATION means the Amended
and Restated Certificate of Incorporation of the Reorganized Debtor which
shall be substantially in the form set forth in Exhibit I attached to the
Disclosure Statement.
BALLOTS means the ballots accompanying the Disclosure Statement upon
which holders of Impaired Claims or Impaired Interests entitled to vote on
the Plan shall indicate their acceptance or rejection of the Plan in
accordance with the instructions regarding voting.
BANKRUPTCY CODE means title 11 of the United States Code, as now in
effect or hereafter amended.
BANKRUPTCY RULES means, collectively, the Federal Rules of Bankruptcy
Procedure, as amended, promulgated under 28 U.S.C. Section 2015 and the
general and local rules of the Court, as applicable from time to time in the
Reorganization Case.
BAR DATE means the bar date for Filing proofs of claim against the
Debtor as established by order of the Court.
BENEFICIAL HOLDER means the entity holding the beneficial interest in
a Claim or Interest.
BENEFICIARIES means the holders of Allowed Indemnification Claims
other than the estate of James A. Doyle and John N. Brincat.
BENEFITS CLAIM means any Unsecured Claim against the Debtor arising
from or with respect to any benefits plan, but excluding any Claim alleged in
or arising from the facts and circumstances alleged in the action styled as
FERRE V. MERCURY FINANCE COMPANY, ET AL., No. 97C 5245 (N.D. Ill.).
BUSINESS DAY means any day except a Saturday, Sunday or "legal
holiday" (as defined in Bankruptcy Rule 9006(a)).
CASH means cash and cash equivalents.
CLAIM means a claim against the Debtor, whether asserted or not
asserted, as defined in section 101(5) of the Bankruptcy Code.
CLAIMS PURCHASE means the purchase by any Person of any or all of the
Net Senior Debt Claims thereby entitling such Person to receive a share of
the New Senior Secured Notes and the New Common Stock as set forth in Section
8.05 of the Plan.
CLASS means a category of holders of Claims or Interests as defined in
Article III of the Plan.
CONFIRMATION DATE means the date on which the Court enters the
Confirmation Order on its docket, within the meaning of Bankruptcy Rules 5003
and 9021.
CONFIRMATION ORDER means the order of the Court confirming the Plan
pursuant to section 1129 of the Bankruptcy Code.
CONSUMER LITIGATION CLAIMS means all claims against the Debtor
incurred in the ordinary course of business which are asserted under lawsuits
or complaints and are pending as of the commencement of the Reorganization
Case in state or federal court set forth in Exhibit A attached to the Plan,
excluding the Securities Fraud Claims and derivative actions pending against
the Debtor set forth in Exhibit B attached to the Plan.
CONSUMMATION means the occurrence of the Effective Date.
COURT means the United States Bankruptcy Court for the Northern
District of Illinois and, to the extent it may exercise jurisdiction in the
Reorganization Case, the United States District Court for the Northern
District of
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<PAGE>
Illinois, or if either such Court ceases to exercise jurisdiction over the
Reorganization Case, such other court that exercises jurisdiction over the
Reorganization Case.
CREDITORS' COMMITTEE means the Official Creditors' Committee appointed
pursuant to section 1102 of the Bankruptcy Code in the Reorganization Case.
DEBTOR means Mercury Finance Company.
DELAWARE GENERAL CORPORATION LAW means title 8 of the Delaware Code,
as now in effect or hereafter amended.
DISCLOSURE STATEMENT means the Debtor's Disclosure Statement Filed
with the Court on July 15, 1998, as it may be amended, modified or
supplemented (and all exhibits or schedules annexed thereto or referenced
therein), which relates to the Plan and which has been prepared and
distributed in accordance with sections 1125 and 1126(b) of the Bankruptcy
Code and Bankruptcy Rule 3018.
DISTRIBUTION RECORD DATE means the Business Day immediately preceding
the Confirmation Date.
DIVIDEND CLAIMS means any and all Claims relating to the Old Common
Stock for declared but unpaid dividends or rights under the shareholder's
rights plan dated February 17, 1997.
EFFECTIVE DATE means a date selected by the Debtor that is no more
than ten Business Days following the date on which all conditions to the
Effective Date set forth in Section 10.02 have been satisfied or, if capable
of being waived, duly and expressly waived.
ENTITY means an entity as defined in section 101(15) of the Bankruptcy
Code.
EQUITY HOLDERS' COMMITTEE means the Official Committee of Equity
Holders appointed by the Court.
EQUITY INTERESTS means the rights of holders of Old Common Stock,
including redemption rights, and liquidation preferences.
ESTATE means the estate created for the Debtor in its Reorganization
Case pursuant to section 541 of the Bankruptcy Code.
EXCESS CASH means, as of the Effective Date, the ending book cash
balance of the Debtor on a fully consolidated basis, which cash shall include
overnight investments, cash, corporate accounts, credit card cash, and branch
cash including cash of Midland (but only to the extent such branch cash in
the aggregate exceeds $3,000,000) MINUS $20,000,000.
EXCHANGE ACT means the Securities and Exchange Act of 1934, as amended.
EXCHANGE AGENT means an entity to be designated by the Debtor not less
than ten days prior to the hearing on confirmation of the Plan.
EXPIRATION DATE means 4:00 p.m. eastern standard time on December 7,
1998, the date fixed by the Court after which Ballots with respect to the
Plan may no longer be accepted by the Debtor without leave of Court.
FILE, FILED OR FILING means file, filed or filing with the Court in
the Reorganization Case.
FINAL ORDER means an order or judgment as entered on the docket by the
Court, or other court exercising jurisdiction over the subject matter which
has not been reversed, stayed, modified or amended, and which has not been
and may no longer be appealed from or otherwise reviewed or reconsidered, as
a result of which such order or judgment shall have become final and
non-appealable in accordance with Bankruptcy Rule 8002 or any other
applicable law or rule of procedure.
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<PAGE>
IMPAIRED means when used with reference to a Claim or Interest, a
Claim or Interest that is impaired within the meaning of section 1124 of the
Bankruptcy Code.
INDEMNIFICATION CLAIMS means all Allowed Claims, if any, against the
Debtor for indemnification or contribution of current or former officers,
directors or employees of the Debtor.
INTERESTS means Equity Interests and Old Options.
LETTER OF TRANSMITTAL means the documentation required to be provided
to the Exchange Agent as set forth in Section 6.04 of the Plan.
MERCURY means Mercury Finance Company, a Delaware corporation.
NET SENIOR DEBT CLAIM means (i) the Allowed Senior Debt Claim, less
(ii) the pro rata share of Excess Cash to be distributed to Class 4 pursuant
to the Plan.
NEW COLLATERAL DOCUMENTS means the Company Security Agreement, Company
Pledge Agreement, Subsidiaries Guaranty Agreement, Subsidiaries Security
Agreement, each substantially in the form of the Group Exhibit D attached to
the Disclosure Statement.
NEW COMMON STOCK means the 25,000,000 shares of Common Stock par value
$0.01 per share of the Reorganized Debtor authorized pursuant to the Amended
and Restated Certificate of Incorporation, 10,000,000 shares of which are to
be issued and distributed in accordance with the Plan, which shares shall
constitute 100% of the total number of issued shares of such Common Stock
immediately after the Effective Date.
NEW INDENTURES means the New Senior Secured Note Indenture and the New
Junior Subordinated Note Indenture.
NEW JUNIOR SUBORDINATED NOTES means the Junior Subordinated Notes of
the Reorganized Debtor, dated as of the Effective Date and issued pursuant to
the New Junior Subordinated Note Indenture substantially in the form of
Exhibit E attached to the Disclosure Statement, the total principal amount
not to exceed $22,500,000.
NEW JUNIOR SUBORDINATED NOTE INDENTURE means the indenture under which
the New Junior Subordinated Notes will be issued, and which shall be
substantially in the form set forth in Exhibit F attached to the Disclosure
Statement.
NEW SENIOR SECURED NOTES means the Senior Secured Notes of the
Reorganized Debtor, dated as of the Effective Date and issued pursuant to the
New Senior Secured Note Indenture, substantially in the form of Exhibit B
attached to the Disclosure Statement.
NEW SENIOR SECURED NOTE INDENTURE means the indenture under which the
New Senior Notes will be issued, and which shall be substantially in the form
set forth in Exhibit C attached to the Disclosure Statement.
NEW SECURITIES means, collectively, (a) the New Senior Secured Notes,
(b) the New Junior Subordinated Notes, (c) the New Common Stock, and (d) the
New Warrants.
NEW WARRANT AGREEMENT means the New Warrant Agreement in substantially
the form set forth in Exhibit H attached to the Disclosure Statement.
NEW WARRANT ESCROW means the escrow of the New Warrants. The holders
of Claims and Interests in Classes 7A, 7B and 7C shall choose a governing
body of representatives ("Trustees") which shall direct the New Warrant
Escrow Agent with the purpose of liquidating claims and allocating and
distributing the New Warrants.
NEW WARRANT ESCROW AGENT means the escrow agent for the New Warrant
Escrow.
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NEW WARRANTS means the warrants, each to purchase one share of New
Common Stock, to be issued by the Reorganized Debtor pursuant to the New
Warrant Agreement and which warrants shall be issued in accordance with the
Plan to holders of Allowed Claims and Interests in Classes 7A, 7B and 7C,
each having an exercise price and expiration date to be determined in
accordance with the New Warrant Agreement. Three series of New Warrants
shall be issued, and each series will represent the right to purchase 500,000
shares or five percent (5%) of the original 10,000,000 shares of New Common
Stock issued and outstanding as of the Effective Date.
NONDEBTOR SUBSIDIARIES means, collectively, Mercury Finance
Corporation of Alabama; Mercury Finance Company of Arizona; Merc Finance
Company of California; Mercury Finance Company of Colorado; Mercury Finance
Company of Delaware; Mercury Finance Company of Florida; Mercury Finance
Company of Georgia; Mercury Finance Company of Idaho; Mercury Finance Company
of Illinois; Mercury Finance Company of Indiana; Mercury Finance Company of
Iowa; Mercury Finance Company of Kansas; Mercury Finance Company of Kentucky;
Mercury Finance Company of Louisiana; Mercury Finance Company of Michigan;
Mercury Finance Company of Mississippi; Mercury Finance Company of Missouri;
Mercury Finance Company of Nevada; Mercury Finance Company of New Mexico;
Mercury Finance Company of New York; Mercury Finance Company of North
Carolina; Mercury Finance Company of Ohio; MFC Finance Company of Oklahoma;
Mercury Finance Company of Oregon; Mercury Finance Company of Pennsylvania;
Mercury Finance Company of South Carolina; Mercury Finance Company of
Tennessee; MFC Finance Company of Texas; Mercury Finance Company of Utah;
Mercury Finance Company of Virginia; Mercury Finance Company of Washington;
Mercury Finance Company of Wisconsin; Filco Marketing Company; MFC Financial
Services, Inc.; Gulfco Finance Company; Gulfco Investment Company; Midland
Finance Co.; MFN Insurance Company.
OLD COMMON STOCK means the common stock issued by Debtor and
outstanding immediately prior to the Distribution Record Date.
OLD OPTIONS means the options outstanding immediately prior to the
Effective Date to purchase Old Common Stock.
PERSON shall have the meaning set forth in the Bankruptcy Code.
PETITION DATE means July 15, 1998.
PLAN means this First Amended Plan of Reorganization for the Debtor
and all exhibits annexed hereto or referenced herein, as it may be amended or
modified by the Debtor from time to time in accordance with the Bankruptcy
Code and the Bankruptcy Rules, and the terms and conditions of section 14.02
of the Plan.
PRIORITY CLAIM means an Allowed Claim for an amount entitled to
priority under section 507(a) of the Bankruptcy Code, other than an
Administrative Claim or a Tax Claim.
RELIANCE POLICIES means, collectively, the Directors' and Officers'
Liability Policy Number NDA 1494742-96 issued by Reliance Insurance Company,
together with any applicable extended reporting period.
REORGANIZATION CASE means the Debtor's case under chapter 11 of the
Bankruptcy Code.
REORGANIZED DEBTOR means the Debtor on and after the Effective Date.
SCHEDULES means, collectively, the: (a) schedules of assets and
liabilities and the statements of financial affairs, if any, Filed by the
Debtor in the Reorganization Case, pursuant to section 521 of the Bankruptcy
Code, the Bankruptcy Rules and the Official Bankruptcy Forms; and (b)
schedule of unliquidated, disputed or contingent Claims, as required by any
local rule of the Court, as such requirements may be modified by any order of
the Court.
SECURED CLAIM means a Claim that is secured by a lien on property in
which the Estate has an interest or that is subject to setoff under section
553 of the Bankruptcy Code, to the extent of the value of the Claim holder's
interest in the Estate's interest in such property or to the extent of the
amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy Code.
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SECURITIES ACT means the Securities Act of 1933, 15 U.S.C. Sections
77a-77aa, as now in effect or hereafter amended.
SECURITIES CLAIMANTS' COMMITTEE means the Official Committee of
Securities Fraud Claimants appointed by the Court.
SECURITIES FRAUD CLAIMS means all claims asserted against the Debtor
which generally arise from the Debtor's announcement of accounting
irregularities, including the litigation set forth on Exhibit B attached to
the Plan.
SENIOR DEBT CLAIMS means Claims arising from or with respect to
amounts due under the Debtor's commercial paper, short-term loans or senior
term notes against the Debtor, excluding Claims arising from or with respect
to amounts due under the Subordinated Notes, in an amount of the accrued but
unpaid interest, plus outstanding principal amounts due under such agreements
in the aggregate amount of approximately $678,000,000 as of the Petition
Date. All other claims, including, but not limited to, make-whole payments
or any additional interest payments or fees, are waived against the Debtor
for enforcement or collection by holders of Senior Debt Claims; but reserved
solely for purposes of calculating and allocating distributions by and
between the holders of Class 4 Claims.
SETTLEMENT CONTRIBUTION AND INDEMNIFICATION FUND means a fund in the
amount of $13 million allocated by the holders of Senior Debt Claims for the
benefit of the Beneficiaries.
STEERING COMMITTEE means the pre-petition Ad Hoc Steering Committee of
the holders of Senior Debt Claims.
SUBORDINATED NOTEHOLDER means the holder of any Subordinated Notes.
SUBORDINATED NOTES means the $22,500,000 principal amount of
outstanding Mercury subordinated notes.
TAX CLAIM means an Allowed Claim for an amount entitled to priority
under section 507(a)(8) of the Bankruptcy Code.
TRADE CLAIM means any unsecured Claim against the Debtor arising from
or with respect to the sale of goods or services to the Debtor, including
Allowed Claims based on rejection of executory contracts or unexpired leases,
prior to the Petition Date, in the ordinary course of the Debtor's business,
including but not limited to, any Claim of an employee that is not a Priority
Claim or an Indemnification Claim and any Claim of a Nondebtor Subsidiary
against the Debtor.
TRADE CLAIMANT means any holder of a Trade Claim.
UNIMPAIRED CLAIM means a Claim that is not impaired within the meaning
of section 1124 of the Bankruptcy Code.
UNSECURED CLAIM means any Claim which is not an Administrative Claim,
Secured Claim, Priority Claim, Tax Claim, Senior Debt Claim, Claim arising
from the Subordinated Notes, or Securities Fraud Claims.
B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW
1. RULES OF INTERPRETATION. For purposes of the Plan: (a)
whenever from the context it is appropriate, each term, whether stated in the
singular or the plural, shall include both the singular and the plural; (b)
any reference in the Plan to a contract, instrument, release, indenture or
other agreement or document being in a particular form or on particular terms
and conditions means that such document shall be substantially in such form
or substantially on such terms and conditions; (c) any reference in the Plan
to an existing document or Exhibit Filed or to be Filed means such document
or Exhibit, as it may have been or may be amended, modified or supplemented;
(d) if the Plan's description of the terms of an Exhibit is inconsistent with
the terms of the Exhibit, the terms of the
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Exhibit shall control; (e) unless otherwise specified, all references in the
Plan to Articles, Sections, Clauses and Exhibits are references to Articles,
Sections, Clauses and Exhibits of or to the Plan; (f) the words "herein" and
"hereto" refer to the Plan in its entirety rather than to a particular
portion of the Plan; (g) captions and headings to Articles and Sections are
inserted for convenience of reference only and are not intended to be a part
of or to affect the interpretation of the Plan; (h) the rules of construction
set forth in section 102 of the Bankruptcy Code shall apply to the extent
such rules are not inconsistent with any other provision in this Section
1.B.1.
2. COMPUTATION OF TIME. In computing any period of time
prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a)
shall apply.
3. GOVERNING LAW. Except to the extent that the Bankruptcy Code
or Bankruptcy Rules are applicable, and subject to the provisions of any
contract, instrument, release, indenture or other agreement or document
entered into in connection with the Plan, the rights and obligations arising
under the Plan shall be governed by, and construed and enforced in accordance
with, the laws of the State of Illinois, without giving effect to the
principles of conflicts of law thereof.
ARTICLE II
ADMINISTRATIVE AND TAX CLAIMS
In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Tax Claims, as described below, have not been
classified.
2.01 ADMINISTRATIVE CLAIMS. Unless otherwise agreed to by the
parties, each holder of an Allowed Administrative Claim shall receive cash
equal to the unpaid portion of such Allowed Administrative Claim on the later
of (a) the Effective Date and (b) the date on which such Claim becomes an
Allowed Administrative Claim; provided, however, that the Administrative
Claims that represent liabilities incurred by the Debtor in the ordinary
course of its business during the Reorganization Case shall be paid in the
ordinary course of business and in accordance with any terms and conditions
of any agreements relating thereto.
2.02 BAR DATE FOR ADMINISTRATIVE CLAIMS.
(a) PRE-CONFIRMATION DATE CLAIMS AND EXPENSES. All applications for
final compensation of professional persons for services rendered and
reimbursement of expenses incurred on or before the Confirmation Date
(including, without limitation, any compensation and reimbursement of
expenses requested by any professional or any other entity for making a
substantial contribution in the Reorganization Case related to such services
rendered on or before the Confirmation Date) and all other requests for
payment of administrative costs and expenses incurred on or before the
Confirmation Date under section 507(a)(1) or 507(b) of the Bankruptcy Code
(except only for Claims for trade debt incurred in the ordinary course of
business and claims under 28 U.S.C. Section 1930) shall be filed no later
than 45 days after the Confirmation Date.
(b) EFFECT OF FAILURE TO TIMELY FILE CLAIM OR REQUEST FOR PAYMENT.
Any request for payment of an Administrative Claim which is not filed by the
applicable deadline set forth above shall be barred. Under no circumstance
will the applicable deadlines set forth above be extended by order of the
Court or otherwise. Any holders of Administrative Claims who are required to
file a claim or request for payment of such Claims or expenses and who do not
file such claims or requests by the applicable bar date shall be forever
barred from asserting such Claims or expenses against the Debtor, any
property of the Debtor or any distributions under the Plan.
2.03 TAX CLAIMS. Unless otherwise agreed to by the parties, each
holder of a Tax Claim will receive cash equal to the unpaid portion of such
Tax Claim on or as soon as practical after the later of (i) the Effective
Date, and (ii) the date on which such Claim becomes an Allowed Claim;
provided, however, that at the option of the Reorganized Debtor, the
Reorganized Debtor may pay Tax Claims over a period not exceeding six (6)
years after the date of assessment of the Tax Claim as provided in subsection
1129(a)(9)(C) of the Bankruptcy Code. If the Reorganized Debtor elects this
option as to any Tax Claim, then the payment of such Tax Claim shall be made
in equal semiannual installments with the first installment due on the latest
of: (i) the Effective Date, (ii) 30 calendar days after the date on which an
order allowing such Tax Claim becomes a Final Order, and (iii) such other
time as may be agreed to by the holder of such Tax Claim and the Reorganized
Debtor. Each installment shall include
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simple interest on the unpaid portion of such Tax Claim, without penalty of
any kind, at the statutory rate of interest provided for such taxes under
applicable nonbankruptcy law; provided, however, that the Reorganized Debtor
shall reserve the right to pay any Tax Claim, or any remaining balance of
such Tax Claim, in full, at any time on or after the Effective Date, without
premium or penalty.
ARTICLE III
CLASSIFICATION OF CLAIMS AGAINST AND INTERESTS IN THE DEBTOR
The classification of the Claims and Interests listed below shall be
for all purposes, including voting, confirmation and distribution pursuant to
the Plan. A Claim or Interest is in a particular class only to the extent
that the Claim or Interest is an Allowed Claim or Allowed Interest in that
Class and has not been paid, released, or otherwise satisfied before the
Effective Date; a Claim or Interest which is not an Allowed Claim or Interest
is not in any class.
3.01 CLASS 1 - PRIORITY CLAIMS. Class 1 consists of all Priority
Claims, not otherwise treated as unclassified in Article II above.
3.02 CLASS 2 - SECURED CLAIMS. Class 2 consists of all holders of
Secured Claims.
3.03 CLASS 3 - TRADE CLAIMS, CONSUMER LITIGATION CLAIMS, BENEFITS
CLAIMS AND UNSECURED CLAIMS. Class 3 consists of all holders of Trade
Claims, Consumer Litigation Claims, Benefits Claims and Unsecured Claims.
3.04 CLASS 4 - SENIOR DEBT CLAIMS. Class 4 consists of all holders
of Senior Debt Claims.
3.05 CLASS 5 - SUBORDINATED NOTEHOLDER CLAIMS. Class 5 consists of
all holders of Subordinated Notes.
3.06 CLASS 6 - INDEMNIFICATION CLAIMS. Class 6 consists of all
holders of Indemnification Claims.
3.07 CLASS 7A - EQUITY INTERESTS. Class 7A consists of all holders
of Old Common Stock.
3.08 CLASS 7B - SECURITIES FRAUD CLAIMS. Class 7B consists of all
holders of Securities Fraud Claims.
3.09 CLASS 7C - DIVIDEND CLAIMS. Class 7C consists of all holders
of Dividend Claims.
3.10 CLASS 8 - OLD OPTIONS. Class 8 consists of all holders of Old
Options.
3.11 SUMMARY OF CLAIMS AND INTERESTS.
<TABLE>
<CAPTION>
CLASS DESCRIPTION STATUS
<S> <C> <C>
Class 1 Priority Claims Unimpaired; deemed to have accepted
the Plan
Class 2 Secured Claims Unimpaired; deemed to have accepted
the Plan
Class 3 Trade Claims, Unimpaired; deemed to have accepted
Consumer Litigation the Plan
Claims, Benefits
Claims and Unsecured
Claims
Class 4 Senior Debt Claims Impaired; entitled to vote
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Class 5 Subordinated Impaired; entitled to vote
Noteholder Claims
Class 6 Indemnification Impaired; entitled to vote
Claims
Class 7A Equity Interests Impaired; deemed to have rejected
the Plan
Class 7B Securities Fraud Impaired; deemed to have rejected
Claims the Plan
Class 7C Dividend Claims Impaired; deemed to have rejected
the Plan
Class 8 Old Options Impaired; deemed to have rejected
the Plan
</TABLE>
ARTICLE IV
TREATMENT OF CLASSES UNIMPAIRED UNDER THE PLAN
4.01 CLASS 1 - PRIORITY CLAIMS. Allowed Class 1 Claims are
Unimpaired. Unless otherwise agreed to by the parties, each holder of an
Allowed Claim in Class 1 shall be paid the allowed amount of such Claim in
full in cash on the later of (a) the Effective Date, and (b) the date such
Claim becomes an Allowed Claim.
4.02 CLASS 2 - SECURED CLAIMS. Allowed Class 2 Claims are
Unimpaired. Each Class 2 Claimant shall retain, unaltered, the legal,
equitable and contractual rights, including, without limitation, any liens
that secure such Allowed Claims, to which such Allowed Claim entitles
Claimant; provided, however, that each Claimant holding an Allowed Claim in
Class 2 may only exercise such rights and remedies with respect to the assets
and property that secure such Allowed Claim, without recourse of any kind
against the Debtor. Any Allowed Claim in Class 2 based on any deficiency
claim by a Class 2 Claimant shall become, and shall be treated for all
purposes under this Plan as an Allowed Trade Claim and shall be classified as
a Class 3 Claim.
4.03 CLASS 3 - TRADE CLAIMS, CONSUMER LITIGATION CLAIMS, BENEFITS
CLAIMS AND UNSECURED CLAIMS. Allowed Claims in Class 3 are Unimpaired. The
legal, equitable and contractual rights of holders of Allowed Claims in Class
3 shall not be affected by the Reorganization Case, and each holder shall be
entitled to payment of the full amount of its Allowed Claim in complete
settlement, satisfaction and discharge of its Class 3 Claim.
ARTICLE V
TREATMENT OF CLASSES IMPAIRED UNDER THE PLAN
5.01 CLASS 4 - SENIOR DEBT CLAIMS. Allowed Class 4 Claims are
Impaired. Subject to Section 8.05, each holder of an Allowed Class 4 Claim
shall receive, in complete settlement, satisfaction and discharge of its
Class 4 Claim: (i) its pro rata share of Excess Cash; (ii) New Senior Secured
Notes in the amount of 75% of the Net Senior Debt Claims; and (iii) its pro
rata share of 100% of the New Common Stock issued and outstanding as of the
Effective Date. Notwithstanding the foregoing, the acceptance of the Plan by
Class 4 will constitute the acceptance by each holder of a Senior Debt Claim
to the direction under the Plan to the Exchange Agent to pay 13 million
dollars ($13,000,000) from the distribution of Excess Cash to the Settlement
Contribution and Indemnification Fund.
5.02 CLASS 5 - SUBORDINATED NOTEHOLDER CLAIMS. Allowed Claims in
Class 5 are Impaired. Each holder of an Allowed Claim in Class 5 shall
receive, in complete settlement, satisfaction and discharge of its Class 5
Claims, its pro rata share of the New Junior Subordinated Notes.
5.03 CLASS 6 - INDEMNIFICATION CLAIMS. Allowed Claims in Class 6
are Impaired. Each holder of an Allowed Indemnification Claim in Class 6
shall retain, in complete settlement, satisfaction and discharge of its Class
6 Claim, (i) its rights and claims against the Reliance Policies and the
proceeds therefrom; (ii) the Debtor's release
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of any and all rights and Claims it may have against, and cooperation in,
aiding Class 6 Claimants in obtaining the right to, the Reliance Policies and
the proceeds therefrom. In addition, each holder of an Allowed
Indemnification Claim that is a Beneficiary shall also receive (a) the
Limited Release contained in Section 11.03 of the Plan; and (b) the
Beneficiaries shall also receive rights and claims against the Settlement
Contribution and Indemnification Fund.
5.04 CLASS 7A - EQUITY INTERESTS. Interests in Class 7A are
Impaired. Each holder of an Equity Interest in Class 7A shall be enjoined
from pursuing any Claim against the Debtor or Reorganized Debtor and receive,
in complete settlement, satisfaction and discharge of its Equity Interest,
its pro rata distribution of New Warrants from the New Warrant Escrow,
subject to the terms and conditions of the New Warrant Agreement. On the
Effective Date, the New Warrants shall be placed in escrow. The Equity
Holders' Committee and the Securities Claimants' Committee shall each choose
one trustee. The two trustees shall direct the New Warrant Escrow Agent and
adopt and implement procedures for the liquidation and allowance of Claims
and Equity Interests and allocation and distribution of the New Warrants
among the holders of Claims and Equity Interests in Classes 7A, 7B and 7C.
To the extent that the trustees chosen by the Equity Holders' Committee and
the Securities Claimants' Committee cannot agree on a distribution scheme
with which to instruct the New Warrant Escrow Agent, then either or both of
such trustees may seek the instructions of the Court after the Effective Date
on such distribution scheme after notice and a hearing.
5.05 CLASS 7B - SECURITIES FRAUD CLAIMS. Claims in Class 7B are
Impaired. Each holder of a Claim in Class 7B shall be enjoined from pursuing
any Claim against the Debtor or Reorganized Debtor and receive, in complete
settlement, satisfaction and discharge of Claim, its pro rata distribution of
New Warrants from the New Warrant Escrow, subject to the terms and conditions
of the New Warrant Agreement. On the Effective Date, the New Warrants shall
be placed in escrow. The Equity Holders' Committee and the Securities
Claimants' Committee shall each choose one trustee. The two trustees shall
direct the New Warrant Escrow Agent and adopt and implement procedures for
the liquidation and allowance of Claims and Equity Interests and allocation
and distribution of the New Warrants among the holders of Claims and Equity
Interests in Classes 7A, 7B and 7C. To the extent that the trustees chosen
by the Equity Holders' Committee and the Securities Claimants' Committee
cannot agree on a distribution scheme with which to instruct the New Warrant
Escrow Agent, then either or both of such trustees may seek the instructions
of the Court after the Effective Date on such distribution scheme after
notice and a hearing.
5.06 CLASS 7C - DIVIDEND CLAIMS. Claims in Class 7C are Impaired.
Each holder of a Claim in Class 7C shall be enjoined from pursuing any Claim
against the Debtor or the Reorganized Debtor and receive, in complete
settlement, satisfaction and discharge of Claim, its pro rata distribution of
New Warrants from the New Warrant Escrow, subject to the terms and conditions
of the New Warrant Agreement. On the Effective Date, the New Warrants shall
be placed in escrow. The Equity Holders' Committee and the Securities
Claimants' Committee shall each choose one trustee. The two trustees shall
direct the New Warrant Escrow Agent and adopt and implement procedures for
the liquidation and allowance of Claims and Equity Interests and allocation
and distribution of the New Warrants among the holders of Claims and Equity
Interests in Classes 7A, 7B and 7C. To the extent that the trustees chosen
by the Equity Holders' Committee and the Securities Claimants' Committee
cannot agree on a distribution scheme with which to instruct the New Warrant
Escrow Agent, then either or both of such trustees may seek the instructions
of the Court after the Effective Date on such distribution scheme after
notice and a hearing.
5.07 CLASS 8 - OLD OPTIONS. Holders of Old Options are Impaired.
The holders of Old Options shall receive no distributions under the Plan. On
the Effective Date, all of the Old Options shall be cancelled and
extinguished.
ARTICLE VI
GENERAL PROVISIONS REGARDING TREATMENT OF CLAIMS AND
INTERESTS AND DISTRIBUTIONS UNDER THE PLAN
6.01 DISTRIBUTION DATE. Except as otherwise provided in the Plan,
property to be distributed under the Plan to an Impaired Class (a) shall be
distributed on or as soon as practicable after the Effective Date to each holder
of an Allowed Claim of that Class that is an Allowed Claim as of the Effective
Date, and (b) shall be distributed to each holder of an Allowed Claim of that
Class that is allowed after the Effective Date, to the extent allowed, as soon
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<PAGE>
as practicable after the order of the Court allowing the Claim becomes a
Final Order. Property to be distributed under the Plan to a Class that is
not Impaired or on account of an Administrative Claim shall be distributed on
the latest of (i) the distribution dates specified in the preceding sentence,
or (ii) the date on which the distribution to the holder of the Claim would
have been due and payable in the ordinary course of business or under the
terms of the Claim in the absence of the Reorganization Case.
6.02 DISTRIBUTION RECORD DATE--SENIOR DEBT CLAIMS AND SUBORDINATED
NOTEHOLDER CLAIMS. As of the close of business on the Distribution Record
Date, the respective transfer registers for the Senior Debt Claims and
holders of Subordinate Note Claims as maintained by the Debtor, or their
respective agents, shall be closed.
6.03 EXCHANGE AGENT. The Debtor may designate an entity or entities
to serve as Exchange Agent to distribute all the property to be distributed
under the Plan, including, without limitation the delivery of the New Common
Stock, the New Senior Secured Notes, and the New Junior Subordinated Notes
and the New Warrants.
6.04 SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTIONS--SENIOR
DEBT CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS. As a condition to
participation under the Plan, each holder of a Senior Debt Claim or a
Subordinated Noteholder Claim is required to provide evidence of the
securities evidencing the Senior Debt Claims and Subordinated Noteholders
Claims ("Old Securities") by (i) completing and returning a Letter of
Transmittal to the Exchange Agent, together with certificates (to the extent
such exist) representing their Old Securities (the "Tendered Certificates"),
or (ii) completing the book-entry confirmation procedure, promptly after the
Confirmation Date. Holders of Senior Debt Claims relating to commercial
paper need not tender any certificates, as no such certificates exist
evidencing the commercial paper. Promptly following the Effective Date, the
Exchange Agent will mail to those persons who have properly completed and
returned Letters of Transmittal and Tendered Certificates or completed the
book-entry confirmation procedure, certificates representing the New Senior
Secured Notes, the New Junior Subordinated Notes and/or the New Common Stock
to be issued in accordance with the Plan. HOLDERS OF OLD SECURITIES WHO
HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE EXCHANGE AGENT LETTERS OF
TRANSMITTAL OR COMPLETED THE BOOK-ENTRY CONFIRMATION PROCEDURE WITHIN ONE
YEAR OF THE EFFECTIVE DATE, TOGETHER WITH THE TENDERED CERTIFICATES, WILL NOT
RECEIVE THE CERTIFICATES OR CASH TO WHICH THEY ARE OTHERWISE ENTITLED
PURSUANT TO THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION
UNDER THE PLAN. The Debtor selected one year as opposed to the five year
period permitted (but not required) under section 1143 of the Bankruptcy Code
because the securities mature in less than five years and the Debtor believes
that the cost and expense of establishing an escrow fund for delinquent
tenders outweighs the risk that substantial holders of Old Securities will
fail to surrender their certificates within one year.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account
with respect to the Old Securities at DTC. Any tendering financial
institution that is a participant in DTC's book-entry transfer facility
system must make a book-entry delivery of the Old Securities by causing DTC
to transfer such Old Securities into the Exchange Agent's account at DTC in
accordance with DTC's Automated Tender Offer Program ("ATOP") procedures for
transfers. Such holder of Old Securities using ATOP should transmit its
acceptance to DTC on or prior to the Expiration Date (or comply with the
guaranteed delivery procedures set forth below), DTC will verify such
acceptance, execute a book-entry transfer of the tendered Old Securities
Notes into the Exchange Agent's account at DTC and then send to the Exchange
Agent confirmation of such book-entry transfer, including an agent's message
confirming that DTC has received an express acknowledgment from such holder
that such holder has received and agrees to be bound by the Letter of
Transmittal and that the company may enforce the Letter of Transmittal
against such holder (a "book-entry confirmation").
A beneficial owner of Old Securities that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial
owner wishes to participate.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
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LETTERS OF TRANSMITTAL. Signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution (as defined below), unless the Old
Securities tendered pursuant thereto are tendered for the account of an
Eligible Institution. If signatures on a Letter of Transmittal are required
to be guaranteed, such guarantees must be by a member firm of a registered
national securities exchange in the United States, a member of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or a correspondent in the United States (each of
which is an "Eligible Institution"). If Old Securities are registered in the
name of a person other than the person signing the Letter of Transmittal, in
order to be validly tendered, the Old Securities must be endorsed or
accompanied by properly completed power of authority, with signature
guaranteed by an Eligible Institution.
Holders of Old Securities who are not holders of record should:
(i) obtain a properly completed Letter of Transmittal (or
facsimile thereof) from the record holder,
(ii) obtain and include with the Letter of Transmittal a
properly competed stock or bond power, as the case may be,
from the record holder, or
(iii) effect a record transfer of their Old Securities prior to
delivery of the Letter of Transmittal.
If a holder desires to tender Old Securities pursuant to the Letter of
Transmittal but is unable to locate the Tendered Certificates, such holder
should write to or telephone the Exchange Agent about procedures for
obtaining replacement certificates for Old Securities or arranging for
indemnification.
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of Ballots, Letters of Transmittal and Tendered
Certificates will be resolved by the Debtor, whose determination will be
final and binding, subject only to review by the Court upon application with
due notice to any affected parties in interest. The Debtor reserves the
right to reject any and all Ballots, Letters of Transmittal and Tendered
Certificates not in proper form, or Letters of Transmittal and Tendered
Certificates, the Debtors acceptance of which would, in the opinion of the
Debtor or its counsel, be unlawful.
6.05 DISTRIBUTION RECORD--OLD COMMON STOCK. The distributions under
the Plan on account of an Allowed Claim under or evidenced by the Old Common
Stock shall be distributed to holders of record as of the Distribution Record
Date. At the close of business on the Distribution Record Date, the transfer
ledgers for the Old Common Stock shall be closed, and there shall be no
further changes in the record holders of the Old Common Stock. The Debtor
shall have no obligation to recognize any transfer of the Old Common Stock
occurring on or after the Distribution Record Date. The Debtor shall be
entitled instead to recognize and deal for all purposes hereunder with only
those record holders stated on the transfer ledgers as of the close of
business on the Distribution Record Date.
6.06 ACCRUAL OF INTEREST. Interest on the New Senior Secured Notes
shall begin to accrue at the respective rates set forth in the New Senior
Secured Notes, payable quarterly, ninety-one (91) days following the Petition
Date.
6.07 UNCLAIMED DISTRIBUTIONS. If any holder of a Claim or Interest
entitled to a distribution directly from the Exchange Agent under the Plan
cannot be located on the Effective Date, such distributions shall be set
aside and maintained by the Exchange Agent. If such person is located within
two years of the Effective Date, such distributions shall be distributed to
such person. If such person cannot be located within two years of the
Effective Date, any such securities shall become the property of and shall be
released to the Reorganized Debtor; PROVIDED, HOWEVER, that nothing contained
in this Plan shall require the Reorganized Debtor to attempt to locate such
person.
6.08 TAX PROVISIONS. Pursuant to section 1146(c) of the Bankruptcy
Code, the issuance, transfer or other exchange of a security, or the making
or delivery of an instrument of transfer under the Plan shall not be taxed
under any state or local law imposing a stamp tax, transfer tax, or similar
tax or fee.
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6.09 SETOFFS. Except with respect to Senior Debt Claims, the Debtor
may, but shall not be required to, setoff against any Claim (for purposes of
determining the allowed amount of such Claim on which distribution shall be
made), any claims of any nature whatsoever that the Debtor may have against
the claimant, but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by the Debtor of any such
claim the Debtor may have against such claimant.
ARTICLE VII
PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT AND
UNLIQUIDATED CLAIMS AND ADMINISTRATIVE EXPENSES
7.01 CHARACTERIZATION OF DISPUTED CLAIMS. Pursuant to subsection
1111(a) of the Bankruptcy Code, proof of a Claim is deemed filed under
section 501 of the Bankruptcy Code if that Claim is included in the schedules
filed under section 1106(a)(2) of the Bankruptcy Code, except if the Claim is
scheduled as disputed, contingent, or unliquidated. Such a disputed,
contingent, or unliquidated claim must be asserted by its holder, or an
indenture trustee representing such holder, by the timely filing of a proof
of claim. If a proof of claim is not filed in a timely manner, the Claim may
be deemed to be disallowed.
7.02 RESOLUTION OF CONTESTED CLAIMS AND INTERESTS. The Debtor shall
have the right to object to and contest the allowance of any Claim or
Interest Filed or deemed Filed with the Court, whether or not such Claim was
scheduled as disputed, contingent or unliquidated. The Senior Debt Claims,
as defined under the Plan, shall be deemed allowed.
ARTICLE VIII
IMPLEMENTATION OF THE PLAN
8.01 CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE
REORGANIZED DEBTOR. The Debtor shall, as the Reorganized Debtor, continue to
exist after the Effective Date as a separate corporate entity, with all
powers of a corporation under the laws of the State of Delaware and without
prejudice to any right to alter or terminate such existence (whether by
merger or otherwise) under such applicable state law. Except as otherwise
expressly provided in the Plan on the Confirmation Date, the Reorganized
Debtor shall be vested with all of the property of the Estate free and clear
of all claims, liens, encumbrances, charges and other interests of creditors
and equity security holders, and may operate its business free of any
restrictions imposed by the Bankruptcy Code or by the Court, including,
without limitation, any contracts or leases entered into or assumed by the
Debtors after the Petition Date; provided, however, that the Reorganized
Debtor shall continue as a debtor in possession under the Bankruptcy Code
until the Effective Date, and thereafter, subject to the terms of this Plan,
the Reorganized Debtor may operate its business free of any restriction
imposed by the Bankruptcy Code or the Court.
8.02 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. On the
Effective Date, the Reorganized Debtor shall file its Amended and Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware in accordance with Section 103 of the Delaware General Corporation
Law. The Amended and Restated Certificate of Incorporation will, among other
things, provide (to the extent necessary to effectuate the terms of the Plan)
for (i) the prohibition of the issuance of non-voting equity securities, and
(ii) the authorization of 25,000,000 shares of the New Common Stock, and
which encompasses the shares to be issued upon exercise of the New Warrants;
the shares to be issued upon the exercise of stock options granted for the
establishment of a stock option plan for management of the Reorganized
Debtors. Confirmation of the Plan shall constitute an election by the Debtor
not to be governed by Section 203 of the Delaware General Corporation Law.
8.03 AMENDED AND RESTATED BYLAWS. The Reorganized Debtor shall
adopt and effect the Amended and Restated Bylaws in accordance with Section
109 of the Delaware General Corporation Law.
8.04 NEW SECURITIES. On the Effective Date, the Reorganized Debtor
(i) shall issue, in accordance with the provisions of Article V and Section
8.05 of the Plan, the New Senior Secured Notes, the New Junior Subordinated
Notes, the New Common Stock and the New Warrants, and (ii) shall execute and
deliver the New Collateral Documents, the New Indentures, and the New Warrant
Agreement. In addition, the Nondebtor Subsidiaries will issue the
Subsidiaries Guaranty Agreement and the Subsidiaries Security Agreement.
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8.05 CLAIMS PURCHASE. Pursuant to the terms of the Consent
Agreement, each of the holders of the Senior Debt Claims which is a party to
the Consent Agreement has agreed to accept in satisfaction of its Net Senior
Debt Claim an amount in cash equal to 98.5% of its Net Senior Debt Claim (the
"Claims Purchase"). The Creditors' Committee has informed the Debtor that
the signatories to the Consent Agreements are prepared to permit any Person
to effectuate the Claims Purchase subject to the condition that any Person
seeking to acquire more than 15% of the Net Senior Debt Claims shall commit
to acquire all the Net Senior Debt Claims. Accordingly, any offer to acquire
more than 15% of the Net Senior Debt Claims shall be treated as null and void
unless such Person offers to acquire all of the Net Senior Debt Claims. To
the extent that the Claims Purchase is oversubscribed, the offers received
shall be adjusted downwards on a ratable basis.
Any Person desiring to participate in the Claims Purchase must give
written notice thereof to the Debtor prior to the Expiration Date specifying
therein the amount of Net Senior Debt Claims it desires to purchase and
providing the Debtor with reasonable evidence of its financial ability to
close the purchase. Any Claims Purchase transaction must be consummated by
the commencement of the confirmation hearing in this Reorganization Case.
All Claims Purchases shall be documented and completed in accordance with
Rule 3001(e) of the Bankruptcy Rules.
8.06 CANCELLATION OF SECURITIES AND AGREEMENTS. Except as expressly
provided in the Plan or in the Confirmation Order, on the Effective Date, the
Debtor's commercial paper, short-term notes, senior notes, Old Common Stock,
options, shareholder's rights plans and all the documentation relating
thereto and all obligations of the Debtor under any of the foregoing shall be
terminated and cancelled.
8.07 MANAGEMENT OF THE REORGANIZED DEBTOR. Upon the Effective Date,
the operation of the Reorganized Debtor shall become the general
responsibility of the board of directors who shall, thereafter, have the
responsibility for the management, control and operation of the Reorganized
Debtor. The board of directors of the Reorganized Debtor shall be comprised
of seven (7) persons, the names of six of whom will be designated by the
Creditors' Committee and will be announced prior to hearing on the
Confirmation Date of the Plan. The seventh director shall be the new Chief
Executive Officer, when appointed. Such six designated persons and the new
CEO shall be deemed elected pursuant to the Confirmation Order, and such
elections shall be effective on and after the Effective Date, without any
requirement of further action by stockholders of the Reorganized Debtor. The
initial chairman of the board of directors of the Reorganized Debtor shall be
chosen by the board of directors of the Reorganized Debtor after the
Effective Date.
8.08 OFFICERS. On the Effective Date, the existing officers of the
Reorganized Debtor shall be retained and shall remain as officers and shall
continue to serve until such time as they may resign, be removed or replaced
by the board of directors.
8.09 SATURDAY, SUNDAY OR LEGAL HOLIDAY. If any payment or act under
the Plan is required to be made or performed on a date that is not a
Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, but shall be deemed to
have been completed as of the required date.
8.10 OTHER DOCUMENTS AND ACTIONS. The Debtor and the Reorganized
Debtor may execute such documents and take such other action as is necessary
to effectuate the transactions provided for in the Plan.
8.11 CORPORATE ACTIONS. The issuance of the New Common Stock and
the New Warrants, the adoption of the Amended and Restated Certificate of
Incorporation and Bylaws by the Reorganized Debtor, the selection of certain
directors and officers of the Reorganized Debtor, the execution and delivery
of any documents to be executed and delivered under the Plan, and other
matters under the Plan involving the corporate structure of the Debtor or
corporate action by the Debtor shall be deemed to have occurred and be
effective on and after the Effective Date without any requirement of further
action by stockholders or directors of the Debtor pursuant to and in
accordance with Section 303 of the Delaware General Corporation Law. Without
limiting the foregoing, upon entry of the Confirmation Order by the Clerk of
the Court, the Filing by the Debtor or the Reorganized Debtor of the Amended
and Restated Certificate of Incorporation and Bylaws shall be authorized and
approved in all respects. On the Effective Date, or as soon thereafter as is
practicable, pursuant to applicable state law, the Reorganized Debtor shall
file with the applicable state governmental agencies or offices the
respective Certificates of Incorporation and Bylaws.
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8.12 REGISTRATION RIGHTS. The Reorganized Debtor shall use its
reasonable best efforts to register the New Senior Secured Notes, New Junior
Subordinated Notes and the New Common Stock pursuant to the Registration
Rights Agreement.
8.13 LISTING OF THE NEW COMMON STOCK AND WARRANTS. The Reorganized
Debtor shall use its reasonable best efforts to list each series of the New
Warrants and the New Common Stock on the Nasdaq National Market.
8.14 DISTRIBUTION OF NEW WARRANTS. As set forth in Sections 5.05,
5.06 and 5.07 of the Plan, on the Effective Date, the New Warrants shall be
placed escrow. The Equity Holders' Committee and the Securities Claimants'
Committee shall each choose one trustee. The two trustees shall direct the
New Warrant Escrow Agent and adopt and implement procedures for the
liquidation and allowance of Claims and Equity Interests and allocation and
distribution of the New Warrants among the holders of Claims and Equity
Interests in Classes 7A, 7B and 7C. To the extent that the trustees chosen
by the Equity Holders' Committee and the Securities Claimants' Committee
cannot agree on a distribution scheme with which to instruct the New Warrant
Escrow Agent, then either or both of such trustees may seek the instructions
of the Court after the Effective Date on such distribution scheme after
notice and a hearing. The Debtor shall deposit with the New Warrant Escrow
Agent a reasonable amount necessary for administration of the liquidation,
allocation and distribution process as allowed by the Court.
ARTICLE IX
ACCEPTANCE OR REJECTION OF THE PLAN
9.01 PRESUMED ACCEPTANCE OF PLAN. Classes 1, 2 and 3 are unimpaired
under the Plan, and, therefore, conclusively are presumed to have accepted
the Plan in accordance with Section 1126(f) of the Bankruptcy Code.
9.02 DEEMED NON-ACCEPTANCE OF PLAN. For voting purposes only, and
with specific reservation of rights by all parties as to all other issues,
Classes 7A, 7B, and 7C, in addition to Class 8, are deemed to have rejected
the Plan and will not be solicited for acceptances or rejections of the Plan.
9.03 VOTING CLASSES. Each holder of an Allowed Claim or an Allowed
Interest in Classes 4, 5 and 6 shall be entitled to vote to accept or reject
the Plan.
9.04 ACCEPTANCE BY IMPAIRED CLASSES. An Impaired Class of Claims
shall have accepted the Plan if (i) the holders (other than those designated
under section 1126(e) of the Bankruptcy Code) of at least two-thirds in
amount of the Allowed Claims actually voting in such Class have voted to
accept the Plan and (ii) the holders (other than those designated under
section 1126(e) of the Bankruptcy Code) of more than one-half in number of
the Allowed Claims actually voting in such Class have voted to accept the
Plan. An Impaired Class of Interests shall have accepted the Plan if the
holders (other than those designated under section 1126(e) of the Bankruptcy
Code) of at least two-thirds in amount of the Allowed Interests actually
voting in such Class have voted to accept the Plan.
9.05 NON-CONSENSUAL CONFIRMATION. The Debtor will seek confirmation
of the Plan under section 1129(b) of the Bankruptcy Code in view of the
deemed non-acceptance by Classes 7A, 7B, 7C and 8. In the event that any
other Impaired Class of Claims or Interests does not accept the Plan in
accordance with section 1126 of the Bankruptcy Code, the Debtor hereby
requests that the Court confirm the Plan in accordance with section 1129(b)
of the Bankruptcy Code. Subject to Section 1127 of the Bankruptcy Code, the
Debtor reserves the right to modify the Plan to the extent that confirmation
pursuant to section 1129(b) of the Bankruptcy Code requires modification.
ARTICLE X
CONDITIONS PRECEDENT
10.01 CONDITIONS TO CONFIRMATION. It is a condition to confirmation
of the Plan that the Confirmation Order include provisions:
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(a) authorizing the Reorganized Debtor to adopt and file the Amended
and Restated Certificate of Incorporation and Bylaws;
(b) authorizing the issuance of the New Common Stock and New Warrants;
(c) authorizing the Claims Purchase;
(d) authorizing the issuance of the New Senior Secured Notes and the
New Junior Subordinated Notes;
(e) authorizing all of the other transactions contemplated by the Plan
in order to effectuate the Plan;
(f) exempting the New Senior Secured Notes, the New Junior
Subordinated Notes, the New Common Stock and the New Warrants from
registration under the Securities Act and state or local laws,
pursuant to Section 1145; and
(g) making the provisions of the Confirmation Order non-severable and
mutually dependent.
10.02 CONDITIONS TO THE EFFECTIVE DATE. The Confirmation Order shall
contain the provisions set forth in Section 10.01 of the Plan and the
Confirmation Order shall be in full force and effect and shall not have been
reversed, stayed, modified or amended.
10.03 WAIVER OF CONDITIONS. The Debtor, with the consent of the
Creditors' Committee, may waive any condition set forth in this Article X at
any time, without notice, without leave of the Court, and without any formal
action other than proceeding to consummate the Plan.
ARTICLE XI
EFFECTS OF PLAN CONFIRMATION
11.01 DISCHARGE. Except as otherwise expressly provided in the Plan
or Confirmation Order, as of the Effective Date, the Debtor shall be
discharged forthwith from, and the Confirmation Order shall operate as an
injunction against, the commencement or continuation of an action, the
employment of process, or an act to collect, recover or offset, any Claim and
any "debt" (as that term is defined in section 101(12) of the Bankruptcy
Code) and any Interest (or Claims or debt related thereto), and the Debtor's
liability in respect thereof is extinguished completely, whether reduced to
judgment or not, liquidated or unliquidated, contingent or noncontingent,
asserted or unasserted, fixed or not, matured or unmatured, disputed or
undisputed, legal or equitable, known or unknown, that arose from any
agreement of the Debtor entered into or obligation of any kind of the Debtor
incurred by the Debtor before the Confirmation Date, or from any conduct of
the Debtor prior to the Confirmation Date or that otherwise arose before the
Confirmation Date, including, without limitation, all interest, if any, on
any such debts, whether such interest accrued before or after the date of
commencement of the applicable Reorganization Case, and from any liability of
a kind specified in section 502(g), 502(h) and 502(i) of the Bankruptcy Code,
whether or not a proof of claim is filed or deemed filed under section 501 of
the Bankruptcy Code, such Claim is allowed under section 502 of the
Bankruptcy Code, or the holder of such Claim has accepted the Plan.
11.02 RELEASE. On the Effective Date, in consideration for, or as
part of, the treatment accorded to the holders of Impaired Claims and
Interests under the Plan, each holder of a Claim or Interest against or in
the Debtor shall be deemed to have released the Debtor from any and all
causes of action and claims, in law or in equity, whether based on tort,
fraud, contract or otherwise, which arose prior to the date of the filing of
the Petition Date.
11.03 LIMITED RELEASE BY THE DEBTOR OF DIRECTORS, OFFICERS AND
EMPLOYEES. Except for the estate of James A. Doyle and John N. Brincat, as
of the Effective Date, the Debtor shall be deemed to have waived and released
its present and former directors, officers and employees from any and all
claims of the Debtor (including claims which the Debtor or Debtor in
Possession otherwise has legal power to assert, compromise or settle in
connection with its Reorganization Case) against such present and former
directors, officers and employees arising on or prior to the Effective Date.
11.04 TERM OF INJUNCTIONS OR STAYS. Unless otherwise provided, all
injunctions or stays provided for in the Reorganization Case pursuant to
Section 105 or 362 of the Bankruptcy Code or otherwise in effect on the
Confirmation Date shall remain in full force and effective until the
Effective Date.
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11.05 EXCULPATION. Except with respect to KPMG Peat Marwick, neither
the Debtor, the Reorganized Debtor, any of their respective officers,
directors, employees, advisors, agents, professionals or representatives,
benefit plan administrators or trustees, nor the members of the Steering
Committee and their principals, advisors, professionals and agents, nor the
Creditors' Committee, Equity Holders' Committee, Securities Claimants'
Committee and their members, advisors, professionals and agents shall have or
incur any liability to any holder of a Claim or Interest for any act or
omission in connection with or arising out actions taken or omitted to be
taken in good faith in connection with the Debtor's restructuring, the Plan,
the Reorganization Case, including all prepetition activities leading to the
promulgation and confirmation of the Plan, and administration of the Plan or
the property to be distributed under the Plan.
11.06 REVESTING. Except as otherwise expressly provided in the Plan
or in the New Collateral Documents, on the Effective Date, the Debtor will be
vested with all of the property of its Estate free and clear of all Claims,
liens, encumbrances, charges and other interests of creditors and equity
security holders, and may operate its business free of any restrictions
imposed by the Bankruptcy Code or by the Court. The Debtor shall continue as
debtor in possession under the Bankruptcy Code until the Effective Date and,
thereafter, the Reorganized Debtor may operate its business free of any
restrictions imposed by the Bankruptcy Code or the Court except as
specifically authorized by the Plan.
11.07 RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS.
(a) Except as provided in Section 11.03 and subsection (c) below,
nothing contained in the Plan or the Confirmation Order shall be deemed to be
a waiver or relinquishment of any rights or causes of action that the Debtor
or the Reorganized Debtor may have or which the Reorganized Debtor may choose
to assert on behalf of the Estate under any provision of the Bankruptcy Code
or any similar applicable non-bankruptcy law, including, without limitation,
(i) any and all Claims against any entity, including but not limited to KPMG
Peat Marwick, to the extent such entity asserts a crossclaim, counterclaim
and/or claim for setoff which seeks affirmative relief against the Debtor,
the Reorganized Debtor, their officers, directors or representatives; (ii)
the avoidance of any transfer by or obligation of the Debtor, or (iii) the
turnover of any property to the Estate, all of which are expressly reserved
by the Plan, or (iv) derivative actions currently pending on behalf of the
Debtor.
(b) Nothing contained in the Plan or the Confirmation Order shall
be deemed to be a waiver or relinquishment of any claim, cause of action,
right or setoff, or other legal or equitable defense which the Debtor had
immediately prior to the Petition Date, against or with respect to any claim
left unaltered or unimpaired by the Plan. The Reorganized Debtor shall have,
retain, reserve and be entitled to assert all such claims, causes of action,
rights of setoff and other legal or equitable defenses which it had
immediately prior to the Petition Date fully as if the Reorganization Case
had not been commenced; and all of the Reorganized Debtor's legal and
equitable rights respecting any claim left unaltered or unimpaired by the
Plan may be asserted after the Confirmation Date to the same extent as if the
Reorganization Case had not been commenced.
(c) Except for the estate of James A. Doyle, John N. Brincat and
KPMG Peat Marwick, the Debtor waives and releases any rights or causes of
action for the recovery of preferential payments or fraudulent conveyances
against any party.
11.08 POST-CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS.
Outstanding notes, stock certificates and other evidences of Claims against
or Interests in the Debtor in Classes 4, 5, 6, 7A, 7B, 7C and 8 shall,
effective upon the Effective Date, represent only the right to participate in
the distributions contemplated by the Plan, if any.
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ARTICLE XII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
12.01 ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. On
the Effective Date, and to the extent permitted by applicable law, all
executory contracts and unexpired leases of the Debtor set forth on Exhibit C
attached to the Plan shall be assumed in accordance with the provisions of
section 365 and section 1123 of the Bankruptcy Code, unless such executory
contracts or unexpired leases are rejected by the Debtor's motion prior to
confirmation or in connection with the confirmation hearing..
Contracts or leases entered into after the Petition Date will be
performed by the Reorganized Debtor in the ordinary course of business.
12.02 CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED
LEASES. Any Claims arising out of the rejection of contracts or leases must
be filed with the Court within the time set by any Final Order rejecting an
executory contract or unexpired lease or 30 days after the Effective Date.
Any Claims not filed within such time will be forever barred from assertion
against the Debtor or Reorganized Debtor, its estate and property. Unless
otherwise ordered by the Court or provided in this Plan, all such Claims for
which proofs of Claim are required to be filed will be treated as Class 3
Claims.
ARTICLE XIII
RETENTION OF JURISDICTION
13.01 RETENTION OF JURISDICTION. Notwithstanding the entry of the
Confirmation Order or the Effective Date having occurred, the Court shall
retain original and exclusive jurisdiction to (a) determine any disputed
Claims, (b) determine requests for payment of Claims entitled to priority
under section 507(a)(1) of the Bankruptcy Code, including compensation of and
reimbursement of expenses of professionals and other parties entitled
thereto, (c) resolve controversies and disputes regarding interpretation and
implementation of the Plan, (d) enter orders in aid of the Plan, including,
without limitation, appropriate orders (which may include contempt or other
sanctions) to protect the Debtor and the Reorganized Debtor in accordance
with sections 524 and 1141 of the Bankruptcy Code and the terms and
conditions of the Confirmation Order, (e) modify the Plan pursuant to Section
14.02 of the Plan, (f) determine any and all applications, adversary
proceedings and contested or litigated matters pending on the Effective Date,
(g) allow, disallow, estimate, liquidate or determine any Claim or Interest
and to enter or enforce any order requiring the filing of any such Claim
before a particular date, (h) determine any and all pending applications for
the rejection of executory contracts or unexpired leases, or for the
assignment of assumed executory contracts and unexpired leases, and to hear
and determine, and if need to be liquidate, any and all Claims arising from
any such rejection, assumption and/or assignment, (i) determine any actions
or controversies arising under or in connection with the Plan, the
Confirmation Order, or any contract, instrument, release, or other agreement
created in connection with the Plan, (j) enter and implement orders as are
necessary or appropriate if the Confirmation Order is for any reason
modified, stayed, reversed, revoked or vacated, (k) enter a final decree
closing the Reorganization Case, and (l) determine any actions or
controversies related to or asserted against the Exchange Agent.
13.02 FAILURE OF COURT TO EXERCISE JURISDICTION. If the Court
abstains from exercising or declines to exercise jurisdiction, or determines
that it is otherwise without jurisdiction over any matter or proceeding
arising out of, related to or otherwise connected with the Reorganization
Case, including the matters set forth in this Article XIII , this Article
shall not prohibit, or limit or otherwise affect the exercise of jurisdiction
by any other court having competent jurisdiction with respect to such matter
or proceeding.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.01 RETIREE BENEFITS. On and after the Effective Date, pursuant to
section 1129(a)(13) of the Bankruptcy Code and applicable nonbankruptcy law,
the Reorganized Debtor shall continue to be obligated to pay all retiree
benefits, as that term is defined in section 1114 of the Bankruptcy Code, and
shall continue to pay such
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retiree benefits as they become due at the level established at any time
prior to confirmation of the Plan pursuant to subsection (e)(1)(B) or (g) of
section 1114, for the duration of the period the Debtor has obligated itself
to provide such benefits; provided, however, that nothing herein shall extend
or otherwise modify the duration of such period or prohibit the Debtor's
ability or the Reorganized Debtor's ability to modify the terms and
conditions of the retiree benefits as otherwise permitted by such plans and
otherwise applicable nonbankruptcy law.
14.02 MODIFICATION OF PLAN. The Debtor reserves the sole right, in
accordance with the Bankruptcy Code and Bankruptcy Rules, to amend or modify
the Plan prior to the entry of the Confirmation Order. After the entry of
the Confirmation Order, the Reorganized Debtor may, upon order of the Court,
amend or modify the Plan in accordance with section 1127(b) of the Bankruptcy
Code and the Bankruptcy Rules or remedy any defect or omission or reconcile
any inconsistency in the Plan in such manner as may be necessary to carry out
the purpose and intent of the Plan.
14.03 WITHDRAWAL OF PLAN. The Debtor reserves the right, at any time
prior to the entry of the Confirmation Order, to revoke and withdraw the
Plan. If the Debtor revokes or withdraws the Plan under this section, or if
entry of the Confirmation Order does not occur, then the Plan shall be deemed
null and void. In that event, nothing contained in the Plan shall be deemed
to constitute a waiver or release of any Claims by or against or any
Interests in the Debtor, to prejudice in any manner the rights of the Debtor
in any further proceedings involving the Debtor, or constitute an admission
against interest by the Debtor or any other party in interest.
14.04 HEADINGS. The headings used in this Plan are inserted for
convenience only and neither constitute a portion of the Plan nor in any
manner affect the provisions of the Plan.
14.05 SUCCESSORS AND ASSIGNS. The rights, benefits and obligations
of any person or entity named or referred to in the Plan shall be binding
upon, and shall inure to the benefit of, the heir, executor, administrator,
successor or assign of such person or entity.
14.06 PAYMENT OF STATUTORY FEES. All fees payable pursuant to
section 1930 of Title 28 of the United States Code, as determined by the
Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy
Code, shall be paid on or before the Effective Date.
14.07 NOTICES. Any notice, request or demand given or made under
this Plan or under the Bankruptcy Code or the Bankruptcy Rules shall be in
writing and shall be hand delivered or sent by a reputable overnight courier
service, and shall be deemed given when received at the following addresses
whether hand delivered or sent by overnight courier service:
Mark E. Dapier
General Counsel
Mercury Finance Company
100 Field Drive
Suite 340
Lake Forest, Illinois 60045
with a copy to:
Lewis S. Rosenbloom
David D. Cleary
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Notwithstanding anything to the contrary provided herein, all notices
concerning this Plan shall be served upon the entities prescribed and in the
manner prescribed under the Bankruptcy Code and the Bankruptcy Rules.
14.08 SEVERABILITY OF PLAN PROVISIONS. If prior to confirmation, any
term or provision of the Plan which does not govern the treatment of Claims
or Interests or the conditions to confirmation or the Effective Date is held
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by the Court to be invalid, void or unenforceable, the Court shall have the
power to alter and interpret such term or provision to make it valid or
enforceable to the maximum extent practicable, consistent with the original
purpose of the term or provision held to be invalid, void or unenforceable,
and such term or provision shall then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration or interpretation,
the remainder of the terms and provision of the Plan will remain in full
force and effect and will in no way be affected, impaired or invalidated by
such holdings, alteration or interpretation. The Confirmation Order shall
constitute a final judicial determination and shall provide that each term
and provision of the Plan as it may have been altered or interpreted in
accordance with the foregoing, is valid and enforceable pursuant to its terms.
14.09 EXHIBITS. Exhibits to the Plan or Disclosure Statement that
are not filed simultaneously with the Plan shall be filed with the Court not
less than ten days prior to the hearing on the Disclosure Statement to be
conducted pursuant to the Bankruptcy Rule 3017 and shall be mailed to the
Creditors' Committee, the Securities and Exchange Commission, the
Commissioner of Securities for the State of Illinois and any party in
interest that makes a written request for such Exhibit to the Debtor.
14.10 NO ADMISSIONS. Notwithstanding anything herein to the
contrary, nothing contained in the Plan shall be deemed as a admission by the
Debtor with respect to any matter set forth herein including, without
limitation, liability on any Claim or the propriety of any Claims
classification.
* * *
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ARTICLE XIII
CONFIRMATION REQUEST
The Debtor requests confirmation of the Plan under Section 1129(b) of
the Bankruptcy Code.
Dated: October 15, 1998
MERCURY FINANCE COMPANY
By: _____________________________
William A. Brandt, Jr.
President and Chief Executive
Officer
Prepared by:
Lewis S. Rosenbloom
David D. Cleary
McDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, Illinois 60606-5096
(312) 372-2000
Counsel for Mercury Finance
Company
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<PAGE>
COMPANY SECURITY AGREEMENT
This Company Security Agreement dated as of [DATE], 1998 (this
"AGREEMENT"), is made by Mercury Finance Company, a Delaware corporation (the
"COMPANY"), in favor of [NAME OF TRUSTEE], as trustee for the Holders under
the Indenture described below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. The Company is a party to the Indenture of even date with this
Agreement (as amended, restated, supplemented or otherwise modified from time
to time, the "INDENTURE"), with the Trustee, under which the Company will
issue its senior secured notes to the holders thereof and their successors
and assigns.
2. It is a condition precedent to the issuance of the senior secured
notes that the Company enter into this Agreement and grant to the Trustee,
for the benefit of itself and the holders of such senior secured notes the
security interests provided in this Agreement to secure the obligations of
the Company described below.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, the
Company agrees as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Agreement, capitalized terms used in this Agreement and not otherwise defined
have the meanings given to such terms from time to time in the Indenture.
1.2 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"ACCOUNTS" means any and all "accounts," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by the
Company, and in any event includes all accounts receivable, contract
rights, rights to payment and other obligations of any kind owed to the
Company arising out of or in connection with the sale or lease of
merchandise, goods or commodities or the rendering of services or arising
from any other transaction, however evidenced, and whether or not earned by
performance, all guaranties, indemnities and security with respect to the
foregoing, and all letters of credit relating thereto, in each case whether
now existing or hereafter acquired or arising.
"AGREEMENT" has the meaning set forth in the PREAMBLE.
<PAGE>
"BOOKS" means all books, records and other written, electronic or
other documentation in whatever form maintained now or hereafter by or for
the Company in connection with the ownership of its assets or the conduct
of its business or evidencing or containing information relating to the
Collateral, including (i) ledgers, (ii) records indicating, summarizing,
or evidencing the Company's assets (including Inventory and Rights to
Payment), business operations or financial condition, (iii) computer
programs and software, (iv) computer discs, tapes, files, manuals,
spreadsheets, (v) computer printouts and output of whatever kind, (vi) any
other computer prepared or electronically stored, collected or reported
information and equipment of any kind and (vii) any and all other rights
now or hereafter arising out of any contract or agreement between the
Company and any service bureau, computer or data processing company or
other Person charged with preparing or maintaining any of the Company's
books or records or with credit reporting, including with regard to the
Company's Accounts.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by the
Company.
"COLLATERAL" has the meaning specified in SECTION 2.1.
"COMPANY" has the meaning set forth in the PREAMBLE.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of the Company
with a bank, savings and loan association, credit union or like
organization and all funds and amounts therein, whether or not restricted
or designated for a particular purpose.
"DOCUMENTS" means any and all "documents," as such term is defined in
the UCC, including without limitation all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other
documents of the Company, whether or not negotiable, and includes all other
documents which purport to be issued by a bailee or agent and purport to
cover goods in any bailee's or agent's possession which are either
identified or are tangible portions of an identified mass, including such
documents of title made available to the Company for the purpose of
ultimate sale or exchange of goods or for the purpose of loading,
unloading, storing, shipping, transshipping, manufacturing, processing or
otherwise dealing with goods in a manner preliminary to their sale or
exchange, in each case whether now existing or hereafter acquired or
arising.
"EQUIPMENT" means all "equipment," as such term is defined in the UCC,
whether now existing or hereafter acquired by the Company in all of its
forms, wherever located, and in any event includes any and all machinery,
furniture, equipment, furnishings and fixtures in which the Company now or
hereafter acquires any right, and all other goods and tangible personal
property (other than Inventory), including tools, parts and supplies,
computer and other electronic data processing equipment and other office
equipment, computer programs and related data processing software, and all
additions, substitutions, replacements, parts,
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accessories, and accessions to and for the foregoing, now owned or
hereafter acquired, and including any of the foregoing which are or are to
become fixtures on real property.
"FINANCING STATEMENTS" has the meaning specified in SECTION 3.
"FIXTURES" shall mean any "fixtures" as such term is defined in the
UCC, whether now owned or hereafter acquired by the Company.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in the UCC, whether now existing or hereafter arising or acquired
by the Company, and in any event includes (i) all tax and other refunds,
rebates or credits of every kind and nature to which the Company is now or
hereafter may become entitled, (ii) all goodwill, choses in action and
causes of action, whether legal or equitable, whether in contract or tort
and however arising, (iii) all Intellectual Property Collateral, (iv) all
uncertificated securities and interests in limited and general partnerships
and limited liability companies, (v) all rights of stoppage in transit,
replevin and reclamation, (vi) all licenses, permits, consents, indulgences
and rights of whatever kind issued in favor of or otherwise recognized as
belonging to the Company by any Governmental Authority and (vii) all
indemnity agreements, guaranties, insurance policies and other contractual,
equitable and legal rights of whatever kind or nature; in each case whether
now existing or hereafter acquired or arising.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDENTURE" has the meaning set forth in the first preliminary
statement.
"INSOLVENCY DEFAULT" means a Default under Section 9.01(a)(vii) or
Section 9.01(a)(viii) of the Indenture.
"INSTRUMENTS" means any and all negotiable instruments, certificated
securities and every other writing which evidences a right to the payment
of money, in each case whether now existing or hereafter acquired by the
Company.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by the Company or in which the Company otherwise has
any interest, now existing or hereafter acquired or arising:
(A) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and
royalties with respect to any licenses (including without
limitation such patents, patent applications and patent licenses
as described in SCHEDULE E), present or future infringement
thereof, all rights arising therefrom
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and pertaining thereto and all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof;
(B) all copyrights and applications for copyright, domestic or foreign,
together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published
and whether said copyrights are statutory or arise under the common
law, and all other rights and works of authorship, all rights, claims
and demands in any way relating to any such copyrights or works,
including royalties and rights to sue for past, present or future
infringement, and all rights of renewal and extension of copyright;
(C) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating
to any of the foregoing and all income and royalties with respect to
any licenses (including without limitation such marks, names,
applications and licenses as described in SCHEDULE E), whether
registered or unregistered and wherever registered, all rights to sue
for past, present or future infringement or unconsented use thereof,
all rights arising therefrom and pertaining thereto and all reissues,
extensions and renewals thereof;
(D) all trade secrets, confidential information, customer lists, license
rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, drawings, specifications, blue prints,
descriptions, inventions name plates and catalogs; and
(E) the entire goodwill of or associated with the businesses now or
hereafter conducted by the Company connected with an symbolized by any
of the aforementioned properties and assets.
"INVENTORY" means any "inventory," as such term is defined in the UCC,
wherever located, whether now owned or hereafter acquired by the Company,
and in any event includes all goods (including goods in transit) which are
held for sale, lease or other disposition, including those held for display
or demonstration or out on lease or consignment or to be furnished under a
contract of service, or which are raw materials, work in process, finished
goods or materials used or consumed in the Company's business, and the
resulting product or mass, and all repossessed, returned, rejected,
reclaimed and replevied goods, together with all parts, components,
supplies, packing and other materials used or usable in connection with the
manufacture, production, packing, shipping, advertising, selling or
furnishing of such goods; and all other items hereafter acquired by the
Company by way of substitution, replacement, return, repossession or
otherwise, and all additions and accessions thereto, and any Document
representing or relating to any of the foregoing at any time.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto in
Section 9-115 of the UCC in those jurisdictions in which such definition
has been adopted and shall include without limitation (i) all securities,
whether certificated or uncertificated, stocks, bonds,
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interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares, (ii) all
securities entitlements of the Company including without limitation, the
rights of the Company to any securities account of the Company and
financial assets held by a securities intermediary in such securities
account and any fee, credit balance or other money owing by any securities
intermediary with respect to that account, (iii) all securities accounts
held by the Company, (iv) all commodity contracts held by the Company and
(v) all commodity accounts held by the Company.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, collateral deposit arrangement, security interest, encumbrance
for the payment of money, lien (statutory or other), preference, right of
setoff, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, the interest of a
lessor under a capital lease, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement (other than a financing statement filed by a "true"
lessor under Section 9-408 of the UCC) naming the owner of the asset to
which such Lien relates as debtor, under the UCC or other comparable law of
any jurisdiction.
"MAJORITY HOLDERS" means Holders having at least 25% in principal
amount of the Outstanding Securities.
"PERMITTED LIEN" has the meaning set forth in the First Supplemental
Trust Indenture of even date with this Agreement between the Company and
the Trustee.
"PROCEEDS" means proceeds," as such term is defined in the UCC, and in
any event, includes whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of the
Company, any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of the Company from time to time
with respect to any of the Collateral, any and all payments (in any form
whatsoever) made or due and payable to the Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), any
and all other amounts from time to time paid or payable under or in
connection with any of the Collateral or for or on account of any damage or
injury to or conversion of any Collateral by any Person, any and all other
tangible or intangible property received upon the sale or disposition of
Collateral, and all proceeds of proceeds.
"RIGHTS TO PAYMENT" means all Accounts, and any and all rights and
claims to the payment or receipt of money or other forms of consideration
of any kind in, to and under all Chattel Paper, Documents, General
Intangibles, Instruments and Proceeds.
"SECURED OBLIGATIONS" means all Indenture Obligations (as defined in
the Indenture).
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"TRANSACTION DOCUMENTS" means the Indenture, the Collateral Security
Documents and any and all other agreements, instruments and documents
executed or delivered in connection therewith.
"TRUSTEE" has the meaning set forth in the PREAMBLE.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; PROVIDED, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
1.3 TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned
to them in the UCC.
SECTION 2. SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, and to induce the Trustee to enter
into the Indenture and the Holders to accept and exchange the Securities and
to issue the Securities as provided therein, the Company grants, pledges,
assigns, transfers, hypothecates and sets over to the Trustee for the benefit
of itself and the Holders, a security interest in all of the Company's right,
title and interest in, to and under the following property, wherever located
and whether now existing or owned or hereafter acquired or arising
(collectively, the "COLLATERAL"): (i) all Accounts; (ii) all Chattel Paper;
(iii) all Deposit Accounts; (iv) all Documents; (v) all General Intangibles;
(vi) all Instruments; (vii) all Books; (viii) all Fixtures; (ix) all
Investment Property; (x) all Equipment, (xi) all Inventory, (xii) all money,
cash or cash equivalents; and (xiii) all products and Proceeds of any and all
of the foregoing; PROVIDED, that the Collateral will not include (a) General
Intangibles which by their terms are unassignable to the extent that consent
to such an assignment is not obtained and (b) intent to use trademark
applications to the extent such trademark applications would be void or
voidable as a result of the pledge and collateral assignment hereunder.
2.2 COMPANY REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) the Company shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by
the Trustee of any of the rights hereunder shall not release the Company from
any of its duties or obligations under such contracts, agreements and other
documents included in the Collateral and (iii) neither the Trustee nor any
Holder shall have any obligation or liability under any contracts, agreements
and other documents included in the Collateral by reason of this Agreement,
nor shall the Trustee or any Holder be obligated to perform any of the
obligations or duties of the Company thereunder or to take
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any action to collect or enforce any such contract, agreement or other
document included in the Collateral hereunder.
2.3 CONTINUING SECURITY INTEREST. The Company agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with SECTION 11.15.
SECTION 3. FINANCING STATEMENTS ETC.
The Company shall execute and deliver to the Trustee concurrently with
the execution of this Agreement, and at any time and from time to time
thereafter, all financing statements, continuation financing statements,
termination statements, security agreements, chattel mortgages, assignments,
patent, copyright and trademark collateral assignments, fixture filings,
blocked account agreements, warehouse receipts, documents of title,
affidavits, reports, notices, schedules of account, letters of authority and
all other documents and instruments, in form satisfactory to the Trustee (the
"FINANCING STATEMENTS"), and take all other action, as the Trustee may
reasonably request, to perfect and continue perfected, maintain the priority
of or provide notice of the Trustee's security interest in the Collateral and
to accomplish the purposes of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In addition to and not in limitation of the representations and
warranties of the Company set forth in the Indenture, the Company represents
and warrants to the Trustee that:
4.1 LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. The Company's
chief executive office, corporate office and principal place of business is
located at the address set forth in SCHEDULE A, and all other locations where
the Company conducts business or Collateral is kept are set forth in SCHEDULE A.
4.2 LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing
such Books and the names and addresses of all service bureaus, computer or
data processing companies and other Persons keeping any Books or collecting
Rights to Payment for the Company, are set forth in SCHEDULE B.
4.3 TRADE NAMES AND TRADE STYLES. All trade names and trade styles
under which the Company presently conducts its business operations are set
forth in SCHEDULE C, and, except as set forth in SCHEDULE C, the Company has
not, at any time during the preceding five years (i) been known as or used
any other corporate, trade or fictitious name, (ii) changed its name,
(iii) been the surviving or resulting corporation in a merger or
consolidation or (iv) acquired through asset purchase or otherwise any
business of any Person.
4.4 OWNERSHIP OF COLLATERAL. The Company is, and, except as permitted
by SECTION 5.9, will continue to be, the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time the
Company acquires rights in such Collateral, will be the legal and beneficial
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owner thereof), and has good, indefeasible and merchantable title to the
Collateral free and clear of any and all Liens other than Permitted Liens.
4.5 ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This Agreement
creates a valid and continuing security interest which is enforceable against
the Collateral in which the Company now has rights and will create a security
interest which is enforceable against the Collateral in which the Company
hereafter acquires rights at the time the Company acquires any such rights
and (ii) subject to Permitted Liens and assuming the filing of the Financing
Statements, the possession of Instruments and the control over Investment
Property, the Trustee has a perfected and first priority security interest in
the Collateral in which the Company now has rights, and will have a perfected
and first priority security interest in the Collateral in which the Company
hereafter acquires rights at the time the Company acquires any such rights,
in each case for the Trustee's own benefit or for the benefit of the Holders,
and in each case securing the payment and performance of the Secured
Obligations. All action necessary or desirable to protect and perfect such
security interest in the existing Collateral under the UCC has been duly
taken.
4.6 OTHER FINANCING STATEMENTS. Other than (i) financing statements or
similar filings naming the owner of the asset to which such lien relates as
debtor, under the UCC or any comparable law ("UCC FINANCING STATEMENTS")
disclosed to the Trustee and filed in connection with the Permitted Liens and
(ii) UCC Financing Statements in favor of the Trustee in its capacity as
Trustee for the benefit of itself and the Holders under the Indenture and any
other Transaction Documents, no effective UCC Financing Statement naming the
Company as debtor, assignor, grantor, mortgagor, pledgor or the like and
covering all or any part of the Collateral is on file in any filing or
recording office in any jurisdiction.
4.7 RIGHTS TO PAYMENT. The Rights to Payment represent valid, binding
and enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto, and are and will be genuine, free from Liens other than Permitted
Liens, and not subject to any adverse claims, counterclaims, setoffs,
defaults, disputes, defenses, discounts, retainages, holdbacks or conditions
precedent of any kind of character, except to the extent permitted under the
Indenture and for ordinary course setoffs and asserted claims or to the
extent, if any, that such account debtors or other Persons may be entitled to
normal and ordinary course trade discounts, returns, adjustments and
allowances in accordance with SECTION 5.15, or as otherwise disclosed to the
Trustee in writing;
(A) the Company has not assigned any of its rights under the Rights to
Payment except as provided in this Agreement or as set forth in the
Indenture or other Transaction Documents; and
(B) the Company has no knowledge of any fact or circumstance which would
impair the validity or collectibility of any of the Rights to Payment.
4.8 INVENTORY. With respect to any Inventory in which the Trustee is
granted a security interest pursuant to the terms of this Agreement, (i) such
Inventory is located at the locations set
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forth on SCHEDULE A, (ii) no Inventory is now, or shall at any time or times
hereafter be stored with a bailee, warehouseman or similar party (except as
disclosed on SCHEDULE D) without the Trustee's prior written consent, and if
the Trustee gives such written consent, the Company will concurrently
therewith at the Trustee's reasonable request use its best efforts to cause
any such bailee, warehouseman or similar party to issue and deliver to the
Trustee in form and substance acceptable to the Trustee, warehouse receipts
therefor in the Trustee's name, (iii) such Inventory is of good and
merchantable quality, free from any material defects, (iv) such Inventory is
not subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent
of any third party upon sale or disposition of that Inventory or the payment
of any monies to any third party as a precondition of such sale or other
disposition and (v) the completion of manufacture, sale or other disposition
of such Inventory by the Trustee following a Default or an Event of Default
will not require the consent of any Person and will not constitute a breach
or default under any contract or agreement to which the Company is a party or
to which such Inventory is subject.
4.9 INTELLECTUAL PROPERTY. Except as set forth in SCHEDULE E, the
Company does not own, possess or use under any licensing arrangement any
patents, copyrights, trademarks, service marks or trade names, nor is there
currently pending before any Governmental Authority any application for
registration of any patent, copyright, trademark, service mark or trade name;
(A) all patents, copyrights, trademarks, service marks and trade names are
subsisting and none have been adjudged invalid or unenforceable in
whole or in part;
(B) all maintenance fees required to be paid on account of any patents
have been timely paid for maintaining such patents in force, and, to
the Company's knowledge, each of the patents is valid and enforceable;
(C) to the Company's knowledge after due inquiry, no material infringement
or unauthorized use presently is being made of any Intellectual
Property Collateral by any Person;
(D) the Company is the sole and exclusive owner of the Intellectual
Property Collateral identified on SCHEDULE E (other than Intellectual
Property Collateral licensed by the Company) and the past, present and
contemplated future use of such Intellectual Property Collateral by
the Company has not, does not and will not infringe or violate any
right, privilege or license agreement of or with any other Person; and
(E) the Company either owns, has material rights under, is a party to, or
an assignee of a party to all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark
applications, trade names and all other Intellectual Property
Collateral necessary to continue to conduct its business as heretofore
conducted.
4.10 EQUIPMENT. None of the Equipment or other Collateral is affixed to
real property, except Collateral with respect to which the Company has supplied
the Trustee with all information and documentation necessary to make all fixture
filings required to perfect and protect the priority
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of the Trustee's security interest in all such Collateral which may be
fixtures as against all Persons having an interest in the premises to which
such property may be affixed.
4.11 DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which the Company maintains its Deposit Accounts, and the
account numbers and account names of such Deposit Accounts, are set forth in
SCHEDULE F.
4.12 CHATTEL PAPER AND INSTRUMENTS. All action necessary to protect
and perfect the security interest of the Trustee in all Instruments
(including the delivery of all originals thereof to the Trustee) has been
duly taken. With respect to Chattel Paper in which the Trustee is granted a
security interests under the terms of this Agreement:
(A) all action necessary to protect and perfect the security interest in
the specific goods underlying Chattel Paper has been duly taken;
(B) all original documentation evidencing Chattel Paper is in the
possession of the Company; and
(C) all original documentation evidencing Chattel Paper has been marked
with a legend as described in SECTION 5.14.
SECTION 5. COVENANTS
In addition to and not in limitation of the covenants of the Company set
forth in the Indenture, so long as any of the Secured Obligations remain
unsatisfied, the Company agrees that:
5.1 DEFENSE OF COLLATERAL. The Company will defend the Collateral
against all claims and demands of all Persons at any time claiming the same
or any interest therein adverse to the Trustee other than holders of
Permitted Liens.
5.2 PRESERVATION OF COLLATERAL. The Company shall maintain, preserve
and protect the Collateral which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, except as permitted by the Indenture.
5.3 COMPLIANCE WITH LAWS, ETC. The Company will comply with all
requirements of law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act) relating in
a material way to the possession, operation, maintenance and control of the
Collateral, except such as may be contested in good faith or as to which a
bona fide dispute may exist and except to the extent that noncompliance could
not reasonably be expected to materially adversely effect the value of the
Collateral or the worth of the Collateral as Collateral Security or have a
Material Adverse Effect.
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5.4 LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. The Company will (i)
keep all Books pertaining to the Rights to Payment at the locations set forth
in SCHEDULE B and (ii) give at least thirty days' prior written notice to the
Trustee of (a) any changes in any such location where Books pertaining to the
Rights to Payment are kept, including any change of name or address of any
service bureau, computer or data processing company or other Person preparing
or maintaining any Books or collecting Rights to Payment for the Company or
(b) any changes in the location of the Company's chief executive office or
principal place of business.
5.5 LOCATION OF COLLATERAL AND DEPOSIT ACCOUNTS. The Company will (i)
keep the Collateral at the locations set forth in SCHEDULE A or SCHEDULE D
and not remove the Collateral from such locations (other than Collateral in
transit between locations listed in SCHEDULE A or SCHEDULE D in the ordinary
course of business and disposals of Collateral permitted by CLAUSE (i) below)
except upon at least thirty days' prior written notice of any removal to the
Trustee, (ii) give the Trustee at least thirty days' prior written notice of
any change in the locations set forth in SCHEDULE A or SCHEDULE D and (iii)
give the Trustee at least thirty days' prior written notice of the creation
and maintenance of any Deposit Account not set forth on SCHEDULE F.
5.6 CHANGE IN NAME, IDENTITY OR STRUCTURE. The Company will give the
Trustee at least thirty days' prior written notice of (i) any change in name,
(ii) any changes in, additions to or other modifications of its trade names and
trade styles set forth in SCHEDULE C and (iii) any changes in its identity or
structure in any manner which might make any Financing Statement filed hereunder
incorrect or misleading in such a manner as would require the refiling of
Financing Statements under the UCC.
5.7 MAINTENANCE OF RECORDS. The Company will keep accurate and complete
Books with respect to the Collateral, and at the Trustee's request the Company
shall legend the Books pertaining to such Collateral with an appropriate
disclosure of the Trustee's security interest hereunder.
5.8 DISPOSITION OF COLLATERAL. The Company will not surrender or lose
possession of other than to the Trustee), sell, lease, rent, or otherwise
dispose of or transfer any of the Collateral or any right or interest therein,
except to the extent permitted by the Indenture.
5.9 LIENS. Other than liens in favor of the Trustee in its capacity as
Trustee under the Indenture and Permitted Liens, the Company will keep the
Collateral free of all Liens.
5.10 EXPENSES. The Company will maintain, keep and preserve the Collateral
at its own cost and expense in accordance with its customary business practices.
5.11 LEASED PREMISES. At the Trustee's request, the Company will use its
best efforts to obtain from each Person from whom the Company leases any
premises at which any Collateral is at any time present such subordination,
waiver, consent and estoppel agreements as the Trustee may reasonably require,
in form and substance reasonably satisfactory to the Trustee.
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5.12 RIGHTS TO PAYMENT. The Company will:
(A) with such frequency as the Trustee may reasonably require upon the
occurrence and during the continuance of an Insolvency Default or an
Event of Default, furnish to the Trustee (i) master customer listings,
including all names and addresses, together with copies or originals
(as requested by the Trustee) of documents, customer statements,
repayment histories and present status reports relating to the
Accounts, (ii) accurate records and summaries of Accounts, including
detailed agings specifying the name, face value and date of each
invoice, and listings of Accounts that are disputed or have been
canceled and (iii) such other matters and information relating to the
Accounts as the Trustee shall from time to time reasonably request;
(B) in accordance with its sound business judgment perform and comply in
all material respects with its obligations in respect of the Accounts
and other Rights to Payment;
(C) upon the request of the Trustee (i) at any time, notify all or any
designated portion of the account debtors and other obligors on the
Rights to Payment of the security interest hereunder and (ii) if an
Insolvency Default or an Event of Default has occurred and is
continuing; notify the account debtors and other obligors on the
Rights to Payment or any designated portion thereof that payment shall
be made directly to the Trustee or to such other Person or location as
the Trustee shall specify; and
(D) establish such lockbox, blocked account or similar arrangements for
the payment of the Accounts and other Rights to Payment as the Trustee
shall require.
5.13 DOCUMENTS ETC. The Company will (i) immediately deliver to the
Trustee, or an agent designated by it, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all Documents and Instruments
and all other Rights to Payment at any time evidenced by promissory notes, trade
acceptances or other instruments and (ii) at the reasonable request of the
Trustee, mark all Documents and Chattel Paper with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of [NAME OF TRUSTEE], as trustee, for the benefit of itself
and certain holders." With respect to Chattel Paper in which the Trustee is
granted a security interests under the terms of this Agreement, the Company will
(A) take all action necessary to protect and perfect the security interest
in the specific goods underlying Chattel Paper;
(B) take possession of all original documentation evidencing Chattel
Paper; and
(C) not sell or transfer any Chattel Paper, whether in the ordinary course
of business or otherwise.
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5.14 INVENTORY. The Company will:
(A) at such times as the Trustee shall reasonably request but in any event
not more than once each fiscal year, prepare and deliver to the
Trustee a report of all Inventory, in form and substance satisfactory
to the Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or an
Event of Default has occurred and is continuing, take a physical
listing of the Inventory and promptly deliver a copy of such physical
listing to the Trustee.
5.15 EQUIPMENT. The Company will:
(A) upon the Trustee's reasonable request but in any event not more than
once each fiscal year, prepare and deliver to the Trustee a report of
each item of Equipment, in form and substance satisfactory to the
Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or an
Event of Default has occurred and is continuing, take a physical
listing of the Equipment and promptly deliver a copy of such physical
listing to the Trustee.
5.16 INTELLECTUAL PROPERTY COLLATERAL. The Company will:
(A) not enter into any agreements or transactions (including any license
or royalty agreement) pertaining to any Intellectual Property
Collateral except in the ordinary course of business;
(B) if reasonably within the Company's abilities, not allow or suffer any
Intellectual Property Collateral to become abandoned, nor any
registration thereof to be terminated, forfeited, expired or dedicated
to the public unless such Intellectual Property Collateral is no
longer useful or necessary to the operation of its business;
(C) diligently prosecute all applications for patents, copyrights and
trademarks useful and necessary to the operation of its business, and
file and prosecute any and all continuations, continuations-in-part,
applications for reissue, applications for certificate of correction
and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and
all maintenance, license, registration and other fees, taxes and
expenses incurred in connection with any Intellectual Property
Collateral; and
(D) provide the Trustee on a quarterly basis with a list of all new
applications and registrations for United States and foreign patents,
copyrights, trademarks, service marks or trade names, which such new
applications and registrations shall be subject to the terms and
conditions of the Indenture and this Agreement.
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5.17 NOTICES, REPORTS AND INFORMATION. The Company will (i) furnish to the
Trustee such statements and schedules further identifying and describing the
Collateral and such other reports and other information in connection with the
Collateral as the Trustee may reasonably request, all in reasonable detail and
(ii) upon the reasonable request of the Trustee make such demands and requests
for information and reports as the Company is entitled to make in respect of the
Collateral.
5.18 FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from time
to time upon the written consent of the Trustee and at the sole expense of the
Company, the Company shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further actions as the
Trustee may deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including without limitation (i) using its
best efforts to secure all consents and approvals necessary or appropriate for
the assignment to or for the benefit of the Trustee for the benefit of itself
and the Holders, of any license or contract held by the Company or to which the
Company has any rights not heretofore assigned, or any other General Intangible
which by its terms is unassignable, (ii) filing any financing or continuation
statements under the UCC with respect to the Liens and security interests
granted hereunder or under any other Transaction Document, (iii) transferring
Collateral to the Trustee's possession for the benefit of itself and the Holders
(if such Collateral consists of Chattel Paper or if a security interest in such
Collateral can be perfected only by possession) and (iv) using its best efforts
to obtain waivers of Liens, if any exist, from landlords and mortgagees in
accordance with the Indenture. The Company also hereby authorizes the Trustee,
for the benefit of itself and the Holders to file any such financing or
continuation statements without the signature of the Company to the extent
permitted by applicable law. If any amount payable under or in connection with
any of the collateral is or shall become evidenced by any Instrument, such
Instruments, other than checks and Securities received in the ordinary course of
business, shall be duly endorsed in a manner satisfactory to the Trustee
immediately upon the Company's receipt thereof.
5.19 RIGHT OF INSPECTION. The Trustee, or any agent or employee designated
by the Trustee in writing, has the right, from time to time after the date of
this Agreement, to call at the Company's place or places of business (or any
other place where the Collateral or any information relating to the Collateral
is kept or located) during reasonable business hours and, without unreasonable
hindrance or delay, (i) to inspect, audit, check and make copies of and extracts
from the Company's books, records, journals, orders, receipts and any
correspondence and other data relating to the Company's business or to any
transactions between the parties thereto and (ii) to make such verification
concerning the Collateral as the Trustee may consider reasonable under the
circumstances.
SECTION 6. COLLECTION OF RIGHTS TO PAYMENT
Until the Trustee exercises its rights hereunder to collect Rights to
Payment, the Company shall endeavor in the first instance diligently to collect
all amounts due or to become due on or with respect to the Rights to Payment.
At the request of the Trustee, upon and after the occurrence of any Default or
Event of Default, all remittances received by the Company shall be held in trust
for the Trustee and, in accordance with the Trustee's instructions, remitted to
the Trustee or deposited to an
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account with the Trustee in the form received (with any necessary
endorsements or instruments of assignment or transfer).
SECTION 7. AUTHORIZATION; TRUSTEE APPOINTED ATTORNEY-IN-FACT
The Company hereby irrevocably constitutes and appoints the Trustee, for
the benefit of itself, the Holders and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Company and in the
name of the Company or in its own name, from time to time in the Trustee's sole
discretion for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute and deliver any and all documents
which may be necessary or desirable to accomplish the purposes of this Agreement
and, without limiting the generality of the foregoing, hereby grants to the
Trustee, for the benefit of itself and the Holders, the power and right, on
behalf of the Company, without notice to or assent by the Company, and at any
time, to do the following:
(A) sign any of the Financing Statements which must be executed or filed
to perfect or continue perfected, maintain the priority of or provide
notice of the Trustee's security interest in the Collateral;
(B) take possession of and endorse any securities, acceptances, checks,
drafts, money orders or other forms of payment or security and collect
any Proceeds of any Collateral;
(C) sign and endorse any invoice or bill of lading relating to any of the
Collateral, warehouse or storage receipts, drafts against customers or
other obligors, assignments, notices of assignment, verifications and
notices to customers or other obligors;
(D) notify the United States Postal Service authorities to change the
address for delivery of mail addressed to the Company to such address
as the Trustee may designate and, without limiting the generality of
the foregoing, establish with any Person lockbox or similar
arrangements for the payment of the Rights to Payment;
(E) receive, open and dispose of all mail addressed to the Company;
(F) send requests for verification of Rights to Payment to the customers
or other obligors of the Company;
(G) contact, or direct the Company to contact, all account debtors and
other obligors on the Rights to Payment and instruct such account
debtors and other obligors to make all payments directly to the
Trustee;
(H) assert, adjust, sue for, compromise or release any claims under any
policies of insurance;
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(I) exercise dominion and control over, and refuse to permit further
withdrawals from, Deposit Accounts maintained with the Trustee;
(J) notify each Person maintaining lockbox or similar arrangements for the
payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Trustee;
(K) ask, demand, collect, receive and give acquittances and receipts for
any and all Rights to Payment, enforce payment or any other rights in
respect of the Rights to Payment and other Collateral, grant consents,
agree to any amendments, modifications or waivers of the agreements
and documents governing the Rights to Payment and other Collateral,
and otherwise file any claims, take any action or institute, defend,
settle or adjust any actions, suits or proceedings with respect to the
Collateral, as the Trustee may deem necessary or desirable to
maintain, preserve and protect the Collateral, to collect the
Collateral or to enforce the rights of the Trustee with respect to the
Collateral;
(L) execute any and all applications, documents, papers and instruments
necessary for the Trustee to use the Intellectual Property Collateral
and grant or issue any exclusive or non-exclusive license or
sublicense with respect to any Intellectual Property Collateral;
(M) execute any and all endorsements, assignments or other documents and
instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral;
(N) execute any and all such other documents and instruments, and do any
and all acts and things for and on behalf of the Company, which the
Trustee may deem necessary or advisable to maintain, protect, realize
upon and preserve the Collateral; and
(O) execute any and all such other documents and instruments, and do any
and all acts and things for and on behalf of the Company, which the
Trustee may reasonably deem necessary or advisable to maintain,
protect and preserve the Trustee's security interest in the
Collateral.
The Trustee agrees that, except upon and during the occurrence of an Insolvency
Default or an Event of Default, it shall not exercise the power of attorney, or
any rights granted to the Trustee, pursuant to CLAUSES (B) through (N) above.
The foregoing power of attorney is coupled with an interest and irrevocable so
long as the Secured Obligations have not been paid and performed in full. The
Company hereby ratifies, to the extent permitted by law, all that the Trustee
shall lawfully and in good faith do or cause to be done by virtue of and in
compliance with this SECTION 7.
SECTION 8. TRUSTEE PERFORMANCE OF COMPANY OBLIGATIONS
16
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After a Default or an Event of Default has occurred and is continuing,
Trustee may perform or pay any obligation which the Company has agreed to
perform or pay under or in connection with this Agreement, and the Company shall
reimburse the Trustee on demand for any amounts paid by the Trustee pursuant to
this SECTION 8.
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SECTION 9. TRUSTEE'S DUTIES
Notwithstanding any provision contained in this Agreement, but subject to
the following sentence, the Trustee shall have no duty to exercise any of the
rights, privileges or powers afforded to it and shall not be responsible to the
Company or any other Person for any failure to do so or delay in doing so.
Beyond the exercise of reasonable care to assure the safe custody of Collateral
in the Trustee's possession and the accounting for moneys actually received by
the Trustee hereunder, the Trustee shall have no duty or liability to exercise
or preserve any rights, privileges or powers pertaining to the Collateral.
SECTION 10. REMEDIES
10.1 REMEDIES. After an Event of Default has occurred and is continuing,
the Trustee shall have, in addition to all other rights and remedies granted to
it in this Agreement, the Indenture or any other Transaction Document, all
rights and remedies of a secured party under the UCC and other applicable laws.
Without limiting the generality of the foregoing, the Company agrees that the
Trustee may:
(A) peaceably and without notice enter any premises of the Company, take
possession of any the Collateral, remove or dispose of all or part of
the Collateral on any premises or elsewhere, or, in the case of
Equipment, render it nonfunctional, and otherwise collect, receive,
appropriate and realize upon all or any part of the Collateral, and
demand, give receipt for, settle, renew, extend, exchange, compromise,
adjust, or sue for all or any part of the Collateral, as the Trustee
may determine;
(B) require the Company to assemble all or any part of the Collateral and
make it available to the Trustee at any place and time designated by
the Trustee;
(C) use or transfer any of the Company's rights and interests in any
Intellectual Property Collateral, by license, by sublicense (to the
extent permitted by an applicable license) or otherwise, on such
conditions and in such manner as the Trustee may determine;
(D) secure the appointment of a receiver of the Collateral or any part
thereof to the extent and in the manner provided by applicable law;
(E) withdraw (or cause to be withdrawn) any and all funds from Deposit
Accounts; and
(F) sell, resell, lease, use, assign, transfer or otherwise dispose of any
or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing (utilizing in
connection therewith any of the Company's assets, without charge or
liability to the Trustee therefor) at public or private sale, by one
or more contracts, in one or more parcels, at the same or different
times, for cash or credit, or for future delivery without assumption
of any credit risk, all as the Trustee deems advisable; PROVIDED, that
the Company shall be credited with the net proceeds of sale
18
<PAGE>
only when such proceeds are finally collected by the Trustee. The
Trustee shall have the right upon any such public sale, and, to the
extent permitted by law, upon any such private sale, to purchase
the whole or any part of the Collateral so sold, free of any right
or equity of redemption, which right or equity of redemption the
Company hereby releases, to the extent permitted by law. The
Company hereby agrees that the sending of notice by ordinary mail,
postage prepaid, to the address of the Company set forth in the
Indenture, of the place and time of any public sale or of the time
after which any private sale or other intended disposition is to be
made, shall be deemed reasonable notice thereof if such notice is
sent ten days prior to the date of such sale or other disposition
or the date on or after which such sale or other disposition or the
date on or after which such sale or other disposition may occur;
PROVIDED, that the Trustee may provide the Company shorter notice
or no notice, to the extent permitted by the UCC or other
applicable law.
10.2 LICENSE. For the purpose of enabling the Trustee to exercise its
rights and remedies under this SECTION 10, the Company hereby grants, to the
extent it has the power and authority to do so, to the Trustee an irrevocable,
non-exclusive and assignable license (exercisable without payment or royalty or
other compensation to the Company) to use, license or sublicense any
Intellectual Property Collateral.
10.3 PROCEEDS ACCOUNT. To the extent that any of the Secured Obligations
may be contingent, unmatured or unliquidated at such time as there may exist an
Insolvency Default or an Event of Default, the Trustee may, at its election,
(i) retain the proceeds of any sale, collection, disposition or other
realization upon the Collateral (or any portion thereof) in a special purpose
non-interest bearing restricted deposit account (the "PROCEEDS ACCOUNT") created
and maintained by the Trustee for such purpose (which shall constitute a Deposit
Account included within the Collateral hereunder) until such time as the Trustee
may elect to apply such proceeds to the Secured Obligations, and the Company
agrees that such retention of such proceeds by the Trustee shall not be deemed
strict foreclosure with respect thereto, (ii) in any manner elected by the
Trustee, estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such amount
or (iii) otherwise proceed in any manner permitted by applicable law. The
Company agrees that the Proceeds Account shall be a blocked account and that
upon the irrevocable deposit of funds into the Proceeds Account, the Company
shall not have any right of withdrawal with respect to such funds. Accordingly,
the Company irrevocably waives until the termination of the security interests
granted under this Agreement in accordance with SECTION 11.15 the right to make
any withdrawal from the Proceeds Account and the right to instruct the Trustee
to honor drafts against the Proceeds Account.
10.4 APPLICATION OF PROCEEDS. Subject to SECTION 10.3, the cash proceeds
actually received from the sale or other disposition or collection of Collateral
upon the exercise of any remedy by the Trustee under this SECTION 10, and any
other amounts received in respect of the Collateral the application of which is
not otherwise provided for herein, shall be distributed to the Holders pro rata
and applied as follows:
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FIRST: to the payment of the costs and expenses of such sale, including
reasonable compensation to the Trustee and its agents and attorneys, and of
any judicial or private proceedings in which such sale may be made, and of
all other expenses, liabilities and advances made or incurred by the
Trustee, together with interest on such costs, expenses and liabilities and
on all advances made by the Trustee from the date any such cost, expense or
liability is past due or unpaid or any such advance is made, in each case
until paid in full;
SECOND: to the payment of any other fees, costs or other expenses
constituting obligations under the Transaction Documents other than amounts
payable under CLAUSE "First" above, together with interest on each such
amount at the interest rate(s) applicable to the Secured Obligations
pursuant to and in accordance with the Indenture from and after the date
such amount is due, owing or unpaid until paid in full;
THIRD: to the payment of any interest then due, owing or unpaid in respect
of any Security or any other Secured Obligation from the date such amount
is due, owing or unpaid until paid in full to be applied in accordance with
the Indenture;
FOURTH: to the payment of the whole amount of principal then due, owing or
unpaid in respect of any Security or any other Secured Obligation secured
by this Agreement, to be applied in accordance with the Indenture; and
FIFTH: the surplus, if any, to be paid to the Company or to whomever
lawfully may be entitled to receive such surplus.
The Company shall remain liable to the Trustee for any deficiency which exists
after any sale or other disposition or collection of Collateral.
SECTION 11. MISCELLANEOUS
11.1 CERTAIN WAIVERS. The Company waives, to the fullest extent permitted
by law, (i) any right of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshaling of the
Collateral or other collateral or security for the Secured Obligations, (ii) any
right to require the Trustee (a) to proceed against any Person, (b) to exhaust
any other collateral or security for any of the Secured Obligations, (c) to
pursue any remedy in the Trustee's power or (d) to make or give any
presentments, demands for performance, notices of nonperformance, protests,
notices of protests or notices of dishonor in connection with any of the
Collateral and (iii) all claims, damages, and demands against the Trustee
arising out of the repossession, retention, sale or application of the proceeds
of any sale of the Collateral.
11.2 NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses specified in the Indenture. All
such notices and other communications shall be effective (i) if delivered by
hand or pre-paid courier service, when delivered, (ii) if sent by mail, upon
the earlier of the date of receipt or five Business Days after deposit in the
mail, first class, postage prepaid, (iii) if sent by telex, upon receipt by
the sender of an appropriate answerback and (iv) if sent by facsimile
transmission, when sent.
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<PAGE>
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the Trustee
to exercise, and no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be
available to the Trustee.
11.4 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(A) The Company shall pay, indemnify, and hold the Trustee, each Holder
and each of their respective Affiliates, officers, directors,
employees, counsel, agents and attorneys-in-fact harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or
disbursements, of any kind or nature whatsoever in accordance with the
terms and conditions of the Indenture except to the extent arising
from the Trustee's or such Holder's gross negligence, bad faith,
wilful misconduct or fraud.
(B) The Company agrees to indemnify the Trustee against and hold it
harmless from any and all present and future stamp, transfer, or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, or registration of, or otherwise with respect to,
this Agreement.
(C) Any amounts payable to the Trustee and each Holder under this
SECTION 11.4 or otherwise under this Agreement if not paid upon demand
shall bear interest from the date of such demand until paid in full,
at the rate of interest set forth in the Indenture for the Securities.
11.5 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and the Trustee, and their
respective successors and assigns; PROVIDED, that the Company may not assign any
of its rights hereunder or interests herein without the written consent of the
Trustee and the Majority Holders. The Company acknowledges that upon any
assignment or other transfer by the Trustee or any Holder of any of the Secured
Obligations, the Trustee or such Holder may transfer its interest herein, or any
part thereof, to the assignee or transferee, who shall thereupon become vested
with all the rights, remedies, powers, security interests and liens herein
granted to the Trustee or such Holder, or the transferred part thereof, subject,
however, to the restrictions contained herein. No Persons other than the
Company, the Holders, the Trustee and the respective assignees of the Holders
and the Trustee are intended to be benefited hereby or shall have any rights
hereunder, as third-party beneficiaries or otherwise.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT THE TRUSTEE
AND THE HOLDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
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<PAGE>
11.7 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY AND THE TRUSTEE FOR
THE BENEFIT OF ITSELF AND THE HOLDERS EACH CONSENT, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE COMPANY
AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY AND THE TRUSTEE FOR THE
BENEFIT OF ITSELF AND THE HOLDERS, EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
11.8 WAIVER OF JURY TRIAL. THE COMPANY AND THE TRUSTEE FOR THE BENEFIT OF
ITSELF AND THE HOLDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE
TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 11.8 AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
11.9 AMENDMENT. This Agreement shall not be amended except by the written
agreement of the parties as provided in the Indenture.
11.10 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If; however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation
in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only
to the extent of such prohibition or invalidity without affecting
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<PAGE>
the remaining provisions of this Agreement, or the validity or effectiveness
of such provision in any other jurisdiction. This Agreement is to be read,
construed and applied together with the Indenture and the other Transaction
Documents which, taken together, set forth the complete understanding and
agreement of the Trustee, the Holders and the Company with respect to the
matters referred to herein and therein.
11.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
11.12 NO INCONSISTENT REQUIREMENTS. The Company acknowledges that this
Agreement and the other Transaction Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters,
and agrees that all such covenants, terms and provisions are cumulative and
all shall be performed and satisfied in accordance with their respective
terms; PROVIDED, in the event any terms or conditions contained herein
conflict with any term or condition set forth in the Indenture, such term or
condition set forth in the Indenture shall control.
11.13 ENTIRE AGREEMENT. This Agreement (i) integrates all the terms and
conditions mentioned herein or incidental hereto, (ii) supersedes all oral
negotiations and prior writings with respect to the subject matter hereof and
(iii) is intended by the parties as the final expression of the Agreement
with respect to the terms and conditions set forth in this Agreement and as
the complete and exclusive statement of the terms agreed to by the parties.
11.14 FURTHER ASSURANCES. The Company agrees upon the written request
of the Trustee or any Holder, to execute and deliver to the Trustee or such
Holder, from time to time, any additional instruments or documents reasonably
considered necessary by the Trustee or such Holder to cause this Agreement to
be, become or remain, valid and effective in accordance with its terms.
11.15 TERMINATION. Upon payment and performance in full of all Secured
Obligations, this Agreement and the security interests granted under this
Agreement shall terminate and the Trustee shall promptly execute and deliver
to the Company such documents and instruments reasonably requested by the
Company as shall be necessary to evidence termination of this Agreement and
of all security interests given by the Company to the Trustee hereunder;
PROVIDED, that the obligations of the Company under SECTION 11.4 shall
survive such termination.
* * * * *
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Executed and delivered as of the date first above written.
MERCURY FINANCE COMPANY
By:_____________________________________
Name:
Title:
[TRUSTEE]
By:_____________________________________
Name:
Title:
<PAGE>
SCHEDULE A
LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF COLLATERAL
a. Chief Executive Office and Principal Place of Business:
b. Other locations where Company conducts business or Collateral is kept:
<PAGE>
SCHEDULE B
LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
<PAGE>
SCHEDULE C
TRADE NAMES AND TRADE STYLES: OTHER CORPORATE, TRADE OR FICTITIOUS NAMES, ETC.
<PAGE>
SCHEDULE D
INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
<PAGE>
SCHEDULE E
PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
<PAGE>
SCHEDULE F
DEPOSIT ACCOUNTS
<PAGE>
SUBSIDIARIES GUARANTY AGREEMENT
This Subsidiaries Guaranty Agreement dated as of [DATE], 1998 (this
"GUARANTY"), is made by each of the corporations listed on ANNEX I
(collectively, the "GUARANTORS" and each individually, a "GUARANTOR"), in favor
of [NAME OF TRUSTEE], as trustee for the Holders under the Indenture described
below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. Mercury Finance Company, a Delaware corporation (the "COMPANY"), is a
party to the Indenture of even date with this Guaranty (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), with the
Trustee, under which the Company will issue its senior secured notes to the
holders thereof and their successors and assigns.
2. It is a condition precedent to the issuance of the senior secured
notes that the Guarantors enter into this Guaranty.
3. Each Guarantor is a direct or indirect subsidiary of the Company and
will derive substantial and direct benefits (which benefits are acknowledged by
each Guarantor) from the issuance of the senior secured notes and other benefits
to be provided to the Company under the Indenture.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, the
Guarantors, jointly and severally, issue this Guaranty and agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Guaranty, capitalized terms used in this Guaranty and not otherwise defined have
the meanings given to such terms from time to time in the Indenture.
1.2 CERTAIN DEFINED TERMS. As used in this Guaranty, the following terms
have the following meanings:
"AGREEMENT" has the meaning set forth in the PREAMBLE.
"COMPANY" has the meaning set forth in the first preliminary
statement.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Sections 101-1330.
<PAGE>
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDENTURE" has the meaning set forth in the first preliminary
statement.
"MAJORITY HOLDERS" means Holders having at least 25% in principal
amount of the Outstanding Securities.
"TRANSACTION DOCUMENTS" means the Indenture, the Collateral Security
Documents and any and all other agreements, instruments and documents
executed or delivered in connection therewith.
"TRUSTEE" has the meaning set forth in the PREAMBLE.
SECTION 2. GUARANTY
2.1 GUARANTY. Each Guarantor, jointly and severally, irrevocably,
absolutely and unconditionally guarantees to the Trustee for the benefit of
itself, the Holders and their respective successors, endorsees, transferees and
assigns, the full and punctual payment or performance when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all of the Indenture Obligations, including Indenture Obligations
in respect of amounts that would become due but for the operation of the
automatic stay under section 362(a) of the Bankruptcy Code or the operation of
sections 502(b) and 506(b) of the Bankruptcy Code. This Guaranty constitutes a
guaranty of payment and performance when due and not of collection, and each
Guarantor specifically agrees that it shall not be necessary or required that
the Trustee or any Holder whatsoever against the Company (or any other Person)
before or as a condition to the Indenture Obligations of such Guarantor under
this Guaranty.
2.2 INDENTURE OBLIGATIONS INDEPENDENT. The obligations under this Guaranty
are independent of the Indenture Obligations of the Company, and a separate
action or actions may be brought and prosecuted against each Guarantor whether
action is brought against the Company or whether the Company be joined in any
such action or actions.
2.3 WAIVER OF CERTAIN RIGHTS. Each Guarantor waives any and all rights
such Guarantor may have now or in the future under any statute, or at common
law, or at law or in equity, or otherwise, to require the Trustee or any Holder:
(A) to proceed against the Company or any other Person;
(B) to proceed against or exhaust any security for the Indenture
Obligations or any other indebtedness of the Company to the Trustee or
any Holder; or
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<PAGE>
(C) to pursue any other remedy in the Trustee's or any such Holder's power
whatsoever.
It is agreed among each Guarantor, Trustee and the Holders that the waivers
contained in this SECTION 2.3 are of the essence to the transactions
contemplated by the Transaction Documents and that, but for this Guaranty and
such waivers, the Trustee would decline to enter into the Indenture and the
Holders would decline to purchase the Securities.
2.4 WAIVER OF CERTAIN DEFENSES. In addition to the waivers set forth in
SECTION 2.3, each Guarantor waives any defense arising by reason of any
disability or other defense of the Company, or the cessation from any cause
whatsoever of the liability of the Company, whether consensual or arising by
operation of law or any bankruptcy, insolvency or debtor relief proceeding, or
from any other cause, or any claim that such Guarantor's obligations hereunder
exceed or are more burdensome than those of the Company. Each Guarantor waives
any defense arising by reason of any statute of limitations affecting the
liability of the Company. Each Guarantor waives all rights and defenses arising
out of an election of remedies by the Trustee or any Holder, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for the Indenture Obligations, has destroyed such Guarantor's rights of
subrogation and reimbursement against the Company by operation of Section 580d
of the California Code of Civil Procedure (if applicable) or other applicable
law, and all rights or defenses such Guarantor may have by reason of protection
afforded to the Company with respect to the Indenture Obligations pursuant to
the antideficiency laws or other laws of the State of California (or other
applicable jurisdiction) limiting or discharging the Indenture Obligations. Each
Guarantor waives any benefit of; and any right to participate in, any security
or other guaranty now or hereafter held by the Trustee or any Holder securing
the Indenture Obligations.
2.5 WAIVER OF PRESENTMENTS, ETC. Each Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty and of
the existence, creation, or incurring of new or additional Indenture Obligations
or any other indebtedness of the Company to the Trustee or any Holder.
2.6 SUBORDINATION. Any obligations of the Company to any Guarantor, now
or hereafter existing, are hereby fully subordinated in time and priority of
payment to the Indenture Obligations and all other indebtedness of the Company
to the Trustee or any Holder; PROVIDED, that in no event shall this SECTION 2.6
be deemed to grant any Guarantor a right of subrogation contrary to the terms of
SECTION 2.10. Such obligations of the Company to such Guarantor if the Trustee
so requests shall be enforced and performance received by such Guarantor as
trustee for the Trustee and such Holders and the proceeds thereof shall be paid
over to the Trustee and the Holders on account of the Indenture Obligations, but
without reducing or affecting in any manner the liability of such Guarantor
under the other provisions of this Guaranty.
2.7 REINSTATEMENT OF GUARANTY. If any payment or transfer of any interest
in property by the Company to the Trustee or any Holder in fulfillment of any
Indenture Obligation is rescinded or must at any time (including after the
return or cancellation of this Guaranty) be returned, in whole or in part, by
the Trustee or any Holder to the Company or any other Person, upon the
insolvency,
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bankruptcy or reorganization of the Company or otherwise, this Guaranty shall
be reinstated with respect to any such payment or transfer, regardless of any
such prior return or cancellation.
2.8 POWERS. It is not necessary for the Trustee or any Holder to inquire
into the powers of the Company or of the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Indenture Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
2.9 TAXES.
(A) Any and all payments by the Guarantors to each Holder or the Trustee
under this Agreement shall be made free and clear of, and without
deduction or withholding for, any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each
Holder and the Trustee, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Holder's net
income by the jurisdiction under the laws of which such Holder or the
Trustee, as the case may be, is organized or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being referred to as "TAXES").
(B) In addition, the Guarantors shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "OTHER TAXES").
(C) The Guarantors shall indemnify and hold harmless each Holder and the
Trustee for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this SECTION 2.9) paid by the Holder or the Trustee and any
liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days from the date
the Holder or the Trustee makes written demand therefor.
(D) If the Guarantors shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder
to any Holder or the Trustee, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this SECTION 2.9) such Holder or
the Trustee, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made;
(ii) the Guarantors shall make such deductions, and
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(iii) the Guarantors shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(E) Within 30 days after the date of any payment by the Guarantors of
Taxes or Other Taxes, the Guarantors shall furnish to the Trustee the
original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Trustee.
2.10 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in
this Guaranty or in any other Transaction Document to which any Guarantor is a
party, so long as any of the Indenture Obligations remain unsatisfied, each
Guarantor hereby expressly waives any right of subrogation, reimbursement,
indemnification and contribution (contractual, statutory or otherwise), against
the Company arising from the existence or performance of this Guaranty and each
Guarantor hereby expressly waives any right to enforce any remedy which the
Trustee or any Holder now has or may hereafter have against the Company, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by the Trustee or any Holder securing the Indenture Obligations.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Guarantor jointly and severally represents and warrants to the Trustee
and each Holder as follows, which representations and warranties survive the
execution and delivery of this Guaranty:
3.1 CORPORATE EXISTENCE AND POWER. Each Guarantor (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the power and authority to own its
assets, carry on its business and execute, deliver, and perform its Indenture
Obligations under, this Guaranty and any other Transaction Document to which it
is a party, (iii) is duly qualified as a foreign corporation, and licensed and
in good standing, under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification or license except where failure to be so qualified or licensed
would not have a Material Adverse Effect and (iv) has all necessary governmental
licenses, authorizations, consents and approvals to own its assets and carry on
its business, and is in compliance with all applicable requirements of law of
any Governmental Authority except where failure to obtain such licenses,
authorizations, consents or approvals or comply with such laws would not have a
Material Adverse Effect.
3.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Guarantor of this Guaranty and any other Transaction
Document to which it is party have been duly authorized by all necessary
corporate action, and do not and will not (i) contravene the terms of any of
such Guarantor's constitutive documents, (ii) conflict with or result in any
breach or contravention of, or the creation of any lien under, any agreement to
which such Guarantor is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Guarantor or its Property is subject or
(iii) violate any requirement of law of any Governmental Authority.
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3.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, each Guarantor of
this Guaranty or any other Transaction Document to which it is a party or the
transactions contemplated hereby or thereby.
3.4 BINDING EFFECT. This Guaranty and each other Transaction Document to
which each Guarantor is a party constitute the legal, valid and binding
obligations of each Guarantor, enforceable against each Guarantor in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
3.5 REGULATED ENTITIES. No Guarantor, nor any Person controlling any
Guarantor or any Subsidiary of any Guarantor is (i) an "Investment Company"
within the meaning of the Investment Company Act of 1940 or (ii) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur or
guarantee Indebtedness.
SECTION 4. MISCELLANEOUS
4.1 APPLICATION OF PAYMENTS ON GUARANTY. All payments required to be made
by each Guarantor hereunder shall, unless otherwise expressly provided herein,
be made to the Trustee for the account of the Holders at the address of the
Trustee set forth in the Indenture. The Trustee will promptly distribute to each
Holder its pro rata share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Payments received from the
Guarantors shall be applied by the Trustee as follows;
FIRST: to the payment of the costs and expenses due under this Guaranty,
including reasonable compensation to the Trustee and its agents and
attorneys, and of all other expenses, liabilities and advances made or
incurred by the Trustee, together with interest on such costs, expenses and
liabilities and on all advances made by the Trustee from the date any such
cost, expense or liability is past due or unpaid or any such advance is
made, in each case until paid in full;
SECOND: to the payment of any other fees, costs or other expenses
constituting Indenture Obligations under the Transaction Documents other
than amounts payable under CLAUSE "First" above, together with interest on
each such amount at the interest rate(s) applicable to the Indenture
Obligations pursuant to and in accordance with the Indenture from and after
the date such amount is due, owing or unpaid until paid in full;
THIRD: to the payment of any interest then due, owing or unpaid in respect
of any Security or any other Indenture Obligation together with, to the
maximum extent permitted by law, interest thereon at the interest rate(s)
applicable to the Indenture Obligations pursuant to and in accordance with
the Indenture from the date such amount is due, owing or unpaid until paid
in full to be applied in accordance with the Indenture;
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FOURTH: to the payment of the whole amount of principal then due, owing or
unpaid in respect of any Security or any other Indenture Obligation secured
by this Guaranty to be applied in accordance with the Indenture; and
FIFTH: the surplus, if any, to be paid to the applicable Guarantor or to
whomever lawfully may be entitled to receive such surplus.
4.2 ASSIGNMENT. Any Holder may from time to time, without notice to the
Guarantors and without affecting each Guarantor's Indenture Obligations
hereunder, transfer its interest in the Indenture Obligations as provided in the
Indenture.
4.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the Trustee
to exercise, and no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be
available to the Trustee.
4.4 BINDING EFFECT. This Guaranty shall be binding upon, inure to the
benefit of and be enforceable by the Guarantors and the Trustee, and their
respective successors and assigns; PROVIDED, that the Guarantors may not assign
any of its rights hereunder or interests herein without the written consent of
the Trustee and the Majority Holders. Each Guarantor acknowledges that upon any
assignment or other transfer by the Trustee or any Holder of any of the
Indenture Obligations, the Trustee or such Holder may transfer its interest
herein, or any part thereof, to the assignee or transferee, who shall thereupon
become vested with all the rights, remedies, powers, security interests and
liens herein granted to the Trustee or such Holder, or the transferred part
thereof, subject, however, to the restrictions contained herein. No Persons
other than the Guarantors, the Holders, the Trustee and the respective assignees
of the Holders and the Trustee are intended to be benefited hereby or shall have
any rights hereunder, as third-party beneficiaries or otherwise.
4.5 GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT THE TRUSTEE
AND THE HOLDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
4.6 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTORS AND THE TRUSTEE
FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH CONSENT, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE
GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH
IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
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HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO. THE
GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS, EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
4.7 WAIVER OF JURY TRIAL. THE GUARANTORS AND THE TRUSTEE FOR THE BENEFIT
OF ITSELF AND THE HOLDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
GUARANTY, THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTORS AND THE
TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 4.7 AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
4.8 AMENDMENT. This Guaranty shall not be amended except by the written
agreement of the parties as provided in the Indenture.
4.9 SEVERABILITY. Whenever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If; however, any provision of this Guaranty
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Guaranty, or the validity or effectiveness of such provision
in any other jurisdiction. This Guaranty is to be read, construed and applied
together with the Indenture and the other Transaction Documents which, taken
together, set forth the complete understanding and Guaranty of the Trustee, the
Holders and the Guarantors with respect to the matters referred to herein and
therein.
4.10 COUNTERPARTS. This Guaranty may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same Guaranty.
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4.11 NO INCONSISTENT REQUIREMENTS. Each Guarantors acknowledges that this
Guaranty and the other Transaction Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms;
PROVIDED, in the event any terms or conditions contained herein conflict with
any term or condition set forth in the Indenture, such term or condition set
forth in the Indenture shall control.
4.12 ENTIRE GUARANTY. This Guaranty (i) integrates all the terms and
conditions mentioned herein or incidental hereto, (ii) supersedes all oral
negotiations and prior writings with respect to the subject matter hereof and
(iii) is intended by the parties as the final expression of the Guaranty with
respect to the terms and conditions set forth in this Guaranty and as the
complete and exclusive statement of the terms agreed to by the parties.
4.13 FURTHER ASSURANCES. Each Guarantor agrees upon the written request of
the Trustee or any Holder, to execute and deliver to the Trustee or such Holder,
from time to time, any additional instruments or documents reasonably considered
necessary by the Trustee or such Holder to cause this Guaranty to be, become or
remain, valid and effective in accordance with its terms.
4.14 TERMINATION. This Guaranty shall terminate and be of no further force
or effect upon the payment and performance in full of the Indenture Obligations
subject to the provisions of SECTION 2.9. Upon termination of this Guaranty,
the Trustee shall deliver to the Guarantors such documents as the Guarantors may
reasonably request to evidence such termination.
4.15 LIMITATION ON GUARANTEED INDENTURE OBLIGATIONS. Notwithstanding any
provision herein contained to the contrary, each Guarantor's liability hereunder
shall be limited to an amount not to exceed the amount which could be claimed by
the Trustee and Holders from such Guarantor under this Guaranty without
rendering such claim voidable or avoidable under section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute of common law. The
right of a Guarantor to contribution from other Guarantors or any other rights
such Guarantor may have, contractual or otherwise, will be taken into account in
making any determination under this SECTION 4.15.
4.16 CERTAIN ADDITIONAL CONSENTS AND WAIVERS (A) This Guaranty is
absolute, unconditional and irrevocable and is in no way conditioned or
contingent on the Company's performance of any obligation under the Indenture or
any other Transaction Document, any attempt to enforce in whole or in part any
of the Company's liabilities and Indenture Obligations to any Holder or the
existence or continuance of the Company or any other Person as a legal entity,
nor shall this Guaranty or each Guarantor's obligations hereunder be limited,
impaired, restricted or otherwise affected by the consolidation or merger of the
Company with or into any other entity, the sale, lease or other disposition by
the Company of all or substantially all of its assets to any other entity
(whether or not effected in compliance with the Transaction Documents), or the
bankruptcy or insolvency of the Company, the admission in writing by the Company
of its inability to pay its debts as they mature, or its making of a general
assignment for the benefit of, or entering into a composition or arrangement
with, creditors.
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(B) The Trustee and the other Holders may, at any time and from time to
time, without the consent of or notice to any Guarantor, except such notice as
may be required by applicable statute which cannot be waived, without incurring
responsibility to such Guarantor, and without impairing or releasing the
obligations of such Guarantor hereunder, upon or without any terms or conditions
and in whole or in part, (i) to the extent permitted by the Indenture, change
the manner; place and terms of payment or change or extend the time of payment
of, renew or alter any obligation of the Company hereby guaranteed, or in any
manner modify, amend or supplement the terms of the Indenture or other
Transaction Documents (other than this Guaranty) or any documents, instruments
or agreements executed in connection therewith (other than this Guaranty), and
this Guaranty shall apply to the Indenture Obligations and liabilities of the
Company, as changed, extended, renewed, modified, amended, supplemented or
altered in any manner, (ii) exercise or refrain from exercising any rights
against the Company or others (including such Guarantor) or otherwise act or
refrain from acting, (iii) settle or compromise any Indenture Obligations and
liabilities herein guaranteed or any Indenture Obligations and liabilities
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part thereof to
the payment of any Indenture Obligations and liabilities which may be due to the
Trustee, the other Holders or others, (iv) sell, exchange, release, surrender,
realize upon or otherwise deal with in any manner or in any order any property
pledged or mortgaged by anyone to secure or in any manner securing the Indenture
Obligations, any liabilities or obligation (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof or any other
Indenture Obligations or liabilities of the Company or such Guarantor to the
Holders or any offset thereagainst, (v) take and hold security or additional
security for any or all of the Indenture Obligations, (vi) apply any sums by
whomsoever paid or howsoever realized to any Indenture Obligations and
liabilities of the Company to the Holders regardless of what Indenture
Obligations and liabilities remain unpaid and (vii) in accordance with the
Indenture, assign their rights and interests under this Guaranty, the Indenture
or the other Transaction Documents, in whole or in part. Without limiting the
generality of the foregoing, each Guarantor hereby specifically waives such
Guarantor's rights and benefits under any statute, regulation, judicial decision
or other law which purports to exonerate or reduce the liability of a surety if
the underlying obligation is altered in any respect or if the rights and
remedies of the creditor against the principal in respect of a secured
obligation are in any way altered, impaired or suspended and agrees that, by so
doing, such Guarantor's obligations hereunder shall continue even if the Holders
alter any Indenture Obligations under the Indenture or the other Transaction
Documents (other than this Guaranty) in any respect or the Holders' remedies or
rights against the Company are in any way impaired or suspended without such
Guarantor's consent.
(C) No invalidity, irregularity or unenforceability of the Indenture
Obligations or liabilities of the Company under the Indenture or any other
Transaction Document shall affect, impair or be a defense to this Guaranty.
Each Guarantor hereby waives any and all benefits and defenses under any
statute, regulation, judicial decision or other law which purports to exonerate
or reduce the liability of a surety as a result of any disability or absence of
liability of the principal or any defense to liability or enforcement which the
principal may have and agrees that, by so doing, such Guarantor's obligations
and the guarantees granted hereunder shall continue even if the Company had no
liability at the time of execution of the Indenture or thereafter ceased or
cease to be liable. Each Guarantor also waives any and all benefits and defenses
under any statute, regulation, judicial decision or other law which purports to
limit the liability of a surety to that of the principal
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or to reduce the liability of a surety in proportion to any reduction in the
liability of the principal and agrees that, by so doing, such Guarantor's
obligations hereunder may be more burdensome than that of the Company.
(D) Each Guarantor, to the extent permitted under applicable law, hereby
waives any right, whether arising under any statute, regulation, judicial
decision or otherwise, to require the Trustee or any other Holder to (i) proceed
against the Company or any other Person acting as surety, guaranteeing or
providing collateral or other credit support for the Company's Indenture
Obligations under the Indenture or any other Transaction Document (a "THIRD
PARTY CREDIT SUPPORT PROVIDER"), (ii) proceed against or exhaust any security
received from the Company or any Third Party Credit Support Provider or (iii)
pursue any other right or remedy in the Trustee's or the other Holders' power
whatsoever.
(E) Each Guarantor further waives, to the extent permitted under
applicable law (i) any defense resulting from the absence, impairment or loss of
any right of reimbursement, subrogation, contribution or other right or remedy
of such Guarantor against the Company, any Third Party Credit Support Provider
or any security, whether resulting from an election by the Trustee and the other
Holders to foreclose upon security by judicial or nonjudicial sale or otherwise,
(ii) any setoff or counterclaim of the Company or any defense of any kind
(including defenses resulting from any disability) or the cessation or stay of
enforcement from any cause whatsoever of the liability of the Company (including
without limitation the lack of validity or enforceability of the Indenture or
any other Transaction Document), (iii) any right to exoneration, in whole or in
part, of sureties or Third Party Credit Support Providers which would otherwise
be applicable, (iv) any right of subrogation or reimbursement, any right of
contribution, any right to enforce any remedy which the Trustee and the other
Holders now have or may hereafter have against the Company, and any benefit of,
and any right to participate in, any security now or hereafter held or received
by the Holders (or the Trustee on their behalf), (v) except as required under
the Indenture, all presentments, demands for performance, notices of
non-performance, protests, notice of dishonor, notices of acceptance of this
Guaranty or of the existence, creation or incurring of new or additional
Indenture Obligations under the Indenture or the other Transaction Documents, or
any other notices of any kind and (vi) all valuation, appraisal, extension or
redemption laws now or hereafter in effect.
(F) Each Guarantor further specifically waives any and all benefits,
rights and defenses arising out of an election of remedies by the Trustee or any
other Holder even though that election of remedies (i) has destroyed such
Guarantor's rights of subrogation and reimbursement against the Company and all
rights or defenses such Guarantor may have by reason of protection afforded to
the Company with respect to the Indenture Obligations pursuant to antideficiency
laws or other laws limiting or discharging the Indenture Obligations or (ii)
would require the Trustee and the other Holders to foreclosure on all collateral
covered by the other Transaction Documents in one action or would prevent the
Trustee on behalf of itself and the Holders from bringing more than one action
to enforce the Indenture Obligations. Each Guarantor agrees by so doing that (i)
such Guarantor's obligations hereunder shall continue even if the Company had no
liability at the time of execution of the Indenture and other Transaction
Documents or thereafter ceased or ceases to be liable, (ii) that such
Guarantor's obligations hereunder may be more burdensome than that of the
Company and (iii) such Guarantor's obligations hereunder shall continue even if
the Trustee or any Holder alters
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any obligations under the Indenture or the other Transaction Documents (other
than this Guaranty) in any respect or if the Trustee's or the Holder's
remedies or rights against the Company are in any way impaired or suspended
without such Guarantor's consent.
(G) Each Guarantor acknowledges that it has the ability, and hereby
assumes the obligation and responsibility, to keep informed of the financial
condition of the Company and any Third Party Credit Support Provider and of
other matters or circumstances affecting the ability of any of them to pay or
perform their respective obligations thereunder or the risk of nonpayment and
nonperformance. Each Guarantor hereby waives any obligation on the part of the
Trustee or any Holder to inform such Guarantor of the financial condition, or
any changes in financial condition, of the Company or any Third Party Credit
Support Provider or of any other matter or circumstance which might effect the
ability of the Company to pay and perform under the Indenture or any other
Transaction Document, or the risk of nonpayment or nonperformance.
* * * * *
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Executed and delivered as of the day and year first above written.
[TO COME]
By:
----------------------------
Name:
Title:
[TRUSTEE]
By:
-----------------------------
Name:
Title:
<PAGE>
ANNEX I
GUARANTORS
Mercury Finance Company of Alabama
Mercury Finance Company of Arizona
Mercury Finance Company of California
Mercury Finance Company of Colorado
Mercury Finance Company of Delaware
Mercury Finance Company of Florida
Mercury Finance Company of Georgia
Mercury Finance Company of Idaho
Mercury Finance Company of Illinois
Mercury Finance Company of Indiana
Mercury Finance Company of Iowa
Mercury Finance Company of Kansas
Mercury Finance Company of Kentucky
Mercury Finance Company of Louisiana
Mercury Finance Company of Michigan
Mercury Finance Company of Mississippi
Mercury Finance Company of Missouri
Mercury Finance Company of Nevada
Mercury Finance Company of New Mexico
Mercury Finance Company of New York
Mercury Finance Company of North Carolina
Mercury Finance Company of Ohio
MFC Finance Company of Oklahoma
Mercury Finance Company of Oregon
Mercury Finance Company of Pennsylvania
Mercury Finance Company of South Carolina
Mercury Finance of Tennessee
MFC Finance Company of Texas
Mercury Finance Company of Utah
Mercury Finance Company of Virginia
Mercury Finance Company of Washington
Mercury Finance Company of Wisconsin
Filco Marketing Company
MFC Financial Services, Inc.
Gulfco Finance Company
Gulfco Investment Company
Midland Finance Company
MFN Insurance Company
<PAGE>
COMPANY PLEDGE AGREEMENT
This Company Pledge Agreement dated as of [DATE], 1998 (this "AGREEMENT"),
is made by Mercury Finance Company, a Delaware corporation (the "COMPANY"), in
favor of [NAME OF TRUSTEE], as trustee for Holders under the Indenture described
below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. The Company is a party to the Indenture of even date with this
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the "INDENTURE"), with the Trustee, under which the Company will issue its
senior secured notes to the holders thereof and their successors and assigns.
2. It is a condition precedent to the issuance of the senior secured
notes that the Company enter into this Agreement and grant to the Trustee, for
the benefit of itself and the holders of such senior secured notes the security
interests provided in this Agreement to secure the obligations of the Company
described below.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, the
Company agrees as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Agreement, capitalized terms used in this Agreement and not otherwise defined
have the meanings given to such terms from time to time in the Indenture.
1.2 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
"AGREEMENT" has the meaning set forth in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"COMPANY" has the meaning set forth in the PREAMBLE.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends,
mergers, consolidations, and all other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any Pledged Shares or
other shares of capital stock constituting Collateral, but shall not
include Dividends.
<PAGE>
"DIVIDENDS" means cash dividends and cash distributions with respect
to any Pledged Shares or other Pledged Property made in the ordinary course
of business and not a liquidating dividend.
"INDENTURE" has the meaning set forth in the first preliminary
statement.
"INSOLVENCY DEFAULT" means a Default under Section 9.01(a)(vii) or
Section 9.01(a)(viii) of the Indenture.
"PLEDGED PROPERTY" means all Pledged Shares and all other pledged
shares of capital stock, all assignments of any amounts due or to become
due, all other instruments which are now being delivered by the Company to
the Trustee or may from time to time hereafter be delivered by the Company
to the Trustee for the purpose of pledge under this Agreement or any other
Transaction Document, and all proceeds of any of the foregoing.
"PLEDGED SHARE ISSUER" means each Person identified in SCHEDULE I as
the issuer of the Pledged Shares identified opposite the name of such
Person; it being agreed that no insurance company shall be a Pledged Share
Issuer.
"PLEDGED SHARES" means all shares of capital stock of any Pledged
Share Issuer.
"COMPANY" is defined in the PREAMBLE.
"TRANSACTION DOCUMENTS" means the Indenture, the Collateral Security
Documents and any and all other agreements, instruments and documents
executed or delivered in connection therewith.
"TRUSTEE" has the meaning set forth in the PREAMBLE.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; PROVIDED, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
1.3 TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
SECTION 2. PLEDGE
2.1 GRANT OF SECURITY INTEREST. The Company pledges, hypothecates,
assigns, charges, mortgages, delivers, and transfers to the Trustee, for its
benefit and the ratable benefit of each of the
2
<PAGE>
Holders, and grants to the Trustee, for its benefit and the ratable benefit of
the Holders, a continuing security interest in, all of the following property
(the "COLLATERAL"):
(A) all issued and outstanding shares of capital stock of each Pledged
Share Issuer identified on SCHEDULE I;
(B) all other Pledged Shares issued from time to time;
(C) all other Pledged Property, whether now or hereafter delivered to the
Trustee in connection with this Agreement;
(D) all Dividends, Distributions, interest and other payments and rights
with respect to any Pledged Property; and
(E) all proceeds of any of the foregoing.
2.2 SECURITY FOR INDENTURE OBLIGATIONS. This Agreement secures the
payment in full of all Indenture Obligations of the Company now or hereafter
existing under or in connection with the Indenture and each other Transaction
Document, including, without limitation, obligations for costs, fees and
expenses.
2.3 DELIVERY OF PLEDGED PROPERTY. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares, shall
be delivered to and held by or on behalf of the Trustee pursuant hereto, shall
be in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank.
2.4 DIVIDENDS ON PLEDGED SHARES. Subject to Section 4.4, in the event
that any Dividend is to be paid on any Pledged Share, such Dividend or payment
shall be paid directly to the Trustee.
2.5 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall
(A) remain in full force and effect until payment in full of all Indenture
Obligations and the termination of the Indenture in accordance with
its terms,
(B) be binding upon the Company and its successors, transferees and
assigns, and
(C) inure, together with the rights and remedies of the Trustee hereunder,
to the benefit of the Trustee and each Holder.
Without limiting the foregoing CLAUSE (C) above, any Holder may assign or
otherwise transfer (in whole or in part) any Security held by it to any other
Person or entity, and such other Person or entity shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Holder under
any Transaction Document (including this Agreement) or otherwise, subject,
however,
3
<PAGE>
to any contrary provisions in such assignment or transfer. Upon the
payment in full of all Indenture Obligations and the termination of the
Indenture in accordance with its terms, the security interest granted herein
shall terminate and all rights to the Collateral shall revert to the Company.
Upon any such termination, the Trustee will, at the Company's sole expense,
deliver to the Company, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares, together with all other Collateral held by the Trustee
hereunder, and execute and deliver to the Company such documents as the Company
shall reasonably request to evidence such termination.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants unto each Holder, as at the date of
each pledge and delivery hereunder (including each pledge and delivery of
Pledged Shares) by the Company to the Trustee of any Collateral, as set forth in
this SECTION 3:
3.1 OWNERSHIP, NO LIENS, ETC. The Company is the legal and beneficial
owner of, and has good and marketable title to (and has obtained full right and
authority to pledge and assign) such Collateral, free and clear of all liens,
security interests, options, or other charges or encumbrances, except any lien
or security interest granted pursuant hereto in favor of the Trustee. The
Company has obtained all comments and waivers necessary from other creditors to
avoid conflicts with other agreements.
3.2 VALID SECURITY INTEREST. The delivery of such Collateral to the
Trustee is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Indenture
Obligations. No filing or other action will be necessary to perfect or protect
such security interest.
3.3 AS TO PLEDGED SHARES. In the case of any Pledged Shares constituting
such Collateral, all of such Pledged Shares are duly authorized and validly
issued, fully paid, and nonassessable, and constitute all of the issued and
outstanding shares of capital stock of each Pledged Share Issuer. The Company
has no Subsidiary other than the Pledged Share Issuers and insurance companies.
3.4 AUTHORIZATION, APPROVAL, ETC. No authorization, approval, or other
action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(A) for the pledge by the Company of any Collateral pursuant to this
Agreement or for the execution, delivery, and performance of this
Agreement by the Company, or
(B) for the exercise by the Trustee of the voting or other rights provided
for in this Agreement, or, except with respect to any Pledged Shares,
as may be required in connection with a disposition of such Pledged
Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Agreement.
4
<PAGE>
3.5 COMPLIANCE WITH LAWS. The Company is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which could reasonably be
expected to have a Material Adverse Effect or materially adversely affect the
value of the Collateral or the worth of the Collateral as collateral security.
SECTION 4. COVENANTS
4.1 PROTECT COLLATERAL: FURTHER ASSURANCES, ETC. The Company will not
sell, assign, transfer, pledge, or encumber in any other manner the Collateral
(except in favor of the Trustee hereunder). The Company will warrant and defend
the right and title herein granted unto the Trustee in and to the Collateral
(and all right, title, and interest represented by the Collateral) against the
claims and demands of all Persons whomsoever. The Company agrees that at any
time, and from time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that the Trustee may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Trustee to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.
4.2 STOCK POWERS, ETC. The Company agrees that all Pledged Shares (and
all other shares of capital stock constituting Collateral) delivered by the
Company pursuant to this Agreement will be accompanied by duly executed undated
blank stock powers, or other equivalent instruments of transfer acceptable to
the Trustee. The Company will, from time to time upon the request of the
Trustee, promptly deliver to the Trustee such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Trustee, with
respect to the Collateral as the Trustee may reasonably request and will, from
time to time upon the request of the Trustee after the occurrence of any Event
of Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Trustee.
4.3 CONTINUOUS PLEDGE. The Company will, at all times, keep pledged to
the Trustee pursuant hereto all Pledged Shares and all other shares of capital
stock constituting Collateral, all Dividends and Distributions with respect
thereto, and all other Collateral and other securities, instruments, proceeds,
and rights from time to time received by or distributable to the Company in
respect of any Collateral.
4.4 VOTING RIGHTS: DIVIDENDS, ETC. The Company agrees:
(A) Dividends and Distributions may be paid to the Company in respect of
the Pledged Shares; PROVIDED, that the Company shall not pay any
Dividends or Distributions in respect of the Company's capital stock;
and
(B) after any Event of Default shall have occurred and be continuing and
the Trustee has notified the Company of the Trustee's intention to
exercise its voting power under this SECTION 4.4(B):
5
<PAGE>
(i) the Trustee may exercise (to the exclusion of the Company) the
voting power and all other incidental rights of ownership with
respect to any Pledged Shares or other shares of capital stock
constituting Collateral and the Company hereby grants the Trustee
an irrevocable proxy, exercisable under such circumstances, to
vote the Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Trustee such additional proxies and
other documents as may be necessary to allow the Trustee to
exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Company but which the
Company is then obligated to deliver to the Trustee, shall, until delivery to
the Trustee, be held by the Company separate and apart from its other property
in trust for the Trustee. The Trustee agrees that unless an Insolvency Default
or an Event of Default shall have occurred and be continuing and the Trustee
shall have given the notice referred to in SECTION 4.4(B), the Company shall
have the exclusive voting power with respect to any shares of capital stock
(including any of the Pledged Shares) constituting Collateral and the Trustee
shall, upon the written request of the Company, promptly deliver such proxies
and other documents, if any, as shall be reasonably requested by the Company
which are necessary to allow the Company to exercise voting power with respect
to any such share of capital stock (including any of the Pledged Shares)
constituting Collateral; PROVIDED, that no vote shall be cast, or consent,
waiver, or ratification given, or action taken by the Company that would impair
any Collateral or be inconsistent with or violate any provision of the Indenture
or any other Transaction Document (including this Agreement).
SECTION 5. THE TRUSTEE
5.1 TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Company hereby irrevocably
appoints the Trustee the Company's attorney-in-fact, with full authority during
the continuance of an Insolvency Default or an Event of Default in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's discretion, to take any action and to execute any
instrument which the Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(A) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(B) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with CLAUSE (A) above; and
(C) to file any claims or take any action or institute any proceedings
which the Trustee may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the
Trustee with respect to any of the Collateral.
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<PAGE>
The Company hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
5.2 TRUSTEE MAY PERFORM. If the Company fails to perform any agreement
contained herein, the Trustee may itself perform, or cause performance of,
such agreement, and the expenses of the Trustee incurred in connection
therewith shall be payable by the Company pursuant to SECTION 6.4.
5.3 TRUSTEE HAS NO DUTY. The powers conferred on the Trustee hereunder
are solely to protect its interest (on behalf of the Holders) in the
Collateral and shall not impose any duty on it to exercise any such powers.
Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Trustee shall
have no duty as to any Collateral or responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Property, whether or not the
Trustee has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
5.4 REASONABLE CARE. The Trustee is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its
possession; PROVIDED, that the Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if
it takes such action for that purpose as the Company reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Trustee to comply with any such
request at any time shall not in itself be deemed a failure to exercise
reasonable care.
SECTION 6. REMEDIES
6.1 CERTAIN REMEDIES. (A) If any Event of Default shall have occurred
and be continuing, the Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral) and
also may, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of
the Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Trustee may deem commercially
reasonable. The Company agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to the Company of the time
and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Trustee may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(B) If any Event of Default shall have occurred and be continuing, the
Trustee may:
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<PAGE>
(i) transfer all or any part of the Collateral into the name of the
Trustee or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the Collateral to make
payment to the Trustee of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the Company's
name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Company)
endorsements. assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
6.2 COMPLIANCE WITH RESTRICTIONS. The Company agrees that in any sale
of any of the Collateral whenever an Event of Default shall have occurred and
be continuing, the Trustee is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by counsel
is necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution
or resale of such Collateral), or in order to obtain any required approval of
the sale or of the purchaser by any governmental regulatory authority or
official, and the Company further agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Trustee be liable nor
accountable to the Company for any discount allowed by the reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction.
6.3 APPLICATION OF PROCEEDS. All cash proceeds received by the Trustee
in respect of any sale of, collection from, or other realization upon, all or
any part of the Collateral may, in the discretion of the Trustee, be held by
the Trustee as additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Trustee
and any Holder pursuant to SECTION 6.4) in whole or in part by the Trustee
against, all or any part of the Indenture Obligations in the order specified
in Section 10.4 of the Company Security Agreement of even date herewith made
by the Company in favor of the Trustee.
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<PAGE>
6.4 INDEMNITY AND EXPENSES. The Company hereby indemnifies and holds
harmless the Trustee and each Holder from and against any and all claims,
losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Trustee's or such Holder's gross negligence,
bad faith, wilful misconduct or fraud. Upon demand, the Company will pay to
the Trustee and each Holder the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel (which shall
include the allocated costs of in-house counsel fees and expenses) and of any
experts and Trustees, which the Trustee or such Holder may incur in
connection with:
(A) the administration of this Agreement and each other Transaction
Document to which Company is a party;
(B) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(C) the exercise or enforcement of any of the rights of the Trustee or
any Holder hereunder; or
(D) the failure by the Company to perform or observe any of the provisions
hereof.
SECTION 7. MISCELLANEOUS
7.1 PROTECTION OF COLLATERAL. The Trustee may from time to time, at
its option, perform any act which the Company agrees hereunder to perform and
which the Company shall fail to perform after being requested in writing so
to perform (it being understood that no such request need be given after the
occurrence and during the continuance of a Default or an Event of Default)
and the Trustee may from time to time take any other action which the Trustee
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.
7.2 CERTAIN WAIVERS. The Company waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of marshaling
of the Collateral or other collateral or security for the Indenture
Obligations, (ii) any right to require the Trustee (a) to proceed against any
Person, (b) to exhaust any other collateral or security for any of the
Indenture Obligations, (c) to pursue any remedy in the Trustee's power or (d)
to make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Collateral and (iii) all claims, damages, and
demands against the Trustee arising out of the repossession, retention, sale
or application of the proceeds of any sale of the Collateral.
7.3 NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses specified in the Indenture. All
such notices and other communications shall be effective (i) if delivered by
hand or pre-paid courier service, when delivered, (ii) if sent by mail, upon
the earlier of the date of receipt or five Business Days after deposit in the
mail, first class,
9
<PAGE>
postage prepaid, (iii) if sent by telex, upon receipt by the sender of an
appropriate answerback and (iv) if sent by facsimile transmission, when sent.
7.4 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Trustee to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights and remedies under this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
that may otherwise be available to the Trustee.
7.5 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and the Trustee, and their
respective successors and assigns; PROVIDED, that the Company may not assign
any of its rights hereunder or interests herein without the written consent
of the Trustee and the Holders having at least 25% in principal amount of the
Outstanding Securities. The Company acknowledges that upon any assignment or
other transfer by the Trustee or any Holder of any of the Indenture
Obligations, the Trustee or such Holder may transfer its interest herein, or
any part thereof, to the assignee or transferee, who shall thereupon become
vested with all the rights, remedies, powers, security interests and liens
herein granted to the Trustee or such Holder, or the transferred part
thereof, subject, however, to the restrictions contained herein. No Persons
other than the Company, the Holders, the Trustee and the respective assignees
of the Holders and the Trustee are intended to be benefited hereby or shall
have any rights hereunder, as third-party beneficiaries or otherwise.
7.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT THE
TRUSTEE AND THE HOLDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
7.7 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY AND THE
TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH CONSENT, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE COMPANY AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE
HOLDERS EACH IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE COMPANY AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS, EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
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7.8 WAIVER OF JURY TRIAL. THE COMPANY AND THE TRUSTEE FOR THE BENEFIT
OF ITSELF AND THE HOLDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
COMPANY AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION 11.8 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
7.9 AMENDMENT. This Agreement shall not be amended except by the
written agreement of the parties as provided in the Indenture.
7.10 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If; however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation
in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only
to the extent of such prohibition or invalidity without affecting the
remaining provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction. This Agreement is to be read,
construed and applied together with the Indenture and the other Transaction
Documents which, taken together, set forth the complete understanding and
agreement of the Trustee, the Holders and the Company with respect to the
matters referred to herein and therein.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
7.12 NO INCONSISTENT REQUIREMENTS. The Company acknowledges that this
Agreement and the other Transaction Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters,
and agrees that all such covenants, terms and provisions are cumulative and
all shall be performed and satisfied in accordance with their respective
terms; PROVIDED, in the event any terms or conditions contained herein
conflict with any term or condition set forth in the Indenture, such term or
condition set forth in the Indenture shall control.
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7.13 ENTIRE AGREEMENT. This Agreement (i) integrates all the terms and
conditions mentioned herein or incidental hereto, (ii) supersedes all oral
negotiations and prior writings with respect to the subject matter hereof and
(iii) is intended by the parties as the final expression of the Agreement
with respect to the terms and conditions set forth in this Agreement and as
the complete and exclusive statement of the terms agreed to by the parties.
7.14 FURTHER ASSURANCES. The Company agrees upon the written request of
the Trustee or any Holder, to execute and deliver to the Trustee or such
Holder, from time to time, any additional instruments or documents reasonably
considered necessary by the Trustee or such Holder to cause this Agreement to
be, become or remain, valid and effective in accordance with its terms.
* * * * *
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Executed and delivered as of the date first above written.
MERCURY FINANCE COMPANY
By:
-------------------------
Name:
-----------------------
Title:
----------------------
[TRUSTEE]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE>
SCHEDULE I
PLEDGED SHARES
<TABLE>
<CAPTION>
Common Stock
------------------------- % of
Share Authorized Outstanding Outstanding
Pledged Share Issuer Certificate # Shares Shares Shares Pledged
-------------------- ------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Mercury Finance Corporation of Alabama 2 1,000 250 100
Mercury Finance Company of Arizona 2 250 250 100
Merc Finance Company of California 2 250 250 100
Mercury Finance Company of Colorado 1 1,000 250 100
Mercury Finance Company of Delaware 1 1,000 250 100
Mercury Finance Company of Florida 2 1,000 250 100
Mercury Finance Company of Georgia 2 1,000 250 100
Mercury Finance Company of Idaho 1 1,000 250 100
Mercury Finance Company of Illinois 2 1,000 250 100
Mercury Finance Company of Indiana 2 1,000 250 100
Mercury Finance Company of Iowa 1 1,000 250 100
Mercury Finance Company of Kansas 2 1,000 250 100
Mercury Finance Company of Kentucky 2 1,000 250 100
Mercury Finance Company of Louisiana 2 1,000 250 100
Mercury Finance Company of Michigan 1 1,000 250 100
Mercury Finance Company of Mississippi 1 1,000 250 100
Mercury Finance Company of Missouri 2 250 250 100
Mercury Finance Company of Nevada 2 250 250 100
<PAGE>
Mercury Finance Company of New Mexico 1 1,000 250 100
Mercury Finance Company of New York 1 1,000 250 100
Mercury Finance Company of North Carolina 2 1,000 250 100
Mercury Finance Company of Ohio 1 1,000 250 100
MFC Finance Company of Oklahoma 2 1,000 250 100
Mercury Finance Company of Oregon 1 1,000 250 100
Mercury Finance Company of Pennsylvania 1 1,000 250 100
Mercury Finance Company of South Carolina 1 1,000 250 100
Mercury Finance of Tennessee 1 250 250 100
MFC Finance Company of Texas 2 1,000 250 100
Mercury Finance Company of Utah 1 1,000 250 100
Mercury Finance Company of Virginia 2 1,000 250 100
Mercury Finance Company of Washington 1 1,000 250 100
Mercury Finance Company of Wisconsin 1 1,000 250 100
Filco Marketing Company 1 1,000 250 100
MFC Financial Services, Inc. 2 250 250 100
Gulfco Finance Company 1 300,000 1,000 100
Gulfco Investment, Inc. 1 1,000,000 1,000 100
Midland Finance Co. 1 10,000 1,503.5 100
</TABLE>
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SUBSIDIARIES SECURITY AGREEMENT
This Subsidiaries Security Agreement dated as of [DATE], 1998 (this
"AGREEMENT"), is made by each of the corporations listed on ANNEX I
(collectively, the "GUARANTORS"), in favor of [NAME OF TRUSTEE], as trustee for
the Holders under the Indenture described below (in such capacity, the
"TRUSTEE").
PRELIMINARY STATEMENTS:
1. Mercury Finance Company, a Delaware corporation (the "COMPANY"), is a
party to the Indenture of even date with this Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), with the
Trustee, under which the Company will issue its senior secured notes to the
holders thereof and their successors and assigns.
2. The Guarantors have entered into the Subsidiaries Guaranty Agreement
of even date with this Agreement (the "GUARANTY"), made in favor of the Trustee
under which the Guarantors jointly and severally guaranteed the obligations and
liabilities of the Company under the Indenture.
3. It is a condition precedent to the issuance of the senior secured
notes that the Guarantors enter into this Agreement.
4. Each Guarantor is a direct or indirect subsidiary of the Company
and will derive substantial and direct benefits (which benefits are
acknowledged by each Guarantor) from the issuance of the senior secured notes
and other benefits to be provided to the Company under the Indenture.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, each
Guarantor agrees as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Agreement, capitalized terms used in this Agreement and not otherwise defined
have the meanings given to such terms from time to time in the Indenture.
1.2 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
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"ACCOUNTS" means any and all "accounts," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by a
Guarantor, and in any event includes all accounts receivable, contract
rights, rights to payment and other obligations of any kind owed to a
Guarantor arising out of or in connection with the sale or lease of
merchandise, goods or commodities or the rendering of services or arising
from any other transaction, however evidenced, and whether or not earned by
performance, all guaranties, indemnities and security with respect to the
foregoing, and all letters of credit relating thereto, in each case whether
now existing or hereafter acquired or arising.
"AGREEMENT" has the meaning set forth in the PREAMBLE.
"BOOKS" means all books, records and other written, electronic or
other documentation in whatever form maintained now or hereafter by or for
a Guarantor in connection with the ownership of its assets or the conduct
of its business or evidencing or containing information relating to the
Collateral, including (i) ledgers, (ii) records indicating, summarizing,
or evidencing such Guarantor's assets (including Inventory and Rights to
Payment), business operations or financial condition, (iii) computer
programs and software, (iv) computer discs, tapes, files, manuals,
spreadsheets, (v) computer printouts and output of whatever kind, (vi) any
other computer prepared or electronically stored, collected or reported
information and equipment of any kind and (vii) any and all other rights
now or hereafter arising out of any contract or agreement between a
Guarantor and any service bureau, computer or data processing company or
other Person charged with preparing or maintaining any of such Guarantor's
books or records or with credit reporting, including with regard to such
Guarantor's Accounts.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by a
Guarantor.
"COLLATERAL" has the meaning specified in SECTION 2.1.
"COMPANY" has the meaning set forth in the first preliminary
statement.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of a Guarantor
with a bank, savings and loan association, credit union or like
organization and all funds and amounts therein, whether or not restricted
or designated for a particular purpose.
"DOCUMENTS" means any and all "documents," as such term is defined in
the UCC, including without limitation all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other
documents of a Guarantor, whether or not negotiable, and includes all other
documents which purport to be issued by a bailee or agent and purport to
cover goods in any bailee's or agent's possession which are either
identified or are tangible portions of an identified mass, including such
documents of title made available to a Guarantor for the purpose of
ultimate sale or exchange of goods or for the purpose of loading,
unloading, storing, shipping, transshipping, manufacturing, processing or
otherwise
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dealing with goods in a manner preliminary to their sale or exchange, in
each case whether now existing or hereafter acquired or arising.
"EQUIPMENT" means all "equipment," as such term is defined in the UCC,
whether now existing or hereafter acquired by a Guarantor in all of its
forms, wherever located, and in any event includes any and all machinery,
furniture, equipment, furnishings and fixtures in which a Guarantor now or
hereafter acquires any right, and all other goods and tangible personal
property (other than Inventory), including tools, parts and supplies,
computer and other electronic data processing equipment and other office
equipment, computer programs and related data processing software, and all
additions, substitutions, replacements, parts, accessories, and accessions
to and for the foregoing, now owned or hereafter acquired, and including
any of the foregoing which are or are to become fixtures on real property.
"FINANCING STATEMENTS" has the meaning specified in SECTION 3.
"FIXTURES" shall mean any "fixtures" as such term is defined in the
UCC, whether now owned or hereafter acquired by a Guarantor.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in the UCC, whether now existing or hereafter arising or acquired
by a Guarantor, and in any event includes (i) all tax and other refunds,
rebates or credits of every kind and nature to which Guarantor is now or
hereafter may become entitled, (ii) all goodwill, choses in action and
causes of action, whether legal or equitable, whether in contract or tort
and however arising, (iii) all Intellectual Property Collateral, (iv) all
uncertificated securities and interests in limited and general partnerships
and limited liability companies, (v) all rights of stoppage in transit,
replevin and reclamation, (vi) all licenses, permits, consents, indulgences
and rights of whatever kind issued in favor of or otherwise recognized as
belonging to a Guarantor by any Governmental Authority and (vii) all
indemnity agreements, guaranties, insurance policies and other contractual,
equitable and legal rights of whatever kind or nature; in each case whether
now existing or hereafter acquired or arising.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTOR" has the meaning set forth in the PREAMBLE.
"GUARANTY" has the meaning set forth in the second preliminary
statement.
"INDENTURE" has the meaning set forth in the first preliminary
statement.
"INSOLVENCY DEFAULT" means a Default under Section 9.01(a)(vii) or
Section 9.01(a)(viii) of the Indenture.
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<PAGE>
"INSTRUMENTS" means any and all negotiable instruments, certificated
securities and every other writing which evidences a right to the payment
of money, in each case whether now existing or hereafter acquired by a
Guarantor.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by a Guarantor or in which a Guarantor otherwise has
any interest, now existing or hereafter acquired or arising:
(A) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and
royalties with respect to any licenses (including without
limitation such patents, patent applications and patent licenses
as described in SCHEDULE E), present or future infringement
thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(B) all copyrights and applications for copyright, domestic or foreign,
together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published
and whether said copyrights are statutory or arise under the common
law, and all other rights and works of authorship, all rights, claims
and demands in any way relating to any such copyrights or works,
including royalties and rights to sue for past, present or future
infringement, and all rights of renewal and extension of copyright;
(C) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating
to any of the foregoing and all income and royalties with respect to
any licenses (including without limitation such marks, names,
applications and licenses as described in SCHEDULE E), whether
registered or unregistered and wherever registered, all rights to sue
for past, present or future infringement or unconsented use thereof,
all rights arising therefrom and pertaining thereto and all reissues,
extensions and renewals thereof;
(D) all trade secrets, confidential information, customer lists, license
rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, drawings, specifications, blue prints,
descriptions, inventions name plates and catalogs; and
(E) the entire goodwill of or associated with the businesses now or
hereafter conducted by a Guarantor connected with an symbolized by any
of the aforementioned properties and assets.
"INVENTORY" means any "inventory," as such term is defined in the UCC,
wherever located, whether now owned or hereafter acquired by a Guarantor,
and in any event includes all goods (including goods in transit) which are
held for sale, lease or other disposition,
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<PAGE>
including those held for display or demonstration or out on lease or
consignment or to be furnished under a contract of service, or which are
raw materials, work in process, finished goods or materials used or
consumed in a Guarantor's business, and the resulting product or mass,
and all repossessed, returned, rejected, reclaimed and replevied goods,
together with all parts, components, supplies, packing and other
materials used or usable in connection with the manufacture, production,
packing, shipping, advertising, selling or furnishing of such goods; and
all other items hereafter acquired by a Guarantor by way of
substitution, replacement, return, repossession or otherwise, and all
additions and accessions thereto, and any Document representing or
relating to any of the foregoing at any time.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto in
Section 9-115 of the UCC in those jurisdictions in which such definition
has been adopted and shall include without limitation (i) all securities,
whether certificated or uncertificated, stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares, (ii) all securities entitlements of a
Guarantor including without limitation, the rights of a Guarantor to any
securities account of a Guarantor and financial assets held by a securities
intermediary in such securities account and any fee, credit balance or
other money owing by any securities intermediary with respect to that
account, (iii) all securities accounts held by a Guarantor, (iv) all
commodity contracts held by the Company and (v) all commodity accounts held
by a Guarantor.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, collateral deposit arrangement, security interest, encumbrance
for the payment of money, lien (statutory or other), preference, right of
setoff, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, the interest of a
lessor under a capital lease, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement (other than a financing statement filed by a "true"
lessor under Section 9-408 of the UCC) naming the owner of the asset to
which such Lien relates as debtor, under the UCC or other comparable law of
any jurisdiction.
"MAJORITY HOLDERS" means Holders having at least 25% in principal
amount of the Outstanding Securities.
"PERMITTED LIENS" means, without duplication (i) Liens on new
receivables securing any Warehouse Facility, (ii) Liens incurred and
pledges and deposits made in the ordinary course of business in connection
with liability insurance, workers' compensation, unemployment insurance,
old-age pensions, and other social security benefits other than in respect
of employee benefit plans subject to the Employee Retirement Income
Security Act of 1974, as amended, (iii) Liens imposed by law, such as
carriers', warehousemen's, mechanics', materialmen's, and vendor's Liens,
incurred in the ordinary course of business and securing obligations which
are not yet due or which are being contested in good faith by appropriate
proceedings, (iv) Liens securing the payment of taxes, assessments, and
governmental charges or levies, either (a) not delinquent or (b) being
contested in good faith by appropriate legal or administrative proceedings
and as to which adequate reserves
5
<PAGE>
shall have been established on the books of the relevant Person in
conformity with GAAP, (v) zoning restrictions, easements, rights of way,
reciprocal easement agreements, operating agreements, covenants,
conditions, or restrictions on the use of any parcel of property that
are routinely granted in real estate transactions or do not interfere in
any material respect with the ordinary conduct of the business of the
Guarantors or the value of such property for the purpose of such
business, (vi) Liens on property existing at the time such property is
acquired, (vii) purchase money Liens upon or in any property acquired or
held in the ordinary course of business to secure Indebtedness incurred
solely for the purpose of financing the acquisition of such property,
(viii) Liens on the assets of any Subsidiary of a Guarantor at the time
such Subsidiary is acquired, (ix) Liens with respect to obligations in
outstanding amounts not to exceed $5,000,000 for the Company and the
Guarantors on a consolidated basis at any particular time and that (a)
are not incurred in connection with the borrowing of money or obtaining
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate interfere in any material
respect with the ordinary conduct of the business of the Company and the
Guarantors, (x) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of the
business of the Guarantors, (xi) Liens resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall
not have expired, or in respect of which (a) such Guarantor shall in
good faith be prosecuting an appeal or proceeding for a review, (b) a
stay of execution pending such appeal or proceeding for review shall be
in effect and (c) such Guarantor shall have established on its books
adequate reserves in accordance with GAAP, (xii) rights of banks to set
off deposits against Indebtedness owed to such banks and (xiii) any
extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses; PROVIDED, that any such extension,
renewal or replacement Lien is limited to the property or assets covered
by the Lien extended, renewed or replaced or substitute property or
assets, the value of which is not materially greater than the value of
the property or assets for which the substitute property or assets are
substituted.
"PROCEEDS" means proceeds," as such term is defined in the UCC, and in
any event, includes whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of a
Guarantor, any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of a Guarantor from time to time
with respect to any of the Collateral, any and all payments (in any form
whatsoever) made or due and payable to a Guarantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), any
and all other amounts from time to time paid or payable under or in
connection with any of the Collateral or for or on account of any damage or
injury to or conversion of any Collateral by any Person, any and all other
tangible or intangible property received upon the sale or disposition of
Collateral, and all proceeds of proceeds.
6
<PAGE>
"RIGHTS TO PAYMENT" means all Accounts, and any and all rights and
claims to the payment or receipt of money or other forms of consideration
of any kind in, to and under all Chattel Paper, Documents, General
Intangibles, Instruments and Proceeds.
"SECURED OBLIGATIONS" means the obligations of each Guarantor under
the Guaranty.
"TRANSACTION DOCUMENTS" means the Indenture, the Collateral Security
Documents and any and all other agreements, instruments and documents
executed or delivered in connection therewith.
"TRUSTEE" has the meaning set forth in the PREAMBLE.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; PROVIDED, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
1.3 TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
SECTION 2. SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, and to induce the Trustee to enter into
the Indenture and the Holders to accept and exchange the Securities and to issue
the Securities as provided therein, each Guarantor grants, pledges, assigns,
transfers, hypothecates and sets over to the Trustee for the benefit of itself
and the Holders, a security interest in all of such Guarantor's right, title and
interest in, to and under the following property, wherever located and whether
now existing or owned or hereafter acquired or arising (collectively, the
"COLLATERAL"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Deposit
Accounts; (iv) all Documents; (v) all General Intangibles; (vi) all Instruments;
(vii) all Books; (viii) all Fixtures; (ix) all Investment Property; (x) all
Equipment, (xi) all Inventory, (xii) all money, cash or cash equivalents; and
(xiii) all products and Proceeds of any and all of the foregoing; PROVIDED, that
the Collateral will not include (a) General Intangibles which by their terms are
unassignable to the extent that consent to such an assignment is not obtained
and (b) intent to use trademark applications to the extent the pledge and
assignment hereunder renders such trademark applications void or voidable.
2.2 GUARANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) each Guarantor shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Trustee of any
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of the rights hereunder shall not release any Guarantor from any of its
duties or obligations under such contracts, agreements and other documents
included in the Collateral and (iii) neither the Trustee nor any Holder shall
have any obligation or liability under any contracts, agreements and other
documents included in the Collateral by reason of this Agreement, nor shall
the Trustee or any Holder be obligated to perform any of the obligations or
duties of a Guarantor thereunder or to take any action to collect or enforce
any such contract, agreement or other document included in the Collateral
hereunder.
2.3 CONTINUING SECURITY INTEREST. Each Guarantor agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with SECTION 11.15.
SECTION 3. FINANCING STATEMENTS ETC.
The Guarantors shall execute and deliver to the Trustee concurrently
with the execution of this Agreement, and at any time and from time to time
thereafter, all financing statements, continuation financing statements,
termination statements, security agreements, chattel mortgages, assignments,
patent, copyright and trademark collateral assignments, fixture filings,
blocked account agreements, warehouse receipts, documents of title,
affidavits, reports, notices, schedules of account, letters of authority and
all other documents and instruments, in form satisfactory to the Trustee (the
"FINANCING STATEMENTS"), and take all other action, as the Trustee may
reasonably request, to perfect and continue perfected, maintain the priority
of or provide notice of the Trustee's security interest in the Collateral and
to accomplish the purposes of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In addition to and not in limitation of the representations and warranties
of the Guarantors set forth in the Guaranty, each Guarantor represents and
warrants to the Trustee that:
4.1 LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. Each Guarantor's
chief executive office, corporate office and principal place of business is
located at the address set forth in SCHEDULE A, and all other locations where
such Guarantor conducts business or Collateral is kept are set forth in SCHEDULE
A.
4.2 LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for each Guarantor, are set forth in SCHEDULE B.
4.3 TRADE NAMES AND TRADE STYLES. All trade names and trade styles under
which each Guarantor presently conducts its business operations are set forth in
SCHEDULE C, and, except as set forth in SCHEDULE C, no Guarantor has, at any
time during the preceding five years (i) been known as or used any other
corporate, trade or fictitious name, (ii) changed its name, (iii) been the
surviving or resulting corporation in a merger or consolidation or (iv) acquired
through asset purchase or otherwise any business of any Person.
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4.4 OWNERSHIP OF COLLATERAL. Each Guarantor is, and, except as permitted
by SECTION 5.9, will continue to be, the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time such
Guarantor acquires rights in such Collateral, will be the legal and beneficial
owner thereof), and has good, indefeasible and merchantable title to the
Collateral free and clear of any and all Liens other than Permitted Liens.
4.5 ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This Agreement
creates a valid and continuing security interest which is enforceable against
the Collateral in which each Guarantor now has rights and will create a security
interest which is enforceable against the Collateral in which such Guarantor
hereafter acquires rights at the time such Guarantor acquires any such rights
and (ii) subject to Permitted Liens and assuming the filing of the Financing
Statements, the possession of Instruments and the control over Investment
Property, the Trustee has a perfected and first priority security interest in
the Collateral in which each Guarantor now has rights, and will have a perfected
and first priority security interest in the Collateral in which such Guarantor
hereafter acquires rights at the time such Guarantor acquires any such rights,
in each case for the Trustee's own benefit or for the benefit of the Holders,
and in each case securing the payment and performance of the Secured
Obligations. All action necessary or desirable to protect and perfect such
security interest in the existing Collateral under the UCC has been duly taken.
4.6 OTHER FINANCING STATEMENTS. Other than (i) financing statements or
similar filings naming the owner of the asset to which such lien relates as
debtor, under the UCC or any comparable law ("UCC FINANCING STATEMENTS")
disclosed to the Trustee and filed in connection with the Permitted Liens and
(ii) UCC Financing Statements in favor of the Trustee in its capacity as Trustee
for the benefit of itself and the Holders under the Indenture and any other
Transaction Documents, no effective UCC Financing Statement naming a Guarantor
as debtor, assignor, Guarantor, mortgagor, pledgor or the like and covering all
or any part of the Collateral is on file in any filing or recording office in
any jurisdiction.
4.7 RIGHTS TO PAYMENT. The Rights to Payment represent valid, binding
and enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto, and
are and will be genuine, free from Liens other than Permitted Liens, and not
subject to any adverse claims, counterclaims, setoffs, defaults, disputes,
defenses, discounts, retainages, holdbacks or conditions precedent of any kind
of character, except to the extent permitted under the Indenture and for
ordinary course setoffs and asserted claims or to the extent, if any, that such
account debtors or other Persons may be entitled to normal and ordinary course
trade discounts, returns, adjustments and allowances in accordance with SECTION
5.15, or as otherwise disclosed to the Trustee in writing;
(A) no Guarantor has assigned any of its rights under the Rights to
Payment except as provided in this Agreement or as set forth in the
Indenture or other Transaction Documents; and
(B) no Guarantor has knowledge of any fact or circumstance which would
impair the validity or collectible of any of the Rights to Payment.
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4.8 INVENTORY. With respect to any Inventory in which the Trustee is
granted a security interest pursuant to the terms of this Agreement, (i) such
Inventory is located at the locations set forth on SCHEDULE A, (ii) no Inventory
is now, or shall at any time or times hereafter be stored with a bailee,
warehouseman or similar party (except as disclosed on SCHEDULE D) without the
Trustee's prior written consent, and if the Trustee gives such written consent,
the Guarantors will concurrently therewith at the Trustee's reasonable request
use its best efforts to cause any such bailee, warehouseman or similar party to
issue and deliver to the Trustee in form and substance acceptable to the
Trustee, warehouse receipts therefor in the Trustee's name, (iii) such Inventory
is of good and merchantable quality, free from any material defects, (iv) such
Inventory is not subject to any licensing, patent, royalty, trademark, trade
name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party as a precondition of such sale or other
disposition and (v) the completion of manufacture, sale or other disposition of
such Inventory by the Trustee following a Default or an Event of Default will
not require the consent of any Person and will not constitute a breach or
default under any contract or agreement to which a Guarantor is a party or to
which such Inventory is subject.
4.9 INTELLECTUAL PROPERTY. Except as set forth in SCHEDULE E, the
Guarantors do not own, possess or use under any licensing arrangement any
patents, copyrights, trademarks, service marks or trade names, nor is there
currently pending before any Governmental Authority any application for
registration of any patent, copyright, trademark, service mark or trade name;
(A) all patents, copyrights, trademarks, service marks and trade names are
subsisting and none have been adjudged invalid or unenforceable in
whole or in part;
(B) all maintenance fees required to be paid on account of any patents
have been timely paid for maintaining such patents in force, and, to
the Guarantor's knowledge, each of the patents is valid and
enforceable;
(C) to the Guarantor's knowledge after due inquiry, no material
infringement or unauthorized use presently is being made of any
Intellectual Property Collateral by any Person;
(D) each Guarantor is the sole and exclusive owner of the Intellectual
Property Collateral identified on SCHEDULE E (other than Intellectual
Property Collateral licensed by such Guarantor) and the past, present
and contemplated future use of such Intellectual Property Collateral
by the Guarantors has not, does not and will not infringe or violate
any right, privilege or license agreement of or with any other Person;
and
(E) each Guarantor either owns, has material rights under, is a party to,
or an assignee of a party to all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark
applications, trade names and all other Intellectual Property
Collateral necessary to continue to conduct its business as heretofore
conducted.
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4.10 EQUIPMENT. None of the Equipment or other Collateral is affixed to
real property, except Collateral with respect to which the Guarantors have
supplied the Trustee with all information and documentation necessary to make
all fixture filings required to perfect and protect the priority of the
Trustee's security interest in all such Collateral which may be fixtures as
against all Persons having an interest in the premises to which such property
may be affixed.
4.11 DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which the Guarantors maintain their respective Deposit Accounts,
and the account numbers and account names of such Deposit Accounts, are set
forth in SCHEDULE F.
4.12 CHATTEL PAPER AND INSTRUMENTS. All action necessary to protect and
perfect the security interest of the Trustee in all Instruments (including the
delivery of all originals thereof to the Trustee) has been duly taken. With
respect to Chattel Paper in which the Trustee is granted a security interests
under the terms of this Agreement:
(A) all action necessary to protect and perfect the security interest in
the specific goods underlying Chattel Paper has been duly taken;
(B) all original documentation evidencing Chattel Paper is in the
possession of the Guarantors; and
(C) all original documentation evidencing Chattel Paper has been marked
with a legend as described in SECTION 5.14.
SECTION 5. COVENANTS
In addition to and not in limitation of the covenants of the Guarantors set
forth in the Guaranty, so long as any of the Secured Obligations remain
unsatisfied, each Guarantor agrees that:
5.1 DEFENSE OF COLLATERAL. Each Guarantor will defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Trustee other than holders of Permitted
Liens.
5.2 PRESERVATION OF COLLATERAL. Each Guarantor shall maintain, preserve
and protect the Collateral which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by the Indenture.
5.3 COMPLIANCE WITH LAWS, ETC. Each Guarantor will comply with all
requirements of law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act) relating in a
material way to the possession, operation, maintenance and control of the
Collateral, except such as may be contested in good faith or as to which a bona
fide dispute may exist and except to the extent that noncompliance could not
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reasonably be expected to materially adversely affect the value of the
Collateral or the worth of the collateral as collateral security or have a
Material Adverse Effect.
5.4 LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. Each Guarantor will
(i) keep all Books pertaining to the Rights to Payment at the locations set
forth in SCHEDULE B and (ii) give at least thirty days' prior written notice
to the Trustee of (a) any changes in any such location where Books pertaining
to the Rights to Payment are kept, including any change of name or address of
any service bureau, computer or data processing company or other Person
preparing or maintaining any Books or collecting Rights to Payment for such
Guarantor or (b) any changes in the location of such Guarantor's chief
executive office or principal place of business.
5.5 LOCATION OF COLLATERAL AND DEPOSIT ACCOUNTS. Each Guarantor will (i)
keep the Collateral at the locations set forth in SCHEDULE A or SCHEDULE D and
not remove the Collateral from such locations (other than Collateral in transit
between locations listed in SCHEDULE A or SCHEDULE D in the ordinary course of
business and disposals of Collateral permitted by CLAUSE (I) below) except upon
at least thirty days' prior written notice of any removal to the Trustee,
(ii) give the Trustee at least thirty days' prior written notice of any change
in the locations set forth in SCHEDULE A or SCHEDULE D and (iii) give the
Trustee at least thirty days' prior written notice of the creation and
maintenance of any Deposit Account not set forth on SCHEDULE F.
5.6 CHANGE IN NAME, IDENTITY OR STRUCTURE. Each Guarantor will give the
Trustee at least thirty days' prior written notice of (i) any change in name,
(ii) any changes in, additions to or other modifications of its trade names and
trade styles set forth in SCHEDULE C and (iii) any changes in its identity or
structure in any manner which might make any Financing Statement filed hereunder
incorrect or misleading in such a manner as would require the refiling of
Financing Statements under the UCC.
5.7 MAINTENANCE OF RECORDS. Each Guarantor will keep accurate and
complete Books with respect to the Collateral, and at the Trustee's request such
Guarantor shall legend the Books pertaining to such Collateral with an
appropriate disclosure of the Trustee's security interest hereunder.
5.8 DISPOSITION OF COLLATERAL. No Guarantor will surrender or lose
possession of other than to the Trustee), sell, lease, rent, or otherwise
dispose of or transfer any of the Collateral or any right or interest therein,
except to the extent permitted by the Indenture.
5.9 LIENS. Other than liens in favor of the Trustee in its capacity as
Trustee under the Indenture and Permitted Liens, each Guarantor will keep the
Collateral free of all Liens.
5.10 EXPENSES. Each Guarantor will maintain, keep and preserve the
Collateral at its own cost and expense in accordance with its customary business
practices.
5.11 LEASED PREMISES. At the Trustee's request, each Guarantor will use
its best efforts to obtain from each Person from whom such Guarantor leases any
premises at which any Collateral
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is at any time present such subordination, waiver, consent and estoppel
agreements as the Trustee may reasonably require, in form and substance
reasonably satisfactory to the Trustee.
5.12 RIGHTS TO PAYMENT. Each Guarantor will:
(A) with such frequency as the Trustee may reasonably require upon the
occurrence and during the continuance of an Insolvency Default or an
Event of Default, furnish to the Trustee (i) master customer listings,
including all names and addresses, together with copies or originals
(as requested by the Trustee) of documents, customer statements,
repayment histories and present status reports relating to the
Accounts, (ii) accurate records and summaries of Accounts, including
detailed agings specifying the name, face value and date of each
invoice, and listings of Accounts that are disputed or have been
canceled and (iii) such other matters and information relating to the
Accounts as the Trustee shall from time to time reasonably request;
(B) in accordance with its sound business judgment perform and comply in
all material respects with its obligations in respect of the Accounts
and other Rights to Payment;
(C) upon the request of the Trustee (i) at any time, notify all or any
designated portion of the account debtors and other obligors on the
Rights to Payment of the security interest hereunder and (ii) if an
Insolvency Default or an Event of Default has occurred and is
continuing; notify the account debtors and other obligors on the
Rights to Payment or any designated portion thereof that payment shall
be made directly to the Trustee or to such other Person or location as
the Trustee shall specify; and
(D) establish such lockbox, blocked account or similar arrangements for
the payment of the Accounts and other Rights to Payment as the Trustee
shall require.
5.13 DOCUMENTS ETC. Each Guarantor will (i) immediately deliver to the
Trustee, or an agent designated by it, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all Documents and Instruments
and all other Rights to Payment at any time evidenced by promissory notes, trade
acceptances or other instruments and (ii) at the reasonable request of the
Trustee, mark all Documents and Chattel Paper with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of [NAME OF TRUSTEE], as trustee, for the benefit of itself
and certain holders." With respect to Chattel Paper in which the Trustee is
granted a security interests under the terms of this Agreement, each Guarantor
will
(A) take all action necessary to protect and perfect the security interest
in the specific goods underlying Chattel Paper;
(B) take possession of all original documentation evidencing Chattel
Paper; and
(C) not sell or transfer any Chattel Paper, whether in the ordinary course
of business or otherwise.
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5.14 INVENTORY. Each Guarantor will:
(A) at such times as the Trustee shall reasonably request but in any event
not more than once each fiscal year, prepare and deliver to the
Trustee a report of all Inventory, in form and substance satisfactory
to the Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or an
Event of Default has occurred and is continuing, take a physical
listing of the Inventory and promptly deliver a copy of such physical
listing to the Trustee.
5.15 EQUIPMENT. Each Guarantor will:
(A) upon the Trustee's reasonable request but in any event not more than
once each fiscal year, prepare and deliver to the Trustee a report of
each item of Equipment, in form and substance satisfactory to the
Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or an
Event of Default has occurred and is continuing, take a physical
listing of the Equipment and promptly deliver a copy of such physical
listing to the Trustee.
5.16 INTELLECTUAL PROPERTY COLLATERAL. Each Guarantor will:
(A) not enter into any agreements or transactions (including any license
or royalty agreement) pertaining to any Intellectual Property
Collateral except in the ordinary course of business;
(B) if reasonably within such Guarantor's abilities, not allow or suffer
any Intellectual Property Collateral to become abandoned, nor any
registration thereof to be terminated, forfeited, expired or dedicated
to the public unless such Intellectual Property Collateral is no
longer useful or necessary to the operation of its business;
(C) diligently prosecute all applications for patents, copyrights and
trademarks useful and necessary to the operation of its business, and
file and prosecute any and all continuations, continuations-in-part,
applications for reissue, applications for certificate of correction
and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and
all maintenance, license, registration and other fees, taxes and
expenses incurred in connection with any Intellectual Property
Collateral; and
(D) provide the Trustee on a quarterly basis with a list of all new
applications and registrations for United States and foreign patents,
copyrights, trademarks, service marks or trade names, which such new
applications and registrations shall be subject to the terms and
conditions of the Indenture and this Agreement.
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5.17 NOTICES, REPORTS AND INFORMATION. Each Guarantor will (i) furnish to
the Trustee such statements and schedules further identifying and describing the
Collateral and such other reports and other information in connection with the
Collateral as the Trustee may reasonably request, all in reasonable detail and
(ii) upon the reasonable request of the Trustee make such demands and requests
for information and reports as such Guarantor is entitled to make in respect of
the Collateral.
5.18 FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from time
to time upon the written consent of the Trustee and at the sole expense of the
Guarantors, each Guarantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further actions as the
Trustee may deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including without limitation (i) using its
best efforts to secure all consents and approvals necessary or appropriate for
the assignment to or for the benefit of the Trustee for the benefit of itself
and the Holders, of any license or contract held by such Guarantor or to which
such Guarantor has any rights not heretofore assigned, or any other General
Intangible which by its terms is unassignable, (ii) filing any financing or
continuation statements under the UCC with respect to the Liens and security
interests granted hereunder or under any other Transaction Document,
(iii) transferring Collateral to the Trustee's possession for the benefit of
itself and the Holders (if such Collateral consists of Chattel Paper or if a
security interest in such Collateral can be perfected only by possession) and
(iv) using its best efforts to obtain waivers of Liens, if any exist, from
landlords and mortgagees in accordance with the Indenture. Each Guarantor also
hereby authorizes the Trustee, for the benefit of itself and the Holders to file
any such financing or continuation statements without the signature of such
Guarantor to the extent permitted by applicable law. If any amount payable
under or in connection with any of the collateral is or shall become evidenced
by any Instrument, such Instruments, other than checks and Securities received
in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to the Trustee immediately upon such Guarantor's receipt thereof.
5.19 RIGHT OF INSPECTION. The Trustee, or any agent or employee designated
by the Trustee in writing, has the right, from time to time after the date of
this Agreement, to call at the Guarantor's place or places of business (or any
other place where the Collateral or any information relating to the Collateral
is kept or located) during reasonable business hours and, without unreasonable
hindrance or delay, (i) to inspect, audit, check and make copies of and extracts
from the Guarantor's books, records, journals, orders, receipts and any
correspondence and other data relating to the Guarantor's business or to any
transactions between the parties thereto and (ii) to make such verification
concerning the Collateral as the Trustee may consider reasonable under the
circumstances.
SECTION 6. COLLECTION OF RIGHTS TO PAYMENT
Until the Trustee exercises its rights hereunder to collect Rights to
Payment, each Guarantor shall endeavor in the first instance diligently to
collect all amounts due or to become due on or with respect to the Rights to
Payment. At the request of the Trustee, upon and after the occurrence of any
Default or Event of Default, all remittances received by the Guarantors shall be
held in trust for the Trustee and, in accordance with the Trustee's
instructions, remitted to the Trustee or deposited to an
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account with the Trustee in the form received (with any necessary
endorsements or instruments of assignment or transfer).
SECTION 7. AUTHORIZATION; TRUSTEE APPOINTED ATTORNEY-IN-FACT
Each Guarantor hereby irrevocably constitutes and appoints the Trustee, for
the benefit of itself, the Holders and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Guarantor and in
the name of such Guarantor or in its own name, from time to time in the
Trustee's sole discretion for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents which may be necessary or desirable to accomplish the purposes
of this Agreement and, without limiting the generality of the foregoing, hereby
grants to the Trustee, for the benefit of itself and the Holders, the power and
right, on behalf of such Guarantor, without notice to or assent by such
Guarantor, and at any time, to do the following:
(A) sign any of the Financing Statements which must be executed or filed
to perfect or continue perfected, maintain the priority of or provide
notice of the Trustee's security interest in the Collateral;
(B) take possession of and endorse any securities, acceptances, checks,
drafts, money orders or other forms of payment or security and collect
any Proceeds of any Collateral;
(C) sign and endorse any invoice or bill of lading relating to any of the
Collateral, warehouse or storage receipts, drafts against customers or
other obligors, assignments, notices of assignment, verifications and
notices to customers or other obligors;
(D) notify the United States Postal Service authorities to change the
address for delivery of mail addressed to such Guarantor to such
address as the Trustee may designate and, without limiting the
generality of the foregoing, establish with any Person lockbox or
similar arrangements for the payment of the Rights to Payment;
(E) receive, open and dispose of all mail addressed to such Guarantor;
(F) send requests for verification of Rights to Payment to the customers
or other obligors of such Guarantor;
(G) contact, or direct such Guarantor to contact, all account debtors and
other obligors on the Rights to Payment and instruct such account
debtors and other obligors to make all payments directly to the
Trustee;
(H) assert, adjust, sue for, compromise or release any claims under any
policies of insurance;
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(I) exercise dominion and control over, and refuse to permit further
withdrawals from, Deposit Accounts maintained with the Trustee;
(J) notify each Person maintaining lockbox or similar arrangements for the
payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Trustee;
(K) ask, demand, collect, receive and give acquittances and receipts for
any and all Rights to Payment, enforce payment or any other rights in
respect of the Rights to Payment and other Collateral, grant consents,
agree to any amendments, modifications or waivers of the agreements
and documents governing the Rights to Payment and other Collateral,
and otherwise file any claims, take any action or institute, defend,
settle or adjust any actions, suits or proceedings with respect to the
Collateral, as the Trustee may deem necessary or desirable to
maintain, preserve and protect the Collateral, to collect the
Collateral or to enforce the rights of the Trustee with respect to the
Collateral;
(L) execute any and all applications, documents, papers and instruments
necessary for the Trustee to use the Intellectual Property Collateral
and grant or issue any exclusive or non-exclusive license or
sublicense with respect to any Intellectual Property Collateral;
(M) execute any and all endorsements, assignments or other documents and
instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral;
(N) execute any and all such other documents and instruments, and do any
and all acts and things for and on behalf of such Guarantor, which the
Trustee may deem necessary or advisable to maintain, protect, realize
upon and preserve the Collateral; and
(O) execute any and all such other documents and instruments, and do any
and all acts and things for and on behalf of such Guarantor, which the
Trustee may reasonably deem necessary or advisable to maintain,
protect and preserve the Trustee's security interest in the
Collateral.
The Trustee agrees that, except upon and during the occurrence of an Insolvency
Default or an Event of Default, it shall not exercise the power of attorney, or
any rights granted to the Trustee, pursuant to CLAUSES (B) through (N) above.
The foregoing power of attorney is coupled with an interest and irrevocable so
long as the Secured Obligations have not been paid and performed in full. Each
Guarantor hereby ratifies, to the extent permitted by law, all that the Trustee
shall lawfully and in good faith do or cause to be done by virtue of and in
compliance with this SECTION 7.
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SECTION 8. TRUSTEE PERFORMANCE OF GUARANTOR OBLIGATIONS
After a Default or an Event of Default has occurred and is continuing,
Trustee may perform or pay any obligation which a Guarantor has agreed to
perform or pay under or in connection with this Agreement, and the Guarantors
shall reimburse the Trustee on demand for any amounts paid by the Trustee
pursuant to this SECTION 8.
SECTION 9. TRUSTEE'S DUTIES
Notwithstanding any provision contained in this Agreement, but subject to
the following sentence, the Trustee shall have no duty to exercise any of the
rights, privileges or powers afforded to it and shall not be responsible to any
Guarantor or any other Person for any failure to do so or delay in doing so.
Beyond the exercise of reasonable care to assure the safe custody of Collateral
in the Trustee's possession and the accounting for moneys actually received by
the Trustee hereunder, the Trustee shall have no duty or liability to exercise
or preserve any rights, privileges or powers pertaining to the Collateral.
SECTION 10. REMEDIES
10.1 REMEDIES. After an Event of Default has occurred and is continuing,
the Trustee shall have, in addition to all other rights and remedies granted to
it in this Agreement, the Indenture or any other Transaction Document, all
rights and remedies of a secured party under the UCC and other applicable laws.
Without limiting the generality of the foregoing, each Guarantor agrees that the
Trustee may:
(A) peaceably and without notice enter any premises of the Guarantors,
take possession of any the Collateral, remove or dispose of all or
part of the Collateral on any premises or elsewhere, or, in the case
of Equipment, render it nonfunctional, and otherwise collect, receive,
appropriate and realize upon all or any part of the Collateral, and
demand, give receipt for, settle, renew, extend, exchange, compromise,
adjust, or sue for all or any part of the Collateral, as the Trustee
may determine;
(B) require the Guarantors to assemble all or any part of the Collateral
and make it available to the Trustee at any place and time designated
by the Trustee;
(C) use or transfer any of the Guarantor's rights and interests in any
Intellectual Property Collateral, by license, by sublicense (to the
extent permitted by an applicable license) or otherwise, on such
conditions and in such manner as the Trustee may determine;
(D) secure the appointment of a receiver of the Collateral or any part
thereof to the extent and in the manner provided by applicable law;
(E) withdraw (or cause to be withdrawn) any and all funds from Deposit
Accounts; and
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(F) sell, resell, lease, use, assign, transfer or otherwise dispose of any
or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing (utilizing in
connection therewith any of the Guarantors' assets, without charge or
liability to the Trustee therefor) at public or private sale, by one
or more contracts, in one or more parcels, at the same or different
times, for cash or credit, or for future delivery without assumption
of any credit risk, all as the Trustee deems advisable; PROVIDED, that
the Guarantors shall be credited with the net proceeds of sale only
when such proceeds are finally collected by the Trustee. The Trustee
shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of
redemption, which right or equity of redemption each Guarantor hereby
releases, to the extent permitted by law. Each Guarantor hereby
agrees that the sending of notice by ordinary mail, postage prepaid,
to the address of such Guarantor set forth in the Indenture, of the
place and time of any public sale or of the time after which any
private sale or other intended disposition is to be made, shall be
deemed reasonable notice thereof if such notice is sent ten days prior
to the date of such sale or other disposition or the date on or after
which such sale or other disposition or the date on or after which
such sale or other disposition may occur; PROVIDED, that the Trustee
may provide the Guarantors shorter notice or no notice, to the extent
permitted by the UCC or other applicable law.
10.2 LICENSE. For the purpose of enabling the Trustee to exercise its
rights and remedies under this SECTION 10, the Company hereby grants, to the
extent it has the power and authority to do so, to the Trustee an irrevocable,
non-exclusive and assignable license (exercisable without payment or royalty or
other compensation to the Guarantors) to use, license or sublicense any
Intellectual Property Collateral.
10.3 PROCEEDS ACCOUNT. To the extent that any of the Secured Obligations
may be contingent, unmatured or unliquidated at such time as there may exist an
Insolvency Default or an Event of Default, the Trustee may, at its election,
(i) retain the proceeds of any sale, collection, disposition or other
realization upon the Collateral (or any portion thereof) in a special purpose
non-interest bearing restricted deposit account (the "PROCEEDS ACCOUNT") created
and maintained by the Trustee for such purpose (which shall constitute a Deposit
Account included within the Collateral hereunder) until such time as the Trustee
may elect to apply such proceeds to the Secured Obligations, and each Guarantor
agrees that such retention of such proceeds by the Trustee shall not be deemed
strict foreclosure with respect thereto, (ii) in any manner elected by the
Trustee, estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such amount
or (iii) otherwise proceed in any manner permitted by applicable law. Each
Guarantor agrees that the Proceeds Account shall be a blocked account and that
upon the irrevocable deposit of funds into the Proceeds Account, such Guarantor
shall not have any right of withdrawal with respect to such funds. Accordingly,
such Guarantor irrevocably waives until the termination of the security
interests granted under this Agreement in accordance with SECTION 11.15 the
right to make any withdrawal from the Proceeds Account and the right to instruct
the Trustee to honor drafts against the Proceeds Account.
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10.4 APPLICATION OF PROCEEDS. Subject to SECTION 10.3, the cash
proceeds actually received from the sale or other disposition or collection
of Collateral upon the exercise of any remedy by the Trustee under this
SECTION 10, and any other amounts received in respect of the Collateral the
application of which is not otherwise provided for herein, shall be
distributed to the Holders pro rata and applied as follows:
FIRST: to the payment of the costs and expenses of such sale, including
reasonable compensation to the Trustee and its agents and attorneys, and of
any judicial or private proceedings in which such sale may be made, and of
all other expenses, liabilities and advances made or incurred by the
Trustee, together with interest on such costs, expenses and liabilities and
on all advances made by the Trustee from the date any such cost, expense or
liability is past due or unpaid or any such advance is made, in each case
until paid in full;
SECOND: to the payment of any other fees, costs or other expenses
constituting obligations under the Transaction Documents other than amounts
payable under CLAUSE "First" above, together with interest on each such
amount at the interest rate(s) applicable to the Secured Obligations
pursuant to and in accordance with the Indenture from and after the date
such amount is due, owing or unpaid until paid in full;
THIRD: to the payment of any interest then due, owing or unpaid in respect
of any Security or any other Secured Obligation from the date such amount
is due, owing or unpaid until paid in full to be applied in accordance with
the Indenture;
FOURTH: to the payment of the whole amount of principal then due, owing or
unpaid in respect of any Security or any other Secured Obligation secured
by this Agreement, to be applied in accordance with the Indenture; and
FIFTH: the surplus, if any, to be paid to the Guarantors or to whomever
lawfully may be entitled to receive such surplus.
The Guarantors shall remain liable to the Trustee for any deficiency which
exists after any sale or other disposition or collection of Collateral.
SECTION 11. MISCELLANEOUS
11.1 CERTAIN WAIVERS. Each Guarantor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of marshaling of
the Collateral or other collateral or security for the Secured Obligations, (ii)
any right to require the Trustee (a) to proceed against any Person, (b) to
exhaust any other collateral or security for any of the Secured Obligations, (c)
to pursue any remedy in the Trustee's power or (d) to make or give any
presentments, demands for performance, notices of nonperformance, protests,
notices of protests or notices of dishonor in connection with any of the
Collateral and (iii) all claims, damages, and demands against the Trustee
arising out of the repossession, retention, sale or application of the proceeds
of any sale of the Collateral.
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11.2 NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses specified in the Indenture. All
such notices and other communications shall be effective (i) if delivered by
hand or pre-paid courier service, when delivered, (ii) if sent by mail, upon
the earlier of the date of receipt or five Business Days after deposit in the
mail, first class, postage prepaid, (iii) if sent by telex, upon receipt by
the sender of an appropriate answerback and (iv) if sent by facsimile
transmission, when sent.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Trustee to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights and remedies under this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
that may otherwise be available to the Trustee.
11.4 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(A) The Guarantors shall pay, indemnify, and hold the Trustee, each Holder
and each of their respective Affiliates, officers, directors,
employees, counsel, agents and attorneys-in-fact harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or
disbursements, of any kind or nature whatsoever in accordance with the
terms and conditions of the Indenture except to the extent arising
from the Trustee's or such Holder's gross negligence, bad faith,
wilful misconduct or fraud.
(B) The Guarantors agree to indemnify the Trustee against and hold it
harmless from any and all present and future stamp, transfer, or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, or registration of, or otherwise with respect to,
this Agreement.
(C) Any amounts payable to the Trustee and each Holder under this SECTION
11.4 or otherwise under this Agreement if not paid upon demand shall
bear interest from the date of such demand until paid in full, at the
rate of interest set forth in the Indenture for the Securities.
11.5 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Guarantors and the Trustee, and their
respective successors and assigns; PROVIDED, that the Guarantors may not
assign any of its rights hereunder or interests herein without the written
consent of the Trustee and the Majority Holders. Each Guarantor acknowledges
that upon any assignment or other transfer by the Trustee or any Holder of
any of the Secured Obligations, the Trustee or such Holder may transfer its
interest herein, or any part thereof, to the assignee or transferee, who
shall thereupon become vested with all the rights, remedies, powers, security
interests and liens herein granted to the Trustee or such Holder, or the
transferred part thereof, subject, however, to the restrictions contained
herein. No Persons other than the Guarantors,
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the Holders, the Trustee and the respective assignees of the Holders and the
Trustee are intended to be benefited hereby or shall have any rights
hereunder, as third-party beneficiaries or otherwise.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT THE
TRUSTEE AND THE HOLDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
11.7 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GUARANTORS AND THE
TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH CONSENT, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE
HOLDERS EACH IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS,
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
11.8 WAIVER OF JURY TRIAL. THE GUARANTORS AND THE TRUSTEE FOR THE
BENEFIT OF ITSELF AND THE HOLDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE
HOLDERS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION 11.8 AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
11.9 AMENDMENT. This Agreement shall not be amended except by the
written agreement of the parties as provided in the Indenture.
22
<PAGE>
11.10 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If; however, any provision of
this Agreement shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation,
or, if for any reason it is not deemed so modified, it shall be ineffective
and invalid only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Agreement, or the validity or
effectiveness of such provision in any other jurisdiction. This Agreement is
to be read, construed and applied together with the Indenture and the other
Transaction Documents which, taken together, set forth the complete
understanding and agreement of the Trustee, the Holders and the Guarantors
with respect to the matters referred to herein and therein.
11.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
11.12 NO INCONSISTENT REQUIREMENTS. Each Guarantor acknowledges
that this Agreement and the other Transaction Documents may contain covenants
and other terms and provisions variously stated regarding the same or similar
matters, and agrees that all such covenants, terms and provisions are
cumulative and all shall be performed and satisfied in accordance with their
respective terms; PROVIDED, in the event any terms or conditions contained
herein conflict with any term or condition set forth in the Indenture, such
term or condition set forth in the Indenture shall control.
11.13 ENTIRE AGREEMENT. This Agreement (i) integrates all the terms
and conditions mentioned herein or incidental hereto, (ii) supersedes all
oral negotiations and prior writings with respect to the subject matter
hereof and (iii) is intended by the parties as the final expression of the
Agreement with respect to the terms and conditions set forth in this
Agreement and as the complete and exclusive statement of the terms agreed to
by the parties.
11.14 FURTHER ASSURANCES. Each Guarantor agrees upon the written
request of the Trustee or any Holder, to execute and deliver to the Trustee
or such Holder, from time to time, any additional instruments or documents
reasonably considered necessary by the Trustee or such Holder to cause this
Agreement to be, become or remain, valid and effective in accordance with its
terms.
11.15 TERMINATION. Upon payment and performance in full of all
Secured Obligations, this Agreement and the security interests granted under
this Agreement shall terminate and the Trustee shall promptly execute and
deliver to the Guarantors such documents and instruments reasonably requested
by the Guarantors as shall be necessary to evidence termination of this
Agreement and of all security interests given by the Guarantors to the
Trustee hereunder; PROVIDED, that the obligations of the each Guarantors
under SECTION 11.4 shall survive such termination.
* * * * *
23
<PAGE>
Executed and delivered as of the date first above written.
[TO COME]
By:
------------------------------------
Name:
Title:
[TRUSTEE]
By:
------------------------------------
Name:
Title:
<PAGE>
ANNEX I
GUARANTORS
Mercury Finance Company of Alabama
Mercury Finance Company of Arizona
Mercury Finance Company of California
Mercury Finance Company of Colorado
Mercury Finance Company of Delaware
Mercury Finance Company of Florida
Mercury Finance Company of Georgia
Mercury Finance Company of Idaho
Mercury Finance Company of Illinois
Mercury Finance Company of Indiana
Mercury Finance Company of Iowa
Mercury Finance Company of Kansas
Mercury Finance Company of Kentucky
Mercury Finance Company of Louisiana
Mercury Finance Company of Michigan
Mercury Finance Company of Mississippi
Mercury Finance Company of Missouri
Mercury Finance Company of Nevada
Mercury Finance Company of New Mexico
Mercury Finance Company of New York
Mercury Finance Company of North Carolina
Mercury Finance Company of Ohio
MFC Finance Company of Oklahoma
Mercury Finance Company of Oregon
Mercury Finance Company of Pennsylvania
Mercury Finance Company of South Carolina
Mercury Finance of Tennessee
MFC Finance Company of Texas
Mercury Finance Company of Utah
Mercury Finance Company of Virginia
Mercury Finance Company of Washington
Mercury Finance Company of Wisconsin
Filco Marketing Company
MFC Financial Services, Inc.
Gulfco Finance Company
Gulfco Investment Company
Midland Finance Company
MFN Insurance Company
<PAGE>
SCHEDULE A
LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF COLLATERAL
a. Chief Executive Office and Principal Place of Business:
b. Other locations where the Guarantors conduct business or Collateral is
kept:
<PAGE>
SCHEDULE B
LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
<PAGE>
SCHEDULE C
TRADE NAMES AND TRADE STYLES: OTHER CORPORATE, TRADE OR FICTITIOUS NAMES, ETC.
<PAGE>
SCHEDULE D
INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
<PAGE>
SCHEDULE E
PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
<PAGE>
SCHEDULE F
DEPOSIT ACCOUNTS
<PAGE>
Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
FIRST SUPPLEMENTAL TRUST INDENTURE
Dated as of __________, 1998
Supplementing that certain
INDENTURE
Dated as of __________, 1998
Authorizing the Issuance and Delivery of
Senior Subordinated Securities
consisting of $___________* aggregate principal amount of
9% Senior Subordinated Notes Due 2003
_____________
* In the execution version, the appropriate amount determined in
accordance with __________________________ of the Plan will be inserted
here, in the first paragraph on page 2 and in Section 1.1(b) hereof.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
[Form of Reverse of Security]. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE I. ISSUANCE OF SENIOR SUBORDINATED NOTES. . . . . . . . . . . . . . . . . .7
Section 1.1.Issuance of Senior Subordinated Notes; Principal Amount;
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 1.2.Interest on the Senior Subordinated Notes; Payment of Interest. . .7
ARTICLE II. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.1.Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.1.Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.2.Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 10
Section 4.1.Immediate Events of Default . . . . . . . . . . . . . . . . . . . 10
ARTICLE V. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.1.Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.2.Repurchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.1.Reference to and Effect on the Indenture. . . . . . . . . . . . . 10
Section 6.2.Waiver of Certain Covenants.. . . . . . . . . . . . . . . . . . . 11
Section 6.3.Supplemental Indenture May be Executed in Counterparts. . . . . . 11
</TABLE>
-i-
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this "First
Supplemental Indenture"), between Mercury Finance Company, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a U.S. national banking
association, as Trustee (the "Trustee"), supplementing that certain Indenture,
dated as of __________, 1998, between the Company and the Trustee (the
"Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its senior
subordinated unsecured debentures (the "Securities") to be issued in one or
more series as provided for in the Indenture.
B. The Indenture provides that the Securities of each series shall be in
such form as may be established by or pursuant to a Board Resolution or in one
or more indentures supplemental thereto, 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 the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"9% Senior Subordinated Notes Due 2003" (the "Senior Subordinated Notes")
pursuant to the terms of this First Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this First Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Subordinated Notes, as evidenced by their execution
thereof.
-3-
<PAGE>
[Form of Face of Security]
MERCURY FINANCE COMPANY
9% SENIOR SUBORDINATED NOTE DUE 2003
No. R-__________
MERCURY FINANCE COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to [_______________], or registered
assigns, the principal sum of $__________ on [the fifth anniversary of the
Effective Date], subject to earlier redemption or repurchase as described below,
and to pay interest thereon from [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, at
the rate of 9% per annum, payable quarterly on ___________ of each year,
commencing on __________, 199_, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, as provided in said Indenture,
be computed on the basis of a 360-day year consisting of twelve 30-day months
and paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be ________________________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
calendar days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of and any such interest on this Security shall be
made at the office or agency of the Company maintained for such purpose in New
York, New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address appears in the Security Register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE REVERSE
HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH IN THIS PLACE.
-2-
<PAGE>
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in accordance
with the Indenture.
MERCURY FINANCE COMPANY
By: _______________________
Name: _____________________
Title: ____________________
Attest:
By: ________________________
-3-
<PAGE>
[Form of Reverse of Security]
MERCURY FINANCE COMPANY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of __________, 1998 (herein called
the "Indenture"), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $___________.
To the extent set forth in the Indenture, each Security issued thereunder,
including this Security, is and will be subordinated in right of payment to all
existing and future Senior Debt of the Company. This Security will rank PARI
PASSU with any existing and future senior subordinated indebtedness of the
Company and will rank senior to all other subordinated indebtedness of the
Company.
No sinking fund is provided for the Securities. Provided that no Senior
Indebtedness of the Company is Outstanding, the Securities are subject to
redemption at the option of the Company, at any such time and from time to time,
in whole or in part, in increments of not less than $5.0 million, upon not more
than 60 nor less than 30 days' notice to the Holders prior to the Redemption
Date, at the principal amount thereof, plus accrued and unpaid interest thereon
to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such method as
the Trustee may deem fair and appropriate. In the event of the redemption of
this Security in part only, a new Security or Securities of this series and of
like tenor for the portion hereof not so redeemed shall be issued in the name of
the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities
-4-
<PAGE>
of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder unless (a) such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, (b) the Holders of not less than 25% in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, (c) the
Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request and (d) the Trustee shall have failed to
institute such proceeding for 60 calendar days after receipt of such notice,
request, and offer of indemnity.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium or interest
on this Security at the times, place, and rate, and in the coin or currency,
herein prescribed.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and integral multiples thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and interest on this
Security are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, shall be
issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
-5-
<PAGE>
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security that are defined in the Indenture shall
have the respective meanings assigned to them in the Indenture. This
Security and the Indenture shall be construed in accordance with the laws of
the State of New York without giving effect to principles of conflict of laws
of such State.
D. The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Dated: ________________________, as Trustee
By: _____________________________
Authorized Signatory
E. All acts and things necessary to make the Senior Subordinated
Notes, when the Senior Subordinated Notes have been executed by the Company
and authenticated by the Trustee and delivered as provided in the Indenture
and this First Supplemental Indenture, the valid, binding and legal
obligations of the Company and to constitute these presents a valid indenture
and agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this First
Supplemental Indenture and the issue hereunder of the Senior Subordinated
Notes have in all respects been duly authorized; and the Company, in the
exercise of the legal right and power in it vested, has executed and
delivered the Indenture and is executing and delivering this First
Supplemental Indenture and proposes to make, execute, issue and deliver the
Senior Subordinated Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Subordinated Notes are authenticated, issued, and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Senior Subordinated Notes by the Holders thereof, it is mutually agreed, for
the equal and proportionate benefit of the respective Holders from time to
time of the Senior Subordinated Notes, as follows:
-6-
<PAGE>
ARTICLE I. ISSUANCE OF SENIOR SUBORDINATED NOTES.
Section 1.1. Issuance of Senior Subordinated Notes; Principal Amount;
Maturity.
(a) On __________, 1998, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Senior Subordinated Notes
substantially in the form set forth above, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture and this First Supplemental Indenture, and with
such letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Senior Subordinated Notes, as evidenced by their
execution thereof.
(b) The Senior Subordinated Notes shall be issued in the aggregate
principal amount of $_________ and shall mature on [the fifth anniversary
of the Effective Date].
Section 1.2. Interest on the Senior Subordinated Notes; Payment of Interest.
(a) The Senior Subordinated Notes shall bear interest at the rate of 9%
per annum from [the Effective Date], or, if later, from the most recent
Interest Payment Date to which interest has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name a Senior Subordinated Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the ______________ (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name the Senior Subordinated Note
(or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to Holders of the
Senior Subordinated Notes not less than 10 calendar days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Senior Subordinated Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
(c) Payment of the principal of and any such interest on the Senior
Subordinated Notes shall be made at the office or agency of the Company
maintained for such purpose in New York, New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register].
-7-
<PAGE>
ARTICLE II. CERTAIN DEFINITIONS.
Section 2.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this First Supplemental Indenture
otherwise requires) for all purposes of this First Supplemental Indenture and
of any indenture supplemental hereto have the respective meanings specified
in this Section 2.1. All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP. All other terms used
in this First Supplemental Indenture that are defined in the Indenture or the
Trust Indenture Act, either directly or by reference therein (except as
herein otherwise expressly provided or unless the context of this First
Supplemental Indenture otherwise requires), have the respective meanings
assigned to such terms in the Indenture or the Trust Indenture Act, as the
case may be, as in force at the date of this First Supplemental Indenture as
originally executed.
"Affiliate" has the meaning ascribed thereto in Section 3.8.
"Effective Date" means ______________, 1998.
"Leverage Ratio" means, at any date of determination, the ratio of the
sum of the Indebtedness and the net worth of the Company and its Subsidiaries
to the Indebtedness of the Company and its Subsidiaries, in each case
calculated on a consolidated basis in accordance with GAAP.
"Permitted Indebtedness" means, without duplication: (a) the Series A
Senior Secured Notes and the Series B Senior Secured Notes; (b) Indebtedness
under one or more Warehouse Facilities; (c) Indebtedness between or among the
Company and its wholly owned Subsidiaries; (d) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap agreements, collar
agreements, insurance arrangements, or any similar agreement or arrangement,
in each case designed to provide a BONA FIDE hedge against fluctuations in
interest rates, the cost of currency, or the cost of goods (other than
inventory); (e) other Indebtedness of the Company or its Subsidiaries in
outstanding amounts not to exceed $10 million in the aggregate at any
particular time; (f) liabilities (other than for or in connection with
borrowed money) incurred in the operation of the Finance Business in the
ordinary course thereof and not more than six months overdue, unless
contested in good faith by appropriate proceedings; (g) Indebtedness
evidenced by letters of credit that are issued in the ordinary course of the
business of the Company and its Subsidiaries to secure workers' compensation
and other insurance coverages; (l) deferred taxes and other deferred
obligations incurred in the ordinary course of business and not evidenced by
notes, bonds, debentures or other evidences of indebtedness; and (m)
Indebtedness incurred in connection with any extension, renewal, refinancing,
replacement, or refunding (including successive extensions, renewals,
refinancings, replacements, or refundings), in whole or in part, of any
Indebtedness of the Company or its Subsidiaries; provided, however, that the
principal amount of the Indebtedness so incurred does not exceed the sum of
the principal amount of the Indebtedness so extended, renewed, refinanced,
replaced, or refunded, plus all interest accrued thereon and all related fees
and expenses.
-8-
<PAGE>
"Plan" means the Plan of Reorganization of Mercury Finance Company
confirmed by the United States Bankruptcy Court for the District of
_______________ pursuant to an order dated ___________ __, 1998.
"Restricted Payments" has the meaning ascribed thereto in Section 3.2.
"Senior Subordinated Notes" means the Company's 9% Senior Subordinated
Notes Due 2003 issued pursuant to this First Supplemental Indenture.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is expressly subordinated in right of payment to the senior secured notes
issued under the Senior Secured Notes Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
amended or modified from time to time.
ARTICLE III. CERTAIN COVENANTS.
Section 3.1. Indebtedness.
The Company shall not, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become liable with respect to, any
Indebtedness other than Permitted Indebtedness if immediately after incurring
such Indebtedness other than Permitted Indebtedness, the Company's Leverage
Ratio, calculated on a pro forma basis, would be equal to or greater than
3.00:1.00.
Section 3.2. Restricted Payments.
The Company shall not (a) declare or pay any dividend on, or make any
other distribution on account of, the Company's capital stock or (b)
purchase, redeem or otherwise acquire or retire for value any capital stock
(including any option, warrant or right to purchase capital stock) of the
Company owned beneficially by a Person other than a wholly owned Subsidiary
of the Company (all such dividends, distributions, purchases or redemptions
being collectively referred to as "Restricted Payments"). Notwithstanding
anything in the foregoing to the contrary, the Company may take the actions
described above if, at the time of such action or after giving effect
thereto: (i) no Event of Default shall have occurred and is continuing; (ii)
the Company could incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness) under Section 3.1; or (iii) the cumulative amount of Restricted
Payments made subsequent to the Effective Date shall not be greater than the
sum of: (A) 50% of the Company's cumulative consolidated net income (or a
negative amount equal to 100% of the Company's cumulative consolidated net
loss, if applicable) from the Effective Date through the end of the Company's
fiscal quarter immediately preceding the taking of such action; and (B) 100%
of the aggregate net cash proceeds received by the Company from the issue or
sale of capital stock of the Company (other than redeemable capital stock),
including capital stock issued upon the conversion of convertible
Indebtedness issued on or after the Effective Date, in exchange for
outstanding Indebtedness, or from the
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<PAGE>
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent to
the Effective Date (with the Company being deemed, in the case of capital
stock issued upon conversion or in exchange for Indebtedness, to have
received net cash proceeds equal to the principal amount of the Indebtedness
so converted or exchanged); provided, however, that (1) the payment of any
dividend within 60 calendar days after the date of declaration thereof, if
such declaration complied with the foregoing redemption or other acquisition
provisions on the date of such declaration, (2) the purchase, redemption, or
other acquisition or retirement for value of any shares of capital stock of
the Company in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale (other than to a Subsidiary of the Company) of
other shares of capital stock (other than redeemable capital stock) of the
Company, and (3) any purchase, redemption or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan shall not be
deemed to constitute "Restricted Payments" and shall not be prohibited under
this Section.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section 4.1. Immediate Events of Default
Notwithstanding anything in Section 9.01 of the Indenture to the
contrary, if the Company defaults in the performance of, or breaches any,
covenant set forth in Article III (other than SECTION 3.8) of this First
Supplemental Indenture or in Section 6.05 of the Indenture, such default or
breach shall immediately constitute an Event of Default, without giving
effect to any passage of time or notice or both.
ARTICLE V. REDEMPTION OF SECURITIES.
Section 5.1. Right of Redemption.
The Senior Subordinated Notes may be redeemed in accordance with the
provisions of the form thereof set forth herein.
Section 5.2. Repurchase.
Provided that no Senior Indebtedness of the Company is Outstanding, the
Company may at any such time and from time to time purchase Senior Subordinated
Notes in the open market or otherwise at any price, and any Senior Subordinated
Notes so purchased shall be promptly surrendered to the Trustee for cancellation
and shall not be reissued.
ARTICLE VI. MISCELLANEOUS.
Section 6.1. Reference to and Effect on the Indenture.
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This First Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this First Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed and
delivered is hereby (i) incorporated by reference in this First Supplemental
Indenture and (ii) ratified, approved and confirmed.
Section 6.2. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article III hereof if the Holders of a
majority in principal amount of the Outstanding Senior Subordinated Notes
shall, by Act of such Holders, either waive such compliance in such instance
or generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force
and effect.
Section 6.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] MERCURY FINANCE COMPANY
By: _________________________
Name: _______________________
Title: ______________________
Attest:
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: _________________________
Name: _______________________
Title: ______________________
Attest:
Name:
Title:
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STATE OF [ ] )
) SS:
COUNTY OF [ ] )
On this _____ day of [__________], 1998, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he/she is a _______________ of MERCURY FINANCE COMPANY, one of the
entities described in and which executed the above instrument; that he/she
knows the seal of said entity; that the seal or a facsimile thereof affixed
to said instrument is such seal; that it was so affixed by authority of the
Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
______________________________
Notary Public
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STATE OF [ ] )
) SS:
COUNTY OF [ ] )
On this _____ day of [__________], 1998, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he/she is a _______________ of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________
Notary Public
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Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
_______________________
INDENTURE
Dated as of ______________, 1998
_______________________
SENIOR SUBORDINATED NOTES
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Table of Contents*
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Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.01. Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . .1
ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AFFILIATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AUTHENTICATING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BOARD RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CAPITAL LEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CAPITAL LEASE OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . .2
COMMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
COMPANY REQUEST OR COMPANY ORDER . . . . . . . . . . . . . . . . . . . . .3
CORPORATE TRUST OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . .3
COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
DEFEASIBLE SERIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
DEPOSITARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
EXCHANGE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
GLOBAL SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
HOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INTEREST PAYMENT DATE. . . . . . . . . . . . . . . . . . . . . . . . . . .5
MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . .5
MATURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
OFFICER'S CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . .6
OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ORIGINAL ISSUE DISCOUNT SECURITY . . . . . . . . . . . . . . . . . . . . .6
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
PLACE OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
PREDECESSOR SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . .7
REDEMPTION DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
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REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
REGULAR RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
RESPONSIBLE OFFICER. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECURITY REGISTER AND SECURITY REGISTRAR . . . . . . . . . . . . . . . . .8
SENIOR INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SPECIAL RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
STATED MATURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
U.S. GOVERNMENT OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . .9
VICE PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
WAREHOUSE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II. THE SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.01. Designation and Amount of Securities. . . . . . . . . . . . . . 10
Section 2.02. Form of Securities and Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.03. Date and Denominations. . . . . . . . . . . . . . . . . . . . . 13
Section 2.04. Execution, Authentication, and Delivery of Securities . . . . . 13
Section 2.05. Registration of Transfer and Exchange . . . . . . . . . . . . . 15
Section 2.06. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . 16
Section 2.07. Mutilated, Destroyed, Lost, and Stolen Securities . . . . . . . 16
Section 2.08. Cancellation of Surrendered Securities. . . . . . . . . . . . . 17
Section 2.09. Payment of Interest; Interest Rights Preserved. . . . . . . . . 18
Section 2.10. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11. Computation of Interest . . . . . . . . . . . . . . . . . . . . 19
Section 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.01. Applicability of Article. . . . . . . . . . . . . . . . . . . . 20
Section 3.02. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . 20
Section 3.03. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . 21
Section 3.04. Securities Payable on Redemption Date . . . . . . . . . . . . . 21
Section 3.05. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . 21
ARTICLE IV. SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.01. Applicability of Article. . . . . . . . . . . . . . . . . . . . 22
Section 4.02. Satisfaction of Sinking Fund Payments With Securities . . . . . 22
Section 4.03. Redemption of Securities for Sinking Fund . . . . . . . . . . . 22
ARTICLE V. DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . 22
Section 5.01. Company's Option to Effect Defeasance or Covenant Defeasance. . 22
Section 5.02. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . 23
Section 5.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.04. Conditions to Defeasance or Covenant Defeasance . . . . . . . . 24
Section 5.05. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions. . . . . . . . . . . . . . . . . . 26
Section 5.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI. PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . 26
</TABLE>
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Section 6.01. Payment of Principal, Premium, and Interest on Securities . . . 26
Section 6.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 27
Section 6.03. Money for Securities Payments to be Held in Trust . . . . . . . 27
Section 6.04. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . 28
Section 6.05. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.06. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 29
Section 6.07. Statement by Officers as to Default . . . . . . . . . . . . . . 29
Section 6.08. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . 29
Section 6.09. Calculation of Original Issue Discount. . . . . . . . . . . . . 29
ARTICLE VII. SECURITIES HOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.01. Company to Furnish Trustee Names and Addresses of Holders . . . 30
Section 7.02. Preservation of Information; Communication to Holders . . . . . 30
Section 7.03. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.04. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.01. Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Securities on Default in Payment of Interest or Principal; Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.03. Application of Money Collected by Trustee . . . . . . . . . . . 35
Section 8.04. Limitation on Suits by Holders of Securities. . . . . . . . . . 35
Section 8.05. Rights and Remedies Cumulative; Delay or Omission in Exercise
of Rights not a Waiver of Event of Default . . . . . . . . . . . . . . . 36
Section 8.06. Rights of Holders of Majority in Principal Amount of
Outstanding Securities to Direct Trustee . . . . . . . . . . . . . . . . 36
Section 8.07. Requirement of an Undertaking to Pay Costs in Certain Suits
Under the Indenture or Against the Trustee . . . . . . . . . . . . . . . 37
Section 8.08. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.09. Unconditional Right of Holders to Receive Principal, Premium,
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.10. Restoration of Rights and Remedies. . . . . . . . . . . . . . . 37
Section 8.11. Trustee May File Proofs of Claims . . . . . . . . . . . . . . . 38
ARTICLE IX SUBORDINATION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . 38
Section 9.01 Securities Subordinate to Senior Indebtedness. . . . . . . . . . 38
Section 9.02 Payment Over of Proceeds Upon Dissolution, etc.. . . . . . . . . 38
Section 9.03 Prior Payment to Senior Indebtedness Upon Acceleration of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.04 Payment Limitation . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.05 Payment Permitted. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.06 Certain Limitations. . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.07 Subrogation to Rights of Holders of Senior Indebtedness. . . . . 41
Section 9.08 Provisions Solely to Define Relative Rights. . . . . . . . . . . 41
Section 9.09 Agreement to Effectuate Subordination. . . . . . . . . . . . . . 42
Section 9.10 No Waiver of Subordination Provisions. . . . . . . . . . . . . . 42
Section 9.11 Reliance on Judicial Order or Certificate of Liquidating Agent . 43
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Section 9.12 Prohibited Payments Held In Trust. . . . . . . . . . . . . . . . 43
ARTICLE X. CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 10.01. Certain Duties and Responsibilities. . . . . . . . . . . . . . 43
Section 10.02. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . 43
Section 10.03. Not Responsible for Recitals or Issuance of Securities . . . . 44
Section 10.04. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . 44
Section 10.05. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . 45
Section 10.06. Compensation and Reimbursement . . . . . . . . . . . . . . . . 45
Section 10.07. Disqualification; Conflicting Interests. . . . . . . . . . . . 46
Section 10.08. Corporate Trustee Required Eligibility . . . . . . . . . . . . 46
Section 10.09. Resignation and Removal; Appointment of Successor. . . . . . . 46
Section 10.10. Acceptance of Appointment by Successor . . . . . . . . . . . . 47
Section 10.11. Merger, Conversion, Consolidation, or Succession to Business . 48
Section 10.12. Preferential Collection of Claims Against Company. . . . . . . 49
Section 10.13. Appointment of Authenticating Agent. . . . . . . . . . . . . . 49
ARTICLE XI. SUPPLEMENTAL INDENTURES AND CERTAIN ACTIONS . . . . . . . . . . . . . 50
Section 11.01. Purposes for Which Supplemental Indentures May Be Entered
Into Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . 51
Section 11.02. Modification of Indenture With Consent of Holders of at
Least a Majority in Principal Amount of Outstanding Securities . . . . . 51
Section 11.03. No Amendments to Article IX. . . . . . . . . . . . . . . . . . 53
Section 11.04. Execution of Supplemental Indentures . . . . . . . . . . . . . 53
Section 11.05. Effect of Supplemental Indentures. . . . . . . . . . . . . . . 53
Section 11.06. Conformity with Trust Indenture Act. . . . . . . . . . . . . . 53
Section 11.07. Reference in Securities to Supplemental Indentures . . . . . . 53
ARTICLE XII. CONSOLIDATION, MERGER, SALE, OR TRANSFER . . . . . . . . . . . . . . 53
Section 12.01. Consolidations and Mergers of Company and Sales Permitted
Only on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . 54
Section 13.01. Satisfaction and Discharge of Indenture. . . . . . . . . . . . 54
Section 13.02. Application of Trust Money . . . . . . . . . . . . . . . . . . 55
ARTICLE XIV. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 55
Section 14.01. Successors and Assigns of Company Bound by Indenture . . . . . 55
Section 14.02. Service of Required Notice to Trustee and Company. . . . . . . 55
Section 14.03. Service of Required Notice to Holders; Waiver. . . . . . . . . 55
Section 14.04. Indenture and Securities to be Construed in Accordance with
the Laws of the State of New York. . . . . . . . . . . . . . . . . . . . 56
Section 14.05. Compliance Certificates and Opinions . . . . . . . . . . . . . 56
Section 14.06. Form of Documents Delivered to Trustee . . . . . . . . . . . . 56
Section 14.07. Payments Due on Non-Business Days. . . . . . . . . . . . . . . 56
Section 14.08. Provisions Required by Trust Indenture Act to Control. . . . . 57
Section 14.09. Invalidity of Particular Provisions. . . . . . . . . . . . . . 57
Section 14.10. Indenture May be Executed In Counterparts. . . . . . . . . . . 57
Section 14.11. Acts of Holders; Record Dates. . . . . . . . . . . . . . . . . 57
Section 14.12. Effect of Headings and Table of Contents . . . . . . . . . . . 59
Section 14.13. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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This INDENTURE, dated as of ___________ __, 1998, between Mercury
Finance Company, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), and Norwest Bank Minnesota, National
Association, a U.S. national banking association, as Trustee (the "Trustee").
RECITALS
A. The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its senior
subordinated notes (the "Securities"), to be issued in one or more series as
in this Indenture provided.
B. All acts and things necessary to make the Securities, when the
Securities have been executed by the Company and authenticated by the Trustee
and delivered as provided in this Indenture, the valid, binding and legal
obligations of the Company, and to constitute these presents a valid
indenture and agreement according to its terms, have been done and performed,
and the execution and delivery by the Company of this Indenture and the issue
hereunder of the Securities have in all respects been duly authorized; and
the Company, in the exercise of legal right and power in it vested, is
executing and delivering this Indenture and proposes to make, execute, issue
and deliver the Securities.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the
Securities are authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Securities by the
Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of the respective Holders from time to time of the Securities or of a
series thereof, as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. CERTAIN TERMS DEFINED.
(a) The terms defined in this Section 1.01 for all purposes of
this Indenture and of any indenture supplemental hereto (except as herein or
therein otherwise expressly provided or unless the context of this Indenture
otherwise requires) have the respective meanings specified in this Section
1.01. All other terms used in this Indenture that are defined in the Trust
Indenture Act, either directly or by reference therein (except as herein
otherwise expressly provided or unless the context of this Indenture
otherwise requires), have the respective meanings assigned to such terms in
the Trust Indenture Act as in force at the date of original execution of this
Indenture.
ACT:
The term "Act," when used with respect to any Holder, has the
meaning set forth in Section 14.11.
AFFILIATE:
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The term "Affiliate" means, with respect to a particular Person,
any Person that, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this
definition, control of a 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 of the foregoing.
AUTHENTICATING AGENT:
The term "Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 10.13 to act on behalf of the Trustee to
authenticate Securities of one or more series.
BOARD OF DIRECTORS:
The term "Board of Directors" means the Board of Directors of the
Company or any duly authorized committee of such Board.
BOARD RESOLUTION:
The term "Board Resolution" means a copy of a resolution delivered
to the Trustee and 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.
BUSINESS DAY:
The term "Business Day," when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment are
authorized or required by law or executive order to close.
CAPITAL LEASE:
The term "Capital Lease" means, with respect to any Person, any
lease of property (whether real, personal, or mixed) by such Person or any of
its Subsidiaries as lessee that would be capitalized on a balance sheet of
such Person or any of its Subsidiaries prepared in conformity with GAAP,
other than, in the case of such Person or any of its Subsidiaries, any such
lease under which such Person or any of its Subsidiaries is the lessor.
CAPITAL LEASE OBLIGATIONS:
The term "Capital Lease Obligations" means, with respect to any
Person, the capitalized amount of all obligations of such Person and its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.
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COMMISSION:
The term "Commission" means the Securities and Exchange Commission,
as from time to time constituted, 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 at such time.
COMMON STOCK:
The term "Common Stock" means the common stock of the Company.
COMPANY:
The term "Company" means Mercury Finance Company, a Delaware
corporation, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" will mean
such successor Person.
COMPANY REQUEST OR COMPANY ORDER:
The term "Company Request" or "Company Order" means a written
request or order signed in the name of the Company by one of its Responsible
Officers and delivered to the Trustee.
CORPORATE TRUST OFFICE:
The term "Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business is principally
administered, which on the date hereof is Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479.
COVENANT DEFEASANCE:
The term "Covenant Defeasance" has the meaning set forth in Section
5.03.
DEFAULT:
The term "Default" means any event which, with notice or passage of
time or both, would constitute an Event of Default.
DEFAULTED INTEREST:
The term "Defaulted Interest" has the meaning set forth in Section
2.09.
DEFEASANCE:
The term "Defeasance" has the meaning set forth in Section 5.02.
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DEFEASIBLE SERIES:
The term "Defeasible Series" has the meaning set forth in Section
5.01.
DEPOSITARY:
The term "Depositary" means, with respect to Securities of any
series issuable in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Exchange Act that is
designated to act as Depositary for such Securities in accordance with
Section 2.01.
EVENT OF DEFAULT:
The term "Event of Default" has the meaning set forth in Section
8.01(a).
EXCHANGE ACT:
The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, as the same may be in effect from time to time.
GAAP:
The term "GAAP" means generally accepted accounting principles in
the United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and The
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by any successor entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination.
GLOBAL SECURITY:
The term "Global Security" means a Security that evidences all or
part of the Securities of any series and is authenticated and delivered to,
and registered in the name of, the Depositary for such Securities or a
nominee thereof.
HOLDER:
The term "Holder" means a person in whose name a particular
Security is registered in the Security Register.
INDEBTEDNESS:
The term "Indebtedness" means, as applied to any Person, without
duplication, (a) indebtedness for borrowed money, all indebtedness evidenced
by notes, bonds, debentures or other evidences of indebtedness, and all
indebtedness under purchase money mortgages or other
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purchase money liens or conditional sales or similar title retention
agreements, in each case where such indebtedness has been created, incurred,
assumed or guaranteed by such Person or where such Person is otherwise liable
therefor, and (b) indebtedness for borrowed money secured by any mortgage,
pledge or other lien or encumbrance upon property owned by such Person even
though such Person has not assumed or become liable for the payment of such
indebtedness; PROVIDED, HOWEVER, that indebtedness of the type referred to in
clause (b) above shall be included within the definition of "Indebtedness"
only to the extent of the lesser of: (i) the amount of the underlying
indebtedness referred to in the clause (b) above and (ii) the aggregate value
of the security for such indebtedness.
INDENTURE:
The term "Indenture" means this Indenture, as this Indenture may be
amended, supplemented or otherwise modified from time to time, including, for
all purposes of this Indenture and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and
govern this instrument and any such supplemental indenture, respectively.
The term "Indenture" will also include the terms of particular series of
Securities established in accordance with Section 2.01.
INTEREST:
The term "interest," (i) when used with respect to an Original
Issue Discount Security, which by its terms bears interest only after
Maturity, means interest which accrues from and after and is payable after
Maturity and (ii) when used with respect to any Security, means the amount of
all interest accruing on such Security, including any default interest and
any interest that would have accrued after any Event of Default but for the
occurrence of such Event of Default, whether or not a claim for such interest
would be otherwise allowable under applicable law.
INTEREST PAYMENT DATE:
The term "Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
MATERIAL ADVERSE EFFECT:
The term "Material Adverse Effect" means a material adverse effect
on the business, assets, financial condition or results of operations of the
Company (taken together with its Subsidiaries as a whole).
MATURITY:
The term "Maturity," when used with respect to any Security, means
the date on which the principal of that Security or an installment of
principal becomes due and payable as
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therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption, or otherwise.
NOTICE OF DEFAULT:
The term "Notice of Default" means a written notice of the kind set
forth in Section 8.01(a)(iv).
OFFICER'S CERTIFICATE:
The term "Officer's Certificate" means a certificate executed on
behalf of the Company by a Responsible Officer and delivered to the Trustee.
OPINION OF COUNSEL:
The term "Opinion of Counsel" means an opinion in writing signed by
legal counsel, who, subject to any express provisions hereof, may be an
employee of or counsel to the Company or any Subsidiary, reasonably
acceptable to the Trustee.
ORIGINAL ISSUE DISCOUNT SECURITY:
The term "Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 8.01(b).
OUTSTANDING:
The term "Outstanding" means, when used with reference to
Securities as of a particular time, all Securities theretofore issued by the
Company and authenticated and delivered by the Trustee under this Indenture,
except (a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation, (b) Securities in respect of which (i) notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made, and (ii) money in the
amount required for the redemption thereof has been deposited with the
Trustee or any Paying Agent (other than the Company) in trust for the Holders
of such Securities, (c) Securities paid pursuant to Section 2.07(c), and (d)
Securities in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the
Company; PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent, or waiver
hereunder, (x) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon acceleration of the Maturity thereof to such date pursuant to Section
8.01(b), (y) the principal amount of a Security denominated in one or
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more foreign currencies or currency units will be the U.S. dollar equivalent,
determined in the manner contemplated by Section 2.01 on the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent on the date of
original issuance of such Security of the amount determined as provided in
clause (i) above) of such Security, and (z) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or
of such other obligor will be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee will be protected in relying
upon any such request, demand, authorization, direction, notice, consent, or
waiver, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned will be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or
any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
PAYING AGENT:
The term "Paying Agent" means any Person authorized by the Company
to pay the principal of or any premium or interest on any Securities on
behalf of the Company.
PERSON:
The term "Person" means any individual, partnership, corporation,
limited liability company, limited liability partnership, joint stock
company, business trust, trust, unincorporated association, joint venture, or
other entity, or a governmental or political subdivision or agency thereof.
PLACE OF PAYMENT:
The term "Place of Payment," when used with respect to the
Securities of any series, means the place or places for the payment of the
principal of and any premium and interest on the Securities of that series
established in accordance with Section 2.01.
PREDECESSOR SECURITY:
The term "Predecessor Security," when used with respect to any
particular Security, means every previous Security evidencing all or a
portion of the same debt as that evidenced by such Security; and, for the
purposes of this definition, any Security authenticated and delivered under
Section 2.07 in exchange for or in lieu of a mutilated, destroyed, lost, or
stolen Security will be deemed to evidence the same debt as the mutilated,
destroyed, lost, or stolen Security.
REDEMPTION DATE:
The term "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.
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REDEMPTION PRICE:
The term "Redemption Price," when used with respect to any Security
to be redeemed, means the price (including premium, if any) at which it is to
be redeemed pursuant to this Indenture.
REGULAR RECORD DATE:
The term "Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series means the date
established for that purpose in accordance with Section 2.01.
RESPONSIBLE OFFICER:
The term "Responsible Officer," when used (a) with respect to the
Company, means the Chief Executive Officer, the President, the Chief
Financial Officer or the Secretary of the Company and (b) with respect to the
Trustee, means any Vice President, any Assistant Vice President, any
Assistant Secretary, any Assistant Treasurer, any trust officer or assistant
trust officer, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons
who at the time are such officers, respectively, or to whom any corporate
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
SECURITIES:
The term "Securities" has the meaning set forth in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
SECURITY REGISTER AND SECURITY REGISTRAR:
The terms "Security Register" and "Security Registrar" have the
respective meanings set forth in Section 2.05.
SENIOR INDEBTEDNESS:
The term "Senior Debt" means (a) the Company's 9% Senior Secured
Notes, Series A issued under the Indenture dated as of ___________ __, 1998
(the "Senior Secured Notes Indenture") between the Company and the trustee
thereunder, (b) the Company's Senior Secured Notes, Series B issued under the
Senior Secured Notes Indenture, (c) any senior secured notes issued in the
future under the Senior Secured Notes Indenture, (d) Indebtedness with
respect to any Warehouse Facility and (e) any other Indebtedness which is not
expressed to be subordinate or junior in right of payment to any other
Indebtedness.
SPECIAL RECORD DATE:
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The term "Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.09.
STATED MATURITY:
The term "Stated Maturity," when used with respect to any Security,
any installment of interest thereon, or any other amount payable under this
Indenture or the Securities, means the date specified in this Indenture or
such Security as the regularly scheduled date on which the principal of such
Security, such installment of interest, or such other amount, is due and
payable.
SUBSIDIARY:
The term "Subsidiary" means, as applied with respect to any Person,
any corporation, partnership, or other business entity of which, in the case
of a corporation, more than 50% of the issued and outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation has or might have voting power
upon the occurrence of any contingency), or, in the case of any partnership
or other legal entity, more than 50% of the ordinary equity capital
interests, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries, or by one
or more of such Person's other Subsidiaries. Unless the context of this
Indenture or any indenture supplemental hereto otherwise expressly requires,
the term "Subsidiary" shall refer to a Subsidiary of the Company.
TRUST INDENTURE ACT:
The term "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, as in force at the date as of which this instrument was
executed; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939, as so
amended.
TRUSTEE:
The term "Trustee" means the Person named as the "Trustee" in the
first paragraph of this Indenture until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture and, thereafter,
"Trustee" will mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series will mean each Trustee with respect
to Securities of that series.
U.S. GOVERNMENT OBLIGATION:
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The term "U.S. Government Obligation" means (a) any security that
is (i) a direct obligation of the United States of America for the payment of
which the full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof and (b) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any U.S.
Government Obligation specified in clause (a), which U.S. Government
Obligation is held by such custodian for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of
or interest on any such U.S. Government Obligation, PROVIDED that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal or interest evidenced by such depositary
receipt.
VICE PRESIDENT:
The term "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."
WAREHOUSE FACILITY:
The term "Warehouse Facility" means any funding arrangement with a
financial institution or other lender or purchaser to the extent (and only to
the extent) funding thereunder is used exclusively to finance or refinance
the purchase or origination of Receivables by the Company or any Subsidiary
in each case in the ordinary course of the Finance Business.
(b) The words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture. 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.
Certain terms used principally in Articles V, VI, and IX are defined in those
Articles. Terms in the singular include the plural and terms in the plural
include the singular.
ARTICLE II. THE SECURITIES
SECTION 2.01. DESIGNATION AND AMOUNT OF SECURITIES.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
(b) The Securities may be issued in one or more series. There
will be established in or pursuant to a Board Resolution and, subject to
Section 2.04, set forth or determined in the manner provided in an Officer's
Certificate, or established in one or more
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indentures supplemental hereto, prior to the issuance of Securities of any
series: (i) the title of the Securities of the series (which will
distinguish the Securities of the series from Securities of any other
series); (ii) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in the exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.05, 2.06, 2.07, 3.05, or 11.07 and except for
any Securities which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder); (iii) the Person to whom any interest
on a Security of the series will be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest; (iv) the date or dates on which the principal of the Securities of
the series is payable; (v) the rate or rates at which the Securities of the
series will bear interest, if any, the date or dates from which such interest
will accrue, the Interest Payment Dates on which any such interest will be
payable, and the Regular Record Date for any interest payable on any Interest
Payment Date; (vi) the place or places where the principal of and any premium
and interest on Securities of the series will be payable; (vii) the period or
periods within which, the price or prices at which, and the terms and
conditions upon which Securities of the series may be redeemed, in whole or
in part, at the option of the Company; (viii) the obligation, if any, of the
Company to redeem or purchase Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which, and the
terms and conditions upon which Securities of the series will be redeemed or
purchased, in whole or in part, pursuant to such obligation; (ix) if other
than denominations of $1,000 and integral multiples thereof, the
denominations in which Securities of the series will be issuable; (x) the
currency, currencies, or currency units in which payment of the principal of
and any premium and interest on any Securities of the series will be payable
if other than the currency of the United States of America and the manner of
determining the equivalent thereof in the currency of the United States of
America for purposes of the definition of "Outstanding" in Section 1.01; (xi)
if the amount of payments of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index, based
upon a formula, or in some other manner, the manner in which such amounts
will be determined; (xii) if the principal of or any premium or interest on
any Securities of the series is to be payable, at the election of the Company
or a Holder thereof, in one or more currencies or currency units other than
that or those in which the Securities are stated to be payable, the currency,
currencies, or currency units in which payment of the principal of and any
premium and interest on Securities of such series as to which such election
is made will be payable, and the periods within which and the terms and
conditions upon which such election is to be made; (xiii) if other than the
principal amount thereof, the portion of the principal amount of Securities
of the series which will be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 8.01(b); (xiv) if applicable, that the
Securities of the series will be subject to either or both of Defeasance or
Covenant Defeasance as provided in Article V, provided that no series of
Securities that is convertible into Common Stock pursuant to Section
2.01(b)(xvi) or convertible into or exchangeable for any other securities
pursuant to Section 2.01(b)(xvii) will be subject to Defeasance pursuant to
Section 5.02; (xv) if and as applicable, that the Securities of the series
will be issuable in whole or in part in the form of one or more Global
Securities and, in such
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case, the Depositary or Depositaries for such Global Security or Global
Securities and any circumstances other than those set forth in Section 2.05
in which any such Global Security may be transferred to, and registered and
exchanged for Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in which any
such transfer may be registered; (xvi) the terms and conditions, if any,
pursuant to which the Securities are convertible into Common Stock; (xvii)
the terms and conditions, if any, pursuant to which the Securities are
convertible into or exchangeable for any other securities, including (without
limitation) securities of Persons other than the Company; and (xviii) any
other terms of, or provisions, covenants, rights or other matters applicable
to, the series (which terms, provisions, covenants, rights or other matters
will not be inconsistent with the provisions of this Indenture, except as
permitted by Section 11.01(d)).
(c) All Securities of any one series will be substantially
identical except as to denomination and except as may otherwise be provided
in or pursuant to the Board Resolution referred to below and (subject to
Section 2.04) set forth or determined in the manner provided in the Officer's
Certificate referred to above or in any such indenture supplemental hereto.
(d) If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action will be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee concurrently with or prior to the
delivery of the Officer's Certificate setting forth the terms of the series.
SECTION 2.02. FORM OF SECURITIES AND TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
(a) The Securities of each series will be in such form as may be
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, 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 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. If the form
of Securities of any series is established by action taken pursuant to a
Board Resolution, a copy of an appropriate record of such action will be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee concurrently with or prior to the delivery of the
Company Order contemplated by Section 2.04 for the authentication and
delivery of such Securities.
(b) The definitive Securities will be printed, lithographed, or
engraved on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may
be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
(c) The Trustee's certificate of authentication will be in
substantially the following form:
[Form of Trustee's Certificate of Authentication for Securities]
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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
(d) Every Global Security authenticated and delivered hereunder will
bear a legend in substantially the following form:
[Form of Legend for Global Securities]
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. This Security may not be transferred to, or registered or
exchanged for Securities registered in the name of, any Person other than the
Depositary or a nominee thereof, and no such transfer may be registered, except
in the limited circumstances described in the Indenture. Every Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, this Security will be a Global Security subject to the
foregoing, except in such limited circumstances.
SECTION 2.03. DATE AND DENOMINATIONS.
Each Security will be dated the date of its authentication. The
Securities of each series will be issuable only in registered form without
coupons in such denominations as may be specified in accordance with Section
2.01. In the absence of any such specified denomination with respect to the
Securities of any series, the Securities of such series will be issuable in
denominations of $1,000 and integral multiples thereof.
SECTION 2.04. EXECUTION, AUTHENTICATION, AND DELIVERY OF SECURITIES.
(a) The Securities will be executed on behalf of the Company by
the Chief Executive Officer or the President of the Company and attested by
the Treasurer or the Secretary of the Company under its corporate seal. The
signature of any of these officers on the Securities may be manual or
facsimile. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted, or otherwise reproduced on the
Securities.
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(b) Only such Securities bearing the Trustee's certificate of
authentication, signed manually by the Trustee, will be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
execution of the certificate of authentication by the Trustee upon any
Securities executed by the Company will be conclusive evidence that the
Securities so authenticated have been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.08, for all purposes of this Indenture
such Security will be deemed never to have been authenticated and delivered
hereunder and will never be entitled to the benefits of this Indenture.
(c) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company will 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.
(d) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order will authenticate and make such
Securities available for delivery. If the form or terms of the Securities of
the series have been established in or pursuant to one or more Board Resolutions
as permitted by Sections 2.01 and 2.02, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee will be entitled to receive, and (subject to
Section 10.01) will be fully protected in relying upon, an Opinion of Counsel
stating (i) if the form of such Securities has been established by or pursuant
to a Board Resolution as permitted by Section 2.02, that such form has been
established in conformity with the provisions of this Indenture, (ii) if the
terms of such Securities have been established by or pursuant to a Board
Resolution as permitted by Section 2.01, that such terms have been established
in conformity with the provisions of this Indenture, and (iii) that such
Securities, when authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and binding obligations of the Company
enforceable in accordance with their terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws of general applicability relating to or affecting creditors' rights and by
general principles of equity.
(e) Notwithstanding the provisions of Sections 2.01 and 2.04(d), if
all Securities of a series are not to be originally issued at one time, it will
not be necessary to deliver the Officer's Certificate otherwise required
pursuant to Section 2.01 or the Company Order and Opinion of Counsel otherwise
required pursuant to Section 2.04(d) at or prior to the time of authentication
of each Security of such series if such documents are delivered at or prior to
the authentication upon original issuance of the first Security of such series
to be issued.
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SECTION 2.05. REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company will cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company will provide for the registration
of Securities and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
(b) Upon surrender for registration of transfer of any Security of
any series at the office or agency in a Place of Payment for that series, the
Company will execute, and the Trustee will authenticate and make available for
delivery, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor.
(c) At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company will execute, and the
Trustee will authenticate and make available for delivery, the Securities which
the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration of
transfer or exchange will (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument or instruments of transfer,
in form reasonably satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 2.06, 3.05, or 11.06 not involving any transfer. The
Company will not be required (i) to issue, register the transfer of, or exchange
Securities of any series during a period beginning at the opening of business 15
calendar days before the mailing of a notice of redemption of Securities of that
series selected for redemption under Section 3.02(c) and ending at the close of
business on the day of such mailing or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except, in
the case of any Securities to be redeemed in part, the portion thereof not being
redeemed.
(e) All Securities issued upon any registration of transfer or
exchange of Securities will be valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
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(f) Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such Global
Security or any nominee thereof, and no such transfer may be registered, unless
(i) such Depositary (A) notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or (B) ceases to be a clearing
agency registered under the Exchange Act, (ii) the Company executes and delivers
to the Trustee a Company Order that such Global Security shall be so
transferable, registrable, and exchangeable, and such transfers shall be
registrable, (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities evidenced by such Global Security or (iv)
there shall exist such other circumstances, if any, as have been specified for
this purpose in accordance with Section 2.01. Notwithstanding any other
provision in this Indenture, a Global Security to which the restriction set
forth in the preceding sentence shall have ceased to apply may be transferred
only to, and may be registered and exchanged for Securities registered only in
the name or names of, such Person or Persons as the Depositary for such Global
Security shall have directed and no transfer thereof other than such a transfer
may be registered. Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security to which the
restriction set forth in the first sentence of this Section 2.05(f) shall apply,
whether pursuant to this Section 2.05, Section 2.06, 2.07, 3.05, or 11.06 or
otherwise, will be authenticated and delivered in the form of, and will be, a
Global Security.
SECTION 2.06. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company may execute and register and upon Company Order the Trustee will
authenticate and make available for delivery temporary Securities (printed,
lithographed, or typewritten), of any authorized denomination, and
substantially in the form of the definitive Securities but with such
omissions, insertions, and variations as may be appropriate for temporary
Securities, all as may be determined by the officers executing such
Securities as evidenced by their execution of such Securities; PROVIDED,
HOWEVER, that the Company will use reasonable efforts to have definitive
Securities of that series available at the times of any issuance of
Securities under this Indenture. Every temporary Security will be executed
and registered by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect,
as the definitive Securities. The Company will execute and register and
furnish definitive Securities of such series as soon as practicable and
thereupon any or all temporary Securities of such series may be surrendered
in exchange therefor at the office or agency of the Company in the Place of
Payment for that series, and the Trustee will authenticate and make available
for delivery in exchange for such temporary Securities of such series one or
more definitive Securities of the same series, of any authorized
denominations, and of a like aggregate principal amount and tenor. Such
exchange will be made by the Company at its own expense and without any
charge to the Holder therefor. Until so exchanged, the temporary Securities
of any series will be entitled to the same benefits under this Indenture as
definitive Securities of the same series authenticated and delivered
hereunder.
SECTION 2.07. MUTILATED, DESTROYED, LOST, AND STOLEN SECURITIES.
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(a) If any mutilated Security is surrendered to the Trustee, the
Company will execute and the Trustee will authenticate and make available for
delivery in exchange therefor a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss, or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company will execute and the Trustee will authenticate
and make available for delivery, in lieu of any such destroyed, lost, or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
(c) 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.
(d) Upon the issuance of any new Security under this Section 2.07,
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.
(e) Every new Security of any series issued pursuant to this
Section 2.07 in exchange for any mutilated Security or in lieu of any
destroyed, lost, or stolen Security will constitute an original additional
contractual obligation of the Company, whether or not the mutilated,
destroyed, lost, or stolen Security shall be at any time enforceable by
anyone, and will be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
(f) The provisions of this Section 2.07 are exclusive and will
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 2.08. CANCELLATION OF SURRENDERED SECURITIES.
All Securities surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any sinking fund payment will, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and will be promptly canceled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered will be promptly canceled by the Trustee. No
Securities will be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section
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2.08, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee will be disposed of as directed by a Company
Order, provided, however, that the Trustee will not be required to destroy
canceled Securities except in accordance with its established policies.
SECTION 2.09. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) Except as otherwise provided in accordance with Section 2.01 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date will
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.
(b) Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") will forthwith cease to be payable to the
Holder on the relevant regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company together with interest
thereon (to the extent permitted by law) at the rate of interest applicable to
such Security, at its election in each case, as provided in clause (i) or (ii)
below:
(i) The Company may elect to make payment of any
Defaulted Interest (and interest thereon, if any) to the Persons in
whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
will be fixed in the following manner. The Company will notify the
Trustee in writing of the amount of Defaulted Interest (and interest
thereon, if any) proposed to be paid on each Security of such series and
the date of the proposed payment, and at the same time the Company will
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest (and
interest thereon, if any) or will 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 (and interest thereon, if any) as in
this clause (i) provided. Thereupon the Trustee will fix a Special
Record Date for the payment of such Defaulted Interest (and interest
thereon, if any) which will be not more than 15 calendar days and not
less than 10 calendar days prior to the date of the proposed payment and
not less than 10 calendar days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee will promptly notify the
Company of such Special Record Date and, in the name and at the expense
of the Company, will cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series
at such Holder's address as it appears in the Security Register, not
less than 10 calendar days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest (and interest thereon,
if any) and the Special Record Date therefor having been so mailed, such
Defaulted Interest will be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business
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on such Special Record Date and
will no longer be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted
Interest (and interest thereon, if any) on the Securities of any series
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this
clause (ii), such manner of payment shall be deemed practicable by the
Trustee.
(c) Subject to the foregoing provisions of this Section 2.09, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security will carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 2.10. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee, and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 2.09) any interest on such Security and for all other
purposes whatsoever, whether or not such Security shall be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee will be
affected by notice to the contrary.
SECTION 2.11. COMPUTATION OF INTEREST.
Except as otherwise specified in accordance with Section 2.01 for
Securities of any series, interest on the Securities of each series will be
computed on the basis of a 360-day year consisting of 12 30-day months.
SECTION 2.12. CUSIP NUMBERS.
The Company, in issuing Securities of any series, may use "CUSIP"
numbers (if then generally in use) and, if so, the Trustee will use "CUSIP"
numbers in notices of redemption as a convenience to Holders; PROVIDED that
any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only
on the other identification numbers printed on the Securities, and any such
redemption will not be affected by any defect in or omission of such numbers.
To the extent applicable, the Company will promptly notify the Trustee of
any change in the "CUSIP" numbers.
ARTICLE III. REDEMPTION OF SECURITIES
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SECTION 3.01. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated
Maturity will be redeemable in accordance with their terms and (except as
otherwise specified in accordance with Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
(a) The election of the Company to redeem any Securities will be
evidenced by a Board Resolution. In case of any redemption at the election
of the Company, the Company will, at least 60 calendar days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed. In the
case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company will furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction.
(b) Notice of redemption of Securities to be redeemed at the
election of the Company will be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and
will be irrevocable. Notice of redemption will be given by mail, first-class
postage prepaid, not less than 30 or more than 60 calendar days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register. All notices of redemption will identify
the Securities to be redeemed (including the CUSIP numbers thereof, if
applicable) and will state (i) the Redemption Date, (ii) the Redemption
Price, (iii) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to be
redeemed, (iv) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date, (v) the
place or places where such Securities are to be surrendered for payment of
the Redemption Price, (vi) that the redemption is for a sinking fund, if such
is the case, and (vii) the specific provision of this Indenture pursuant to
which such Securities are to be redeemed.
(c) If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed will be selected not more
than 60 calendar 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 may deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. The Trustee will promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
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(d) For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
will relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 3.03. DEPOSIT OF REDEMPTION PRICE.
At or prior to 10:00 a.m., New York City time, on any Redemption Date,
the Company will deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 6.03) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
any accrued interest on, all of the Securities that are to be redeemed on that
date.
SECTION 3.04. SECURITIES PAYABLE ON REDEMPTION DATE.
(a) Notice of redemption having been given as aforesaid, the
Securities so to be redeemed will, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company defaults in the payment of the Redemption Price and
accrued interest) such Securities will cease to accrue interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security will be paid by the Company at the Redemption Price, together
with accrued interest to the Redemption Date; PROVIDED, HOWEVER, that, unless
otherwise specified in accordance with Section 2.01, installments of interest
whose Stated Maturity is on or prior to the Redemption Date will be payable
to the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates in
accordance with their terms and the provisions of Section 2.09.
(b) If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium will,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 3.05. SECURITIES REDEEMED IN PART.
Any Security that is to be redeemed only in part will be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
will execute, and the Trustee will authenticate and make available for
delivery to the Holder of such Security without service charge, a new
Security or Securities of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
of the Security so surrendered.
ARTICLE IV. SINKING FUNDS
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SECTION 4.01. APPLICABILITY OF ARTICLE.
The provisions of this Article IV will be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise
specified in accordance with Section 2.01 for Securities of such series. The
minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
series, the amount of any sinking fund payment may be subject to reduction as
provided in Section 4.02. Each sinking fund payment with respect to
Securities of a particular series will be applied to the redemption of
Securities of such series as provided for by the terms of Securities of such
series.
SECTION 4.02. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a
credit Securities of a series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of such series required
to be made pursuant to the terms of such Securities as provided for by the
terms of such series, provided that such Securities have not been previously
so credited. Such Securities will be received and credited for such purpose
by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
sinking fund payment will be reduced accordingly.
SECTION 4.03. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 calendar days prior to each sinking fund payment
date for any series of Securities, the Company will deliver to the Trustee an
Officer's Certificate specifying the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, that is to be satisfied by payment of cash and the portion
thereof, if any, that is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 4.02 and will also deliver to
the Trustee any Securities to be so delivered. Not less than 30 calendar
days before each such sinking fund payment date, the Trustee will select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.02(c) and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner provided
in Section 3.02(b). Such notice having been duly given, the redemption of
such Securities will be made upon the terms and in the manner stated in
Sections 3.04 and 3.05.
ARTICLE V. DEFEASANCE AND COVENANT DEFEASANCE
SECTION 5.01. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
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<PAGE> The Company may elect, at its option by Board Resolution at
any time, to have either Section 5.02 or Section 5.03 applied to the
Outstanding Securities of any series designated pursuant to Section 2.01 as
being defeasible pursuant to this Article V (hereinafter called "Defeasible
Series"), upon compliance with the conditions set forth below in this Article
V, PROVIDED that Section 5.02 will not apply to any series of Securities that
is convertible into Common Stock pursuant to Section 2.01(b)(xvi) or
convertible into or exchangeable for any other securities pursuant to Section
2.01(b)(xvii).
SECTION 5.02. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 5.01
to have this Section 5.02 applied to the Outstanding Securities of any
Defeasible Series and subject to the proviso to Section 5.01, the Company
will be deemed to have been discharged from its obligations with respect to
the Outstanding Securities of such series as provided in this Section 5.02 on
and after the date the conditions set forth in Section 5.04 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means
that the Company will be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Securities of such series and to
have satisfied all its other obligations under the Securities of such series
and this Indenture insofar as the Securities of such series are concerned
(and the Trustee, at the expense of the Company, will execute proper
instruments acknowledging the same), subject to the following which will
survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of Securities of such series to receive, solely from the trust
fund described in Section 5.04 and as more fully set forth in Section 5.04,
payments in respect of the principal of and any premium and interest on such
Securities of such series when payments are due, (b) the Company's
obligations with respect to the Securities of such series under Sections
2.05, 2.06, 2.07, 6.02, 6.03, and 11.06, (c) the rights, powers, trusts,
duties, and immunities of the Trustee hereunder, and (d) this Article V.
Subject to compliance with this Article V, the Company may exercise its
option provided in Section 5.01 to have this Section 5.02 applied to the
Outstanding Securities of any Defeasible Series notwithstanding the prior
exercise of its option provided in Section 5.01 to have Section 5.03 applied
to the Outstanding Securities of such series.
SECTION 5.03. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 5.01
to have this Section 5.03 applied to the Outstanding Securities of any
Defeasible Series, (a) the Company will be released from its obligations
under Sections 6.04 through 6.07, inclusive, Section 12.01, and such
provisions of any Supplemental Indenture as may be specified in such
Supplemental Indenture, and (b) the occurrence of any event specified in
Sections 8.01(a)(iii), 8.01(a)(iv) (with respect to any of Sections 6.04
through 6.07, inclusive, Section 12.01, and such provisions of any
Supplemental Indenture as may be specified in such Supplemental Indenture),
8.01(a)(v), 8.01(a)(vi), and 8.01(a)(ix) will be deemed not to be or result
in an Event of Default, in each case with respect to the Outstanding
Securities of such series as provided in this Section on and after the date
the conditions set forth in Section 5.04 are satisfied (hereinafter called
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means
that the Company may omit
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to comply with and will have no liability in respect of any term, condition,
or limitation set forth in any such specified Section or provision (to the
extent so specified in the case of Section 8.01(a)(iv)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
provision or by reason of any reference in any such Section or provision to
any other provision herein or in any other document, but the remainder of
this Indenture and the Securities of such series will be unaffected thereby.
SECTION 5.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following will be the conditions to application of either Section
5.02 or Section 5.03 to the Outstanding Securities of any Defeasible Series:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 10.08 and agrees to comply with the
provisions of this Article V applicable to it) as trust funds in trust for
the benefit of the Holders of Outstanding Securities of such series (i)
money in an amount, or (ii) U.S. Government Obligations that through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, without reinvestment, not later
than one day before the due date of any payment, money in an amount, or
(iii) a combination thereof, in each case sufficient to pay and discharge,
and which will be applied by the Trustee (or any such other qualifying
trustee) to pay and discharge, the principal of and any premium and
interest on the Securities of such series on the respective Stated
Maturities or on any earlier date or dates on which the Securities of such
series shall be subject to redemption and the Company shall have given the
Trustee irrevocable instructions satisfactory to the Trustee to give notice
to the Holders of the redemption of the Securities of such series, all in
accordance with the terms of this Indenture and the Securities of such
series.
(b) In the case of an election under Section 5.02, the Company shall
have delivered to the Trustee an Opinion of Counsel (from a counsel who
shall not be an employee of the Company) to the effect that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the Holders
of the Outstanding Securities of such series will not recognize gain or
loss for federal income tax purposes as a result of the deposit,
Defeasance, and discharge to be effected with respect to the Securities of
such series and will be subject to federal income tax on the same amount,
in the same manner, and at the same times as would be the case if such
deposit, Defeasance, and discharge were not to occur.
(c) In the case of an election under Section 5.03, the Company shall
have delivered to the Trustee an Opinion of Counsel (from a counsel who
shall not be an employee of the Company) to the effect that the Holders of
the Outstanding Securities of such series will not recognize gain or loss
for federal income tax purposes as a result of
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the deposit and Covenant Defeasance to be effected with respect to the
Securities of such series and will be subject to federal income tax on
the same amount, in the same manner, and at the same times as would be
the case if such deposit and Covenant Defeasance were not to occur.
(d) The Company shall have delivered to the Trustee an Opinion of
Counsel (from a counsel who shall not be an employee of the Company)
stating that the defeasance trust does not violate the Investment Company
Act of 1940.
(e) The Company shall have delivered to the Trustee the opinion of a
nationally recognized independent public accounting firm certifying the
sufficiency of the amount of the moneys, U.S. Government Obligations, or a
combination thereof, placed on deposit to pay, without regard to any
reinvestment, the principal of and any premium and interest on the
Securities on the Stated Maturity thereof or on any earlier date on which
the Securities shall be subject to redemption as to which the Company has
given irrevocable instructions satisfactory to the Trustee to give notice
to the Holders of the redemption of the Securities of such series, all in
accordance with the terms of this Indenture and the Securities of such
series.
(f) The Company shall have delivered to the Trustee an Officer's
Certificate (i) stating that the deposit was not made by the Company with
the intent of preferring the holders of the Securities over the other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others, and (ii) to the
effect that the Securities of such series, if then listed on any securities
exchange, will not be delisted solely as a result of such deposit.
(g) No Default or Event of Default shall have occurred and be
continuing at the time of such deposit or, with regard to any Event of
Default or any such event specified in Sections 8.01(a)(vii) and (viii), at
any time on or prior to the 124th calendar day after the date of such
deposit (it being understood that this condition will not be deemed
satisfied until after such 124th calendar day).
(h) Such Defeasance or Covenant Defeasance will not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(i) Such Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(j) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
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SECTION 5.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
(a) Subject to the provisions of Section 6.03(e), all money and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee or other qualifying trustee (solely for purposes of this Section 5.05
and Section 5.06, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 5.04 in respect of the
Securities of any Defeasible Series will be held in trust and applied by the
Trustee, in accordance with the provisions of the Securities of such series and
this Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of Securities of such series, of all sums due and to
become due thereon in respect of principal and any premium and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
(b) The Company will pay and indemnify the Trustee against any tax,
fee, or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 5.04 or the principal and interest
received in respect thereof other than any such tax, fee, or other charge that
by law is for the account of the Holders of Outstanding Securities.
(c) Notwithstanding anything in this Article V to the contrary, the
Trustee will deliver or pay to the Company from time to time upon a Company
Request any money or U.S. Government Obligations held by it as provided in
Section 5.04 with respect to Securities of any Defeasible Series that are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Defeasance or Covenant Defeasance with respect to the
Securities of such series.
SECTION 5.06. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article V with respect to the Securities of any series by
reason of any order or judgment of any court or governmental authority
enjoining, restraining, or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities of such series
will be revived and reinstated as though no deposit had occurred pursuant to
this Article V with respect to Securities of such series until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust pursuant
to Section 5.05 with respect to Securities of such series in accordance with
this Article V; PROVIDED, HOWEVER, that if the Company makes any payment of
principal of or any premium or interest on any Security of such series following
the reinstatement of its obligations, the Company will be subrogated to the
rights of the Holders of Securities of such series to receive such payment from
the money so held in trust.
ARTICLE VI. PARTICULAR COVENANTS OF THE COMPANY
SECTION 6.01. PAYMENT OF PRINCIPAL, PREMIUM, AND INTEREST ON SECURITIES.
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The Company, for the benefit of each series of Securities, will duly
and punctually pay the principal of and any premium and interest on the
Securities of that series in accordance with the terms of the Securities and
this Indenture.
SECTION 6.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices, and demands may be made or served at
the Corporate Trust Office, and the Company hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission will in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of any series for
such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 6.03. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
(a) If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
(b) Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
(c) The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent will agree with the Trustee, subject to
the provisions of this Section 6.03, that such Paying Agent will (i) comply with
the provisions of the Trust Indenture Act applicable to it as a Paying
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Agent and (ii) during the continuance of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment in respect of the Securities of that series, and upon the written
request of the Trustee, forthwith pay to the Trustee all sums held in trust
by such Paying Agent for payment in respect of the Securities of that series.
(d) The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent will be released from all further liability with respect to
such money.
(e) Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any premium
or interest on any Security of any series and remaining unclaimed for two years
after such principal, premium, or interest has become due and payable will be
paid to the Company upon a Company Request (or, if then held by the Company,
will be discharged from such trust); and the Holder of such Security will
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, will thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which will not
be less than 30 calendar days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 6.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary of the
Company or upon the income, profits, or property of the Company or any
Subsidiary of the Company, and (b) all lawful claims for labor, materials and
supplies, in each case which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary of the Company and would have a
Material Adverse Effect; PROVIDED, HOWEVER, that (x) the Company will not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge, or claim the amount, applicability, or validity of which is
being contested in good faith by appropriate proceedings, and (y) any failure to
pay any such tax, assessment, charge, or claim shall not constitute a breach of
this Section 6.04 if such failure (i) was not willful and (ii) does not and will
not result in any Material Adverse Effect.
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SECTION 6.05. EXISTENCE.
Subject to Article XI, the Company will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (charter and statutory),
and franchises; PROVIDED, HOWEVER, that, except with respect to the
preservation of the Company's existence, nothing in this Section 6.06 will
(i) require the Company to take any action that it determines in good faith
to be contrary to its best interests, so long as the failure to take such
action will not have a Material Adverse Effect, or (ii) prevent the Company
from taking any action that it determines in good faith to be in its best
interests, so long as the taking of such action will not have a Material
Adverse Effect.
SECTION 6.06. COMPLIANCE WITH LAWS.
The Company will, and will cause each of its Subsidiaries to,
comply with all applicable federal, state, local, or foreign laws, rules,
regulations, or ordinances, including without limitation such laws, rules,
regulations, or ordinances relating to pension, environmental, employee, and
tax matters, to the extent that, in the aggregate, the failure so to comply
would have a Material Adverse Effect.
SECTION 6.07. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 calendar days
after the end of each fiscal year of the Company ending after the date
hereof, an officer's certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company
stating whether or not to the knowledge of such person after due inquiry the
Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company is in
default, specifying all such defaults and the nature and status thereof of
which such person may have such knowledge.
SECTION 6.08. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision, or condition set forth in Sections 6.04 and 6.06 and such
provisions of any Supplemental Indenture as may be specified in such
Supplemental Indenture, with respect to the Securities of any series if the
Holders of a majority in principal amount of the Outstanding Securities of
such series shall, by Act of such Holders, either waive such compliance in
such instance or generally waive compliance with such term, provision, or
condition, but no such waiver will extend to or affect such term, provision,
or condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee in respect of any such term, provision, or condition will remain in
full force and effect.
SECTION 6.09. CALCULATION OF ORIGINAL ISSUE DISCOUNT.
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The Company will, to the extent applicable, file with the Trustee
promptly at the end of each calendar year (i) a written notice specifying the
amount of original issue discount (including daily rates and accrual periods)
accrued on Outstanding Securities as of the end of such year and (ii) such
other specific information relating to such original issue discount as may
then be required under the Internal Revenue Code of 1986, as amended from
time to time.
ARTICLE VII. SECURITIES HOLDERS' LISTS AND
REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 calendar days after the applicable
Regular Record Date, a list for each series of Securities, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders
of Securities of such series as of such Regular Record Date and (b) at such
other times as the Trustee may request in writing, within 30 calendar days
after the receipt by the Company of any such request, a list of similar form
and content as of a date not more than 15 calendar 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 7.02. PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.
(a) The Trustee will preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.01 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities,
and the corresponding rights and privileges of the Trustee, will be as
provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them will be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 7.03. REPORTS BY TRUSTEE.
The Trustee will transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act or any rule or regulation of the Commission
promulgated pursuant thereto at the times and in the manner provided therein.
If required by Section 313(a) of the Trust Indenture Act, the Trustee will,
within sixty days after each May 15 following the date of this Indenture,
deliver to Holders a brief report, dated as of such May 15, which complies
with the provisions of such Section
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313(a). A copy of each such report will, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission, and with the Company. The
Company will promptly notify the Trustee when any Securities are listed on
any stock exchange.
SECTION 7.04. REPORTS BY COMPANY.
The Company will file with the Trustee and the Commission, and
transmit to Holders, such information, documents, and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act or
any rule or regulation of the Commission promulgated pursuant thereto at the
times and in the manner provided therein; PROVIDED that any such information,
documents, or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act will be filed with the Trustee within
15 calendar days after the same is so required to be filed with the
Commission. Delivery of such reports, information, and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
will not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
ARTICLE VIII. DEFAULT
SECTION 8.01. EVENT OF DEFAULT.
(a) "Event of Default," wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it may 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):
(i) default in the payment of any interest on any Security of
that series when it becomes due and payable, and continuance of such
default for a period of [30] calendar days;
(ii) default in the payment of principal of (or premium, if
any, on) any Security of that series when it becomes due and payable,
whether by redemption, repurchase, or otherwise;
(iii) default in the making of any sinking fund payment when
and as due by the terms of a Security of that series;
(iv) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant or
warranty, a default in the performance or breach of which is elsewhere
in this Section 8.01 specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of one or
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more series of Securities other than that series), and continuance of
such default or breach for a period of 30 calendar days after there has
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25%
in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
(v) any default in the payment at maturity of principal of
any Indebtedness of the Company or any Subsidiary of the Company in an
aggregate principal amount of $25.0 million or more, which, in any such
case, (A) continues beyond any period of grace provided with respect
thereto and (B) results in such Indebtedness becoming due prior to its
stated maturity or occurs at the final maturity of such Indebtedness;
PROVIDED, HOWEVER, that, subject to the provisions of Section 10.01 and
8.08, the Trustee will not be deemed to have knowledge of such
nonpayment or other default unless either (1) a Responsible Officer of
the Trustee has actual knowledge of nonpayment or other default or (2)
the Trustee has received written notice thereof from the Company, from
any Holder, from the holder of any such Indebtedness or from the trustee
under the agreement or instrument relating to such Indebtedness;
(vi) the entry of one or more judgments or orders for the
payment of money against the Company, which judgments and orders create
a liability of $25.0 million or more in excess of insured amounts and
have not been stayed (by appeal or otherwise), vacated, discharged, or
otherwise satisfied within 60 calendar days of the entry of such
judgments and orders;
(vii) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Subsidiary in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or (B) a decree or order adjudging the Company or any
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment, or composition
of or in respect of the Company or any Subsidiary under any applicable
federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or other similar official of the
Company or any Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 calendar days;
(viii) the commencement by the Company or any Subsidiary of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company or any Subsidiary in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization,
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or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief with
respect to the Company under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law, or the consent by it
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Company or any Subsidiary
or of any substantial part of its property pursuant to any such law, 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 or
any Subsidiary in furtherance of any such action; or
(ix) any other Event of Default provided in an indenture
supplemental hereto with respect to Securities of that series created
thereunder.
(b) If an Event of Default (other than an Event of Default arising
under Section 8.01(a)(vii) or (viii)) with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or,
if any of the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof) of all of the Securities of that series to be
due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) will become immediately due and
payable. If an Event of Default under Section 8.01(a)(vii) or (viii) occurs,
then the principal of, premium, if any, and accrued interest on the
Securities shall become immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder.
(c) At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article VIII provided, the Holders of a majority in
principal amount of the outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if (i) the Company has paid or deposited with the
Trustee a sum sufficient to pay (A) all overdue interest on all Securities of
that series, (B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities, (C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and (D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements, and
advances of the Trustee and its agents and counsel and (ii) all Events of
Default with respect to Securities of that series, other than the non-payment
of the principal of Securities of that series that has become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 8.01(d). No such rescission will affect any subsequent default or
impair any right consequent thereon.
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(d) The Holders of 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 (i) in the payment of the
principal of or any premium or interest on any Security of such series or
(ii) in respect of a covenant or provision hereof which under Article X
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected. Upon any such waiver, such
default will cease to exist, and any Event of Default arising therefrom will
be deemed to have been cured, for every purpose of this Indenture, but no
such waiver will extend to any subsequent or other default or impair any
right consequent thereon.
SECTION 8.02. COVENANT OF COMPANY TO PAY TO TRUSTEE WHOLE AMOUNT DUE ON
SECURITIES ON DEFAULT IN PAYMENT OF INTEREST OR PRINCIPAL;
SUITS FOR ENFORCEMENT BY TRUSTEE.
(a) The Company covenants that if (i) default is made in the
payment of any interest on any Security when such interest becomes due and
payable and such default continues for a period of 30 calendar days or (ii)
default is made in the payment of the principal of (or premium, if any, on)
any Security when it becomes due and payable, the Company will, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal and
any premium and interest and, to the extent that payment of such interest
will be legally enforceable, interest on any overdue principal and premium
and on any overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as will be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel.
(b) If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
(c) In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee will be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture
Act in order to have claims of the Holders and the Trustee allowed in any
such proceeding. In particular, the Trustee will be authorized to collect
and receive any money or other property payable or deliverable on any such
claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator, or other similar official in any such
judicial proceeding is hereby authorized by each Holder to make such payments
to the Trustee and, in the event that the Trustee consents to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable
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compensation, expenses, disbursements, and advances of the Trustee and its
agents and counsel, and any other amounts due the Trustee under Section 10.06.
(d) No provision of this Indenture will be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment, or composition affecting
the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding;
PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders, vote for
the election of a trustee in bankruptcy or similar official and be a member
of a creditors' or other similar committee.
(e) All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee will be brought in its own name as trustee of an express trust, and
any recovery of judgment will, after provision for the payment of the
reasonable compensation, expenses, disbursements, and advances of the Trustee
and its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 8.03. APPLICATION OF MONEY COLLECTED BY TRUSTEE.
Any money collected by the Trustee pursuant to this Article VIII
will 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 any premium or interest, upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 10.06; and
SECOND: To the payment of the amounts then due and unpaid for
interest on the Securities in respect of which or for the benefit
of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable
on such Securities for interest thereon.
THIRD: To the payment of the amounts then due and unpaid for
principal of and any premium on the Securities in respect of which
or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any
premium, respectively.
SECTION 8.04. LIMITATION ON SUITS BY HOLDERS OF SECURITIES.
No Holder of any Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a
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receiver or trustee, or for any other remedy hereunder, unless (a) such
Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities of that series, (b) the
Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder, (c) 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, (d) the Trustee for 60 calendar
days after its receipt of such notice, request, and offer of indemnity has
failed to institute any such proceeding, and (e) no direction inconsistent
with such written request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of the Outstanding
Securities of that series, it being understood and intended that no one or
more of such Holders will have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect, disturb, or
prejudice the rights of any other of such Holders, or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal and ratable benefit of all of such Holders.
SECTION 8.05. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE
OF RIGHTS NOT A WAIVER OF EVENT OF DEFAULT.
(a) Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Securities in the last
paragraph of Section 2.07, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy will, 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, will not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
(b) No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
will 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 VIII or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
SECTION 8.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF
OUTSTANDING SECURITIES TO DIRECT TRUSTEE.
The Holders of a majority in principal amount of the Outstanding
Securities of any series will have the right to direct the Trustee with
respect to the time, method, and place of conducting any proceeding for any
remedy available to the Trustee and the exercise of any trust or power
conferred on the Trustee, in each case with respect to the Securities of such
series, PROVIDED that (a) such direction will not be in conflict with any
rule of law or with this Indenture
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and (b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 8.07. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS
UNDER THE INDENTURE OR AGAINST THE TRUSTEE.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered,
or omitted by it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of such suit, and may assess
costs, including legal fees and expenses, against any such party litigant, in
the manner and to the extent provided in the Trust Indenture Act; PROVIDED
that neither this Section 8.07 nor the Trust Indenture Act will be deemed to
authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Trustee or by the Company.
SECTION 8.08. NOTICE OF DEFAULTS.
If a Default occurs hereunder with respect to Securities of any
series, the Trustee will give the Holders of Securities of such series notice
of such Default actually known to it as and to the extent provided by the
Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any Default of
the character specified in Section 8.01(a)(iv) with respect to Securities of
such series no such notice to Holders will be given until at least 30
calendar days after the occurrence thereof. The Company will give the
Trustee notice of any uncured Event of Default within 10 days after any
Responsible Officer of the Company becomes aware of or receives actual notice
of such Event of Default.
SECTION 8.09. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder
of any Security will have the right, which is absolute and unconditional, to
receive payment of the principal of, premium, if any, and (subject to Section
2.09) interest on such Security on the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on the Redemption Date) and
to institute suit for the enforcement of any such payment, and such rights
may not be impaired without the consent of such Holder.
SECTION 8.10. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee, and the Holders
will be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders will continue as though no such proceeding had been instituted.
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SECTION 8.11. TRUSTEE MAY FILE PROOFS OF CLAIMS.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceeding relative to the Company or the
Subsidiaries (or any other obligor upon the Securities), their creditors or
their property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claim and to
distribute the same, and any custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay 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
hereunder. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE IX SUBORDINATION OF SECURITIES
SECTION 9.01 SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
To the extent and in the manner hereinafter set forth in this
Article IX, the payment of principal of, premium, if any, and interest on and
all other payments in respect of the Securities of any series issued under
this Indenture shall be subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, including (without
limitation) all principal thereof and all premium, if any, and interest
thereon.
SECTION 9.02 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding
or other similar case or proceeding under any Federal or state bankruptcy or
similar law, or any receivership, liquidation, arrangement, relief,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its assets, or (b) any liquidation,
dissolution, reorganization, compromise, arrangement, adjustment, protection,
composition, relief or other winding up of the Company or its debts, whether
voluntary or involuntary and whether or not involving any insolvency or
bankruptcy or any case or proceeding of any kind, or (c) any assignment for
the benefit of creditors or any other marshaling of assets and liabilities of
the Company, then, and in each such event, the holders of Senior Indebtedness
shall be entitled to receive payment in full of all amounts due or to become
due on or in respect of all Senior Indebtedness, before the Company may make,
and before any Holder of Securities is entitled to receive or retain, any
payment or distribution of any kind or character (whether in cash, property
or securities) on account of Securities, and to that end the Holders of
Securities agree to
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promptly pay over, or cause to be paid over, to the holders of Senior
Indebtedness (pro rata to each such holder on the basis of the respective
amounts of such Senior Indebtedness held by such holder) any payment or
distribution of any kind or character, whether in cash, property or
securities, to the extent necessary to pay or prepay in full the Senior
Indebtedness.
Each Holder of Securities shall duly and promptly take such action as is
reasonably necessary to file appropriate claims or proofs of claims in any
such proceedings referred to in this Section 9.02 and to execute and deliver
such other instruments and take such other actions as may be reasonably
necessary to prove or realize upon such claims and to have the proceeds of
such claims paid as provided in this Section 9.02, and, in the event any
Holder of Securities shall not have made any such filing on or prior to the
date 30 days before the expiration of the time for such filing or shall not
have timely executed or delivered any such other instruments and taken such
other actions, the holders of not less than 25% of any series of Senior
Indebtedness, acting through a trustee, agent or otherwise, are hereby
irrevocably authorized and empowered (but shall have no obligation) to, as
the agent and attorney-in-fact for such holder for the specific and limited
purpose set forth in this paragraph, file such proof of claim for or on
behalf of such holder, execute and deliver such other instrument for or on
behalf of such holder and take such other action necessary under applicable
law to collect any amounts due in respect of such claim in such proceeding.
Anything contained in this paragraph notwithstanding, the right to vote any
claim or claims in respect of any Securities in connection with any
proceedings referred to in this Section 9.02 is exclusively reserved to the
holder of such Securities.
SECTION 9.03 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES.
In the event that Securities of any series are declared due and
payable before their Stated Maturity, then and in such event the holders of
Senior Indebtedness outstanding at the time such Securities so become due and
payable shall be entitled to receive payment in full on all amounts due or to
become due on or in respect of such Senior Indebtedness before the Company
may make, and before any Holder of such Securities is entitled to receive or
retain, any payment or distribution of assets of the Company or any
Subsidiary of any kind or character, whether in cash, property or securities
on account of any such Securities.
SECTION 9.04 PAYMENT LIMITATION.
(a) In the event and during the continuance of any Senior Default
(as hereinafter in this paragraph defined) and prior to the declaration of
such Senior Indebtedness to be due and payable prior to its stated maturity,
the holders of not less than 25% of the aggregate principal amount of such
series of Senior Indebtedness, acting through a trustee, agent or otherwise
may give to both the Company and each Holder of Securities written notice
referring to the Securities and this Indenture and specifying that it is a
notice of a Senior Default (a "Senior Default Notice") and, thereafter, no
payment or distribution of any kind or character (whether in cash, property
or securities) shall be made on or in respect of any Securities, and no
Holder of Securities shall take or receive or retain from the Company or any
Subsidiary, directly or indirectly, in cash, property or securities, or by
way of set-off or in any other manner, payment
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of all or any of the Securities during the period (a "Senior Default Blockage
Period") commencing on the date of receipt by both the Company and the
Trustee of such notice and ending on the earliest of (i) the date of the
repayment in full of such Senior Indebtedness, (ii) the date on which such
Senior Indebtedness shall have been declared due and payable prior to its
stated maturity (in which case Section 9.04(b) shall govern), (iii) the date
on which such Senior Default shall have been cured or waived, (iv) the date
on which the holders of not less than 25% of the aggregate outstanding
principal amount of such series of Senior Indebtedness, acting through a
trustee, agent or otherwise, shall have delivered to the Company and the
Trustee a notice referring to the Securities and the immediately preceding
Senior Default Notice and stating that such Senior Default Notice has been
withdrawn, or (v) the 180th day following the receipt by both the Company and
the Trustee of such Senior Default Notice pursuant to this clause (a). Any
number of Senior Default Notices may be given, provided that (A) only one
Senior Default Notice may be given with respect to any single occurrence of a
Senior Default and (B) no Senior Default Notice shall be effective at any
time to prevent any payment from being made by or on behalf of the Company or
any Subsidiary for or on account of any Securities (and any such Senior
Default Notice shall be or become null and void ab initio) if, within the
360-day period next preceding the date on which such Senior Default Notice
shall have been delivered to the Company and the Trustee, a Senior Default
Blockage Period was in effect for all or part of such period. All payments
in respect of Securities postponed during any Senior Default Blockage Period
shall be immediately due and payable upon the termination thereof (together
with such additional interest as is provided herein, any indentures
supplemental hereto and in the Securities for late payment of principal,
premium or interest). As used herein, the term "Senior Default" means any
default with respect to any Senior Indebtedness which as of such time permits
the holders of not less than 25% of the aggregate outstanding principal
amount of such Senior Indebtedness to cause such Senior Indebtedness to
become due prior to its scheduled maturity.
(b) In the event that the holders of not less than 25% of the
aggregate outstanding principal amount of any series of Senior Indebtedness
shall declare such series of Senior Indebtedness to be due and payable prior
to its stated maturity as a result of the occurrence of a Senior Default in
respect thereof, no payment or distribution of any kind or character (whether
in cash, property or securities) shall be made on or in respect of any
Securities, and no Holder of Securities shall take or receive or retain from
the Company or any Subsidiary, directly or indirectly, in cash, property or
securities, or by way of set-off or in any other manner, payment of all or
any of the Securities until the earlier of (i) the payment in full of such
series of Senior Indebtedness or (ii) the rescission or termination of such
declaration.
(c) The provisions of this Section 9.04 shall not apply to any
payment with respect to which Section 9.02 or Section 9.03 would be
applicable.
SECTION 9.05 PAYMENT PERMITTED.
Nothing contained in this Article IX or elsewhere in this
Indenture, any indenture supplemental hereto or in any Securities issued
hereunder shall prevent the Company at any
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time, except as expressly provided in Section 9.02, Section 9.03, Section
9.04 or Section 9.06, from making payments of principal of or premium, if
any, or interest on Securities of any series in accordance with the terms
thereof.
SECTION 9.06 CERTAIN LIMITATIONS.
As long as any Senior Indebtedness remains outstanding, no Holder
of Securities shall (a) exchange all or part of such for any equity security
of the Company, except as provided in Section 9.02, (b) forgive all or any
part of such Securities, except as provided in Section 9.02 or (c) accept any
optional prepayment with respect to such Securities if, after receipt of
written notice from the Company, such prepayment would constitute an event of
default under, and as defined in, any agreement or agreements with respect to
any Senior Indebtedness.
SECTION 9.07 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Holders of Securities of each series hereunder shall be subrogated
equally and ratably to the rights of the holders of Senior Indebtedness at
the time outstanding to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until all amounts
payable for or on account of such Securities shall be paid in full; provided,
however, that no payment or distribution to any holder or owner of Senior
Indebtedness pursuant to this Article IX shall entitle any Holder of
Securities to exercise any rights of subrogation in respect thereof until all
Senior Indebtedness shall have been paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Holders of
Securities would be entitled except for the provisions of this Article IX,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the holders of Senior Indebtedness and the Holders of
Securities, be deemed to be a payment or distribution by the Company to or on
account of Senior Indebtedness.
SECTION 9.08 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article IX are and are intended solely for
the purpose of defining the relative rights of the Holders of Securities on
the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article IX or elsewhere in this Indenture, any
indenture supplemental hereto or in the Securities issued hereunder is
intended to or shall (a) impair, as among the Company, its creditors (other
than holders of Senior Indebtedness) and the Holders of Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of Securities the principal of, premium, if any, and interest on, and
all other amounts payable with respect to, the Securities as and when the
same shall become due and payable in accordance with their respective terms,
(b) affect the relative rights against the Company of the Holders of
Securities and creditors of the Company (other than the holders of Senior
Indebtedness), (c) prevent the Holder of any Securities from exercising all
remedies otherwise permitted by applicable law upon a Default or Event of
Default under this Indenture, subject to the rights under the provisions of
Section 9.02, Section 9.03 and Section 9.04 hereof of the holders of Senior
Indebtedness to receive cash, property or securities
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otherwise payable or deliverable to the Holders of Securities or (d) restrict
or otherwise impair the right of the Holders of Securities to, in accordance
with the terms of this Indenture, declare the Securities of any series to be
due and payable prior to their respective stated maturity upon the occurrence
of an Event of Default.
SECTION 9.09 AGREEMENT TO EFFECTUATE SUBORDINATION.
(a) Each Holder of Securities by its acceptance thereof agrees to
take such action as may be reasonably necessary or appropriate to effectuate,
as between the holders of Senior Indebtedness and such Holder of Securities,
the subordination provided in this Article IX.
(b) The provisions of this Article IX (including, without
limitation, this Section 9.09) may not be amended, modified or waived without
the prior written consent of all the holders of Senior Indebtedness which is
at the time outstanding. The provisions set forth in Article IX constitute a
continuing agreement and shall (i) be and remain in full force and effect at
any time, and from time to time, during which any Senior Indebtedness shall
remain outstanding, (ii) be binding upon the Holders of Securities and the
Company and its successors, transferees and assigns, and (iii) inure to the
benefit of, and be enforceable, in accordance with the terms hereof, directly
by, each of the holders of the Senior Indebtedness and their respective
successors, transferees and assigns, against the Holders of Securities and
the Company and their successors, transferees and assigns.
SECTION 9.10 NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce its rights under this Indenture shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such
holder, or by any non-compliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to any Holder of Securities,
without incurring responsibility to any Holder of Securities and without
impairing or releasing the subordination provided in this Article IX or the
obligations hereunder of any Holder of Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, all or any of the Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release, not perfect or otherwise deal with any property
pledged, assigned or mortgaged to secure, or otherwise securing, Senior
Indebtedness; (iii) as holders of Senior Indebtedness, exercise or refrain
from exercising any rights against the Company and any other Person; and (iv)
apply any sums from time to time received to the payment of the Senior
Indebtedness.
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SECTION 9.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred
to in this Article IX, the Holders of Securities shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in
which any insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the holders of Securities,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article IX.
SECTION 9.12 PROHIBITED PAYMENTS HELD IN TRUST.
In the event that, notwithstanding the provisions of this Article
IX, the Company or any Subsidiary shall make, or any Holder of Securities
shall receive or retain, any payment or distribution of the Company's or such
Subsidiary's assets of any kind or character, whether in cash, property or
securities, then and in such event such payment or distribution shall be
received and held by such Holder of Securities in trust for the benefit of
the holders of Senior Indebtedness, shall be paid over or delivered, in the
same form as so received (with any necessary endorsement) forthwith to such
holders of Senior Indebtedness (pro rata to each such holder on the basis of
the respective amounts of such Senior Indebtedness held by such holder) for
application to the payment or prepayment in full of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness.
ARTICLE X. CONCERNING THE TRUSTEE
SECTION 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee will be as provided
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Indenture will require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee will be subject to the provisions of this Section
10.01.
SECTION 10.02. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 10.01: (a) the Trustee may
conclusively rely and will be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
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note, other evidence of indebtedness, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties; (b) any request or direction of the Company mentioned herein will be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board will 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 Officer's Certificate; (d) the Trustee may consult
with counsel of its selection and the advice of such counsel or any Opinion
of Counsel will 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 will be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses, and liabilities which might be incurred by it in
compliance with such request or direction; (f) the Trustee will not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it will be entitled to examine the books, records,
and premises of the Company, personally or by agent or attorney; (g) the
Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and the
Trustee will not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder; (h) the
Trustee will not be liable for any action taken, suffered, or omitted to be
taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture, unless it shall be proved that the Trustee acted, or failed to
act, in a negligent manner; and (i) the Trustee will not be deemed to have
notice of any Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event or
circumstance which is in fact such a Default or Event of Default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities (or the applicable series thereof) and this
Indenture.
SECTION 10.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, may be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
The Trustee or any Authenticating Agent will not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 10.04. MAY HOLD SECURITIES.
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The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar, or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 10.07 and 10.12, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar, or such other agent.
SECTION 10.05. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required herein or by law. The Trustee
will be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 10.06. COMPENSATION AND REIMBURSEMENT.
(a) The Company will (i) pay to the Trustee from time to time such
compensation as shall be agreed to in writing between the Company and the
Trustee for all services rendered by it hereunder (which compensation will
not be limited to any provision of law in regard to the compensation of a
trustee of an express trust); (ii) except as otherwise expressly provided
herein, reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances incurred or made by the Trustee in accordance
with provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of agents and counsel), except any such
expense, disbursement, or advance as may be attributable to its negligence or
bad faith; and (iii) indemnify the Trustee and any predecessor Trustee for,
and hold them harmless against, any and all losses, liabilities, damages,
claims and expenses, including taxes (other than taxes based on the income of
the Trustee or predecessor Trustee and other taxes relating to the Trustee's
or predecessor Trustee's overall business and operations) incurred without
negligence or bad faith on its part arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
(b) The Trustee will have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owed to it or any
predecessor Trustee pursuant to this Section 10.06, except with respect to
funds held in trust for the benefit of the Holders of particular Securities.
(c) When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 8.01(a)(vii) or
Section 8.01(a)(viii), such expenses (including the reasonable fees and
expenses of its counsel) and the Trustee's compensation for such services are
intended to constitute expenses of administration under any applicable
federal or state bankruptcy, insolvency, or other similar law.
(d) The provisions of this Section 10.06 will survive the
termination of this Indenture.
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SECTION 10.07. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee will either eliminate such
interest or resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 10.08. CORPORATE TRUSTEE REQUIRED ELIGIBILITY.
There will at all times be one or more Trustees hereunder with
respect to the Securities of each series, at least one of which will be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $100,000,000 and its
Corporate Trust Office or principal office in New York City, or any other
major city in the United States that is acceptable to the Company. If such
Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining state or federal authority,
then for the purposes of this Section 10.08, the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 10.08, it will resign immediately in the manner and with the
effect hereinafter specified in this Article X.
SECTION 10.09. 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 X will become effective until
the acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 10.10.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 10.10 shall not have been delivered to the Trustee within 30 calendar
days after the giving of such notice of resignation, the resigning Trustee
may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company. If the instrument of acceptance by a successor Trustee
required by Section 10.10 shall not have been delivered to the Trustee within
30 calendar days after the giving of such notice of removal, the Trustee
being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(d) If, at any time, (i) the Trustee fails to comply with Section
10.07 after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, (ii) the
Trustee ceases to be eligible under Section 10.08 and
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fails to resign after written request therefor by the Company or by any such
Holder, or (iii) the Trustee becomes incapable of acting or is adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property is
appointed or any public officer takes 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, (A) the Company by a Board Resolution
may remove the Trustee with respect to all Securities or (B) subject to
Section 8.07, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee resigns, is removed, or becomes incapable of
acting, or if a vacancy occurs in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company by a Board
Resolution will promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there will be only one
Trustee with respect to the Securities of any particular series) and will
comply with the applicable requirements of Section 10.10. If, within one
year after such resignation, removal, or incapability or the occurrence of
such vacancy, a successor Trustee with respect to the Securities of any
series is 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 will, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 10.10, become the successor Trustee with respect to the Securities
of such series and to that extent supersede the successor Trustee appointed
by the Company. If no successor Trustee with respect to the Securities of
any series shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 10.10, any Holder who
has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(f) The Company will give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series to all holders of Securities of such series in the manner provided in
Section 14.03. Each notice will include the name of the successor Trustee
with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed
will execute, acknowledge, and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee will become effective and such
successor Trustee, without any further act, deed, or conveyance, will become
vested with all the rights, powers, trusts, and duties of the retiring
Trustee, but, on the request of the Company or
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the successor Trustee, such retiring Trustee will, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers, and duties of the retiring Trustee and will
duly assign, transfer, and deliver to such Trustee all property and money
held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee, and each successor Trustee with respect to the
Securities of one or more series will execute and deliver an indenture
supplemental hereto wherein such successor Trustee will accept such
appointment and which (i) will contain such provisions as may be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts, and duties of the retiring Trustee with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates, (ii) if the retiring Trustee is not retiring
with respect to all Securities, will contain such provisions as may be deemed
necessary or desirable to confirm that all the rights, powers, trusts, and
duties of the retiring Trustee with respect to the Securities of that or
those series as to which the retiring Trustee is not retiring will continue
to be vested in the retiring Trustee, and (iii) will add to or change any of
the provisions of this Indenture as may 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 will constitute such Trustees co-trustees of the same trust and
that each such Trustee will be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Trustees and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee will become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed, or conveyance, will become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates; but on request of the Company or any successor
Trustee, such retiring Trustee will duly assign, transfer, and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company will
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all applicable rights, powers, and
trusts referred to in the preceding paragraphs of this Section 10.10.
(d) No successor Trustee will accept its appointment unless at the
time of such acceptance such successor Trustee is qualified and eligible
under this Article IX.
SECTION 10.11. MERGER, CONVERSION, CONSOLIDATION, OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion, or consolidation to which the Trustee may be a party, or
any corporation succeeding to all or
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substantially all the corporate trust business of the Trustee, will be the
successor of the Trustee hereunder, provided such corporation is otherwise
qualified and eligible under this Article IX, 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 10.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee is or becomes a creditor of the Company (or
any other obligor upon the Securities), the Trustee will be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 10.13. APPOINTMENT OF AUTHENTICATING AGENT.
(a) The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which will be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued
upon original issue and upon exchange, registration of transfer, or partial
redemption thereof or pursuant to Section 2.07, and Securities so
authenticated will be entitled to the benefits of this Indenture and will 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 will be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any state thereof, or the
District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section 10.13, the combined capital
and surplus of such Authenticating Agent will 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 10.13, such Authenticating
Agent will resign immediately in the manner and with the effect specified in
this Section 10.13.
(b) 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 may be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, will
continue to be an Authenticating Agent, provided such corporation is
otherwise
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eligible under this Section 10.13, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and 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 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 this Section 10.13, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
will mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which
such Authenticating Agent will serve, as their names and addresses appear in
the Security Register. Any successor Authenticating Agent upon acceptance of
its appointment hereunder will 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 will be
appointed unless eligible under the provisions of this Section 10.13.
(d) The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section
10.13, and the Trustee will be entitled to be reimbursed for such payments,
subject to the provisions of Section 10.06.
(e) If an appointment with respect to one or more series of
Securities is made pursuant to this Section 10.13, the Securities of such
series may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative form of 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 XI. SUPPLEMENTAL INDENTURES AND CERTAIN ACTIONS
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SECTION 11.01. PURPOSES FOR WHICH SUPPLEMENTAL INDENTURES MAY BE ENTERED INTO
WITHOUT CONSENT OF HOLDERS.
Without the consent of or notice to any Holders, 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:
(a) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities, all to the extent otherwise permitted
hereunder;
(b) to make any change to the provisions of this Indenture that
would provide any additional rights or benefits to the Holders of the
Securities;
(c) to add to or change any of the provisions of this Indenture to
such extent as may be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities in uncertificated form;
(d) to add to, change, or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, PROVIDED that
any such addition, change, or elimination (i) will neither (A) apply to
any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision nor
(B) modify the rights of the Holder of any such Security with respect to
such provision or (ii) will become effective only when there is no such
Security Outstanding;
(e) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as may be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 10.10; or
(g) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, PROVIDED that such action
pursuant to this clause (g) will not adversely affect the interests of
the Holders of Securities of any series in any material respect.
SECTION 11.02. MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS OF AT LEAST
A MAJORITY IN PRINCIPAL AMOUNT OF OUTSTANDING SECURITIES.
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(a) With the consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture will, without the
consent of the Holder of each Outstanding Security affected thereby:
(i) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Sections
8.01(b), 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 Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date);
(ii) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which
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
(iii) modify any of the provisions of this Section 11.02, Section
8.01(d) or Section 6.08, except to increase the percentage in principal
amount of Holders required under any such Section 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, PROVIDED, HOWEVER, that this clause (c) will not be deemed to
require the consent of any Holder with respect to changes in the references
to "the Trustee" and concomitant changes in this Section 11.02 and Section
6.08, or the deletion of this proviso, in accordance with the requirements
of Sections 10.10 and 11.01(f).
(b) 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, will be deemed not
to affect the rights under this Indenture of the Holders of Securities of any
other series.
(c) It will not be necessary for any Act of Holders under this
Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it will be sufficient if such Act approves the substance
thereof.
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SECTION 11.03. NO AMENDMENTS TO ARTICLE IX.
Notwithstanding the provisions of Sections 11.01 and 11.02, no
amendments shall be made to the provisions of Article IX and this Section
11.03 without the unanimous consent of the holders of Outstanding Senior
Indebtedness.
SECTION 11.04. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article X or the modifications
thereby of the trusts created by this Indenture, the Trustee will be entitled
to receive, and (subject to Section 10.01) will 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
will not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties, or immunities under this Indenture
or otherwise.
SECTION 11.05. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article
X, this Indenture will be modified in accordance therewith, and such
supplemental indenture will form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder will be bound thereby.
SECTION 11.06. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article X
will conform to the requirements of the Trust Indenture Act.
SECTION 11.07. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article X may, and
will if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE XII. CONSOLIDATION, MERGER, SALE, OR TRANSFER
SECTION 12.01. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES PERMITTED
ONLY ON CERTAIN TERMS.
(a) The Company shall not consolidate with or merge with or into
any other Person, or transfer (by lease, assignment, sale, or otherwise) its
properties and assets
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substantially as an entirety to another Person unless (i) either (A) the
Company shall be the continuing or surviving Person in such a consolidation
or merger or (B) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which the properties
and assets of the Company are transferred substantially as an entirety (the
Company or such other Person being referred to as the "Surviving Person")
shall be a corporation organized and validly existing under the laws of the
United States, any state thereof, or the District of Columbia, and shall
expressly assume, by an indenture supplement, all the obligations of the
Company under the Securities and the Indenture, (ii) immediately after the
transaction and the incurrence or anticipated incurrence of any Indebtedness
to be incurred in connection therewith, no Default will exist, and (iii) an
Officer's Certificate has been delivered to the Trustee to the effect that
the conditions set forth in the preceding clauses (i) and (ii) have been
satisfied and an Opinion of Counsel (from a counsel who shall not be an
employee of the Company) has been delivered to the Trustee to the effect that
the conditions set forth in the preceding clause (i) have been satisfied.
(b) The Surviving Person will succeed to and be substituted for
the Company with the same effect as if it had been named herein as a party
hereto, and thereafter the predecessor corporation (if it is not the
Surviving Person) will be relieved of all obligations and covenants under
this Indenture and the Securities.
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture will upon a Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at
the expense the Company, will execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when: (a) either (i) all
Securities theretofore authenticated and delivered (other than (A) Securities
which have been destroyed, lost, or stolen and which have been replaced or
paid as provided in Section 2.07 and (B) Securities for the payment of which
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 6.03) have been delivered to the Trustee for
cancellation or (ii) all such Securities not theretofore delivered to the
Trustee for cancellation (A) have become due and payable, (B) will become due
and payable at their Stated Maturity within one year, or (C) 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 clause (A), (B), or
(C) 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 for cancellation, for principal and any premium 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;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and (c) the Company has delivered to the Trustee an
Officer's
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Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been satisfied. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee
under Section 10.06, the obligations of the Company to any Authenticating
Agent under Section 10.13, and, if money shall have been deposited with the
Trustee pursuant to subclause (ii) of clause (a) of this Section 13.01, the
obligations of the Trustee under Sections 6.03(e) and 13.02, will survive.
SECTION 13.02. APPLICATION OF TRUST MONEY.
Subject to provisions of Section 6.03(e), all money deposited with
the Trustee pursuant to Section 13.01 will be held in trust and applied by
it, in accordance with the provisions of the Securities and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal and any premium and interest for
whose payment such money has been deposited with the Trustee.
ARTICLE XIV. MISCELLANEOUS PROVISIONS
SECTION 14.01. SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE.
All the covenants, stipulations, promises, and agreements in this
Indenture contained by or on behalf of the Company will bind its successors
and assigns, whether so expressed or not.
SECTION 14.02. SERVICE OF REQUIRED NOTICE TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver, Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with (a) the
Trustee by any Holder or by the Company will, upon receipt, be sufficient for
every purpose hereunder if made, given, furnished, or filed in a writing
received by the Trustee at its Corporate Trust Office (addressed to the
attention of: Corporate Trust Trustee Administration) or (b) the Company by
the Trustee or by any Holder will, upon receipt, be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished, or filed in a writing received by the Company at its
principal executive offices (addressed to the attention of both its Chief
Financial Officer and its General Counsel).
SECTION 14.03. SERVICE OF REQUIRED NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event,
such notice will be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any
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particular Holder will affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver will be the
equivalent of such notice. Waivers of notice by Holders will be filed with
the Trustee, but such filing will not be a condition precedent to the
validity of any action taken in reliance upon such waiver. In case by reason
of the suspension of regular mail service or by reason of any other cause it
will be impracticable to give such notice by mail, then such notification as
may be made with the approval of the Trustee will constitute a sufficient
notification for every purpose hereunder.
SECTION 14.04. INDENTURE AND SECURITIES TO BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Indenture and the Securities will be deemed to be a contract
made under the laws of the State of New York, and for all purposes will be
construed in accordance with the laws of said State without giving effect to
principles of conflict of laws of such State.
SECTION 14.05. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
will furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion will be
given in the form of an Officer's Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by counsel, and will
comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.
SECTION 14.06. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
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 14.07. PAYMENTS DUE ON NON-BUSINESS DAYS.
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of
the Securities (other than a provision of the Securities of any series which
specifically states that such provision will apply in lieu of this Section
14.07)) payment of interest or principal (and premium, if any) need not be
made at
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such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if
made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, and no interest shall accrue for the intervening period.
SECTION 14.08. PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO CONTROL.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed on any Person by Sections 310 through 317 of the
Trust Indenture Act (including provisions automatically deemed included in
this Indenture pursuant to the Trust Indenture Act unless this Indenture
provides that such provisions are excluded), which are deemed to be a part of
and govern this Indenture, whether or not contained herein, then such imposed
duties will control.
SECTION 14.09. INVALIDITY OF PARTICULAR PROVISIONS.
In case any one or more of the provisions contained in this
Indenture or in the Securities is for any reason held to be invalid, illegal,
or unenforceable in any respect, such the validity, illegality, or
enforceability will not affect any other provision of this Indenture or of
the Securities, but this Indenture and such Securities will be construed as
if such invalid or illegal or unenforceable provision had never been
contained herein or therein.
SECTION 14.10. INDENTURE MAY BE EXECUTED IN COUNTERPARTS.
This instrument may be executed in any number of counterparts, each
of which will be an original, but such counterparts will together constitute
but one and the same instrument.
SECTION 14.11. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action will become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
will be sufficient for any purpose of this Indenture and (subject to Section
10.01) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 14.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying
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that the individual signing such instrument or writing acknowledged to him
the execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
will also constitute sufficient proof of his authority. The fact and date of
the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Securities will be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Security will bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange thereof or in lieu
thereof in respect of anything done, omitted, or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(e) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to give or take
any request, demand, authorization, direction, notice, consent, waiver, or
other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series. With regard to any record date set
pursuant to this paragraph, the Holders of Outstanding Securities of the
relevant series on such record date (or their duly appointed agents), and
only such Persons, will be entitled to give or take the relevant action,
whether or not such Holders remain Holders after such record date. With
regard to any action that may be given or taken hereunder only by Holders of
a requisite principal amount of Outstanding Securities of any series (or
their duly appointed agents) and for which a record date is set pursuant to
this paragraph, the Company may, at its option, set an expiration date after
which no such action purported to be given or taken by any Holder will be
effective hereunder unless given or taken on or prior to such expiration date
by Holders of the requisite principal amount of Outstanding Securities of
such series on such record date (or their duly appointed agents). On or
prior to any expiration date set pursuant to this paragraph, the Company may,
on one or more occasions at its option, extend such date to any later date.
Nothing in this paragraph will prevent any Holder (or any duly appointed
agent thereof) from giving or taking, after any such expiration date, any
action identical to, or, at any time, contrary to or different from, the
action or purported action to which such expiration date relates, in which
event the Company may set a record date in respect thereof pursuant to this
paragraph. Nothing in this Section 14.11(e) will be construed to render
ineffective any action taken at any time by the Holders (or their duly
appointed agents) of the requisite principal amount of Outstanding Securities
of the relevant series on the date such action is so taken. Notwithstanding
the foregoing or the Trust Indenture Act, the Company will not set a record
date for, and the provisions of this Section 14.11(e) will not apply with
respect to, any notice, declaration, or direction referred to in the next
paragraph.
(f) Upon receipt by the Trustee from any Holder of Securities of
a particular series of (a) any notice of default or breach referred to in
Section 8.01(a)(iv) or 8.01(a)(v) with
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respect to Securities of such series, if such default or breach has occurred
and is continuing and the Trustee shall not have given such notice to the
Company, (b) any declaration of acceleration referred to in Section 8.01(b),
if an Event of Default with respect to Securities of such series has occurred
and is continuing and the Trustee shall not have given such a declaration to
the Company, or (c) any direction referred to in Section 8.06 with respect to
Securities of such series, if the Trustee shall not have taken the action
specified in such direction, then a record date will automatically and
without any action by the Company or the Trustee be set for determining the
Holders of Outstanding Securities of such series entitled to join in such
notice, declaration, or direction, which record date will be the close of
business on the tenth calendar day following the day on which the Trustee
receives such notice, declaration, or direction. Promptly after such receipt
by the Trustee, and in any case not later than the fifth calendar day
thereafter, the Trustee will notify the Company and the Holders of
Outstanding Securities of such series of any such record date so fixed. The
Holders of Outstanding Securities of such series on such record date (or
their duly appointed agents), and only such Persons, will be entitled to join
in such notice, declaration, or direction, whether or not such Holders remain
Holders after such record date; PROVIDED that, unless such notice,
declaration, or direction shall have become effective by virtue of Holders of
the requisite principal amount of Outstanding Securities of such series on
such record date (or their duly appointed agents) having joined therein on or
prior to the 90th calendar day after such record date, such notice,
declaration, or direction will automatically and without any action by any
Person be canceled and of no further effect. Nothing in this Section
14.11(f) will be construed to prevent a Holder (or a duly appointed agent
thereof) from giving, before or after the expiration of such 90-day period, a
notice, declaration, or direction contrary to or different from, or, after
the expiration of such period, identical to, the notice, declaration, or
direction to which such record date relates, in which event a new record date
in respect thereof will be set pursuant to this Section 14.11(f). Nothing in
this Section 14.11(f) will be construed to render ineffective any notice,
declaration, or direction of the type referred to in this Section 14.11(f)
given at any time to the Trustee and the Company by Holders (or their duly
appointed agents) of the requisite principal amount of Outstanding Securities
of the relevant series on the date such notice, declaration, or direction is
so given.
(g) Without limiting the foregoing, a Holder entitled hereunder
to give or take any action hereunder with regard to any particular Security
may do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of such
principal amount.
SECTION 14.12. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and will not affect the construction hereof.
SECTION 14.13. BENEFITS OF INDENTURE.
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Nothing in this Indenture or in the Securities, express or implied,
will give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right,
remedy, or claim under this Indenture.
____________________
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
[Seal] MERCURY FINANCE COMPANY
By: ________________________________
Name:_______________________________
Title:______________________________
Attest:
By: ________________________________
Name:_______________________________
Title:______________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS TRUSTEE
By: ________________________________
Name:_______________________________
Title:______________________________
Attest:
By: ________________________________
Name:_______________________________
Title:______________________________
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STATE OF____________)
)SS:
COUNTY OF___________)
On this ____ day of_________________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by authority
of the Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
________________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
________________________________
Notary Public
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STATE OF____________)
)SS:
COUNTY OF___________)
On this ____ day of , 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he/she is ___________________ of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, one of the entities described in and which executed the above
instrument; that he/she knows the seal of said entity; that the seal or a
facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that he/she
signed his/her name thereto by like authority.
________________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
________________________________
Notary Public
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
__________, 1998, is by and among Mercury Finance Company, a Delaware
corporation (the "Company"), and the Persons identified on Schedule 1 hereto
[those senior creditors which will own 10% or more of the New Common Stock]
(the "Securities Holders").
RECITALS
A. Pursuant to the Company's Plan of Reorganization dated as of
__________,1998, (the "Plan") as part of the distribution to Class 4
claimholders under the Plan, the Company will issue all of the then
outstanding shares of the New Common Stock of the Company (the "Shares") and
certain New Senior Secured Notes (both as defined in the Plan) to such
claimholders. In addition, the New Junior Subordinated Notes (as defined in
the Plan ) shall be distributed to Class 5 claimholders under the Plan.
B. As a condition to the consummation of the transactions
contemplated by the Plan, the Company has agreed to grant certain securities
registration rights to the New Securities Holders as set forth herein.
AGREEMENTS
In consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. DEFINITIONS. In addition to the capitalized terms defined
elsewhere in this Agreement and to the defined terms set forth in the Plan
that are not otherwise defined herein, the following capitalized terms shall
have the following meaning when used in this Agreement:
"Adverse Disclosure" means public disclosure of material non-public
information relating to a significant transaction, which disclosure (i) would
be required to be made in any registration statement filed with the
Commission by the Company so that such registration statement would not be
materially misleading; (ii) would not be required to be made at such time but
for the filing of such registration statement; and (iii) would, in the good
faith judgment of the Company's Board of Directors, have a material adverse
effect upon the Company's ability to complete such significant transaction or
upon the terms on which such significant transaction could be completed.
"Affiliate" means, as to any specified person, any other Person
which, directly or indirectly, controls, is controlled by or is under common
control with, such specified Person. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction
of the management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise.
"Commission" means the Securities and Exchange Commission.
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"Common Stock" means the Company's New Common Stock issued pursuant
to the Plan.
"Expiration Time" means the earlier of (i) __________, 2001
[3rd anniversary of Effective Date of the Plan], and (ii) the first time at
which no Holder holds more than 10% of the Shares.
"Holders" means the holders of Registrable Shares who are New
Securities Holders or successors or assigns or subsequent holders
contemplated by Section 15 hereof.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision
thereof.
"Qualified Public Offering" means the first underwritten offering
of Common Stock made by the Company for its own account after the date hereof
and on or prior to __________, 2001
[3rd anniversary of Effective Date of the Plan]pursuant to an effective
registration statement under the Securities Act.
"Registrable Shares" means the Common Stock, the New Senior Secured
Notes, and the New Junior Subordinated Notes beneficially owned by the
Holders; PROVIDED, HOWEVER, that Registrable Shares shall not include (a) any
share that has been sold under an effective registration statement pursuant
to the Securities Act, or (b) any share that has been otherwise transferred
(other than to a New Securities Holder or an Affiliate of a New Securities
Holder) and in the opinion of counsel to the Company, the subsequent
disposition of such share shall not require registration under the Securities
Act.
"Registration Expenses" has the meaning ascribed to it in Section 7
of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Shelf Period" has the meaning set forth in Section 2(b).
"Shelf Registration" means a registration effected pursuant to
Section 2.
"Shelf Registration Statement" means a registration statement of
the Company filed with the Commission on Form S-1 or, if available, Form S-3
(or any successors thereto) for an offering to be made on a continuous basis
pursuant to Rule 415 (or any similar rule that may be adopted by the
Commission) covering some or all of the Registrable Shares, as applicable.
"Subsidiary" means any corporation, association or other entity of
which securities or other ownership interests representing more than fifty
percent (50%) of the ordinary
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voting power are, at the time as of which any determination is being made,
owned or controlled by the Company or one or more Subsidiaries of the Company
or by the Company and one or more Subsidiaries of the Company.
"Underwritten Offering" means a registration in which securities of
the Company are sold to an underwriter on a firm commitment basis for
reoffering to the public.
2. SHELF REGISTRATION
(a) FILING. As soon as is practicable after the effective date of
the Company's Plan, the Company shall file with the Commission a Shelf
Registration Statement relating to the offer and sale of the Registrable
Shares by the Holders thereof from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement and, thereafter shall use its best efforts to cause
such Shelf Registration Statement to be declared effective under the
Securities Act. If, on the effective date of the Plan, the Company does not
qualify to file a Shelf Registration Statement, then the provisions of
Section 3, below, shall apply, but any time thereafter that the Company does
so qualify, it shall, as promptly as practicable, file a Shelf Registration
Statement.
(b) CONTINUED EFFECTIVENESS. The Company shall use its best
efforts to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders
until the third anniversary of the Effective Date of the Plan (but in no
event prior to the applicable period referred to in Section 4(3) of the Act
and Rule 174 thereunder) (such period being the "Shelf Period"). The Company
shall not be deemed to have used its best efforts to keep the Shelf
Registration Statement effective during the Shelf Period if the Company
voluntarily takes any action or omits to take any action that would result in
Holders of the Registrable Shares covered thereby not being able to offer and
sell any such Registrable Shares during the Shelf Period, unless such action
or omission is required by applicable law.
(c) DELAY IN FILING; SUSPENSION OF REGISTRATION. If the filing of
the Shelf Registration Statement or the continued effectiveness of the Shelf
Registration Statement at any time would require the Company to make an
Adverse Disclosure, the Company may, upon giving prompt written notice of
such action to the Holders, delay filing the Shelf Registration Statement or
suspend use of the Shelf Registration Statement (in either case, a "Shelf
Suspension"); PROVIDED, HOWEVER, the Company shall not be permitted to
exercise a Shelf Suspension (i) more than twice during any twelve (12) month
period, (ii) for a period exceeding forty-five (45) days on any one occasion,
or (iii) for an aggregate period exceeding sixty (60) days in any twelve (12)
month period. In the case of a Shelf Suspension, the notice required above
shall request the Holders to suspend any sale or purchase, or offer to sell
or purchase the Registrable Shares, and to suspend use of the Prospectus
related to the Shelf Registration in connection with any such sale or
purchase or offer to sell or purchase. The Company shall immediately notify
the holders upon the termination of any Shelf Suspension, amend or supplement
the Prospectus, if necessary, so it does not contain any untrue statement or
omission therein and furnish to the holder such numbers of copies of the
Prospectus as so amended or supplemented as the Holders may reasonably
request.
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(d) UNDERWRITTEN OFFERING. If the Holders of not less than 10% of
the Shares covered by the Shelf Registration Statement so elect, the offering
of Registrable Shares pursuant to such Shelf Registration Statement shall be
in the form of an Underwritten Offering and the Company shall amend or
supplement the Registration Statement, if appropriate. The Holders of not
less than [ ] % of the Registrable Shares included in such Shelf
Registration shall have the right to select the managing underwriter or
underwriters to administer the offering, subject to the consent of the
Company, which consent shall not be unreasonably withheld.
3. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. If, at any time within six months
after the Effective Date of the Plan and prior to the Expiration Time, a
Shelf Registration Statement shall not be effective (other than as a result
of the operation of the provisions of Section 2(c) hereof), then at such time
any Holder or Holders of at least 10% of the Shares may request registration
under the Securities Act of all or part of their Registrable Shares;
PROVIDED, HOWEVER, that such request shall relate to not less than 10% of the
Shares. Within 14 days after receipt of any request pursuant to this Section
3(a), the Company will give written notice of such request to all other
holders of Registrable Shares and, subject to the terms hereof and applicable
law, will use its best efforts to effect such registration and will include
in such registration all Registrable Shares with respect to which the Company
has received written requests for inclusion therein within 14 days after the
Company's notice has been given. All registrations requested pursuant to
this Section 3(a) are referred to herein as "Demand Registrations." Subject
to the terms hereof, the Company shall have the right to include securities
for its own account in any Demand Registration, and holders of the Company's
securities who have the right to participate in any Demand Registration
pursuant to an agreement with the Company shall have the right to include
securities (the "Required Shares") in such Demand Registration.
(b) NUMBER OF DEMAND REGISTRATIONS. The Holders may request no
more than, and the Company will be obligated to effect no more than, three
Demand Registrations pursuant to Section 3(a). A registration will not count
as a Demand Registration hereunder until the related registration statement
has become effective.
(c) PAYMENT OF EXPENSES FOR DEMAND REGISTRATIONS. The Company
will pay all Registration Expenses for any Demand Registration.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Holder or Holders
initiating the Demand Registration may elect whether the offering of such
Registrable Shares pursuant to such Demand Registration shall be in the form
of a Underwritten Offering or otherwise. In any case in which an offering is
in the form of a Underwritten Offering, if the managing underwriter or
underwriters of such offering advises the Company in writing that, in its or
their opinion, it is probable that inclusion of the number of Registrable
Shares, Required Shares, if any, and securities of the Company ("Company
Shares"), if any, proposed to be included in such offering would adversely
affect the marketability of the Common Stock, the Company will include in
such registration the number of Registrable Shares, Required Shares, if any,
and Company Shares, if any, that in the opinion of such managing underwriter
or underwriters can be sold
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without adversely affecting the market for the Common Stock. In such event,
(a) FIRST, the number of Required Shares, if any, and Company Shares, if any,
to be offered shall be reduced to the extent necessary to reduce the total
number of shares to be included in such offering to the number recommended by
such managing underwriter or underwriters and (b) THEN, if necessary, the
number of Registrable Shares to be offered shall be reduced PRO RATA on the
basis of the relative number of Registrable Shares requested by each such
Holder to be included in such registration to the extent necessary to reduce
the total number of shares to be included in such offering to the number
recommended by such managing underwriter or underwriters.
(e) RESTRICTIONS ON REGISTRATIONS. (i) The Company may postpone
for a reasonable period not to exceed 120 days, the filing, amendment or the
effectiveness of a registration statement for a Demand Registration if the
board of directors of the Company determines reasonably and in good faith
that such filing would be significantly disadvantageous to the Company or its
stockholders.
(ii) A Holder shall not request the registration of Registrable
Shares pursuant to Section 3(a) hereof during the period commencing on the
seventh day prior to the effective date of an offering by the Company that is
registered under the Securities Act and ending on the ninetieth day after such
offering is completed.
(f) SHORT-FORM REGISTRATIONS. If an underwritten Demand Registration
is registered pursuant to Form S-3 (or any successor form thereto), and if the
managing underwriter reasonably requests the inclusion in the Registration
Statement of information which is not required under the Securities Act to be
included on Form S-3, the Company will provide such information for inclusion by
the managing underwriter.
4. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO INITIAL PIGGYBACK. In connection with a Qualified
Public Offering, if the registration form to be used may be used for the
registration of Registrable Shares (an "Initial Piggyback Registration"), the
Company will give written notice (the "Offering Notice") at least 21 days prior
to the anticipated filing date to all holders of Registrable Shares of its
intention to effect such a registration, and the Company will use its best
efforts to effect such registration and will include in such registration all
Registrable Shares with respect to which the Company has received written
requests for inclusion therein within 14 days after the Company's notice has
been given (the "Included Registrable Shares"). Notwithstanding the foregoing,
if, and to the extent, that the managing underwriter or underwriters of the
offering advise the Company that in its or their opinion it is probable that the
inclusion of the Included Registrable Shares in the Qualified Public Offering
would adversely affect the marketability of the shares to be sold in such
offering, then the total number of Included Registrable Shares may be reduced on
a PRO RATA basis on the basis of the relative number of Registrable Shares
requested by each such Holder to that number recommended by the underwriter or
underwriters.
(b) RIGHT TO ADDITIONAL PIGGYBACK. At any time after the effective
date of the Plan and prior to the Expiration Time, whenever Common Stock is to
be registered under the Securities Act (including pursuant to a Demand
Registration), and the registration form to be
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used may be used for the registration of Registrable Shares (a "Piggyback
Registration"), the Company will give an Offering Notice at least 21 days
prior to the anticipated filing date to all holders of Registrable Shares of
its intention to effect such a registration, and the Company will use its
best efforts to effect such registration and will include in such
registration all Registrable Shares with respect to which the Company has
received a written request for inclusion therein within 14 days after the
Offering Notice has been given.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration (including, without limitation, the Initial Piggyback
Registration) is a primary Underwritten Offering on behalf of the Company,
and the managing underwriter or underwriters advise the Company in writing
that in its or their opinion it is probable that the inclusion of the number
of securities requested to be included in the registration would adversely
affect the marketability of the shares to be sold in such offering, the
Company will include in such registration (i) FIRST, the securities the
Company proposes to sell, (ii) SECOND, the Registrable Shares requested to be
included in such registration which in the opinion of such underwriters can
be sold without having such effect, PRO RATA among the Holders of such
Registrable Shares on the basis of the number of Registrable Shares owned by
such Holders with further successive PRO RATA allocations among the Holders
of Registrable Shares if any such Holder has requested the registration of
less than all the Registrable Shares it is entitled to register, and (iii)
THIRD, other securities requested to be included in such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is a secondary Underwritten Offering on behalf of holders of the
Company's securities, and the managing underwriter or underwriters advise the
Company in writing that in their opinion it is probable that the inclusion of
the number of securities requested to be included in such registration would
adversely affect the marketability of the shares to be sold in such offering,
the Company will include in such registration the Registrable Shares held by
the Holders requested to be included in such registration and the securities
requested to be included therein by the holders of the Company's securities
requesting such registration (all such Registrable Shares and other
securities requesting such registration being collectively referred to as the
"Secondary Shares") which in the opinion of such underwriters can be sold
without having such effect, PRO RATA among the holders of such Secondary
Shares on the basis of the number of Secondary Shares owned or deemed to be
owned by such holders, with further successive PRO RATA allocations among the
holders of Secondary Shares if any such holder of Secondary Shares has
requested the registration of less than all such Secondary Shares it is
entitled to register.
5. HOLDBACK AGREEMENTS.
(a) The Company agrees, if reasonably requested by the managing
underwriter or underwriters, not to effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to, and during
the 90-day period beginning on, the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of
such underwritten registration or pursuant to a registration on Form S-4 or
S-8 or any successor
<PAGE>
form or pursuant to any commitment to do so, condition or otherwise, existing
on the date hereof).
(b) Each Holder agrees, if reasonably requested by the managing
underwriter or underwriters, not to effect any public sale or distribution
(including pursuant to Rule 144) of any equity securities of the Company or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to, and during the 90-day period
beginning on, the effective date of any underwritten Piggyback Registration
(which included such Holder's shares) or any underwritten Demand Registration
(regardless of whether such Demand Registration included such Holder's
shares).
(c) Nothing herein shall prevent a Holder of Registrable Shares
that is a partnership from making a distribution of Registrable Shares to its
partners, a Holder of Registrable Shares that is a trust from making a
distribution of Registrable Shares to its beneficiaries or a Holder of
Registrable Shares that is a corporation from making a distribution of
Registrable Shares to its shareholders. The Holders agree that any such
distribution will be made in accordance with applicable law (including,
without limitation, applicable federal and state securities laws) and that
any distributees of Registrable Shares will take such shares subject to the
terms of this Agreement.
6. REGISTRATION PROCEDURES. Whenever the Holders of Registrable
Shares have requested that any Registrable Shares be registered pursuant to the
terms of this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Shares in accordance with the
terms hereof and the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as is practicable in connection with
such an offering:
(a) prepare and file with the Commission, on any registration form
for which the Company then qualifies and which the Company deems appropriate, a
registration statement with respect to such Registrable Shares and use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as the Registrable Shares registered thereunder have been disposed of in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement; PROVIDED, HOWEVER, except as required by
the Securities Act and the rules and regulations promulgated thereunder, and
except pursuant to Shelf Registrations under Section 2 hereunder, the Company
shall not be obligated to keep any registration statement effective for a period
in excess of 45 days;
(c) furnish to each seller of such Registrable Shares and the
underwriters of the securities being registered such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement
7
<PAGE>
(including each preliminary prospectus) and such other documents as such
seller or underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale of
such securities by such underwriters;
(d) register or qualify such Registrable Shares under such other
securities laws of such jurisdictions as any seller reasonably requests and
do any and all other acts and things which may be reasonably necessary or
desirable to enable such seller to consummate the public sale or other
disposition in such jurisdictions of the Registrable Shares owned by such
seller; PROVIDED, HOWEVER, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (ii) subject itself to taxation in any such jurisdiction, (iii)
consent to general service of process in any such jurisdiction, or (iv)
provide any undertaking required by such other securities or "blue sky" laws
or make any change in its charter or by-laws that the board of directors of
the Company determines in good faith to be contrary to the best interest of
the Company and its stockholders;
(e) cause all such Registrable Shares to be listed on each
securities exchange on which similar securities issued by the Company are
then listed, provided that all applicable listing requirements are satisfied;
(f) provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
(g) enter into such customary agreements (including underwriting
agreements) and take all such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable Shares in
accordance with the Holders' intended methods of disposition;
(h) make available for inspection by any seller of such
Registrable Shares, any underwriter participating in any disposition pursuant
to such registration statement, and any attorney, accountant or other agent
designated by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to exercise their due diligence responsibilities, and
cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
Inspector in connection with such registration statement (other than those
documents subject to the attorney/client or attorney work product
privileges). Records that the Company determines, in good faith, to be
confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless the contents of such Records become
publicly available or the release of such Records is ordered pursuant to a
subpoena or other order from a court or governmental agency of competent
jurisdiction or required pursuant to applicable state or federal law. Each
seller of Registrable Shares agrees that it will, upon learning that
disclosure of such Records are sought by a court or governmental agency, give
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
8
<PAGE>
(i) notify each seller of such Registrable Shares, promptly after
it shall receive notice thereof, of the time when such registration statement
has become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(j) notify each seller of such Registrable Shares of any request
by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(k) prepare and promptly file with the Commission and promptly
notify each seller of such Registrable Shares of the filing of such amendment
or supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading;
(l) advise each seller of such Registrable Shares, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use all reasonable efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such stop order should be
issued;
(m) prior to the filing of any registration statement or prospectus
or any amendment or supplement to such registration statement or prospectus,
furnish a copy thereof to each seller of such Registrable Shares and refrain
from filing any such registration statement, prospectus, amendment or
supplement to which counsel selected b the Holders of a majority of the
Registrable Shares being registered shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules and
regulations thereunder, unless, in the case of an amendment or supplement, in
the opinion of counsel for the Company the filing of such amendment or
supplement is reasonably necessary to protect the Company from any
liabilities under any applicable federal or state law and such filing will
not violate applicable laws; and
(n) at the request of the managing underwriter or underwriters in
connection with an underwritten offering, furnish on the date or dates
provided for in the underwriting agreement: (i) an opinion of counsel,
addressed to the underwriters, covering such customary matters as such
underwriters may reasonably request; and (ii) a letter or letters from the
independent certified public accountants of the Company addressed to the
underwriters, covering such customary matters as such underwriters may
reasonably request.
Each Holder of Registrable Shares agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in paragraph (k) of this Section 6, such Holder shall forthwith discontinue
disposition of Registrable Shares pursuant to the registration statement
covering such Registrable Shares until such Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by paragraph (k) of this
Section 6 and,
9
<PAGE>
if so directed by the Company, such Holder shall deliver to the Company (at
the Company's expense) all copies of the prospectus covering such Registrable
Shares current at the time of receipt of such notice.
7. REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Agreement, including, but not limited
to, all registration and filing fees, fees and expenses of compliance with
federal, state and foreign securities laws, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Company and
its independent certified public accountants, underwriters (excluding
discounts and commissions attributable to the Registrable Shares included in
such registration which shall be borne by the holder of such Registrable
Shares) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), will be borne by the Company. In
addition, the Company will pay its internal expenses (including, but not
limited to, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review and the expense of any liability insurance obtained by the
Company and the expenses and fees for listing the securities to be registered
on each securities exchange. Registration Expenses shall not include
expenses incurred by the Holders in connection with a Piggyback Registration
(such expenses of the Holders shall include, but not be limited to,
underwriting discounts and commissions relating to the Registrable Shares,
brokerage fees, transfer taxes, and the fees and expenses of any counsel,
accountants or other representatives retained by the Holders) which expenses
shall be borne by the Holders.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the fullest extent
permitted by law, each seller of Registrable Shares, its partners, officers,
directors, trustees and beneficiaries and each Person who controls such
seller (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses including, but not limited to, reasonable
attorneys' fees except as limited by Section 8(c) caused by any untrue or
alleged untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein, in
the case of a prospectus, in light of the circumstances in which they were
made, not misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Company by such seller
expressly for use therein or by such seller's failure to deliver a copy of
the prospectus or any amendments or supplements thereto after the Company has
furnished such seller with a sufficient number of copies of the same or by
the seller's delivery of a prospectus after the Company notified such seller
to discontinue delivery of prospectuses. In connection with an underwritten
offering, the Company, if requested, will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the sellers of Registrable Shares.
(b) In connection with any registration statement in which a seller
of Registrable Shares is participating, each such seller will furnish to the
Company in writing such
10
<PAGE>
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the
fullest extent permitted by law, will indemnify the Company, its directors
and officers and each Person who controls the Company (within the meaning of
the Securities Act) against any losses, claims, damages, liabilities and
expenses (including, but not limited to, reasonable attorneys' fees except as
limited by Section 8(c)) resulting from any untrue statement of a material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission of
a material fact required to be stated therein or necessary to make the
statements therein, in the case of a prospectus, in light of the
circumstances in which they were made, not misleading, but only to the extent
that such untrue statement or omission is contained in or improperly omitted
from, as the case may be, any information or affidavit so furnished in
writing by such seller; PROVIDED that the obligation to indemnify will be
several, not joint and several, among such sellers of Registrable Shares, and
the liability of each such seller of Registrable Shares will be in proportion
to, and provided further that such liability will be limited to, in any
event, the net amount received by such seller from the sale of Registrable
Shares pursuant to such registration statement. In connection with an
underwritten offering, each seller of Registrable Shares will, if requested,
agree to indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided in this Section 8(b) with respect to the
Company.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.
Each indemnifying party also agrees to make such provisions as are
reasonably requested by any indemnified party for contribution to such party
in the event such indemnifying party's indemnification is unavailable for any
reason.
9. COMPLIANCE WITH RULE 144. The Company covenants that it shall
file the reports required to be filed by it under the Securities Exchange
Act, and the rules and regulations thereunder so long as the Company is
obligated to file such reports, and it shall take such further action as any
Holder may reasonably request, all to the extent required from time to time
to
11
<PAGE>
enable such Holder to sell Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time
or (b) any similar rules or regulations hereafter adopted by the Commission.
Upon the written request of any Holder, the Company shall delivery to such
Holder a written statement as to whether it has complied with such
requirements.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (A) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
11. REDUCTIONS OF REGISTRABLE SHARES IN AN OFFERING. In the event
the aggregate number of Registrable Shares to be included in a Demand
Registration or Piggyback Registration is reduced by operation of the terms
hereof to a number less than the number requested by the Holders to be
included in such registration, such aggregate reduction may be allocated
among, and borne by, the Holders in any manner agreed upon by the Holders
notwithstanding any provision herein regarding the manner in which such
reduction shall be allocated among, and borne by, the Holders.
12. INTENTIONALLY OMITTED.
13. REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically, to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
14. AMENDMENTS AND WAIVERS. The provisions of this Agreement may be
amended or waived at any time only by the written agreement of the Company and
the Holders of a majority of the Registrable Shares. Any waiver, permit,
consent or approval of any kind or character on the part of any such holders of
any provision or condition of this Agreement must be made in writing and shall
be effective only to the extent specifically set forth in writing. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder of Registrable Shares and the Company. Each Holder
acknowledges that by operation of this paragraph the Holders of a majority of
the Registrable Shares, acting in conjunction with the Company, will have the
right and power to diminish or eliminate all rights pursuant to this Agreement.
15. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto, whether so
expressed or not. In addition and whether or not any express assignment has
been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Shares are also for the benefit of, and
enforceable by, any subsequent holder of
12
<PAGE>
Registrable Shares, PROVIDED that, such subsequent holder beneficially owns
no less than 10% of the Shares.
16. FINAL AGREEMENT. This Agreement constitutes the final
agreement of the parties concerning the matters referred to herein, and
supersedes all prior agreements and understandings.
17. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
18. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement.
19. NOTICES. any notices required or permitted to be sent
hereunder shall be delivered personally, telecopied (and confirmed) or
mailed, certified mail, return receipt requested, or delivered by overnight
courier service to the following addresses, or such other addresses as shall
be given by notice delivered hereunder, and shall be deemed to have been
given upon delivery, if delivered personally or telecopied, three business
days after mailing, if mailed, or one business day after delivery to the
courier, if delivered by overnight courier service:
If to the initial Holders of the Registrable Shares, to the addresses
set forth on Schedule 1 hereto.
If to the Holders of Registrable Shares other than the initial Holders
of the Registrable Shares, to the addresses set forth on the stock record books
of the Company.
If to the Company, to:
Mercury Finance Company
[address]
Facsimile:
Attention:
20. GOVERNING LAW. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of
Illinois applicable to contracts made and to be performed in that state.
21. COUNTERPARTS AND FACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an
13
<PAGE>
original, and such counterparts together shall constitute one instrument.
This agreement may be executed by the exchange of signatures by facsimile
transmission. Each party shall receive a duplicate original of the
counterpart copy or copies executed by it and the Company.
[Remainder of page intentionally left blank.
Signature pages follow.]
14
<PAGE>
- ------------------------------------------------------------------------------
WARRANT AGREEMENT
between
MERCURY FINANCE COMPANY
and
HARRIS TRUST AND SAVINGS BANK
as Warrant Agent
__________________________
Dated as of __________, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Form of Warrant; Execution; Registration . . . . . . . . . . 3
2.1 Form of Warrant; Execution of Warrants . . . . . . . . . . . 3
2.2 Registration . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Countersignature of Warrants . . . . . . . . . . . . . . . . 3
Section 3. Transfer and Exchange of Warrants. . . . . . . . . . . . . . 4
Section 4. Term of Warrants; Exercise of Warrants; Compliance with
Government Regulation. . . . . . . . . . . . . . . . . . . . 4
4.1 Term of Warrants. . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . 5
4.3 Compliance with Government Regulations; Qualification under
Securities Laws . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 6
Section 6. Mutilated or Missing Warrant Certificates . . . . . . . . . . 6
Section 7. Reservation of Warrant Shares . . . . . . . . . . . . . . . . 7
Section 8. Stock Exchange Listings . . . . . . . . . . . . . . . . . . . 7
Section 9. Adjustment of Exercise Price, Number of Warrant Shares and
Shares of Capital Stock Warrants Are Exercisable Into . . . . 7
9.1 Mechanical Adjustments. . . . . . . . . . . . . . . . . . . . 8
(a) Adjustment for Change in Capital Stock . . . . . . . . . 8
(b) Adjustment for Rights Issue. . . . . . . . . . . . . . . 8
(c) Adjustment for Other Distributions . . . . . . . . . . . 9
(d) Adjustment for Common Stock and Convertible Securities
Issue. . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Current Market Price; Price Per Share. . . . . . . . . . 10
(f) When De Minimis Adjustment May Be Deferred . . . . . . . 11
(g) Adjustment in Exercise Price . . . . . . . . . . . . . . 12
(h) When No Adjustment Required. . . . . . . . . . . . . . . 12
(i) Shares of Common Stock . . . . . . . . . . . . . . . . . 12
(j) Expiration of Rights, etc. . . . . . . . . . . . . . . . 13
9.2 Voluntary Adjustment by the Company . . . . . . . . . . . . . 13
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.3 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . 13
9.4 Preservation of Purchase Rights upon Merger or
Consolidation . . . . . . . . . . . . . . . . . . . . . . . . 14
9.5 Statement on Warrants . . . . . . . . . . . . . . . . . . . . 14
Section 10. Fractional Interests . . . . . . . . . . . . . . . . . . . . 14
Section 11. No Rights as Stockholders; Notices to Holders . . . . . . . 14
Section 12. Payments in U.S. Currency . . . . . . . . . . . . . . . . . 15
Section 13. Merger or Consolidation or Change of Name of Warrant Agent . 15
Section 14. Appointment of Warrant Agent . . . . . . . . . . . . . . . . 16
14.1 Concerning the Warrant Agent . . . . . . . . . . . . . . . . 16
14.2 Correctness of Statements . . . . . . . . . . . . . . . . . 16
14.3 Breach of Covenants . . . . . . . . . . . . . . . . . . . . 16
14.4 Performance of Duties . . . . . . . . . . . . . . . . . . . 16
14.5 Reliance on Counsel . . . . . . . . . . . . . . . . . . . . 16
14.6 Proof of Actions Taken . . . . . . . . . . . . . . . . . . . 17
14.7 Compensation and Indemnification . . . . . . . . . . . . . . 17
14.8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 17
14.9 Other Transactions in Securities of Company . . . . . . . . 17
14.10 Liability of Warrant Agent . . . . . . . . . . . . . . . . . 18
14.11 Reliance on Documents . . . . . . . . . . . . . . . . . . . 18
14.12 Validity of Agreement . . . . . . . . . . . . . . . . . . . 18
14.13 Instructions from Company . . . . . . . . . . . . . . . . . 18
Section 15. Change of Warrant Agent . . . . . . . . . . . . . . . . . . 18
Section 16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 17. Cancellation of Warrants . . . . . . . . . . . . . . . . . . 19
Section 18. Supplements and Amendments . . . . . . . . . . . . . . . . . 19
Section 19. Successors . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 20. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 20
Section 21. Benefits of this Agreement . . . . . . . . . . . . . . . . . 20
Section 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 20
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 23. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-iii-
<PAGE>
WARRANT AGREEMENT, dated as of __________, 1998, between
Mercury Finance Company, a Delaware corporation (the "COMPANY"), and
[Harris Trust and Savings Bank], as Warrant Agent (together with any
successors and assigns, the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company was a Debtor and Debtor-in-Possession in
the case (the "CHAPTER 11 CASE") filed in the United States Bankruptcy Court
for the District of ___________________ (the "BANKRUPTCY COURT"), entitled
"In re Mercury Finance Company, Debtor," Chapter 11 Case No. ________, under
the Bankruptcy Code;
WHEREAS, in connection with and as part of the transactions to
be consummated pursuant to the confirmation of a Plan of Reorganization (as
amended, modified or supplemented from time to time) of the Company in the
Chapter 11 Case (the "PLAN"), the Company has agreed to issue three series of
Warrants (the "Series A Warrants", the "Series B Warrants" and the "Series C
Warrants" and collectively, the "WARRANTS") with each series of Warrants
exercisable for the purchase of ________[5%] shares of Common Stock of the
Company outstanding on the effective date of the Plan (the "EFFECTIVE DATE").
WHEREAS, by Order dated __________ __, 1998, the Bankruptcy
Court confirmed the Plan;
WHEREAS, the Plan contemplates that the Company will enter
into certain agreements, including, without limitation, this Warrant
Agreement;
WHEREAS, the Company desires to issue the Warrants, each of
which entitles the holder thereof to purchase one share of its Common Stock
(each of said shares of Common Stock deliverable upon exercise of the
Warrants, a "WARRANT SHARE"); and
WHEREAS, the Company wishes the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act in connection with
the issuance, division, transfer, exchange and exercise of Warrants.
NOW, THEREFORE, in consideration of the foregoing, to
implement the terms of the Plan, and for the purpose of defining the terms
and provisions of the Warrants and the respective rights and obligations
thereunder of the Company and the registered owners of the Warrants (the
"HOLDERS") and any security into which they may be exchanged, the Company and
the Warrant Agent hereby agree as follows:
Section 1. DEFINITIONS. The following terms, as used herein,
have the following meanings (all terms defined in the singular to have the
correlative meanings when used in the plural and vice versa):
"AGREEMENT" means this Warrant Agreement, as the same may be
amended, modified or supplemented from time to time.
"ASSETS" has the meaning ascribed to such term in Section
9.1(c) hereof.
<PAGE>
"BUSINESS DAY" means a day other than (a) a Saturday or
Sunday, (b) any day on which banking institutions located in the City of New
York, New York or Chicago, Illinois are required or authorized by law or by
local proclamation to close, or (c) any day on which the New York Stock
Exchange is closed.
"COMMERCIALLY REASONABLE EFFORTS", when used with respect to
any obligation to be performed or term or provision to be observed hereunder,
means such efforts as a prudent Person seeking the benefits of such
performance or action would make, use, apply or exercise to preserve, protect
or advance its rights or interests, PROVIDED that such efforts do not require
such Person to incur a material financial cost or a substantial risk of
material liability unless such cost or liability (i) would customarily be
incurred in the course of performance or observance of the relevant
obligation, term or provision, (ii) is caused by or results from the wrongful
act or negligence of the Person whose performance or observance is required
hereunder, or (iii) is not excessive or unreasonable in view of the rights or
interests to be preserved, protected or advanced. Such efforts may include,
without limitation, the expenditure of such funds and retention by such
Person of such accountants, attorneys or other experts or advisors as may be
necessary or appropriate to effect the relevant action; the undertaking of
any special audit or internal investigation that may be necessary or
appropriate to effect the relevant action; and the commencement, termination
or settlement of any action, suit or proceeding involving such Person to the
extent necessary or appropriate to effect the relevant action.
"COMMON STOCK" means the common stock, par value $___, of the
Company after the Effective Date (as defined in the Plan).
"CONVERTIBLE SECURITIES" has the meaning ascribed to such term
in Section 9.1(d) hereof.
"EXERCISE PERIOD" has the meaning ascribed to such term in
Section 4.1 hereof.
"EXERCISE PRICE" means (i) $_____________ per share for the
Series A Warrants, (ii) $_____________ per share for the Series B Warrants,
and (iii) $______________ per share for the Series C Warrants, as adjusted
pursuant to Section 9 hereof.
"HOLDER" has the meaning ascribed to such term in the preamble
hereto.
"NASD" has the meaning ascribed to such term in Section 4.2
hereof.
"PERSON" means a natural person, a corporation, a partnership,
a trust, a joint venture, any regulatory authority or any other entity or
organization.
"PLAN" has the meaning ascribed to such term in the preamble
hereto.
"PRICE PER SHARE" has the meaning ascribed to such term in
Section 9.1(e)(ii) hereof.
"RIGHTS" has the meaning ascribed to such term in Section
9.1(b) hereof.
"TRANSFER AGENT" has the meaning ascribed to such term in
Section 7 hereof.
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"SEC" means the United States Securities and Exchange
Commission, or any successor governmental agency or authority thereto.
"SERIES A WARRANTS" has the meaning ascribed to such term in
the preamble hereto.
"SERIES B WARRANTS" has the meaning ascribed to such term in
the preamble hereto.
"SERIES C WARRANTS" has the meaning ascribed to such term in
the preamble hereto.
"SUBSIDIARY" has the meaning ascribed to such term in Section
9.1(c) hereof.
"WARRANT" has the meaning ascribed to such term in the
preamble hereto.
"WARRANT CERTIFICATE" has the meaning ascribed to such term in
Section 2.1 hereof.
"WARRANT REGISTER" has the meaning ascribed to such term in
Section 2.2 hereof.
"WARRANT SHARE" has the meaning ascribed to such term in the
preamble hereto.
Section 2. FORM OF WARRANT; EXECUTION; REGISTRATION.
2.1 FORM OF WARRANT; EXECUTION OF WARRANTS. The certificates
evidencing the Warrants (the "WARRANT CERTIFICATES") shall be in registered
form only and shall be in the form set forth as Exhibit A hereto. The
Warrant Certificates shall be signed on behalf of the Company by its Chairman
of the Board, President, Chief Executive Officer or one of its Vice
Presidents. The signature of any such officer on the Warrant Certificates
may be manual or by facsimile. Any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of such Warrant Certificate, shall be a proper officer of the Company to sign
such Warrant Certificate. Each Warrant Certificate shall be dated the date
it is countersigned by the Warrant Agent pursuant to Section 2.3 hereof.
2.2 REGISTRATION. The Warrant Certificates shall be numbered
and shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent initially in Chicago, Illinois (or such
other place in the continental United States as the Warrant Agent shall from
time to time notify the Company and the Holders in writing) (the "WARRANT
REGISTER") as they are issued. The Company and the Warrant Agent shall be
entitled to treat the registered owner of any Warrant as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person.
2.3 COUNTERSIGNATURE OF WARRANTS. The Warrant Certificates
shall be countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. Warrant Certificates may be countersigned,
however, by the Warrant Agent and may be delivered by the Warrant Agent
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such
officers at the time of such countersignature, issuance or delivery. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
the President, the Chief Executive Officer, any Vice President, the Treasurer
or the Secretary of the Company, countersign, issue and deliver Warrant
Certificates
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<PAGE>
entitling the Holders thereof to purchase not more than an aggregate of
_____________ Warrant Shares (subject to adjustment pursuant to Section 9
hereof) and shall countersign, issue and deliver Warrant Certificates as
otherwise provided in this Agreement.
Section 3. TRANSFER AND EXCHANGE OF WARRANTS. Subject to the
terms hereof, the Warrant Agent shall initially countersign, register in the
Warrant Register and deliver Warrants hereunder in accordance with the
written instructions of the Company. Subject to the terms hereof and the
receipt of such documentation as the Warrant Agent may reasonably require,
the Warrant Agent shall thereafter from time to time register the transfer of
any outstanding Warrants upon the Warrant Register upon surrender of the
Warrant Certificate or Certificates evidencing such Warrants duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Warrant Agent, duly executed
by the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the
terms of this Agreement, each Warrant Certificate may be exchanged for
another Warrant Certificate or Certificates entitling the Holder thereof to
purchase a like aggregate number of Warrant Shares, at the same exercise
price and having the same term, as the surrendered Warrant Certificate or
Certificates then entitles such Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Certificates shall make such request in
writing delivered to the Warrant Agent, and shall surrender, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged. Upon
registration of transfer, the Company shall issue and the Warrant Agent shall
countersign and deliver by certified mail a new Warrant Certificate or
Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or
registration of transfer of a Warrant Certificate or of Warrant Certificates,
but the Company may require payment of a sum sufficient to cover any stamp
tax or other tax or other governmental charge that is imposed in connection
with any such exchange or registration of transfer pursuant to Section 5
hereof.
By accepting the initial delivery, transfer or exchange of
Warrants, each Holder shall be deemed to agree to the terms of this Agreement
as it may be in effect from time to time, including any amendments or
supplements duly adopted in accordance with Section 18 hereof.
Section 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; COMPLIANCE
WITH GOVERNMENT REGULATION.
4.1 TERM OF WARRANTS. Subject to the terms of this
Agreement, each Holder shall have the right, until the expiration of the
applicable Exercise Period for the Warrants held, to receive from the Company
the number of Warrant Shares which the Holder may at the time be entitled to
receive upon exercise of such Warrants and payment of the Exercise Price then
in effect for such Warrant Shares, and the Warrant Shares issued to a Holder
upon exercise of its Warrants shall be duly authorized, validly issued, fully
paid, nonassessable and shall not have been issued in violation of or subject
to any preemptive rights. Each Warrant not exercised prior to the expiration
of its Exercise Period shall become void, and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of the
expiration of such Exercise Period. The Exercise Period for the Warrants
shall begin at 9:00 a.m., New York City time, on the date
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of their issuance, and end at 5:00 p.m., New York City time, on (a)
____________________, 2001 (three years after the Effective Date (as defined
in the Plan) for the Series A Warrants, (b) _______________, 2002 (four years
after the Effective Date) for the Series B Warrants, and (c) _______________,
2003 (five years after the Effective Date) for the Series C Warrants.
4.2 EXERCISE OF WARRANTS. During the Exercise Period, each
Holder may, subject to this Agreement, exercise from time to time some or all
of the Warrants evidenced by its Warrant Certificate(s) by (i) surrendering
to the Company at the principal office of the Warrant Agent such Warrant
Certificate(s) with the form of election to purchase on the reverse thereof
duly filled in and signed, which signature shall be guaranteed by a bank or
trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc. (the "NASD"), and (ii)
paying to the Warrant Agent for the account of the Company the aggregate
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are exercised. Warrants shall be deemed exercised on the date such
Warrant Certificate(s) are surrendered to the Warrant Agent and tender of
payment of the aggregate Exercise Price is made. Payment of the aggregate
Exercise Price shall be made in cash by wire transfer of immediately
available funds to the Warrant Agent for the account of the Company or by
certified or official bank check or checks to the order of the Company or by
any combination thereof.
Upon the exercise of any Warrants in accordance with this
Agreement, the Company shall issue and cause to be delivered with all
reasonable dispatch, to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate or certificates for
the number of full Warrant Shares issuable upon the exercise of such Warrants
and shall take such other actions at its sole expense as are necessary to
complete the exercise of such Warrants (including, without limitation,
payment of any cash with respect to fractional interests required under
Section 10 hereof). The Warrant Agent shall have no responsibility or
liability for such issuance or the determination of the number of Warrant
Shares issuable upon such exercise. The certificate or certificates
representing such Warrant Shares shall have been issued and any person so
designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date such Warrants are exercised
hereunder. Each Warrant Share, when issued upon exercise of the Warrants,
shall be duly authorized, validly issued, fully paid and non-assessable and
will not have been issued in violation of or subject to any preemptive rights.
In the event that less than all of the Warrants evidenced by a
Warrant Certificate are exercised, the Holder thereof shall be entitled to
receive a new Warrant Certificate or Certificates as specified by such Holder
evidencing the remaining Warrant or Warrants, and the Warrant Agent is hereby
irrevocably authorized by the Company to countersign, issue and deliver the
required new Warrant Certificate or Certificates evidencing such remaining
Warrant or Warrants pursuant to the provisions of this Section 4.2 hereof and
of Section 3 hereof. The Company, whenever required by the Warrant Agent,
will supply the Warrant Agent with Warrant Certificates duly executed on
behalf to the Company for such purpose.
Upon delivery of the Warrant Shares issuable upon exercise in
accordance herewith and of any required new Warrant Certificates, the Company
shall direct the Warrant Agent by written order to cancel the Warrant
Certificates surrendered upon exercise. Such canceled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner permitted by
applicable
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<PAGE>
laws and satisfactory to the Company in accordance with its written
instructions to the Warrant Agent. The Warrant Agent shall account promptly
to the Company with respect to Warrants exercised and concurrently pay to the
Company all amounts received by the Warrant Agent upon exercise of such
Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its office. The Company shall at its sole
expense supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may reasonably request.
4.3 COMPLIANCE WITH GOVERNMENT REGULATIONS; QUALIFICATION
UNDER SECURITIES LAWS. The Company is issuing the Warrants based upon the
belief that the issuance and the exercise of the Warrants, and the issuance
of the Common Stock upon exercise of the Warrants, are exempt from
registration under the Federal securities laws pursuant to Section 1145 of
the Bankruptcy Code. The Company covenants that if following a due demand to
exercise warrants any shares of Common Stock required to be reserved for
purposes of exercise of such Warrants require, under any federal or state
law, registration with or approval of any governmental authority before such
shares may be issued upon exercise and/or subsequently transferred, and the
Holder requesting the exercise of a Warrant provides an opinion of counsel
acceptable to the Company to the effect that the exercise of the Warrant
and/or the transfer of the underlying Common Stock require registration,
then, the Company will, unless the Company has received an opinion of counsel
to the effect that such registration is not then required by such laws, use
its Commercially Reasonable Efforts to cause such shares to be duly so
registered or approved, as the case may be; PROVIDED that in no event shall
such shares of Common Stock be issued, and the exercise of all such Warrants
shall be suspended, for the period from the date of such due demand for
exercise until such registration or approval is in effect; PROVIDED, FURTHER,
that the Exercise Period for such Warrants (but only such Warrants) shall be
extended one day for each day (or portion thereof) that any such suspension
is in effect. The Company shall promptly notify the Warrant Agent of any
such suspension, and the Warrant Agent shall have no duty, responsibility or
liability in respect of any shares of Common Stock issued or delivered prior
to its receipt of such notice. The Company shall promptly notify the Warrant
Agent of the termination of any such suspension, and such notice shall set
forth the number of days that the Exercise Period with respect to such
Warrants shall be extended as a result of such suspension.
Section 5. PAYMENT OF TAXES. The Company will pay all
documentary stamp and other like taxes, if any, attributable to the initial
issuance and delivery of the Warrants and the initial issuance and delivery
of the Warrant Shares upon the exercise of Warrants, PROVIDED, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer of the Warrants or involved in the issuance or
delivery of any Warrant Shares in a name other than that of the Holder of the
Warrants being exercised, and the Warrant Agent shall not register any such
transfer or issue or deliver any Warrant Certificate(s) or Warrant Shares
unless or until the persons requesting the registration or issuance shall
have paid to the Warrant Agent for the account of the Company the amount of
such tax, if any, or shall have established to the reasonable satisfaction of
the Company that such tax, if any, has been paid.
Section 6. MUTILATED OR MISSING WARRANT CERTIFICATES. In the
event that any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company shall issue, and at the
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<PAGE>
direction of the Company by written order the Warrant Agent shall countersign
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon receipt
of evidence reasonably satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Warrant Certificate and an indemnity
or bond, if requested by the Company or the Warrant Agent, also reasonably
satisfactory to them. An applicant for such a substitute Warrant Certificate
shall also comply with such other reasonable procedures as the Company or the
Warrant Agent may reasonably require.
Section 7. RESERVATION OF WARRANT SHARES. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Stock, free of all preemptive rights, a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. The transfer agent for the Common
Stock and every subsequent or other transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the Warrants (each, a
"TRANSFER AGENT") will be and are hereby irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file
with each Transfer Agent. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from the Company or a Transfer Agent, as the
case may be, the certificates for Warrant Shares required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply its Transfer Agents with duly
executed stock certificates for such purposes and will itself provide or
otherwise make available any cash which may be payable as provided in Section
10 hereof. The Company will furnish to its Transfer Agents a copy of all
notices of adjustments and certificates related thereto, transmitted to each
Holder pursuant to Section 9.3 hereof. The Company will give the Warrant
Agent prompt notice of any change in any Transfer Agent or any change of
address of any Transfer Agent.
Before taking any action which would cause an adjustment
pursuant to Section 9 reducing the Exercise Price, the Company will take any
and all corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
Section 8. STOCK EXCHANGE LISTINGS. The Company shall use
its Commercially Reasonable Efforts (including requests for waivers) to have
each series of the Warrants included for quotation in The Nasdaq National
Market or the Nasdaq Small Cap Market or listed on the American Stock
Exchange, and shall use its Commercially Reasonable Efforts to maintain such
listing or inclusion. In the event the Warrants do not qualify for such
listing or inclusion, the Company will use its Commercially Reasonable
Efforts (including, requests for waivers) to effect such inclusion or listing
whenever the Warrants qualify therefor, and prior to such time, shall use
Commercially Reasonable Efforts to cause some other customary trading market
to admit the warrants for trading. Any such listing and inclusion shall be
at the Company's sole expense.
Section 9. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF WARRANT
SHARES AND SHARES OF CAPITAL STOCK WARRANTS ARE EXERCISABLE INTO. The number
and kind of securities purchasable
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upon the exercise of each Warrant, and the Exercise Price, shall be subject
to adjustment from time to time upon the happening of certain events, as
hereinafter described. The Warrant Agent shall be fully protected in relying
on the certificate described in Section 9.3 below regarding the adjustment
and on any adjustment therein contained, and shall not be obligated or
responsible for calculating any adjustment, nor shall it be deemed to have
knowledge of such an adjustment unless and until it shall have received such
certificate.
9.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Exercise Price shall be
subject to adjustment as follows:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. Subject to
paragraphs (f) and (h) below, in case the Company shall (i)
pay a dividendon its outstanding shares of Common Stock in
shares of Common Stock ormake a distribution of shares of
Common Stock on its outstanding shares of Common Stock, (ii)
make a distribution on its outstanding shares of Common Stock
in shares of its capital stock other than Common Stock, (iii)
subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, (iv) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (v) issue, by reclassification of
its shares of Common Stock, other securities of the Company
(including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
entity), then the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be
adjusted so that the Holder of each Warrant shall be entitled
to receive upon the exercise of the Warrant the kind and
number of Warrant Shares or other securities of the Company
which such Holder would have owned or have been entitled to
receive upon the happening of any of the events described
above had such Warrant been exercised in full immediately
prior to the happening of such event or any record date with
respect thereto. If a Holder is entitled to receive shares of
two or more classes of capital stock of the Company pursuant
to the foregoing upon exercise of Warrants, the allocation of
the adjusted Exercise Price between such classes of capital
stock shall be determined reasonably and in good faith by the
Board of Directors of the Company. After such allocation, the
exercise privilege and the Exercise Price with respect to each
class of capital stock shall thereafter be subject to
adjustment on terms substantially identical to those
applicable to Common Stock in this Section 9. An adjustment
made pursuant to this paragraph (a) shall become effective
immediately after the record date for such event or, if none,
immediately after the effective date of such event. Such
adjustment shall be made successively whenever such an event
occurs.
(b) ADJUSTMENT FOR RIGHTS ISSUE. Subject to paragraphs
(f) and (h) below, in case the Company shall issue rights,
options or warrants (collectively, "RIGHTS") to all holders of
its outstanding Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a Price Per Share (as
defined in paragraph (e) below) which is lower at the record
date mentioned below than the Current Market Price (as defined
in paragraph (e) below) per share of Common Stock on such
record date, then the number of Warrant Shares
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thereafter purchasable upon the exercise of each Warrant shall
be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on the date of issuance of such
Rights plus the additional Number of Shares (as defined in
paragraph (e) below) of Common Stock offered for subscription
or purchase in connection with such Rights and the denominator
of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such Rights plus the
number of shares of Common Stock which the aggregate Proceeds
(as defined in paragraph (e) below) received or receivable by
the Company upon exercise of such Rights would purchase at the
Current Market Price per share of Common Stock at such record
date. Such adjustment shall be made whenever Rights are
issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to
receive Rights.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. Subject to
paragraphs (f) and (h) below, in case the Company shall
distribute to all holders of its shares of Common Stock (x)
evidences of indebtedness or assets (excluding cash dividends
or distributions payable out of the consolidated earnings or
surplus legally available for such dividends or distributions
and dividends or distributions referred to in paragraphs (a)
or (b) above) of the Company or any corporation or other legal
entity a majority of the voting equity or equity interests of
which are owned, directly or indirectly, by the Company (a
"SUBSIDIARY"), or (y) shares of capital stock of a Subsidiary
(such evidences of indebtedness, assets and securities as set
forth in clauses (x) and (y) above, collectively, "ASSETS"),
then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares
theretofore purchasable upon the exercise of each Warrant by a
fraction, the numerator of which shall be the Current Market
Price per share of Common Stock on the date of such
distribution and the denominator of which shall be such
Current Market Price per share of Common Stock less the fair
value as of such record date as determined reasonably and in
good faith by the Board of Directors of the Company of the
portion of the Assets applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution
is made, and shall become effective on the date of
distribution retroactive to the record date for the
determination of stockholders entitled to receive such
distribution.
(d) ADJUSTMENT FOR COMMON STOCK AND CONVERTIBLE
SECURITIES ISSUE. Subject to paragraphs (f) and (h) below, in
case the Company shall issue shares of its Common Stock, or
securities convertible into, or exchangeable or exercisable
for Common Stock or Rights to subscribe for or purchase such
securities (collectively, "CONVERTIBLE SECURITIES") (excluding
the issuance of (i) Common Stock or Convertible Securities
issued in any of the transactions described in paragraphs (a),
(b) or (c) above or (ii) Warrant Shares issued upon the
exercise of the Warrants, at a Price Per Share of Common
Stock, in the case of the issuance of Common Stock, or at a
Price Per Share of Common Stock initially deliverable upon
conversion, exercise or exchange of such Convertible
Securities, in each
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case, together with any other consideration received by the
Company in connection with such issuance, below the Current
Market Price per share of Common Stock on the date the Company
fixed the offering, conversion or exercise or exchange price
of such additional shares), then the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall
be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a
fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding on such date plus the
additional Number of Shares (as defined below) offered for
subscription or purchase and the denominator of which shall be
the Number of Shares outstanding on such date plus the Number
of Shares which the aggregate Proceeds (as defined below) of
the total amount of Convertible Securities so offered would
purchase at the Current Market Price per share of Common Stock
at such record date. In case the Company shall issue and sell
Convertible Securities for a consideration consisting, in
whole or in part, of property other than cash or its
equivalent, then in determining the "Price Per Share" of
Common Stock and the "consideration received by the Company"
for purposes of this paragraph (d), the Board of Directors of
the Company shall reasonably and in good faith determine the
fair value of such property. The determination of whether any
adjustment is required under this paragraph (d), by reason of
the sale and issuance of any Convertible Securities and the
amount of such adjustment, if any, shall be made at such time
and not at the subsequent time of issuance of shares of Common
Stock upon the exercise, conversion or exchange of Convertible
Securities.
(e) CURRENT MARKET PRICE; PRICE PER SHARE. For the
purpose of any computation under Section 4.2 hereof or this
Section 9.1, the "CURRENT MARKET PRICE" per share of Common
Stock at any date shall be the average of the daily closing
prices for the 20 consecutive trading days preceding the date
of such computation. The closing price for each day shall be
(x) if the Common Stock shall be then listed or admitted to
trading on the New York Stock Exchange, the closing price on
the NYSE - Consolidated Tape (or any successor composite tape
reporting transactions on the New York Stock Exchange) or, (y)
if such a composite tape shall not be in use or shall not
report transactions in the Common Stock, or if the Common
Stock shall be listed on a stock exchange other than the New
York Stock Exchange, the last reported sales price regular way
or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for
such day, in each case on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading (which shall be the national securities
exchange on which the greatest number of shares of the Common
stock have been traded during such 20 consecutive trading
days) or (z) if the Common Stock is not listed or admitted to
trading, the average of the closing bid and asked prices of
the Common Stock in the over-the-counter market as reported by
The Nasdaq National Market or any comparable system or, if the
Common Stock is not included for quotation in The Nasdaq
National Market or a comparable system, the average of the
closing bid and asked prices as furnished by two members of
the NASD selected reasonably and in good faith from time to
time by the Board of Directors for that purpose. In
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the absence of one or more such quotations, the Current Market
Price per share of the Common Stock shall be determined
reasonably and in good faith by the Board of Directors of the
Company.
(ii) For purposes of this Section 9.1, "PRICE PER SHARE"
shall be defined and determined according to the following
formula:
P = R/N
where
P = Price Per Share;
R = the "Proceeds" received or receivable by the
Company which (x) in the case of shares of
Common Stock is the total amount received or
receivable by the Company in consideration for
the issuance and sale of such shares; (y) in
the case of Rights or of Convertible Securities
with respect to shares of Common Stock, is the
total amount received or receivable by the
Company in consideration for the issuance and
sale of Rights or such Convertible Securities,
plus the minimum aggregate amount of additional
consideration, other than the surrender of such
Convertible Securities, payable to the Company
upon exercise, conversion or exchange thereof;
and (z) in the case of Rights to subscribe for
or purchase such Convertible Securities, is the
total amount received or receivable by the
Company in consideration for the issuance and
sale of such Rights plus the minimum aggregate
amount of additional consideration, other than
the surrender of such Convertible Securities,
payable upon the exercise of the Right and the
conversion or exchange or exercise of such
Convertible Securities; PROVIDED that in each
case the proceeds received or receivable by the
Company shall be the net cash proceeds after
deducting therefrom any compensation paid or
discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or
other performing similar services;
N = the "Number of Shares," which (x) in the case
of Common Stock is the number of shares issued;
and (y) in the case of Rights or of Convertible
Securities with respect to shares of Common
Stock, is the maximum number of shares of
Common Stock initially issuable upon exercise,
conversion or exchange thereof.
(f) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No
adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%)
in the number of Warrant Shares purchasable upon the exercise
of each Warrant, PROVIDED that any adjustments which by reason
of this paragraph (f) are
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not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations
shall be made to the nearest one-thousandth of a Warrant Share
and the nearest cent.
(g) ADJUSTMENT IN EXERCISE PRICE. Whenever the number
of Warrant Shares purchasable upon the exercise of each
Warrant is adjusted as herein provided, the Exercise Price
payable upon exercise of each Warrant immediately prior to
such adjustment shall be adjusted by multiplying such Exercise
Price by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment and the
denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter.
(h) WHEN NO ADJUSTMENT REQUIRED. No adjustment in the
number of Warrant Shares purchasable upon the exercise of each
Warrant or in the exercise price need be made under this
Section 9.1 in connection with: (i) the issuance of Common
Stock, options, rights, Warrants or other securities pursuant
to the Plan; (ii) shares of Common Stock, options, rights,
warrants or other securities issued pursuant to any plan
adopted by the Company or its subsidiaries for the benefit of
employees or directors; (iii) any issuance of shares of Common
Stock or securities convertible into or exchangeable for
shares of Common Stock pursuant to an underwritten public
offering for a price per share of Common Stock in the case of
an issuance of shares of Common Stock, or for a price per
share of Common Stock initially deliverable upon conversion or
exchange of such securities, that is equal to or greater than
95% of the Current Market Price per share of Common Stock on
the date the Company fixed the offering, conversion or
exchange price of such additional shares of Common Stock; (iv)
sales of Common Stock pursuant to a plan adopted by the
Company for reinvestment of dividends or interest; or (v)
shares of Common Stock issued to shareholders of any
corporation that is acquired by, merged into or made a part or
subsidiary of the Company in an arm's-length transaction.
Additionally, no adjustment need be made if the Company issues
or distributes to each Holder of Warrants the shares, rights,
options, warrants, evidences of indebtedness, assets or other
securities referred to in those paragraphs which each Holder
of Warrants would have been entitled to receive had the
Warrants been exercised for the number of Warrant Shares for
which Warrants are then exercisable prior to the happening of
such event or the record date with respect thereto. No
adjustment in the number of Warrant Shares will be made for a
change in the par value of the shares of Common Stock.
(i) SHARES OF COMMON STOCK. For all purposes of this
Agreement, the term "shares of Common Stock" shall mean (i)
the class of stock designated as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class
of stock resulting from successive changes or reclassification
of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9.1, the Holders
shall become entitled to purchase any securities of the
Company other than shares of Common Stock,
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thereafter the number of such other shares so purchasable upon
exercise of each Warrant and the Exercise Price of such shares
shall be subject to adjustment from time to time in a manner
and on terms substantially identical to the provisions with
respect to the Warrant Shares contained in paragraphs (a)
through (h) above, and the provisions of this Agreement with
respect to the Warrant Shares shall apply on like terms to any
such other securities.
(j) EXPIRATION OF RIGHTS, ETC. Upon the expiration of
any Rights or conversion or exchange or exercise rights, if
any thereof shall not have been exercised, the Exercise Price
and the number of Warrant Shares purchasable upon the exercise
of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such Rights
or conversion or exchange or exercise rights and (B) such
shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
of such Rights or conversion or exchange or exercise rights
whether or not exercised, provided that no such readjustment
shall have the effect of increasing the Exercise Price or
decreasing the number of Warrant Shares purchasable upon the
exercise of each Warrant by an amount in excess of the amount
of the adjustment initially made in respect of the issuance,
sale or grant of such Rights or conversion or exchange or
exercise rights.
9.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
its option, at any time during the term of the Warrants, reduce the then
current Exercise Price to any amount deemed appropriate by the Board of
Directors of the Company.
9.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Exercise Price of
Warrant Shares is adjusted, as herein provided, the Company shall cause the
Warrant Agent promptly to mail to each Holder, at the sole expense of the
Company by first class mail, postage prepaid, notice of such adjustment or
adjustments and shall deliver to the Warrant Agent a certificate of a firm of
independent public accounts (who may be the regular accountants employed by
the Company) setting forth the number of Warrant Shares purchasable upon the
exercise of each Warrant and the Exercise Price of Warrant Shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth in reasonable detail the computations by which
such adjustment was made. The Warrant Agent shall be entitled to rely on
such certificate and shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same, from time to time, to any
Holder requesting an inspection thereof during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility
to any Holder to determine whether any facts exist which may require any
adjustment of the Exercise Price or the number of Warrant Shares or other
stock or property purchasable on exercise of Warrants, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed in making such adjustment.
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9.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER OR
CONSOLIDATION. In case of any consolidation of the Company with or merger of
the Company into another entity, the Company or such successor entity shall
execute and deliver to the Warrant Agent an agreement, which shall be binding
on the Holders, that each Holder shall have the right thereafter upon payment
of the Exercise Price in effect immediately prior to such action (after
giving effect to any applicable adjustments under Section 9.1 hereof) to
purchase upon exercise of each Warrant (and in lieu of the Common Stock
issuable upon exercise of the Warrant) the kind and amount of shares and
other securities and property (including cash) which such Holder would have
owned or have been entitled to receive after the happening of such
consolidation or merger had such Warrant been exercised immediately prior to
such action. The Company shall at its sole expense mail by first class mail,
postage prepaid, to each Holder notice of the execution of any such
agreement. Such agreement shall provide for adjustments, which shall be
substantially identical to the adjustments provided for in this Section 9. In
addition, the Company shall not merge or consolidate with or into, any other
entity unless the successor entity (if not the Company), shall expressly
assume, by supplemental agreement reasonably satisfactory in form and
substance to the Warrant Agent in its sole judgment and executed and
delivered to the Warrant Agent, the due and punctual performance and
observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company. The provisions of this Section 9.4
shall similarly apply to successive consolidations or mergers. The Warrant
Agent shall be under a good faith duty and responsibility to determine the
correctness of any provisions contained in any such agreement relating to the
kind or amount of shares of stock or other securities or property receivable
upon exercise of Warrants or with respect to the method employed and provided
therein for any adjustments and shall be entitled to rely upon the provisions
contained in any such agreement.
9.5 STATEMENT ON WARRANTS. Irrespective of any adjustments
in the Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same Exercise Price and number and kind of Warrant
Shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
Section 10. FRACTIONAL INTERESTS. Neither the Company nor
the Warrant Agent shall be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be exercised at the
same time by the same Holder, the number of full Warrant Shares which shall
be issuable upon such exercise shall be computed on the basis of the
aggregate number of Warrants so exercised. If any fraction of a Warrant
Share would, except for the provisions of this Section 10, be issuable on the
exercise of any Warrant, then the Company shall pay an amount in cash equal
to the closing price for one share of Common Stock on the date the Warrant
Certificate is presented for exercise (determined in accordance with the
second sentence of Section 9.1(e)(i) hereof), multiplied by such fraction.
Section 11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS.
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders or their transferees the right to
vote or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
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In case:
(a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common Stock
or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common stock of securities or assets
(other than cash dividends); or
(c) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or transfer of a
substantial portion of the properties and assets of the
Company for which approval of any stockholders of the Company
is required, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each Holder at its address appearing on the Warrant
Register, at least twenty (20) days prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is
no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common
Stock entitled to receive any such rights, options, warrants or distribution
are to be determined, or (ii) the initial expiration date set forth in any
tender offer or exchange offer for shares of Common Stock, or (iii) the date
on which any such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up is expected to become
effective or consummated, as well as the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, or winding up. The failure to give the notice required by this
Section 11 or any defect therein shall not affect the legality or validity of
any distribution, right, option, Warrant, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation, winding up or action,
or the vote upon any of the foregoing.
Section 12. PAYMENTS IN U.S. CURRENCY. All payments required
to be made hereunder shall be made in lawful money of the United States of
America.
Section 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
WARRANT AGENT. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporation trust business of the Warrant
Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation
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would be eligible for appointment as a successor Warrant Agent under the
provisions of Section 15 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in its name; and in all such cases such Warrant Certificates
shall be fully valid and effective as provided therein and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrant Certificates
so countersigned; and in case at that time any of the Warrant Certificates
shall not have been countersigned, the Warrant Agent may countersign such
Warrant Certificates either in its prior name or in its changed name; and in
all such cases such Warrant Certificates shall be fully valid and effective
as provided therein and in this Agreement.
Section 14. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company hereunder and in
accordance with the terms and conditions hereof, and the Warrant Agent hereby
accepts such appointment.
14.1 CONCERNING THE WARRANT AGENT. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, and no implied duties or obligations shall be
read into this Warrant Agreement against the Warrant Agent, by all of which
the Company and the Holders, by their acceptance of Warrant Certificates,
shall be bound.
14.2 CORRECTNESS OF STATEMENTS. The statements contained
herein and in the Warrant Certificates shall be taken as statements of the
Company, and the Warrant Agent assumes no responsibility for the correctness
of any of the same except statements that describe the Warrant Agent or
action taken by it. The Warrant Agent assumes no responsibility with respect
to the distribution of the Warrant Certificates or Warrants except as herein
otherwise provided.
14.3 BREACH OF COVENANTS. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the
covenants contained in this Agreement or in the Warrant to be complied with
by the Company.
14.4 PERFORMANCE OF DUTIES. The Warrant Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents and
shall not be responsible for the misconduct or negligence of any attorney or
agent (which shall not include an employee of the Warrant Agent) appointed
with due care.
14.5 RELIANCE ON COUNSEL. Before the Warrant Agent acts or
refrains from acting, the Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and the
Warrant Agent shall incur no liability or responsibility to the
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Company or to any Holder in respect to any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or the
advice of such counsel.
14.6 PROOF OF ACTIONS TAKEN. Whenever in the performance of
its duties under this Agreement the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed conclusively to be proved and established by a certificate
signed by any of the Chairman of the Board, the President, a Vice President,
the Treasurer or the Secretary of the Company and delivered to the Warrant
Agent; and such certificate shall be full authorization to the Warrant Agent
for any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
14.7 COMPENSATION AND INDEMNIFICATION. The Company agrees to
pay the Warrant Agent reasonable compensation for all services rendered by
the Warrant Agent in the performance of its duties under this Agreement, to
reimburse the Warrant Agent for all reasonable expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the performance of its duties under this Agreement
(including but not limited to legal fees and expenses), and to indemnify the
Warrant Agent and its officers, agents and directors for and to hold each
harmless from any and all losses, liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent or any of its
agents in the performance of its duties under this Agreement, except as a
result of the Warrant Agent's gross negligence or willful misconduct as
determined in a final judgment of a court of competent jurisdiction and
authority. The Company's obligations under this Section 14.7 and any claim
arising hereunder shall survive the resignation or removal of the Warrant
Agent and the termination or discharge of the Company's obligations under
this Agreement. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
14.8 LEGAL PROCEEDINGS. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or any one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred or any liabilities
which may arise, but this provision shall not affect the power of the Warrant
Agent to take such action as the Warrant Agent may consider proper, whether
with or without any such security or indemnity. All rights of action of any
Holder under this Agreement or under any of the Warrants may be enforced by
the Warrant Agent without the possession of any of the Warrant Certificates
or the production thereof at any trial or other proceeding relative thereto,
and any such action, suit or proceeding instituted by the Warrant Agent shall
be brought in its name as Warrant Agent, and any recovery of judgment shall
be for the ratable benefit of the Holders, as their respective rights or
interests may appear.
14.9 OTHER TRANSACTIONS IN SECURITIES OF COMPANY. The
Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the Warrants or any other
securities of the Company or have a pecuniary interest in any transaction in
which the Company may be interested or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant
Agent under this
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Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
14.10 LIABILITY OF WARRANT AGENT. The Warrant Agent shall
act hereunder solely as agent, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own negligence or bad faith.
14.11 RELIANCE ON DOCUMENTS. The Warrant Agent will not
incur any liability or responsibility to the Company or to any Holder for any
action taken in reliance on any notice, resolution, waiver, consent order,
certificate, or other paper, document or instrument reasonably believed by it
to be genuine and to have been signed, sent or presented by the proper party
or parties.
14.12 VALIDITY OF AGREEMENT. The Warrant Agent shall not be
under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Warrant
Agent) or for any of the statements of fact or recitals contained in this
Agreement or in respect of the validity or execution of any Warrant
Certificate (except its countersignature thereof) or any Warrant; nor shall
the Warrant Agent by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Warrant Shares (or
other securities) to be issued pursuant to this Agreement or any Warrant, or
as to whether any Warrant Shares (or other securities) will, when issued, be
validly issued, fully paid and nonassessable, or as to the Exercise Price or
the number or amount of Warrant Shares or other securities or any Assets or
other property issuable upon exercise of any Warrant.
14.13 INSTRUCTIONS FROM COMPANY. The Warrant Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any person believed in good faith by
the Warrant Agent to be one of the Chairman of the Board, the President, a
Vice President, the Treasurer or the Secretary of the Company, and to apply
to such officers for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer or officers or
any delay in acting while waiting for these instructions..
Section 15. CHANGE OF WARRANT AGENT. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to
the Company thirty (30) days' written notice. The Warrant Agent may be
removed by like notice to the Warrant Agent and the Holders from the Company,
such notice to specify the date when removal shall become effective. If the
Warrant Agent shall resign or be removed or shall otherwise become incapable
of acting, then the Company shall appoint a successor to the Warrant Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after such removal or written notification of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by any Holder
(who shall with such notice submit his Warrant Certificate or Certificates
for inspection by the Company), then any Holder may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant
Agent. Any successor Warrant Agent, whether appointed by the Company or such
a court, shall be a bank or trust company, in good standing, incorporated
under the laws of the United States of America or any state thereof and
having at the time of its appointment as Warrant Agent a combined capital and
surplus of at least
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$100,000,000. After appointment and acceptance of such appointment in
writing, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor Warrant Agent any property at the time
held by it hereunder, and shall execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to file any
notice provided for in this Section 15, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor Warrant Agent, as the case
may be. In the event of such resignation or removal, the successor Warrant
Agent shall mail, by first class mail, postage prepaid, to each Holder,
written notice of such removal or resignation and the name and address of
such successor Warrant Agent.
Section 16. NOTICES. Any notice pursuant to this Agreement
by the Company or by any Holder to the Warrant Agent, shall be in writing and
shall be delivered in person or sent by registered or certified mail and
shall be deemed given upon receipt at its offices at Harris Trust & Savings
Bank, 311 W. Monroe Street, Chicago, IL 60606 Attention: Thomas
Blatchford. Any notice pursuant to this Agreement by the Warrant Agent or by
any Holder to the Company, shall be in writing and shall be delivered in
person or by confirmed facsimile transmission (plus a copy delivered by
overnight mail) or first class mail, postage prepaid at its offices at
Mercury Finance Company, 100 Field Drive, Lake Forest, Illinois 60045,
Attention: Corporate Secretary, Telecopier No.: ___________________. Each
party hereto may from time to time change the address to which its notices
are to be delivered or mailed hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company or
the Warrant Agent to the Holders shall be in writing and shall be mailed
first class, postage prepaid, or otherwise delivered, to such Holders at
their respective addresses in the Warrant Register. The initial address of
each Holder shall be as provided by the Company to the Warrant Agent. Any
Holder may change its address by notice to the Company and the Warrant Agent
given in accordance with this Section 16.
Section 17. CANCELLATION OF WARRANTS. In the event the
Company shall purchase or otherwise acquire Warrants, the same shall
thereupon be delivered to the Warrant Agent and be cancelled by it and
retired. The Warrant Agent shall cancel any Warrant Certificate surrendered
for exchange, substitution, transfer or exercise in whole or in part.
Section 18. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement, the
Warrants and the Warrant Certificates without approval of any Holder, in
order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provision herein, or to comply with the requirements of any national
securities exchange or The Nasdaq National Market, or to make any other
provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not be inconsistent with the provisions of the Warrants and this Agreement.
Any other supplement or amendment to this Agreement may be made with the
approval of the Holders of a majority of outstanding Warrants of each series
of Warrants, voting separately as three classes; provided, however, that any
such amendment or supplement that (i) increases the
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Exercise Price; (ii) decreases the number of shares of Common Stock issuable
upon exercise of a Warrant; or (iii) shortens the period during which the
Warrants may be exercised shall require the consent of each Holder of a
Warrant affected thereby. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights and duties of
the Warrant Agent under this Agreement will be effective against the Warrant
Agent without the execution of such supplement or amendment by the Warrant
Agent.
Section 19. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent
shall bind and inure solely to the benefit of the Company or the Warrant
Agent and their respective successors hereunder.
Section 20. APPLICABLE LAW. This Agreement and each Warrant
issued hereunder shall be governed by and construed in accordance with the
laws of the state of Delaware without giving effect to the principles of
conflict of laws thereof, except as to the rights and obligations of the
Warrant Agent, which shall be governed by and construed in accordance with
the laws of the Sate of Illinois.
Section 21. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent and the Holders any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent, their
respective successors, and the Holders of the Warrants.
Section 22. COUNTERPARTS. This Agreement may be executed in
any number of counterparts; each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 23. CAPTIONS. The captions of the Sections and
subsections of this Agreement have been inserted for convenience only and
shall have no substantive effect.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
MERCURY FINANCE COMPANY
By: ___________________________
Name: _________________________
Title: ________________________
HARRIS TRUST AND SAVINGS BANK
as Warrant Agent
By: ___________________________
Name: _________________________
Title: ________________________
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No. __________ __________ Warrants
Series A
Warrant Certificate
MERCURY FINANCE COMPANY
This Warrant Certificate certifies that ____________________
or registered assigns, is the registered holder of Series A Warrants (the
"Warrants") expiring at 5:00 p.m., New York City time, on __________ __, 2001
(the "Expiration Date"), to purchase Common Stock, $___ par value per share
(the "Common Stock"), of MERCURY FINANCE COMPANY, a Delaware corporation (the
"Company"). The Warrants may be exercised at any time from 9:00 am., New
York City time, on __________ __, 1998 to 5:00 p.m., New York City time, on
the Expiration Date. Each Warrant entitles the holder upon exercise to
receive from the Company, if exercised before 5:00 p.m., New York City time,
on the Expiration Date, one fully paid and nonassessable share of Common
Stock (a "Warrant Share") at the Exercise Price (as defined in the Warrant
Agreement referred to on the reverse side hereof), payable in lawful money of
the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent,
but only subject to the conditions set forth herein and in the Warrant
Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events as set forth in the Warrant Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY
TIME, ON __________ __, 2001 SHALL BECOME VOID.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
A-1
<PAGE>
IN WITNESS WHEREOF, MERCURY FINANCE COMPANY has caused this
Warrant Certificate to be duly executed.
MERCURY FINANCE COMPANY
By: __________________________
Title: _______________________
Dated: _________________________
Countersigned:
[HARRIS TRUST AND SAVINGS BANK],
as Warrant Agent
By: _____________________________
Authorized Signatory
A-2
<PAGE>
[Form of Warrant Certificate]
(Reverse)
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring on the Expiration Date entitling
the holder on exercise to receive shares of Common Stock of the Company and
are issued or to be issued pursuant to a Warrant Agreement dated as of
__________, 1998 (the "Warrant Agreement"), duly executed and delivered by
the Company to [Harris Trust and Savings Bank], as Warrant Agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company. By accepting initial
delivery, transfer or exchange of this Warrant, the duly registered holder
shall be deemed to have agreed to the terms of the Warrant Agreement as it
may be in effect from time to time, including any amendments or supplements
duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in the manner described below at
the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or its assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire
transfer to the Warrant Agent for the account of the Company or by certified
or official bank check or checks to the order of the Company or by any
combination thereof.
The Warrant Agreement provides that upon the occurrence of
certain events the number of shares of Common Stock issuable upon the
exercise of each Warrant, and the Exercise Price of each Warrant, may,
subject to certain conditions, be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the Company
shall pay the cash value thereof determined as provided in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in
the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
A-3
<PAGE>
exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) hereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
A-4
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this
Series A Warrant, according to the terms and conditions hereof, to the extent
of purchasing __________ shares of Common Stock and hereby makes payment of
$________ in payment of the exercise price thereof. If the number of shares
shall not be all of the shares purchasable under this Warrant, then a new
Warrant Certificate for the balance remaining shall be issued in the name of
the undersigned or its assignee as indicated on the Assignment Form.
Dated: ______________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: _______________________________________________________________
(please typewrite or print in block letters)
Address: ____________________________________________________________
Signature __________________________________________________
Note: The signature must conform in all respects to name of
holder as specified on the face of this Warrant Certificate
Signature Guaranteed:
A-5
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name: ____________________________________________________________________
(please typewrite or print in block letters)
Address: _________________________________________________________________
its right to purchase __________ shares of Common Stock represented by this
Series A Warrant and does hereby irrevocably constitute and appoint
__________ Attorney, to transfer the same on the books of the Company, with
full power of substitution in the premises.
Dated: ________________________________
_______________________________________ Signature: __________________
Social Security or other identifying number Note: The signature must
of holder conform in all respects
to name of holder as
specified on the face of
this Warrant Certificate
Signature Guaranteed:
A-6
<PAGE>
No. __________ __________ Warrants
Series B
Warrant Certificate
MERCURY FINANCE COMPANY
This Warrant Certificate certifies that ____________________
or registered assigns, is the registered holder of Series B Warrants (the
"Warrants") expiring at 5:00 p.m., New York City time, on __________ __, 2002
(the "Expiration Date"), to purchase Common Stock, $___ par value per share
(the "Common Stock"), of MERCURY FINANCE COMPANY, a Delaware corporation (the
"Company"). The Warrants may be exercised at any time from 9:00 am., New
York City time, on __________ __, 1998 to 5:00 p.m., New York City time, on
the Expiration Date. Each Warrant entitles the holder upon exercise to
receive from the Company, if exercised before 5:00 p.m., New York City time,
on the Expiration Date, one fully paid and nonassessable share of Common
Stock (a "Warrant Share") at the Exercise Price (as defined in the Warrant
Agreement referred to on the reverse side hereof), payable in lawful money of
the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent,
but only subject to the conditions set forth herein and in the Warrant
Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events as set forth in the Warrant Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY
TIME, ON __________ __, 2002 SHALL BECOME VOID.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
B-1
<PAGE>
IN WITNESS WHEREOF, MERCURY FINANCE COMPANY has caused this
Warrant Certificate to be duly executed.
MERCURY FINANCE COMPANY
By: ____________________________
Title: _________________________
Dated: ______________________________
Countersigned:
[HARRIS TRUST AND SAVINGS BANK],
as Warrant Agent
By: ________________________________
Authorized Signatory
B-2
<PAGE>
[Form of Warrant Certificate]
(Reverse)
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring on the Expiration Date entitling
the holder on exercise to receive shares of Common Stock of the Company and
are issued or to be issued pursuant to a Warrant Agreement dated as of
__________, 1998 (the "Warrant Agreement"), duly executed and delivered by
the Company to [Harris Trust and Savings Bank], as Warrant Agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company. By accepting initial
delivery, transfer or exchange of this Warrant, the duly registered holder
shall be deemed to have agreed to the terms of the Warrant Agreement as it
may be in effect from time to time, including any amendments or supplements
duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in the manner described below at
the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or its assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire
transfer to the Warrant Agent for the account of the Company or by certified
or official bank check or checks to the order of the Company or by any
combination thereof.
The Warrant Agreement provides that upon the occurrence of
certain events the number of shares of Common Stock issuable upon the
exercise of each Warrant, and the Exercise Price of each Warrant, may,
subject to certain conditions, be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the Company
shall pay the cash value thereof determined as provided in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in
the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
B-3
<PAGE>
exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) hereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
B-4
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this
Series B Warrant, according to the terms and conditions hereof, to the extent
of purchasing __________ shares of Common Stock and hereby makes payment of
$________ in payment of the exercise price thereof. If the number of shares
shall not be all of the shares purchasable under this Warrant, then a new
Warrant Certificate for the balance remaining shall be issued in the name of
the undersigned or its assignee as indicated on the Assignment Form.
Dated: ____________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ____________________________________________________________________
(please typewrite or print in block letters)
Address: _________________________________________________________________
Signature _______________________________________________________
Note: The signature must conform in all respects to name of
holder as specified on the face of this Warrant Certificate
Signature Guaranteed:
B-5
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name: _______________________________________________________________________
(please typewrite or print in block letters)
Address: ____________________________________________________________________
its right to purchase __________ shares of Common Stock represented by this
Series B Warrant and does hereby irrevocably constitute and appoint
__________ Attorney, to transfer the same on the books of the Company, with
full power of substitution in the premises.
Dated: ____________________________________
___________________________________________ Signature: ___________________
Social Security or other identifying number Note: The signature
of holder must conform in all
respects to name of
holder as specified
on the face of this
Warrant Certificate
Signature Guaranteed:
B-6
<PAGE>
No. __________ __________ Warrants
Series C
Warrant Certificate
MERCURY FINANCE COMPANY
This Warrant Certificate certifies that ____________________
or registered assigns, is the registered holder of Series C Warrants (the
"Warrants") expiring at 5:00 p.m., New York City time, on __________ __, 2003
(the "Expiration Date"), to purchase Common Stock, $___ par value per share
(the "Common Stock"), of MERCURY FINANCE COMPANY, a Delaware corporation (the
"Company"). The Warrants may be exercised at any time from 9:00 am., New
York City time, on __________ __, 1998 to 5:00 p.m., New York City time, on
the Expiration Date. Each Warrant entitles the holder upon exercise to
receive from the Company, if exercised before 5:00 p.m., New York City time,
on the Expiration Date, one fully paid and nonassessable share of Common
Stock (a "Warrant Share") at the Exercise Price (as defined in the Warrant
Agreement referred to on the reverse side hereof), payable in lawful money of
the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent,
but only subject to the conditions set forth herein and in the Warrant
Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events as set forth in the Warrant Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY
TIME, ON __________ __, 2003 SHALL BECOME VOID.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
C-1
<PAGE>
IN WITNESS WHEREOF, MERCURY FINANCE COMPANY has caused this
Warrant Certificate to be duly executed.
MERCURY FINANCE COMPANY
By: _________________________
Title: ______________________
Dated: ___________________________
Countersigned:
[HARRIS TRUST AND SAVINGS BANK],
as Warrant Agent
By: _______________________________
Authorized Signatory
C-2
<PAGE>
[Form of Warrant Certificate]
(Reverse)
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring on the Expiration Date entitling
the holder on exercise to receive shares of Common Stock of the Company and
are issued or to be issued pursuant to a Warrant Agreement dated as of
__________, 1998 (the "Warrant Agreement"), duly executed and delivered by
the Company to [Harris Trust and Savings Bank], as Warrant Agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company. By accepting initial
delivery, transfer or exchange of this Warrant, the duly registered holder
shall be deemed to have agreed to the terms of the Warrant Agreement as it
may be in effect from time to time, including any amendments or supplements
duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in the manner described below at
the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or its assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire
transfer to the Warrant Agent for the account of the Company or by certified
or official bank check or checks to the order of the Company or by any
combination thereof.
The Warrant Agreement provides that upon the occurrence of
certain events the number of shares of Common Stock issuable upon the
exercise of each Warrant, and the Exercise Price of each Warrant, may,
subject to certain conditions, be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the Company
shall pay the cash value thereof determined as provided in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in
the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
C-3
<PAGE>
exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) hereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
C-4
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this
Series C Warrant, according to the terms and conditions hereof, to the extent
of purchasing __________ shares of Common Stock and hereby makes payment of
$________ in payment of the exercise price thereof. If the number of shares
shall not be all of the shares purchasable under this Warrant, then a new
Warrant Certificate for the balance remaining shall be issued in the name of
the undersigned or its assignee as indicated on the Assignment Form.
Dated: _________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ____________________________________________________________________
(please typewrite or print in block letters)
Address: _________________________________________________________________
Signature _______________________________________________________
Note: The signature must conform in all respects to name
of holder as specified on the face of this Warrant
Certificate
Signature Guaranteed:
C-5
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name: ____________________________________________________________________
(please typewrite or print in block letters)
Address: _________________________________________________________________
its right to purchase __________ shares of Common Stock represented by this
Series C Warrant and does hereby irrevocably constitute and appoint
__________ Attorney, to transfer the same on the books of the Company, with
full power of substitution in the premises.
Dated: ____________________________________
___________________________________________ Signature: ___________________
Social Security or other identifying number Note: The signature
of holder must conform in all
respects to name of
holder as specified
on the face of this
Warrant Certificate
Signature Guaranteed:
C-6
<PAGE>
MERCURY FINANCE COMPANY
BY-LAWS
ARTICLE I
OFFICES
SECTION 1. The registered office shall be in the City of Wilmington, County of
New Castle, State of Delaware.
SECTION 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for the election of directors shall
be held at such place (within or without the State of Delaware) as may be fixed
from time to time by the board of directors and stated in the notice of the
meeting. Meetings of stockholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders shall be held on the fourth
Wednesday of April (if not a legal holiday and if a legal holiday, then on the
next secular day following), at 4:00 P.M., or at such other date and time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting. At each annual meeting, the shareholders shall
elect, by a plurality vote, a board of directors, and transact such other
business as may properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
SECTION 4. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the
<PAGE>
whole time thereof, and may be inspected by any stockholder who is present.
The original or duplicate stock ledger shall be the only evidence as to who
are the stockholders entitled to examine such list, the stock ledger or the
books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 5. Special meetings of the stockholders for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman or the chief executive officer
of the corporation and shall be called by either such person at the request
in writing of a majority of the board of directors, or at the request in
writing of stockholders owning in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting of the stockholders stating
the place, date and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting, to each stockholder entitled
to vote at such meeting.
SECTION 7. An affidavit of the secretary or an assistant secretary or the
transfer agent of the corporation that notice of a stockholders meeting has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
SECTION 8. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
SECTION 9. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy or the chairman or the chief executive
officer, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at a meeting.
SECTION 10. When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the statutes of the State of Delaware
or the certificate of incorporation, a different vote is required, in which
case, such express provision shall govern and control the decision of such
question.
SECTION 11. Unless otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on
2
<PAGE>
after one (1) year from its date, unless the proxy provides for a longer
period. Persons holding stock in fiduciary capacity shall be entitled to
vote the shares so held. Shares of capital stock owned by the corporation
shall not be voted, directly or indirectly.
SECTION 12. If shares or other securities having voting power stand of
record in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the secretary of the corporation is given
written notice to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein it is so
provided, their acts with respect to voting shall have the following effect;
(a) If only one votes, his acts binds all;
(b) If more than one vote, the act of the majority so voting binds
all;
(c) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any,
may apply to the Court of Chancery or such other court as may have
jurisdiction to appoint an additional person to act with the persons so
voting the shares, which shall then be voted as determined by a majority of
such persons and the person appointed by the Court. If the instrument so
filed shows that any such tenancy is held in unequal interests, a majority
or even split for the purpose of this subsection shall be a majority or
even split in interest.
SECTION 13. Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole board shall
be not less than five nor more than fifteen. Within the limits above specified,
the number of directors shall be determined by resolution of the board of
directors, but absent such resolution, shall be seven. The directors shall be
elected at the annual meeting of the stockholders, except as provided in Section
2 of this Article, and each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
3
<PAGE>
SECTION 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filed by a majority of
the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are not directors in office, then
an election of directors may be held in the manner provided by statute. If,
at the time of filling any vacancy or newly created directorship, the
directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of shares at the time outstanding
having the right to vote for such directors, summarily order an election to
be held to fill any such vacancies or newly created directorships chosen by
the directors then in office.
SECTION 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or
done by the stockholders.
SECTION 4. Any director, member of a committee or other officer may resign
at any time. Such resignation shall be made in writing, and shall take
effect at the time specified therein, and if no time be specified, at the
time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 5. A member of the board of directors or a member of any committee
designated by the board of directors shall, in the performance of his duties,
be fully protected in relying in good faith upon the books of account or
reports made to the corporation by any of its officers, or by an independent
certified public accountant, or by an appraiser selected with reasonable care
by the board of directors or by any committee, or in relying in good faith
upon other records of the corporation.
MEETINGS OF THE
BOARD OF DIRECTORS
SECTION 6. Except as hereinafter provided, any director or directors may be
removed either with or without cause at any time by the affirmative vote of the
holders of a majority of all the shares of stock outstanding and entitled to
vote at a special meeting of the stockholders called for the purpose and the
vacancies thus created may be filled, at the meeting held for the purpose of
removal, by the affirmative vote of a majority in interest of the stockholders
entitled to vote at such meeting.
SECTION 7. The board of directors of the corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
SECTION 8. The annual meeting of the board of directors shall be held
immediately following the annual meeting of stockholders at the place thereof,
or at such other time and place as then may
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be determined by the chairman, for the purpose of appointing directors to
committees of the board and electing the officers of the corporation for the
ensuing year.
SECTION 9. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be
determined by the board.
SECTION 10. Special meetings of the board of directors or committees thereof
may be called by the chairman or the chief executive officer on two days'
notice to each director, either personally or by mail, facsimile or other
written form; special meetings shall be called by the chairman or secretary
in like manner and on like notice on the written request of a majority of the
directors.
SECTION 11. At all meetings of the board of directors a majority of the
directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 12. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting
of the board of directors or any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board of directors or committee.
SECTION 13. During any emergency period following a catastrophe or other
emergency contemplated by Section 110 of the General Corporation Laws of the
State of Delaware as a result of which a quorum of the board of directors or
a standing committee thereof cannot readily be convened for action, a
majority of the directors who can readily convene shall constitute a quorum,
for the purpose of filling vacancies in the board of directors and among the
elected and appointed officers of the corporation.
SECTION 14. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the
board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEE OF DIRECTORS
SECTION 15. The board of directors shall have standing executive, audit,
personnel and compensation, and nominating committees, and may, by resolution
or resolutions passed by a majority of the whole board, designate additional
committees which shall bear such name and have the powers and duties as may
be fixed and determined by the board of directors. The size
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and membership of each standing or other committee shall be determined by the
board of directors from time to time. Each committee shall keep regular
minutes of its meetings and report the same to the board of directors at the
next meeting of the board of directors.
SECTION 16. The executive committee shall include and shall be chaired by
the chairman of the board of directors. During the interval between the
meetings of the board of directors, in cases where the board of directors
cannot readily be convened, the executive committee shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution, amending the by-laws of the
corporation, declaring a dividend, or authorizing the issuance of stock.
SECTION 17. The audit committee shall review the audit schedule and results
of audits performed by internal auditors, meet with and review results of
auditors of the corporation and its subsidiaries performed by independent
public auditors and recommend the selection of independent public auditors.
Directors who are also employees of the corporation shall not be voting
members of this committee.
SECTION 18. The personnel and compensation committee shall recommend to the
board of directors salaries and bonuses of all executive officers, oversee
the corporation's compensation, incentive, and employee benefit programs, and
administer the corporation's retirement, incentive compensation and stock
option plans. The committee shall also review other personnel matters as may
be appropriate and make recommendations to the chief executive officer and
the board of directors. Directors who are also employees of the corporation
shall not be voting members of this committee.
SECTION 19. The nominating committee shall consider nominees to the board of
directors from names recommended by stockholders and shall nominate persons
to be elected to the board of directors at the annual meeting of stockholders
or when vacancies are to be filled. The committee shall also review and
recommend to the board of directors changes in compensation of directors.
COMPENSATION OF DIRECTORS
SECTION 20. By resolution of the board of directors, a non-employee director
may receive compensation for services as a director. Also, the board of
directors may allow a fixed sum and expenses of attendance, for attendance at
each regular or special meeting of the board of directors or a committee
thereof. Nothing herein shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
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ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by facsimile (at a
telephone number provided by such director for such purpose) or by recognized
overnight delivery service.
SECTION 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting
for the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, board of directors or members
of a committee of directors need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the board of
directors and shall be a chairman of the board of directors, a president, a
vice-president, a secretary and a treasurer. The board of directors may also
choose additional vice presidents, one or more assistant secretaries, and one
or more assistant treasurers. The board of directors shall designate either
the chairman of the board of directors or the president to be the chief
executive officer of the corporation. Any number of offices may be held by
the same person, unless the certificate of incorporation or these by-laws
otherwise provide.
SECTION 2. The board of directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
SECTION 3. The salaries of all executive officers of the corporation shall
be fixed by the board of directors.
SECTION 4. The officers of the corporation shall hold office until their
successors are chosen and qualify or until their earlier resignation and/or
removal. Any officer elected or appointed by the board of directors may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall
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be filled by the board of directors. Any officer may resign at any time by
giving written notice to the board of directors, the chairman of the board,
the president or the secretary. Such resignation shall take effect at the
time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
THE CHAIRMAN OF THE
BOARD OF DIRECTORS
SECTION 5. The chairman of the board of directors shall preside at all
meetings of the stockholders and directors. If he is not designated chief
executive officer, he shall, in the absence or disability of such officer,
act in his place and stead, and he shall have such additional powers and
duties as may be assigned by the chief executive officer or the board of
directors.
THE PRESIDENT
SECTION 6. The president, if he is not designated chief executive officer,
shall, in the absence or disability of such officer, act in his place and
stead, and he shall have such other powers and duties as may be assigned by
the chief executive officer or the board of directors.
THE CHIEF
EXECUTIVE OFFICER
SECTION 7. The chief executive officer (i.e., the chairman of the board of
directors or the president, as designated by the board of directors) shall
have general and active management and control of the business and affairs of
the corporation subject to the control of the board of directors, and shall
see that all orders and resolutions of the board are carried into effect.
THE VICE PRESIDENT
SECTION 8. In the absence of the chairman and the president, or in the event
of their inability or refusal to act, the vice president (or in the event
there be more than one vice president, the vice president in the order
designated or in the absence of any designation, then in the order of their
election) shall perform the duties of the chairman and president, and when so
acting, shall have all of the powers of and be subject to all the
restrictions upon the chairman and the president. The vice president shall
perform such other duties and have such other powers and duties as may be
assigned by the chief executive officer or the board of directors.
THE SECRETARY
AND ASSISTANT SECRETARY
SECTION 9. The secretary shall attend all meetings of the board of directors
and all meetings of the stockholders and record all the proceedings of the
meetings of the stockholders and record all of the meetings of the
corporation and of the board of directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when
required. He shall give or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall
perform such other duties as may be assigned by the chief executive officer
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or the board of directors. He shall have custody of the stock ledger (which
may, however, be kept by any transfer agent or agents or the corporation
under his direction) and the corporate seal of the corporation and he, or any
assistant secretary, shall have the authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by his signature.
SECTION 10. The assistant secretary, or if there be more than one, the
assistant secretaries in order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as may be assigned by
the chief executive officer or the board of directors.
THE TREASURER
AND ASSISTANT TREASURER
SECTION 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
money and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
SECTION 12. He shall disburse the funds of the corporation as may be ordered
by the board of directors, taking proper vouchers for such disbursements, and
shall render to the chief executive officer and the board of directors, at
its regular meetings, or when the board of directors so requires, an account
of all his transactions as treasurer and of the financial condition of the
corporation.
SECTION 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the corporation.
SECTION 14. The assistant treasurer, or if there shall be more than one, the
assistant treasurer in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal
to act, perform the duties and exercise the powers and duties as may be
assigned by the chief executive officer or the board of directors.
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ARTICLE VI
CERTIFICATE OF STOCK
SECTION 1. The board of directors may, at any time and from time to time, if
all of the shares of capital stock which the corporation is authorized by its
certificate of incorporation to issue have not been issued, subscribed for,
or otherwise committed to be issued, issue or take subscriptions for
additional shares of its capital stock up to the amount authorized in its
certificate of incorporation. Such stock shall be issued and the
consideration paid therefor in the manner prescribed by law. Shares of stock
with par value may be issued for such consideration, having a value not less
than par value thereof.
SECTION 2. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or the president or a vice president, and the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation;
provided that the board of directors may provide by one or more resolutions
that some or all of any or all classes or series of the corporation's stock
shall be uncertified shares. Certificates may be issued for partly paid
shares and in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the consideration
to be paid therefor, and the amount paid thereon, shall be specified.
SECTION 3. The corporation shall have authority to appoint a transfer agent
and a registrar upon proper resolution of the board of directors.
SECTION 4. Any of or all the signatures of the corporation's officers on the
certificate may be facsimile if a transfer agent or registrar has been
appointed and the authorized signature of such transfer agent or registrar is
manually signed, otherwise at least one corporate officer's signature shall
be manually signed. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
LOST CERTIFICATES
SECTION 5. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen, or
destroyed upon the making of an affidavit of that by the person claiming the
certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates, or
his legal representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum or such
indemnification as it may direct against any claim that may be made against
the corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
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TRANSFERS OF STOCK
SECTION 6. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
FIXING RECORD DATE
SECTION 7. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect to any change, conversion or exchange of stock or for the purpose
of any other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting, nor more than sixty (60) days prior to
any other action. A determination of stockholders of a record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the board of directors
may fix a new record date for the adjourned meeting.
SECTION 8. If no record date is fixed by the board of directors:
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
REGISTERED STOCKHOLDERS
SECTION 9. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
SECTION 2. Before a payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors may from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the corporation, or for such
other purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
SECTION 3. The board of directors shall present at each annual meeting and
at any special meeting of the stockholders, when called or by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons
as the board of directors may from time to time designate.
FISCAL YEAR
SECTION 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
SECTION 7. The corporation shall not be governed by the provisions of Section
203 of the General Corporation Law of the State of Delaware.
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ARTICLE VIII
AMENDMENTS
SECTION 1. These by-laws may be altered, amended or repealed or new by-laws may
be adopted by the board of directors at any regular meeting of the board of
directors or at any special meeting of the board of directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting; or, by the vote of a majority of the total
outstanding stock of the corporation, present in person or by proxy, at any
meeting of stockholders at which a quorum is present.
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AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MERCURY FINANCE COMPANY
ARTICLE ONE
The name of the corporation is Mercury Finance Company (the "Corporation").
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is No. 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE FOUR
A. AUTHORIZED SHARES
The total number of shares of capital stock which the Corporation has
authority to issue is [___,___,___] shares, consisting of:
1. [___,___,___] shares of Preferred Stock, par value, $.01 per share
("Preferred Stock"); and
2. [___,___,___] shares of Common Stock, par value, $.01 per share
("Common Stock").
The Preferred Stock and the Common Stock, respectively, shall have the rights
preferences and limitations set forth below. The Corporation shall not issue
nonvoting equity securities.
B. PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more series,
with such distinctive serial designations as may be stated or expressed in the
resolution or resolutions providing for the issue of such stock adopted from
time to time by the Board of Directors; and in
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such resolution or resolutions providing for the issuance of shares of each
particular series, the Board of Directors is also expressly authorized to
fix: the appropriate right to vote, (after a default or default in dividend
payments); the consideration for which the shares of such series are to be
issued; the number of shares constituting such series, which number may be
increased (except as otherwise fixed by the Board of Directors) or decreased
(but not below the number of shares thereof then outstanding) from time to
time by action of the Board of Directors; the rate of dividends upon which
and the times at which dividends on shares of such series shall be payable,
including a rate payable in shares of Preferred Stock, and the preference, if
any , which such dividends shall have relative to dividends on shares of any
other class or classes or any other series of capital stock of the
Corporation; whether such dividends shall be cumulative or noncumulative, and
if cumulative, the date or dates from which dividends on shares of such
series shall be cumulative; the rights, if any, which the holder of shares of
such series shall have in the event of any voluntary or involuntary
liquidation, merger, consolidation, distribution or sale of assets,
dissolution or winding up of the affairs of the Corporation; the rights, if
any, which the holders of shares of such series shall have to convert such
shares into or exchange such shares for shares of any other class or classes
or any other series of capital stock of the Corporation or for any debt
securities of the Corporation and the terms and conditions, including price
and rate of exchange, of such conversion or exchange; whether shares of such
series shall be subject to redemption, and the redemption price or prices and
other terms of redemption, if any for shares of such series including,
without limitation, a redemption price or prices payable in shares of Common
Stock; the terms and amounts of any sinking fund for the purchase or
redemption of shares of such series; and any and all other powers,
preferences and relative, participating, optional or other special rights and
limitations or restrictions thereof pertaining to shares of such series
permitted by law.
C. COMMON STOCK
1. General.
All authorized shares of Common Stock shall be available for issuance
and may be issued in accordance with the provisions of this Amended and
Restated Certificate of Incorporation, as from time to time amended, and
applicable statutes.
2. Identical Rights
All shares of common stock will be identical and will entitle the holders
thereof to the same rights and privileges.
3. Voting Rights.
Except as otherwise provided by applicable statutes or this Amended and
Restated Certificate of Incorporation, each holder of Common Stock shall have
one vote in respect of each share of stock held by him of record on the books
of the Corporation on all matters voted upon by the stockholders.
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4. Dividends.
Subject to the rights of the holders of outstanding shares of Preferred
Stock, the holders of Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board of Directors out
of the funds legally available therefor.
5. Liquidation, Dissolution or Winding Up.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after there shall
have been paid or set aside for the holders of all shares of Preferred Stock
then outstanding the full preferential amounts to which such holders are
entitled under the resolutions authorizing the issuance of such Preferred
Stock, the net assets of the Corporation shall be divided ratably among the
holders of the Common Stock. The Board of Directors may distribute in kind
to the holders of Common Stock such remaining assets of the Corporation or
may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust or other entity and receive payment
therefor in cash, stock or obligations of such other corporation, trust or
entity, or any combination thereof, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to
holders of Common Stock. The merger or consolidation of the Corporation into
or with any other corporation, or the merger of any other corporation into
it, or any purchase or redemption of shares of stock of the Corporation of
any class, shall not be deemed to be a dissolution, liquidation or winding up
of the Corporation for the purposes of this paragraph.
6. No Preemptive Rights.
No holder of shares of the Common Stock of the Corporation shall have
preemptive rights or otherwise be entitled as a matter of right to purchase
or subscribe for any part of any stock of any class, or of any additional
stock of any class of capital stock of the Corporation, or of any bonds,
certificates of indebtedness, debentures, or other securities convertible
into stock of the Corporation, now or hereafter authorized.
7. Issuance of Stock.
Any Common Stock or other securities convertible into stock may be
issued and disposed of pursuant to resolution by the Board of Directors to
such persons, firms, corporations or associations and upon such terms and for
such consideration (not less than the par value or stated value thereof) as
the Board of Directors in the exercise of its discretion may determine and as
may be permitted by law without action by the stockholders. The Board of
Directors may provide for payment therefor to be received by the Corporation
in cash, personal property, real property (or leases thereof) or services.
Any and all shares of stock so issued for which the consideration so fixed
has been paid or delivered, shall be deemed fully paid and not liable to any
further call or assessment.
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8. Corporation May Acquire Stock
Subject to any applicable provision of this Article Four, the
Corporation may at any time or from time to time purchase or otherwise
acquire shares of its Common Stock in any manner now or hereafter permitted
by law, publicly or privately, or pursuant to any agreement.
ARTICLE FIVE
1. General.
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. The number of directors shall be
fixed by, or in the manner provided in, the By-laws. Elections of the
directors need not be by written ballot unless the By-laws so provide.
2. Removal.
Directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares of Common Stock then outstanding and
entitled to vote.
3. Amendment of By-laws.
Subject to the power of the stockholders under applicable statutes to
make, alter or repeal the By-laws of the Corporation, the Board of Directors
shall have the right to make, alter or repeal the By-laws of the Corporation.
4. Meetings of Stockholders.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide.
5. Books of Corporation.
The books of the Corporation may be kept at such place within or without
the State of Delaware as the By-laws of the Corporation may provide or as may
be designated from time to time by the Board of Directors of the Corporation.
ARTICLE SIX
The Corporation shall, to the full extent permitted by Section 145 of
the Delaware General Cooperation Law, as amended from time to time, indemnify
all persons whom it may indemnify pursuant thereto.
ARTICLE SEVEN
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other
4
<PAGE>
organization in which one or more of its directors or officers are directors
or officers, or have a financial interest, shall be void or voidable solely
for this reason, or solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof which
authorizes the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board or committee
in good faith authorizes the contract or transaction by a vote
sufficient for such purpose without counting the vote of the
interested director or directors;
(b) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or
(c) The contract or transaction is fair as to the Corporation as
of the time it is authorized, approved or ratified, by the Board
of Directors, a committee thereof, or the stockholders.
Interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.
ARTICLE EIGHT
No director of the Corporation or any of its subsidiaries shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of the State of Delaware (or the corresponding
provision of any successor act or law), or (iv) for any transaction from
which the director derived any improper personal benefit. If the Delaware
General Corporation Law is amended subsequent to the date of the filing of
this Amended And Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in any manner which further eliminates or
limits the personal liability of directors, then, without further action by
the Board of Directors or the stockholders of the Corporation, the liability
of a director of the Corporation shall be eliminated or limited to the
fullest extent then permitted by the Delaware General Corporation Law, as so
amended. For purposes of this Article, "fiduciary duty as a director" shall
include any fiduciary duty arising out of serving at the request of the
corporation as a director of another corporation, partnership, joint venture,
trust or other enterprise, and "personally liable to the corporation" shall
include any liability to such other corporation, partnership, joint venture,
trust or other enterprise, and any liability to the
5
<PAGE>
Corporation in its capacity as security holder, joint venture, partner,
beneficiary, creditor or investor of or in any such other corporation,
partnership, joint venture, trust or other enterprise. Any repeal or
modification of this Article by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such repeal
or modification.
ARTICLE NINE
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by the laws of Delaware, and all rights conferred herein
upon stockholders and directors are granted subject to this reservation.
ARTICLE TEN
The Corporation elects not to be governed by Section 203 of the General
Corporation Law of the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF, MERCURY FINANCE COMPANY has caused this
certificate to be signed by _________________, its ________________ and attested
by __________, its Secretary, this __ day of _________, 1998.
MERCURY FINANCE COMPANY
By:___________________________
Title:
ATTEST:
By:____________________________
7
<PAGE>
[SALOMON SMITH BARNEY LETTERHEAD]
May 13, 1998
Board of Directors
Mercury Finance Company
100 Field Drive,
Suite 340
Lake Forest, IL 60045
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of common stock, $1.00 par
value ("Company Common Stock"), of Mercury Finance Company (the "Company") of
the consideration to be received by such holders in connection with the
proposed Mercury Finance Company Restructuring Plan (the "Plan"), to be
implemented pursuant to an Agreement and Plan of Reorganization to be entered
into between the Company and its senior creditors. The Plan contemplates the
filing by the Company of a bankruptcy petition and will be implemented and
become effective only upon approval of the Plan by the appropriate bankruptcy
court. Upon effectiveness of the Plan, each holder of the Company's
commercial paper, short-term loans, senior term debt, and other allowed
general unsecured claims against the Company (a "Senior Lender") will receive
in respect of its claims: (i) its pro rata share of new senior secured notes
to be issued by the reorganized company under the Plan (the "New Senior
Secured Notes"); and (ii) its pro rata share of 100% of the equity in the
reorganized Company (the "New Common Stock"). The New Senior Secured Notes
will be issued pursuant to section 1145 of the Bankruptcy Code, will be
secured by assets of the Company and its subsidiaries, will have a principal
amount equal to 75.0% of the outstanding principal amount due under Senior
Lender claims after giving effect to the payment of Senior Lender claims with
all cash at the Company in excess of $20 million on the effective date, will
mature on the third anniversary of the effective date and will pay a coupon
of 9.0% per annum. Upon the effectiveness of the Plan and subject to
acceptance of the Plan by the holders of the Company's subordinated notes
(the "Subordinated Notes"), the Senior Lenders shall allocate to the holders
of Subordinated Notes $22.5 million in New Junior Subordinated Notes which
will mature five years after the effective date and will pay a coupon of 9.0%
per annum. Upon the effectiveness of the Plan, the holders of issued and
outstanding shares of Company Common
<PAGE>
Mercury Finance Company
May 13, 1998
Page 2
Stock and the holders of allowed claims against the Company based on
securities fraud causes of action will receive, in exchange for such Company
Common Stock and such other claims, warrants (the "Warrants") entitling the
holders thereof to purchase in aggregate up to 15% of the New Common Stock on
a pro forma basis. One third of the Warrants shall have a three-year term and
the exercise price will reflect a recovery of par by the Senior Lenders. One
third of the Warrants shall have a four-year term and the exercise price will
reflect a recovery of 110% of par by the Senior Lenders. One third of the
Warrants shall have a five year term and the exercise price will reflect a
recovery of 120% of par by the Senior Lenders.
The exercise price of the Warrants with a par recovery strike price will
be set by multiplying the aggregate amount of Senior Lender claims by 1.0,
subtracting the amount issued in the form of New Secured Notes and dividing
the result by the number of New Common Stock shares issued to the Senior
Lenders. The exercise price of the Warrants with a 110% recovery strike price
will be set by multiplying the aggregate amount of Senior Lender claims by
1.1, subtracting the amount issued in the form of New Secured Notes and
dividing the result by the number of New Common Stock shares issued to the
Senior Lenders. The exercise price of the Warrants with a 120% recovery
strike price will be set by multiplying the aggregate amount of Senior Lender
claims by 1.2, subtracting the amount issued in the form of New Secured Notes
and dividing the result by the number of New Common Stock shares issued to
the Senior Lenders.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) a preliminary Restructuring Term
Sheet; (ii) certain publicly available information concerning the Company,
including the Annual Reports on Form 10-K of the Company, as amended, for
each of the years of the three-year period ended December 31,1997, and the
Quarterly reports on Form 10-Q of the Company for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; (iii) certain financial
forecasts concerning the business and operations of the Company that were
prepared by management of the Company and Development Specialists, Inc.
("DSI"); and (iv) certain publicly available information with respect to
certain other companies that we believe to be comparable in certain respects
to the Company and the trading markets for such other companies' securities.
We have also met with certain officers and employees of the Company to
discuss the foregoing, including the past and current business operations and
financial condition of the Company, as well as other matters we believe
relevant to our inquiry. We have also considered such financial and other
factors as we have deemed appropriate under the circumstances, including,
among other factors, the following: (i) the historical and current financial
position and results of operations of the Company; (ii) the historical and
current market for the equity securities of the Company, and of certain other
companies that we believe to be comparable in certain respects to the
Company; and (iii) the
<PAGE>
Mercury Finance Company
May 13, 1998
Page 3
nature and terms of other transactions we believe to be relevant. We have
also taken into account our assessment of general economic, market and
financial conditions and our knowledge of the consumer finance industry, as
well as our experience in connection with similar transactions and securities
valuation generally.
In our review and analysis and in arriving at our opinion, we have
assumed and relied upon the accuracy and completeness of the financial and
other information provided us or publicly available and have neither
attempted to independently verify nor assumed responsibility for verifying
any such information. With respect to the financial projections of the
Company, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company or DSI, as the case may be, as to the future
financial performance of the Company and we express no opinion with respect
to such forecasts or the assumptions on which they are based. We have not
made or obtained or assumed any responsibility for making or obtaining any
independent evaluations or appraisals of any of the assets (including
properties and facilities) or liabilities of the Company. At the request of
the Company, we did solicit third party offers to acquire the Company and
organized two sale processes for prospective buyers, one in September of 1997
and the second in January of 1998. The first process failed to produce a
binding offer and the second process resulted in an offer deemed
unsatisfactory by the Senior Lenders and the Company.
Our opinion necessarily is based upon conditions as they exist and can
be evaluated on the date hereof, and we assume no responsibility to update or
revise our opinion based upon circumstances or events occurring after the
date hereof. Our opinion as expressed below does not imply any conclusion as
to the likely trading range of the New Common Stock or the Warrants following
the consummation of the Plan, which may vary depending upon, among other
factors, changes in interest rates, dividend rates, market conditions,
general economic conditions and other factors that generally influence the
price of securities. Our opinion does not address the Company's underlying
business decision to effect the Plan. Our opinion is directed only to the
fairness, from a financial point of view, of the Plan and does not constitute
a recommendation concerning how holders of Company Common Stock should vote
with respect to the Plan.
In rendering our opinion we have assumed that the Plan will conform to
the preliminary Restructuring Term Sheet reviewed by us, and will not deviate
in any material respect there from, and that in the course of obtaining the
necessary regulatory and court approvals for the Plan, no restrictions will
be imposed that would have an adverse affect on the operations of the Company
during or after the restructuring.
<PAGE>
Mercury Finance Company
May 13, 1998
Page 4
As you are aware, we will receive a fee from the Company for the delivery
of this fairness opinion in addition to the fees paid for our investment
banking services already rendered. In addition, in the ordinary course of our
business, we may actively trade the securities of the Company for our own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
<PAGE>
Mercury Finance Company
May 13, 1998
Page 5
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the holders of the Company
Common Stock under the Plan is fair to such holders from a financial point of
view.
Very truly yours,
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
Consolidated Balance Sheet
<TABLE>
<CAPTION>
FOOTNOTE PROJECTED
REF. ASSETS: ACTUAL ACTUAL PROJECTED -----------------------
- --- ------- 1997 AUGUST 1998 4 MONTHS 1998 1999
---- ----------- -------- ---- ----
<S> <C> <C> <C> <C> <C>
Cash & Equivalents $ 53,896 $ 83,462 $ 28,303 $ 28,303 $ 22,483
(1) Finance Receivables 971,377 747,320 713,812 713,812 671,246
Less: Allowance for Credit Losses - - - - -
Less: Allowance for Finance Credit Losses (102,204) (74,750) (90,977) (90,977) (66,167)
Less: Nonrefundable Dealer Reserves (52,731) (36,847) (31,089) (31,089) (32,823)
------------------------------------------------------------------
NET FINANCE RECEIVABLES $ 816,442 $635,723 $591,746 $591,746 $572,256
Deferred Income Taxes, Net - - - - -
(2) Income Taxes Receivable 79,941 52,868 52,868 52,868 43,380
PP&E (@ cost less depreciation) 5,899 4,255 4,372 4,372 3,943
(3) Goodwill 13,604 13,031 - - -
Other Assets (incl. Repos) 9,622 9,638 8,367 8,367 8,367
------------------------------------------------------------------
TOTAL ASSETS $ 979,404 $798,979 $685,656 $685,656 $650,429
LIABILITIES & EQUITY:
(4) New Revolving Facility - - - - 14,046
(5) Senior Debt 829,245 675,245 437,857 437,857 382,328
(6) Subordinated Notes 22,500 22,500 22,500 22,500 22,500
(7) Accounts Payable and Other Liabilities 44,959 40,196 25,486 25,486 25,483
------------------------------------------------------------------
TOTAL LIABILITIES $ 896,704 $737,941 $485,843 $485,843 $444,357
Common Stock 177,901 177,901 199,813 199,813 199,813
Paid-in Capital 8,244 8,244 - - -
(8) Retained Earnings (49,781) (71,443) - - 6,259
Treasury Stock (53,664) (53,664) - - -
------------------------------------------------------------------
TOTAL EQUITY $82,700 $ 61,038 $199,813 $199,813 $206,072
TOTAL LIABILITIES & EQUITY $ 979,404 $798,979 $685,656 $685,656 $650,429
- --------------------------------------------------------------------------------------------------------------------
Working Capital (Excluding Cash) 861,046 658,034 627,495 627,495 598,520
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Debt as a % of Finance Receivables 87.7% 93.4% 64.5% 64.5% 62.4%
- --------------------------------------------------------------------------------------------------------------------
Avg. NFR 1,065,900 859,348 730,566 842,594 692,529
Cash & Finance Receivable to Liabilities 1.1 1.1 1.4 1.4 1.5
Debt to Worth 10.8 12.1 2.4 2.4 2.2
<CAPTION>
FOOTNOTE PROJECTED
REF. ASSETS: -------------------------------------------------------------------
- ---- ------- 2000 2001 2002 2003
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash & Equivalents $ 21,731 $ 21,731 21,731 $ 21,731
(1) Finance Receivables 688,171 713,045 736,201 759,030
Less: Allowance for Credit Losses - - - -
Less: Allowance for Finance Credit Losses (67,653) (70,087) (72,353) (74,591)
Less: Nonrefundable Dealer Reserves (34,066) (35,478) (36,779) (38,053)
------------------------------------------------------------------
NET FINANCE RECEIVABLES $586,451 $607,480 $627,069 $646,386
Deferred Income Taxes, Net - - - -
(2) Income Taxes Receivable - - - -
PP&E (@ cost less depreciation) 3,514 3,085 2,656 2,227
(3) Goodwill - - - -
Other Assets (incl. Repos) 8,367 8,367 8,367 8,367
------------------------------------------------------------------
TOTAL ASSETS $620,063 $640,662 $659,823 $678,711
LIABILITIES & EQUITY:
(4) New Revolving Facility 17,866 20,880 21,468 21,093
(5) Senior Debt 334,705 334,705 334,705 334,705
(6) Subordinated Notes 22,500 22,500 22,500 22,500
(7) Accounts Payable and Other Liabilities 25,483 25,483 25,483 25,483
------------------------------------------------------------------
TOTAL LIABILITIES $400,554 $403,567 $404,156 $403,781
Common Stock 199,813 199,813 199,813 199,813
Paid-in Capital - - - -
(8) Retained Earnings 19,696 37,281 55,854 75,117
Treasury Stock - - - -
------------------------------------------------------------------
TOTAL EQUITY $219,509 $237,094 $255,667 $274,930
TOTAL LIABILITIES & EQUITY $620,063 $640,662 $659,823 $678,711
- -----------------------------------------------------------------------------------------------------------------------
Working Capital (Excluding Cash) 569,335 590,364 609,953 629,270
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Debt as a % of Finance Receivables 54.5% 53.0% 51.4% 49.8%
- -----------------------------------------------------------------------------------------------------------------------
Avg. NFR 679,708 700,608 724,623 747,616
Cash & Finance Receivable to Liabilities 1.5 1.6 1.6 1.7
Debt to Worth 1.8 1.7 1.6 1.5
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
Consolidated Income Statement
<TABLE>
<CAPTION>
PROJECTED
ACTUAL PROJECTED -----------------------------------------
1997 AUGUST 1998 4 MONTHS 1998 1999
---- ----------- -------- ---- ----
<S> <C> <C> <C> <C> <C>
Interest Income
Finance Charge & Loan Fees $ 228,028 21.4% $124,661 21.8% $ 56,041 23.0% $180,702 21.4% $151,258 21.8%
Investment Income 7,593 0.7% 1,887 0.3% 1,407 0.6% 3,294 0.4% 1,392 0.2%
(9) Less: Interest Expense (86,529) -8.1% (52,237) -9.1% - 0.0% (52,237) -6.2% (38,916) -5.6%
Less: Provision for Credit
Losses (106,374) -10.0% (39,204) -6.8% (19,047) -7.8% (58,251) -6.9% (42,105) -6.1%
---------- -------- -------- -------- --------
NET INTEREST INCOME $ 42,718 4.0% $ 35,107 6.1% $ 38,401 15.8% $ 73,508 8.7% $ 71,629 10.3%
OTHER INCOME
Insurance Commissions 5,784 0.5% 3,207 0.6% 2,379 1.0% 5,586 0.7% 4,093 0.6%
Insurance Premiums 35,660 3.3% 2,871 0.5% 0 0.0% 2,871 0.3% 30 0.0%
Fees & Other Income 5,636 0.5% 1,954 0.3% 1,565 0.6% 3,519 0.4% 3,197 0.5%
---------- -------- -------- -------- --------
TOTAL OTHER INCOME 47,080 4.4% 8,921 1.6% 3,055 1.3% 11,976 1.4% 7,320 1.1%
OTHER EXPENSES
Salaries and Employee Benefits 56,799 5.3% 32,964 5.8% 15,997 6.6% 48,962 5.8% 44,732 6.5%
Occupancy Expense 5,897 0.6% 3,134 0.5% 1,182 0.5% 4,317 0.5% 3,227 0.5%
Equipment Expense 3,870 0.4% 2,253 0.4% 1,104 0.5% 3,356 0.4% 3,078 0.4%
Data Processing Expense 2,059 0.2% 1,267 0.2% 619 0.3% 1,886 0.2% 1,661 0.2%
Other Operating Expenses 35,189 3.3% 16,849 2.9% 7,758 3.2% 24,607 2.9% 16,157 2.3%
Insurance Claims 20,466 1.9% - 0.0% - 0.0% - 0.0% - 0.0%
---------- -------- -------- -------- --------
(10) TOTAL OTHER EXPENSES 124,280 11.7% 56,467 9.9% 26,660 10.9% 83,127 9.9% 68,854 9.9%
OPERATING INCOME (LOSS) $ (34,482) -3.2% $(12,439) -2.2% $ 14,796 6.1% $ 2,357 0.3% $ 10,095 1.5%
NON-RECURRING EXPENSES
(11) Reorganization Expenses 20,683 1.9% 9,223 1.6% 5,106 2.1% 14,328 1.7% - 0.0%
Closed Branch Expenses & Lyndon
Sale 35,278 3.3% - 0.0% - 0.0% - 0.0% - 0.0%
---------- -------- -------- -------- --------
Profit (Loss) Before Taxes (90,443) -8.5% (21,662) -3.8% 9,690 4.0% (11,972) -1.4% 10,095 1.5%
(12) Income Tax Provision (Cre. 38.0% (16,250) -1.5% - 0.0% - 0.0% - 0.0% 3,836 0.6%
-------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (74,193) 7.0% $(21,662) -3.8% $ 9,690 4.0% $(11,972) -1.4% $ 6,259 0.9%
-------------------------------------------------------------------------------------------
EBIT $ (3,914) -0.4% $ 30,575 5.3% $ 9,690 4.0% $ 40,265 4.8% $ 49,011 7.1%
AVERAGE NFR $1,065,900 $859,348 $730,566 $842,594 $692,529
<CAPTION>
PROJECTED
----------------------------------------------------------------------------
2000 2001 2002 2003
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income
Finance Charge & Loan Fees $155,209 22.8% $161,503 23.1% $167,108 23.1% $172,439 23.1%
Investment Income 1,317 0.2% 1,087 0.2% 1,087 0.2% 1,087 0.1%
(9) Less: Interest Expense (34,583) -5.1% (33,350) -4.8% (33,464) -4.6% (33,482) -4.5%
Less: Provision for Credit
Losses (36,465) -5.4% (34,653) -4.9% (35,998) -5.0% (37,098) -5.1%
-------- -------- -------- --------
NET INTEREST INCOME $ 85,478 12.6% $ 94,587 13.9% $ 98,733 13.6% $102,946 13.8%
OTHER INCOME
Insurance Commissions 3,998 0.6% 4,152 0.6% 4,290 0.6% 4,187 0.6%
Insurance Premiums - 0.0% - 0.0% - 0.0% - 0.0%
Fees & Other Income 3,369 0.5% 3,494 0.5% 3,605 0.5% 3,518 0.5%
-------- -------- -------- --------
TOTAL OTHER INCOME 7,367 1.1% 7,646 1.1% 7,895 1.1% 7,705 1.0%
OTHER EXPENSES
Salaries and Employee Benefits 46,319 6.8% 48,172 6.9% 50,099 6.9% 52,103 7.0%
Occupancy Expense 3,309 0.5% 3,408 0.5% 3,510 0.5% 3,615 0.5%
Equipment Expense 3,219 0.5% 3,380 0.5% 3,549 0.5% 3,726 0.5%
Data Processing Expense 1,734 0.3% 1,821 0.3% 1,912 0.3% 2,008 0.3%
Other Operating Expenses 16,591 2.4% 17,089 2.4% 17,602 2.4% 18,130 2.4%
Insurance Claims - 0.0% - 0.0% - 0.0% - 0.0%
-------- -------- -------- --------
(10) TOTAL OTHER EXPENSES 71,172 10.5% 73,870 10.5% 76,672 10.6% 79,582 10.6%
OPERATING INCOME (LOSS) $ 21,673 3.2% $ 28,363 4.0% $ 29,956 4.1% $ 31,069 4.2%
NON-RECURRING EXPENSES
(11) Reorganization Expenses - 0.0% - 0.0% - 0.0% - 0.0%
Closed Branch Expenses & Lyndon
Sale - 0.0% - 0.0% - 0.0% - 0.0%
-------- -------- -------- --------
Profit (Loss) Before Taxes 21,673 3.2% 28,363 4.0% 29,956 4.1% 31,069 4.2%
(12) Income Tax Provision (Cre. 38.0% 8,236 1.2% 10,778 1.5% 11,383 1.6% 11,806 1.6%
---------------------------------------------------------------------------------
NET INCOME (LOSS) $ 13,437 2.0% $ 17,585 2.5% $ 18,573 2.6% $ 19,263 2.6%
---------------------------------------------------------------------------------
EBIT $ 56,256 8.3% $ 61,713 8.8% $ 63,420 8.8% $ 64,551 8.6%
AVERAGE NFR $679,708 $700,608 $724,623 $747,616
*Annualized percentage of average net finance receivables.
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
Consolidated Cash Flow Statement
<TABLE>
<CAPTION>
8 MONTHS PROJECTED PROJECTED
AUGUST 1998 4 MONTHS 1998 1999 2000 2001 2002 2003
----------- -------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income (Loss) $(21,662) $ 9,690 $(11,972) $ 6,259 $ 13,437 $ 17,585 $ 18,573 $ 19,263
Add: Income Tax Provision - - - 3,836 8,236 10,778 11,383 11,806
Add: Interest Expense 52,237 - 52,237 38,916 34,583 33,350 33,464 33,482
-------- ------- -------- --------- -------- -------- -------- --------
EBIT $ 30,575 $ 9,690 $ 40,265 $ 49,011 $ 56,256 $ 61,713 $ 63,420 $ 64,551
Depreciation & Amortization 1,381 596 1,977 1,779 1,779 1,779 1,779 1,779
EBITDA $ 31,956 $10,286 $ 42,242 $ 50,790 $ 58,035 $ 63,492 $ 65,199 $ 66,330
Less: Interest Paid (52,237) - (52,237) (38,916) (34,583) (33,350) (33,464) (33,482)
Less: Taxes Paid - - - (3,836) (8,236) (10,778) (11,383) (11,806)
-------- ------- -------- --------- -------- -------- -------- --------
Subtotal (20,281) 10,286 (9,995) 8,038 15,216 19,364 20,352 21,042
Working Capital Changes: 203,012 30,539 233,551 28,975 29,185 (21,029) (19,589) (19,317)
CASH FROM OPERATIONS 182,731 40,825 223,557 37,013 44,401 (1,665) 763 1,725
Less: CAPEX - (450) (450) (1,350) (1,350) (1,350) (1,350) (1,350)
Less: Decrease (Increase) in Cash (29,566) 55,159 25,593 5,820 752 - (0) -
Less: Class Action Settlement - - - - - - - -
-------- ------- -------- --------- -------- -------- -------- --------
CASH AVAILABLE FOR DEBT REDUCTION $153,165 $ 95,534 $248,699 $ 41,483 $ 43,804 $ (3,015) $ (588) $ 375
-------- ------- -------- --------- -------- -------- -------- --------
-------- ------- -------- --------- -------- -------- -------- --------
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
FOOTNOTES TO PROJECTED FINANCIAL STATEMENTS
1) The following assumptions have been made with respect to the finance
receivable balances.
A) ORIGINATIONS
Receivable originations are projected as follows: (in millions)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Direct $135.8 $137.7 $141.8 $146.1 $150.4 $155.0
- -------------------------------------------------------------------------------------------------------------------------
Sales Finance $392.5 $548.0 $564.4 $581.4 $598.8 $616.8
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
B) CHARGE-OFFS:
Charge-offs are assumed at the following rates, based on average net
finance receivables.
<TABLE>
<S> <C>
1998 21.7% (includes credit card portfolio)
1999 17.1%
2000 12.2%
2001 11.6%
2002 11.6%
2003 11.6%
</TABLE>
C) DISCOUNT ACQUIRED:
The projection assumes that company is able to purchase new sales
finance contracts at a 6.5% discount from the gross amount of the loan
for Mercury and 4% for Midland.
2) Income tax refunds are scheduled to be received as follows:
<TABLE>
<S> <C>
1998 $27.7 Million received March 1998
1999 $ 9.5 Million
2000 $43.4 Million
</TABLE>
3) Goodwill of $13.0 million relates to various subsidiaries purchased by
Mercury. It is anticipated that the remaining goodwill will be written off
as of the restructure date.
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
FOOTNOTES TO PROJECTED STATEMENTS
4) A new revolving credit facility is assumed to be available when required in
1999. Borrowings under this facility are used to fund operating
requirements and bear interest at 9.0% per annum.
5) Senior debt and subordinated debt are assumed to remain in place, or to be
re-financed upon maturity at similar terms including interest at 9.0%.
6) Included in the accounts payable as of December 1997 are accrued dividends
of $12.9 million and a reserve for closed office expenses of $1.8 million.
It is assumed that the accrued dividend will be reversed to retained
earnings at the time of the restructure. The remaining reserve for closed
office expenses will be paid out at the time of the restructure.
7) This projection assumes that the restructure will be confirmed December 31,
1998. Prior to the conversion of debt, the Debtor will utilize $95 million
of excess cash to reduce debt. As a part of the restructure, the balance
sheet of the company will be adjusted:
1. 25% of the senior debt will be converted to common stock.
2. The remaining Goodwill outstanding will be written off.
3. An additional reserve of $18.5 million will be established
to recognize the loss on the forecasted sale of the credit
card portfolio at December 31, 1998.
4. The remaining retained deficit will be eliminated.
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
FOOTNOTES TO PROJECTED FINANCIAL STATEMENTS
The following table provides a summary of the expected adjustments:
<TABLE>
<CAPTION>
Projected Balances
As of Restructure Conversion & Pro-
Date Adjustments Forma
<S> <C> <C> <C>
ASSETS
Cash and Equivalents $ 28,303 $0 $ 28,303
Net Finance 610,292 (18,546) 591,746
Receivables
Goodwill 13,031 (13,031) -0-
Other Assets 65,607 -0- 65,607
--------------- --------------- ---------------
Total Assets 717,233 (31,577) $685,656
LIABILITIES
Debt $606,309 ($145,952) $460,357
Accounts Payable and Other Liabilities 40,198 (14,712) 25,486
--------------- --------------- ---------------
Total Liabilities $646,507 ($160,664) $485,843
SHAREHOLDERS EQUITY
Common Equity 70,726 129,087 199,813
--------------- --------------- ---------------
Total Shareholders 70,726 129,087 199,813
Equity
--------------- --------------- ---------------
TOTAL LIABILITIES AND $717,233 ($31,577) $686,656
SHAREHOLDERS EQUITY
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY & SUBSIDIARIES
FOOTNOTES TO PROJECTED FINANCIAL STATEMENTS
8) For comparability, a restructuring fee of $14.5 million paid to senior
lenders in June 1998 is included in interest expense on a pro-forma basis.
9) The operating expense projection includes further reductions in branches in
1999 with increased expense thereafter as a result of receivable growth and
inflation.
10) Reorganization expenses in 1998 include $14 million in fees paid to the
company's and the creditors' professionals.
11) Provision for income taxes is projected at 34% for federal income taxes and
4% for state. For projection purposes, it is assumed that the cancellation
of debt income will offset the net operating loss created during the fiscal
year ending December 1998. The actual tax liability for these periods could
differ substantially.
<PAGE>
Exhibit T3E20
MERCURY FINANCE COMPANY
Liquidation Analysis
(000's omitted)
<TABLE>
<CAPTION>
FOOTNOTE
REFERENCE
<S> <C> <C> <C>
CASH PROCEEDS
(1) & (2) Monthly Cash Collections $ 532,831
(3) Receivable Sale 142,185
Income Tax Refunds 52,364
Assets Sales 3,000
---------
Gross Cash Proceeds 730,380
(4) Less: Cost of Operations (92,097)
Professional fees (9,519)
---------
Net Cash Provided 628,764
Plus Beginning Cash on Hand 38,196
---------
NET CASH PROCEEDS 666,960
PRIORITY CLAIMS
Medical Claims 600
Taxes 1,471
---------
Total Priority Claims 2,071
---------
CASH AVAILABLE FOR UNSECURED CLAIMS 664,889
---------
Unsecured Claims
Long Term Note Holders 335,131
CP Holders 339,340
Midland Debt 773
Subordinated Debt 22,500
---------
Total Debt 697,744
(5) Estimated Accrued Interest 47,739
All Other Unsecured 12,920
---------
TOTAL UNSECURED CLAIMS $ 758,403
---------
---------
DISTRIBUTIONS 87.7%
---------
---------
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY
Liquidation Analysis
(000's Omitted)
FOOTNOTES:
(1) Overall Liquidation Strategy:
The liquidation is assumed to commence on July 1, 1998. Under the
liquidation scenario, the Debtor ceases the acquisition of new loans immediately
and collects its loan portfolio through its branch network for approximately 18
months. The number of branches and employees would decline as the portfolio
shrinks. At the end of 1999, it is assumed that the remaining portfolio is sold
for 80% (based upon net finance receivables net of the bad debt allowance).
Employees would be offered a stay bonus to induce them to remain with the Debtor
until their services are no longer required. This stay bonus is based upon the
same successful compensation plan used when the Debtor downsized its operations
from 260 to 185 branches in late 1997. A brief summary of the Debtor's operating
structure through the course of the liquidation is as follows:
<TABLE>
<CAPTION>
Quarter Beginning
Actual ----------------------
5/31/98 7/1/98 10/1/98 1/1/99 4/1/99 7/1/99 10/1/99 1/1/2000
------- ------ ------- ------ ------ ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# of
Branches 185 185 150 132 132 112 92 0
# of
Employees 1,302 1,115 1,015 905 905 785 710 100
</TABLE>
Midland Finance Company ("Midland"), the Debtor's wholly-owned subsidiary, is
not included in the above summary. Midland is $38 million consumer loan company
and operates from two facilities in Chicago, It is assumed that Midland would be
liquidated in the sane manner as the Debtor, i.e., it would cease new loan
originations immediately, collect its portfolio through a downsized operation
through December, 1999 and the remaining portfolio would be sold at that time.
The Debtor also owns a $59 million unsecured credit card portfolio, which is
administered and serviced by a third party vendor. In order to minimize the
substantial termination damage provisions associated with this service contract
it is assumed that the credit card portfolio continues to operate until
December, 1999 and then sold for 40% of its forecasted December, 1999 gross
balance.
Once the Debtor's various loan portfolios are sold by December, 1999, it is
assumed that a core staff of employees would continue to market and sell
repossessions that were in the "pipeline" at December, 1999, prepare final
financial statements, tax and payroll reports, exit all facilities, pay final
bill sand wind down all administrative affairs of the Debtor. It is assumed that
all functions would cease by March 31, 2000.
2
<PAGE>
MERCURY FINANCE COMPANY
Liquidation Analysis
(000's Omitted)
FOOTNOTES (CONTINUED)
(2) Monthly cash collections 7/98 thru 12/99
<TABLE>
<S> <C> <C>
Cash collected from portfolio $528,980
Recoveries 20,453
Less: Claims with Offset Rights
Progressive Insurance (7,350)
Outstanding Checks for Purchased Contracts (8,886)
Unpaid insurance premiums (366)
------
(16,602)
-------
Monthly Cash Collections 532,831
-------
-------
</TABLE>
(3) Assumes remaining receivables are sold December 1999 as follows:
<TABLE>
<S> <C> <C>
Gross Receivables at 12/99
Direct $ 28,214
Sales Finance 197,918
--------
Total Gross Receivables 226,132
Less:
Unearned Interest (43,388)
Allowance for Credit Losses (22,197)
Unamortized Dealer Reserve (6,196)
--------
(71,781)
Net Receivables 154,351
Estimated Sales Price 80%
--------
Estimated Cash Proceeds 123,481
Credit Car Receivables 46,760
Estimated Sales Price 40%
--------
Estimated Cash Proceeds 18,704
----------
Final Cash Receipts $ 142,185
----------
</TABLE>
(4) Cost of Operations
<TABLE>
<S> <C>
Home Office Expense $ 19,074
Branch Operations 47,449
Closing Expenses 3,822
Midland Expenses 2,909
Credit Card Expenses 7,244
Employee Stay Bonuses 11,599
--------
$ 92,097
--------
--------
</TABLE>
<PAGE>
MERCURY FINANCE COMPANY
Liquidation Analysis
(000's omitted)
(5) Estimated Accrued Interest:
As the Debtor is a finance company, it will immediately generate
substantial positive monthly cash flows upon the cessation of new loan
acquisitions. In order to minimize the post-petition interest expense
due to creditors, the liquidation forecast model assumes that monthly
cash payments of principal and interest are made to pre-petition
unsecured claimants. The $47,739 represents the total interest paid to
creditors on their declining balance at approximately 9% interest
until the final distribution is made at March 31, 2000.
2
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INSTRUCTIONS
OR ADVICE OR TO MAKE ANY REPRESENTATION, OTHER THAN WHAT
IS CONTAINED IN THE MATERIALS MAILED WITH THIS BALLOT.
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: ) CHAPTER 11
)
MERCURY FINANCE COMPANY, ) CASE NO. 98-B-20763
)
DEBTOR. ) THE HONORABLE ERWIN I. KATZ
MASTER BALLOT FOR ACCEPTING OR REJECTING THE
FIRST AMENDED PLAN OF REORGANIZATION DATED OCTOBER 15, 1998
OF MERCURY FINANCE COMPANY
CLASS 4 - HOLDERS OF SENIOR DEBT CLAIMS AGAINST MERCURY FINANCE COMPANY
("MERCURY")
This Master Ballot may not be used FOR any purpose other than FOR casting votes
to accept or reject Mercury's First Amended Plan of Reorganization dated October
15, 1998 (the "Plan") under chapter 11, title 11 of the United States Code (the
"Bankruptcy Code"). All capitalized terms used in the Master Ballot or Voting
Instructions but not otherwise defined therein shall have the meanings ascribed
to them in the Plan.
This Master Ballot is being sent to brokers, proxy intermediaries, and other
nominees of Beneficial Holders (as defined herein) and is to be used by brokers,
proxy intermediaries or other nominees FOR casting votes to accept or reject the
Plan on behalf of and in accordance with the Ballot/Voting Instructions cast by
the Beneficial Holders holding Class 4 Claims through such brokers, proxy
intermediaries, or other nominees. MASTER BALLOTS MUST BE RECEIVED BY LOGAN &
COMPANY, INC. (THE "BALLOTING AGENT") ON OR BEFORE 4:00 P.M. EST ON DECEMBER 7,
1998.
PLEASE READ AND FOLLOW THE ENCLOSED VOTING INSTRUCTIONS
CAREFULLY BEFORE COMPLETING THE MASTER BALLOT.
PLEASE CHECK THE APPROPRIATE BOX BELOW TO INDICATE
YOUR ACCEPTANCE OR REJECTION OF THE PLAN.
ITEM 1. AMOUNT OF CLASS 4 CLAIMS.
On October 21, 1998, the Record Date, the undersigned was the record holder
of $___________ senior notes issued by Mercury, the record holder of
$___________ commercial paper issued by Mercury and the record holder of
$_________ short-term notes issued by Mercury ( the "Class 4 Claims"), FOR which
voting instructions have been received from beneficial holders (the "Beneficial
Holders") as listed in Item 3 below.
ITEM 2. CLASS 4 VOTE
As instructed by the Beneficial Holders of the aggregate number of Class 4
Claims as set forth in Item 1 above, the undersigned transmits the following
votes of such Beneficial Holders in respect of their Class 4 Claims.
To Accept (Vote FOR) the Plan.
---------------------------------- ------------------------------
Aggregate Amount of Class 4 Claims Aggregate number of holders
To Reject (Vote AGAINST) the Plan.
---------------------------------- ------------------------------
Aggregate Amount of Class 4 Claims Aggregate number of holders
<PAGE>
ITEM 3. CLASS 4 VOTE - NUMBER OF HOLDERS OF CLASS 4 CLAIMS
The undersigned certifies that the following vote of the Beneficial Holders
of Class 4 Claims, as identified by their respective customer account numbers or
the respective sequence numbers set forth below, has been delivered to the
undersigned by Ballots casting the following votes (indicate the aggregate
current principal amount for each respective account under the appropriate
column):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INSERT AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Customer Account No. and/or Accept the Plan Reject the Plan
Customer Name for each (VOTE FOR) (VOTE AGAINST)
Beneficial Holder Short- Commercial Short- Commercial
Sr. Notes Term Notes Paper Sr. Notes Term Notes Paper
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1.
- ---------------------------------------------------------------------------------------------------------------------
2.
- ---------------------------------------------------------------------------------------------------------------------
3.
- ---------------------------------------------------------------------------------------------------------------------
4.
- ---------------------------------------------------------------------------------------------------------------------
5.
- ---------------------------------------------------------------------------------------------------------------------
6.
- ---------------------------------------------------------------------------------------------------------------------
7.
- ---------------------------------------------------------------------------------------------------------------------
8.
- ---------------------------------------------------------------------------------------------------------------------
9.
- ---------------------------------------------------------------------------------------------------------------------
10.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 4. The undersigned certifies that it has transcribed below the
information, if any, provided in Item 3 of each Ballot received from a
Beneficial Holder of Class 4 Claims (please use additional sheets of paper if
necessary):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Registered Holder
Names of Holder and or Nominee of Senior Notes Short-Term Notes
Account Number Other Account
- --------------------------------------------------------------------------------------------------------------------
Issue Description Current Principal Current Principal
Amount Description Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Registered Holder
Names of Holder and or Nominee of Commercial Paper
Account Number Other Account
- --------------------------------------------------------------------------------------------------------------------
CUSIP # Current Principal Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
ITEM 5. CERTIFICATION
By signing this Master Ballot, the undersigned certifies:
(a) that each Beneficial Holder of Class 4 Claim whose votes
are being transmitted by this Master Ballot has been provided with a
copy of the Disclosure Statement relating to the Plan, together with the
Exhibits annexed thereto; and
(b) that the undersigned is the registered or record owner of
the aggregate amount of Class 4 Claims set forth in Item 1 and has full
power and authority to vote to accept or reject the Plan. The
undersigned also acknowledges that the solicitation of votes herein is
subject to all the terms and conditions set forth in the Disclosure
Statement.
Dated: Name of Voter:
-------------- -----------------------------
(Print or Type)
Social Security or Tax I.D. No.
-------------
Signature:
----------------------------------
By:
-----------------------------------------
(If Appropriate)
Title:
--------------------------------------
(If Appropriate)
Street Address:
-----------------------------
City, State and Zip Code:
-------------------
Telephone No.:
------------------------------
Participant No.:
----------------------------
THIS MASTER BALLOT MUST BE RECEIVED BY:
BALLOT TABULATION CENTER - MERCURY FINANCE COMPANY
C/O LOGAN & COMPANY, INC.
615 WASHINGTON STREET
HOBOKEN N.J. 07030
TELEPHONE: (201) 798-1031
FACSIMILE: (201) 798-[ ]
BY 4:00 P.M. EASTERN STANDARD TIME ON OR BEFORE DECEMBER 7, 1998, OR YOUR VOTE
WILL NOT BE COUNTED
-3-
<PAGE>
THIS MASTER BALLOT MUST BE RECEIVED BY THE BALLOTING AGENT,
LOGAN & C0MPANY, INC. BY 4:00 P.M., EASTERN STANDARD TIME, ON OR BEFORE
DECEMBER 7, 1998 (UNLESS EXTENDED) OR THE VOTES TRANSMITTED
HEREBY WILL NOT BE COUNTED.
INSTRUCTIONS FOR COMPLETING THE MASTER BALLOT
Mercury is soliciting the votes of holders of Class 4 Claims with respect
to the First Amended Plan of Reorganization dated October 15, 1998 of Mercury
Finance Company (the "Plan") referred to in the Disclosure Statement (a copy of
which is enclosed herewith).
The Plan can be confirmed by the Bankruptcy Court and thereby made
binding upon the Beneficial Holders if it is accepted by the holders of at
least two-thirds in amount and more than one-half in number of the Claims in
each impaired Class of Claims that vote on the Plan and by the holders of at
least two-thirds in amount of the Equity Interests in each impaired Class of
Equity Interests that vote on the Plan, and if the Plan otherwise satisfies
the requirements of section 1129(a) of the Bankruptcy Code. If the requisite
acceptances are not obtained, the Bankruptcy Court may nonetheless confirm
the Plan if it finds that the Plan provides fair and equitable treatment to,
and does not discriminate unfairly against, the Class or Classes of Claims or
Equity Interests rejecting it, and otherwise satisfies the requirements of
section 1129(b) of the Bankruptcy Code. As described in Article VIII.E of
the Disclosure Statement, Mercury will seek confirmation of the Plan under
section 1129(b) of the Bankruptcy Code (known as the cram-down section)
because of the deemed non-acceptance of the holders of Claims in Subclasses
7B and 7C and Equity Interests in Subclass 7B and Class 8. Mercury also
reserves the right to proceed under section 1129(b), if any other impaired
Class of Claims does not accept the Plan. To have the votes of your
Beneficial Holders count, you must complete and return this Master Ballot.
You should deliver the Beneficial Holder Ballot and other documents
relating to the Plan, including the Disclosure Statement (collectively,
"SOLICITATION MATERIALS"), to each Beneficial Holder of Class 4 Claims and
take any action required to enable each such Beneficial Holder to vote the
Class 4 Claims held by such Beneficial Holder. With regard to any Beneficial
Holder Ballots returned to you, to have the vote of your Beneficial Holder
count, you must not later than December 7, 1998, subject to extension in the
sole discretion of Mercury (the "VOTING DEADLINE"), either (i) forward such
Beneficial Holder Ballots to the Balloting Agent (as defined herein)
indicating the appropriate authority to vote from such Beneficial Holder
Ballot submitted or (ii) (a) retain such Beneficial Holder Ballots in your
files and transfer the requested information from each such Beneficial Holder
Ballot onto the attached Master Ballot or your computer generated version of
the Master Ballot that contains the same information (b) execute the Master
Ballot, and (c) arrange FOR delivery by courier, overnight mail or facsimile
of such Master Ballot to Logan & Company, Inc., 615 Washington Street, Second
Floor, Hoboken, New Jersey 07030 , Facsimile (201) 798-____(the "BALLOTING
AGENT"). Please keep any records of the voting instructions received from
Beneficial Holders, including all Beneficial Holder Ballots, until December
31, 1999 (or such other date as is set by subsequent Bankruptcy Court order).
The Master Ballot is not a letter of transmittal and may not be used for
any purpose other than to vote to accept or reject the Plan. Accordingly,
Holders of Class 4 Claims should not surrender instruments or certificates
representing or evidencing their Class 4 Claims, and neither Mercury nor the
Balloting Agent will accept delivery of such instruments or certificates
surrendered together with a Ballot. The remittance of your instruments or
other evidence of your claims FOR exchange pursuant to the Plan may only be
made by you, and will only be accepted if instruments or certificates
representing your Class 4 Claims (in proper form FOR transfer) are delivered
together with a letter of transmittal that will be furnished to you as
provided under the Plan or as notified following confirmation of the Plan by
the Bankruptcy Court.
To properly complete the Master Ballot take the following steps:
(a) provide appropriate information FOR each of the items on the Master
Ballot. Please note that Item 3 requests information for each individual
beneficial holder FOR whom you hold Class 4 Claims in your name (the "BENEFICIAL
HOLDERS"). To identify such Beneficial Holders without disclosing their names,
please use the customer account number assigned by you to identify each such
Beneficial Holder or, if no such customer account number exists, please use the
sequential numbers provided (making sure to retain a separate list of each
Beneficial Holder and his or her assigned sequential number);
(b) vote to accept or reject the Plan in Item 2 for the Class 4 Claims
held by you as the registered holder on behalf of the Beneficial Holders.
(c) sign and date your Master Ballot;
(d) if you are completing this Master Ballot on behalf of another
entity, state your title of such entity, and
-4-
<PAGE>
(e) provide your name and mailing address if different from the
preprinted address on the Master Ballot or if no preprinted address appears on
the Master Ballot.
THE DEBTOR REQUESTS THAT YOU RETAIN IN YOUR FILES THE BALLOTS RECEIVED FROM THE
BENEFICIAL HOLDERS
- You should deliver the Green Ballot to each Beneficial Holder of Class
4 claims and take any action required to enable each such Beneficial
Holder to vote his respective Class 4 Claims to accept or reject the
Plan. With regard to any Ballots returned to you, you must either (1)
forward such Ballots to the Balloting Agent or (2)(a) retain such
Ballots in your files and transfer the requested information from each
such Ballot onto the attached Master Ballot, (b) execute the Master
Ballot and (c) arrange FOR delivery of such Master Ballot to the
Balloting Agent.
- If you are both the registered holder and beneficial holder of any of
the Class 4 Claims and you wish to vote such Class 4 Claims, you may
return either a Ballot or a Master Ballot.
- THE MASTER BALLOT MUST BE DELIVERED TO THE BALLOTING AGENT BY U.S.
MAIL,OVERNIGHT DELIVERY, HAND DELIVERY, OR FACSIMILE PRIOR TO THE
VOTING DEADLINE, OTHERWISE SUCH MASTER BALLOT WILL NOT BE COUNTED.
VOTING DEADLINE AND EXTENSIONS. If a Master Ballot must be completed by
you, please complete, sign and return this Master Ballot so that it is
received by the Balloting Agent no later than 4:00 p.m., Eastern Standard
Time, on December 7, 1998. The Debtor reserves the right to extend the
Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THIS
MASTER BALLOT OR THE VOTING PROCEDURES,
PLEASE CALL THE BALLOTING AGENT AT 201-798-1031.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF MERCURY OR THE BALLOTING AGENT, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE PLAN, EXCEPT FOR THE STATEMENTS
CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH.
-5-
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: ) CHAPTER 11
)
MERCURY FINANCE COMPANY, ) CASE NO. 98-B-20763
)
DEBTOR. ) THE HONORABLE ERWIN I. KATZ
)
BALLOT FOR ACCEPTING OR REJECTING THE
FIRST AMENDED PLAN OF REORGANIZATION DATED OCTOBER 15, 1998
OF MERCURY FINANCE COMPANY
CLASS 4- HOLDERS OF SENIOR DEBT OF MERCURY FINANCE COMPANY ("MERCURY")
PLEASE READ AND FOLLOW THE ENCLOSED VOTING INSTRUCTIONS
CAREFULLY BEFORE COMPLETING THE BALLOT.
PLEASE CHECK THE APPROPRIATE BOX BELOW TO INDICATE
YOUR ACCEPTANCE OR REJECTION OF THE PLAN.
- ------------------------------------------------------------------------------
IF THIS BALLOT IS ACCOMPANIED BY A RETURN ENVELOPE THAT IS ADDRESSED TO LOGAN
& COMPANY, INC. (THE "BALLOTING AGENT"), THIS BALLOT MUST BE RECEIVED BY THE
BALLOTING AGENT BY 4:00 P.M., EASTERN STANDARD TIME, DECEMBER 7, 1998 ("THE
VOTING DEADLINE"). IF YOU RECEIVED A RETURN ENVELOPE ADDRESSED TO A BROKER,
BANK, NOMINEE OR PROXY INTERMEDIARY, YOU MUST RETURN YOUR BALLOT TO YOUR
BROKER, BANK, NOMINEE OR PROXY INTERMEDIARY EARLY ENOUGH FOR YOUR VOTE TO BE
PROCESSED AND THEN FORWARDED BY THE BROKER, BANK, NOMINEE OR PROXY
INTERMEDIARY TO THE BALLOTING AGENT BY THE VOTING DEADLINE. THEREFORE,
PLEASE ALLOW ADDITIONAL TIME.
- ------------------------------------------------------------------------------
The Bankruptcy Court has approved the first amended disclosure statement
(the "Disclosure Statement") with respect to Mercury's First Amended Plan of
Reorganization dated October 15, 1998 (the "Plan"). The Disclosure Statement
provides information to assist you in deciding how to vote your Ballot. If you
do not have a Disclosure Statement you may obtain a copy from the Balloting
Agent. Court approval of the Disclosure Statement does not indicate approval of
the Plan by the Bankruptcy Court.
YOU SHOULD REVIEW THE DISCLOSURE STATEMENT AND THE PLAN BEFORE YOU VOTE.
YOU MAY WISH TO SEEK LEGAL ADVICE CONCERNING THE PLAN AND YOUR CLASSIFICATION
AND TREATMENT UNDER THE PLAN. YOUR CLAIM HAS BEEN PLACED IN CLASS 4 UNDER THE
PLAN. IF YOU HOLD CLAIMS IN MORE THAN ONE CLASS, YOU WILL RECEIVE A BALLOT FOR
EACH CLASS IN WHICH YOU ARE ENTITLED TO VOTE. IF YOUR BALLOT IS NOT RECEIVED
BY THE BALLOTING AGENT ON OR BEFORE 4:00 P.M. EST ON DECEMBER 7, 1998, AND SUCH
DEADLINE IS NOT EXTENDED, YOUR VOTE WILL NOT COUNT AS EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN. IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT IT WILL
BE BINDING ON YOU WHETHER OR NOT YOU VOTE.
ITEM 1. AMOUNT OF CLASS 4 CLAIM
On October 21, 1998, the Record Date, the undersigned was the beneficial
owner of $________ senior notes issued by Mercury, the beneficial owner of
$__________ commercial paper issued by Mercury, and the beneficial owner of
$_________ short-term notes issued by Mercury.
ITEM 2. CLASS 4 VOTE
The beneficial owner of the Claim set forth in Item 1, votes (please check
one):
/ / To Accept the Plan / / To Reject the Plan<PAGE>
<PAGE>
ITEM 3. CERTIFICATION AS TO CLASS 4 CLAIM.
With respect to Item I, the undersigned, hereby certifies the information
in the following table (use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Senior Notes Commercial Paper
Name of Holder* Acct. No ** ------------------------------------------------------------------------
Current Principal Current Principal
Issue Description Amount CUSIP# Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Name of Holder* Account Number** Short-Term Notes
- --------------------------------------------------------------------------------------------------------
Issue Description Current Principal
Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Insert your name if the Class 4 Claims are held by you in record name,
or, if held by a broker or bank (or agent thereof), insert the name of the
broker or bank (or agent thereof) through which you own the Class 4
Claims.
** Please indicate the account number of the broker or bank where the account
is held.
ITEM 4. CERTIFICATIONS.
By signing this Ballot, the undersigned certifies:
(a) that no other Ballots cast with respect to the amount of the
Class 4 Claims identified in Item 1 have been cast with respect to such
Class 4 Claims; or if earlier Ballots were cast, such earlier Ballots are
hereby revoked;
(b) that a copy of the Disclosure Statement relating to the Plan has
been provided to and reviewed by the undersigned; and
(c) that as the holder of the amount of Class 4 Claims set forth in
Item 1, the undersigned has full power and authority to vote to accept or
reject the Plan. The undersigned also acknowledges that this solicitation
is subject to all the terms and conditions set forth in the Disclosure
Statement relating to the Plan.
ITEM 5. YOU ARE URGED TO VOTE TO ACCEPT THE PLAN.
Dated Name of Voter:
------------------------ -------------------------------
(Print or Type)
Social Security or Tax I.D. No.:
------------
Signature:
----------------------------------
By:
-----------------------------------------
(If Appropriate)
Title:
--------------------------------------
(If Appropriate)
Street Address:
-----------------------------
City, State and Zip Code:-------------------
Telephone No.:
------------------------------
Broker where Commercial Paper, if any, is
held:
---------------------------------------
-2-
<PAGE>
VOTING INSTRUCTIONS
PLEASE COMPLETE, SIGN AND DATE
THE BALLOT AND RETURN IT PROMPTLY
YOUR BALLOT MUST BE RECEIVED BY:
BALLOT TABULATION CENTER - MERCURY FINANCE COMPANY
C/O LOGAN & COMPANY, INC.
615 WASHINGTON STREET
HOBOKEN, NJ 07030
BY 4:00 P.M. EASTERN STANDARD TIME ON OR
BEFORE DECEMBER 7, 1998, OR YOUR VOTE WILL NOT BE COUNTED
1. All capitalized terms used in the Ballot or Voting Instructions but not
otherwise defined therein shall have the meanings ascribed to them in the First
Amended Plan of Reorganization dated October 15, 1998 of Mercury Finance Company
(the "Plan").
2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding
upon you if it is accepted by the holders of at least two-thirds in amount and
more than one-half in number of the Claims in each impaired Class of Claims that
vote on the Plan and by the holders of at least two-thirds in amount of the
Interests in each impaired Class of Interests that vote on the Plan, and if the
Plan otherwise satisfies the requirements of section 1129(a) of the Bankruptcy
Code. If the requisite acceptances are not obtained, the Bankruptcy Court may
nonetheless confirm the Plan if it finds that the Plan provides fair and
equitable treatment to, and does not discriminate unfairly against, the Class or
Classes of Claims or Equity Interests rejecting it, and otherwise satisfies the
requirements of section 1129(b) of the Bankruptcy Code. As described in
Article VIII.E of the Disclosure Statement, Mercury will seek confirmation of
the Plan under section 1129(b) of the Bankruptcy Code (known as the cram-down
section) because of the deemed non-acceptance of the holders of Claims in
Subclasses 7B and 7C and Equity Interests in Subclass 7A and Class 8. Mercury
also reserves the right to proceed under section 1129(b), if any other impaired
Class of Claims does not accept the Plan. To have your vote count you must
complete and return this Ballot. Please review the Disclosure Statement for
more information.
3. To ensure that your vote is counted, you must (i) complete the Ballot, (ii)
indicate your decision either to accept or reject the Plan in the boxes provided
in Item 2 of the Ballot, (iii) sign and return the Ballot to the address set
forth on the enclosed prepaid envelope. Your Ballot must be received by Logan &
Company, Inc., 615 Washington Street, Second Floor, Hoboken, New Jersey 07030
(the "Balloting Agent") by 4:00 p.m. Eastern Standard Time on or before
December 7, 1998 (the "Voting Deadline"). If a Ballot is received after the
Voting Deadline, it will not be counted. IF YOU RECEIVED A RETURN ENVELOPE
ADDRESSED TO A BROKER, BANK NOMINEE OR PROXY INTERMEDIARY, YOU MUST RETURN YOUR
BALLOT TO YOUR BROKER, BANK, NOMINEE OR PROXY INTERMEDIARY EARLY ENOUGH FOR YOUR
VOTE TO BE PROCESSED AND THEN FORWARDED BY THE BROKER, BANK, NOMINEE OR PROXY
INTERMEDIARY TO THE BALLOTING AGENT BY THE VOTING DEADLINE. THEREFORE, PLEASE
ALLOW ADDITIONAL TIME.
4. If multiple Ballots are received from an individual holder of Class 4 Claims
with respect to the same Class 4 Claims prior to the Voting Deadline, the last
Ballot timely received will supersede and revoke any earlier received Ballot.
5. The Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Plan. Accordingly, at this
time, holders should not surrender certificates or instruments presenting or
evidencing their Class 4 Claims, and neither Mercury nor the Balloting Agent
will accept delivery of such certificates or instruments surrendered together
with a Ballot. The remittance of your notes or other evidence of your claims
for exchange pursuant to the Plan may only be made by you, and will only be
accepted if certificates or instruments representing your Class 4 Claims (in
proper form for transfer) are delivered together with a letter of transmittal
that will be furnished to you as provided under the Plan or as notified
following confirmation of the Plan by the Bankruptcy Court.
6. This Ballot does not constitute, and shall not be deemed to be, a proof of
claim or equity interest or an assertion or admission of a claim or equity
interest.
7. Please be sure to sign and date your Ballot. If you are completing the
Ballot on behalf of an entity, indicate your relationship with such entity and
the capacity in which you are signing. In addition, please provide your name
and mailing address if different from that set forth on the attached mailing
label or if no such mailing label is attached to the Ballot.
8. If you hold Claims in more than one Class under the Plan, you may receive
more than one Ballot coded for each different Class. Each Ballot votes only
your Claims indicated on that Ballot. Please complete and return each Ballot
you received.
9. The Ballot must be returned in sufficient time to allow it to be RECEIVED by
the Balloting Agent by no later than 4:00 p.m. Eastern Standard Time, on or
before the Voting Deadline. If you believe you have received the wrong Ballot,
please contact the Balloting Agent or your broker or bank immediately.
PLEASE MAIL YOUR BALLOT PROMPTLY
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES,
PLEASE CALL THE BALLOTING AGENT AT 201-798-1031
-3-
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: ) CHAPTER 11
)
MERCURY FINANCE COMPANY, ) CASE NO. 98-B-20763
)
DEBTOR. ) THE HONORABLE ERWIN I. KATZ
)
BALLOT FOR ACCEPTING OR REJECTING THE
FIRST AMENDED PLAN OF REORGANIZATION DATED OCTOBER 15, 1998
OF MERCURY FINANCE COMPANY
CLASS 5- HOLDERS OF SUBORDINATED NOTES OF MERCURY FINANCE COMPANY ("MERCURY")
PLEASE READ AND FOLLOW THE ENCLOSED VOTING INSTRUCTIONS
CAREFULLY BEFORE COMPLETING THE BALLOT.
PLEASE CHECK THE APPROPRIATE BOX BELOW TO INDICATE
YOUR ACCEPTANCE OR REJECTION OF THE PLAN.
- -------------------------------------------------------------------------------
IF THIS BALLOT IS ACCOMPANIED BY A RETURN ENVELOPE THAT IS ADDRESSED TO LOGAN &
COMPANY, INC. (THE "BALLOTING AGENT"), THIS BALLOT MUST BE RECEIVED BY THE
BALLOTING AGENT BY 4:00 P.M., EASTERN STANDARD TIME, DECEMBER 7, 1998 ("THE
VOTING DEADLINE"). IF YOU RECEIVED A RETURN ENVELOPE ADDRESSED TO A BROKER,
BANK, NOMINEE OR PROXY INTERMEDIARY, YOU MUST RETURN YOUR BALLOT TO YOUR BROKER,
BANK, NOMINEE OR PROXY INTERMEDIARY EARLY ENOUGH FOR YOUR VOTE TO BE PROCESSED
AND THEN FORWARDED BY THE BROKER, BANK, NOMINEE OR PROXY INTERMEDIARY TO THE
BALLOTING AGENT BY THE VOTING DEADLINE. THEREFORE, PLEASE ALLOW ADDITIONAL
TIME.
- -------------------------------------------------------------------------------
The Bankruptcy Court has approved the first amended disclosure statement
(the "Disclosure Statement") with respect to Mercury's First Amended Plan of
Reorganization dated October 15, 1998 (the "Plan"). The Disclosure Statement
provides information to assist you in deciding how to vote your Ballot. If you
do not have a Disclosure Statement you may obtain a copy from the Balloting
Agent. Court approval of the Disclosure Statement does not indicate approval of
the Plan by the Bankruptcy Court.
YOU SHOULD REVIEW THE DISCLOSURE STATEMENT AND THE PLAN BEFORE YOU VOTE.
YOU MAY WISH TO SEEK LEGAL ADVICE CONCERNING THE PLAN AND YOUR CLASSIFICATION
AND TREATMENT UNDER THE PLAN. YOUR CLAIM HAS BEEN PLACED IN CLASS 5 UNDER THE
PLAN. IF YOU HOLD CLAIMS IN MORE THAN ONE CLASS, YOU WILL RECEIVE A BALLOT FOR
EACH CLASS IN WHICH YOU ARE ENTITLED TO VOTE. IF YOUR BALLOT IS NOT RECEIVED
BY THE BALLOTING AGENT ON OR BEFORE 4:00 P.M. EST ON DECEMBER 7 1998, AND SUCH
DEADLINE IS NOT EXTENDED, YOUR VOTE WILL NOT COUNT AS EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN. IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT IT WILL
BE BINDING ON YOU WHETHER OR NOT YOU VOTE.
ITEM 1. AMOUNT OF CLASS 5 CLAIM
On October 21, 1998, the Record Date, the undersigned was the beneficial
owner of $___________________ subordinated notes issued by Mercury.
ITEM 2. CLASS 5 VOTE
The beneficial owner of the Claim set forth in Item 1, votes (please check
one):
/ / To Accept the Plan / / To Reject the Plan<PAGE>
<PAGE>
ITEM 3. CERTIFICATION AS TO CLASS 5 CLAIM.
By returning this Ballot, the undersigned, certifies that it has not
submitted any Ballots with respect to the amounts identified in Item 1, except
as specified in the table immediately below. Please provide the information
required by this Item 3 in the following table (use additional sheets of paper
if necessary):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Names of Holder* Account Number** Current Principal Amount of
Subordinated Notes
- ------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
* Insert your name if the Class 5 Claims are held by you in record name,
or, if held by a broker or bank (or agent thereof), insert the name of the
broker or bank (or agent thereof) through which you own the Class 5
Claims.
** Please indicate the account number of the broker or bank where the account
is held.
ITEM 4. CERTIFICATIONS.
By signing this Ballot, the undersigned certifies:
(a) that no other Ballots cast with respect to the amount of the
Class 5 Claims identified in Item 1 have been cast with respect to such
Class 5 Claims, or if earlier Ballots have been cast, such earlier Ballots
are hereby revoked;
(b) that a copy of the Disclosure Statement relating to the Plan has
been provided to and reviewed by the undersigned; and
(c) that as the holder of the amount of Class 5 Claims set forth in
Item 1, the undersigned has full power and authority to vote to accept or
reject the Plan. The undersigned also acknowledges that this solicitation
is subject to all the terms and conditions set forth in the Disclosure
Statement relating to the Plan.
ITEM 5. YOU ARE URGED TO VOTE TO ACCEPT THE PLAN.
Dated Name of Voter:
------------------------ -------------------------------
(Print or Type)
Social Security or Tax I.D. No.:
-------------
Signature:
-----------------------------------
By:
------------------------------------------
(If Appropriate)
Title:
---------------------------------------
(If Appropriate)
Street Address:
------------------------------
City, State and Zip Code:
--------------------
Telephone No.:
-------------------------------
Broker where subordinated notes are
held:
---------------------------------------
-2-
<PAGE>
VOTING INSTRUCTIONS
PLEASE COMPLETE, SIGN AND DATE
THE BALLOT AND RETURN IT PROMPTLY
YOUR BALLOT MUST BE RECEIVED BY:
BALLOT TABULATION CENTER - MERCURY FINANCE COMPANY
C/O LOGAN & COMPANY, INC.
615 WASHINGTON STREET
HOBOKEN, NJ 07030
BY 4:00 P.M. EASTERN STANDARD TIME ON OR
BEFORE DECEMBER 7, 1998, OR YOUR VOTE WILL NOT BE COUNTED
1. All capitalized terms used in the Ballot or Voting Instructions but not
otherwise defined therein shall have the meanings ascribed to them in the First
Amended Plan of Reorganization dated October 15, 1998 of Mercury Finance Company
(the "Plan").
2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding
upon you if it is accepted by the holders of at least two-thirds in amount and
more than one-half in number of the Claims in each impaired Class of Claims that
vote on the Plan and by the holders of at least two-thirds in amount of the
Interests in each impaired Class of Interests that vote on the Plan, and if the
Plan otherwise satisfies the requirements of section 1129(a) of the Bankruptcy
Code. If the requisite acceptances are not obtained, the Bankruptcy Court may
nonetheless confirm the Plan if it finds that the Plan provides fair and
equitable treatment to, and does not discriminate unfairly against, the Class or
Classes of Claims or Interests rejecting it, and otherwise satisfies the
requirements of section 1129(b) of the Bankruptcy Code. As described in
Article VIII.E of the Disclosure Statement, Mercury will seek confirmation of
the Plan under section 1129(b) of the Bankruptcy Code (known as the cram-down
section) because of the deemed non-acceptance of the holders of Claims in
Subclasses 7B and 7C and holders of Equity Interests in Subclass 7A and Class
8. Mercury also reserves the right to proceed under section 1129(b), if any
other impaired Class of Claims does not accept the Plan. To have your vote
count you must complete and return this Ballot. Please review the Disclosure
Statement for more information.
3. To ensure that your vote is counted, you must (i) complete the Ballot, (ii)
indicate your decision either to accept or reject the Plan in the boxes provided
in Item 2 of the Ballot, (iii) sign and return the Ballot to the address set
forth on the enclosed prepaid envelope. Your Ballot must be received by Logan &
Company, Inc., 615 Washington Street, Second Floor, Hoboken, New Jersey 07030
(the "Balloting Agent") by 4:00 p.m. Eastern Standard Time on or before December
7, 1998 (the "Voting Deadline"). If a Ballot is received after the Voting
Deadline, it will not be counted. IF YOU RECEIVED A RETURN ENVELOPE ADDRESSED
TO A BROKER, BANK NOMINEE OR PROXY INTERMEDIARY, YOU MUST RETURN YOUR BALLOT TO
YOUR BROKER, BANK, NOMINEE OR PROXY INTERMEDIARY EARLY ENOUGH FOR YOUR VOTE TO
BE PROCESSED AND THEN FORWARDED BY THE BROKER, BANK, NOMINEE OR PROXY
INTERMEDIARY TO THE BALLOTING AGENT BY THE VOTING DEADLINE. THEREFORE, PLEASE
ALLOW ADDITIONAL TIME.
4. If multiple Ballots are received from an individual holder of Class 5 Claims
with respect to the same Class 5 Claims prior to the Voting Deadline, the last
Ballot timely received will supersede and revoke any earlier received Ballot.
5. The Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Plan. Accordingly, at this
time, holders should not surrender certificates or instruments presenting or
evidencing their Class 5 Claims, and neither Mercury nor the Balloting Agent
will accept delivery of such certificates or instruments surrendered together
with a Ballot. The remittance of your notes or other evidence of your claims
for exchange pursuant to the Plan may only be made by you, and will only be
accepted if certificates or instruments representing your Class 5 Claims (in
proper form for transfer) are delivered together with a letter of transmittal
that will be furnished to you as provided under the Plan or as notified
following confirmation of the Plan by the Bankruptcy Court.
6. This Ballot does not constitute, and shall not be deemed to be, a proof of
claim or equity interest or an assertion or admission of a claim or equity
interest.
7. Please be sure to sign and date your Ballot. If you are completing the
Ballot on behalf of an entity, indicate your relationship with such entity and
the capacity in which you are signing. In addition, please provide your name
and mailing address if different from that set forth on the attached mailing
label or if no such mailing label is attached to the Ballot.
8. If you hold Claims in more than one class under the Plan, you may receive
more than one Ballot coded for each different class. Each Ballot votes only
your claims indicated on that Ballot. Please complete and return each Ballot
you received.
9. The Ballot must be returned in sufficient time to allow it to be RECEIVED by
the Balloting Agent by no later than 4:00 p.m. Eastern Standard Time, on or
before the Voting Deadline. If you believe you have received the wrong Ballot,
please contact the Balloting Agent or your broker or bank immediately.
PLEASE MAIL YOUR BALLOT PROMPTLY
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES,
PLEASE CALL THE BALLOTING AGENT AT 201-798-1031
-3-
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: ) CHAPTER 11
)
MERCURY FINANCE COMPANY, ) CASE NO. 98-B-20763
)
DEBTOR. ) THE HONORABLE ERWIN I. KATZ
)
BALLOT FOR ACCEPTING OR REJECTING THE
FIRST AMENDED PLAN OF REORGANIZATION DATED OCTOBER 15, 1998
OF MERCURY FINANCE COMPANY
CLASS 6- HOLDERS OF INDEMNIFICATION CLAIMS AGAINST MERCURY FINANCE COMPANY
("Mercury")
PLEASE READ AND FOLLOW THE ENCLOSED VOTING INSTRUCTIONS
CAREFULLY BEFORE COMPLETING THE BALLOT.
PLEASE CHECK THE APPROPRIATE BOX BELOW TO INDICATE
YOUR ACCEPTANCE OR REJECTION OF THE PLAN.
- -------------------------------------------------------------------------------
THIS BALLOT IS ACCOMPANIED BY A RETURN ENVELOPE THAT IS ADDRESSED TO LOGAN &
COMPANY, INC. (THE "BALLOTING AGENT"), THIS BALLOT MUST BE RECEIVED BY THE
BALLOTING AGENT BY 4:00 P.M., EASTERN STANDARD TIME, DECEMBER 7, 1998 ("THE
VOTING DEADLINE").
- -------------------------------------------------------------------------------
The Bankruptcy Court has approved the first amended disclosure statement
(the "Disclosure Statement") with respect to Mercury's First Amended Plan of
Reorganization dated October 15, 1998 (the "Plan"). The Disclosure Statement
provides information to assist you in deciding how to vote your Ballot. If you
do not have a Disclosure Statement you may obtain a copy from the Balloting
Agent. Court approval of the Disclosure Statement does not indicate approval of
the Plan by the Bankruptcy Court.
YOU SHOULD REVIEW THE DISCLOSURE STATEMENT AND THE PLAN BEFORE YOU VOTE.
YOU MAY WISH TO SEEK LEGAL ADVICE CONCERNING THE PLAN AND YOUR CLASSIFICATION
AND TREATMENT UNDER THE PLAN. YOUR CLAIM HAS BEEN PLACED IN CLASS 6 UNDER THE
PLAN. IF YOU HOLD CLAIMS IN MORE THAN ONE CLASS, YOU WILL RECEIVE A BALLOT FOR
EACH CLASS IN WHICH YOU ARE ENTITLED TO VOTE. IF YOUR BALLOT IS NOT RECEIVED
BY THE BALLOTING AGENT ON OR BEFORE 4:00 P.M. EST ON DECEMBER 7, 1998, AND SUCH
DEADLINE IS NOT EXTENDED, YOUR VOTE WILL NOT COUNT AS EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN. IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT IT WILL
BE BINDING ON YOU WHETHER OR NOT YOU VOTE.
ITEM 1. AMOUNT OF CLASS 6 CLAIM
The undersigned holds an indemnification claim in the amount of
$_____________ against Mercury.
ITEM 2. CLASS 6 VOTE
The beneficial owner of the Claim set forth in Item 1, votes (please check
one):
/ / To Accept the Plan / / To Reject the Plan<PAGE>
<PAGE>
ITEM 3. CERTIFICATIONS.
By signing this Ballot, the undersigned certifies:
(a) that no other Ballots cast with respect to the amount of the
Class 6 claims identified in Item 1 have been cast with respect to such
Class 6 Claims, or in such case earlier Ballots were cast, such earlier
Ballots are hereby revoked;
(b) that a copy of the Disclosure Statement relating to the Plan has
been provided to and reviewed by the undersigned; and
(c) that as the holder of the amount of Class 6 Claims set forth in
Item 1, the undersigned has full power and authority to vote to accept or
reject the Plan. The undersigned also acknowledges that this solicitation
is subject to all the terms and conditions set forth in the Disclosure
Statement relating to the Plan.
ITEM 4. YOU ARE URGED TO VOTE TO ACCEPT THE PLAN.
Dated Name of Voter:
------------------- -------------------------------
(Print or Type)
Social Security or Tax I.D. No.:
-------------
Signature:
-----------------------------------
By:
------------------------------------------
(If Appropriate)
Title:
---------------------------------------
(If Appropriate)
Street Address:
------------------------------
City, State and Zip Code:
--------------------
Telephone No.:
-------------------------------
-2-
<PAGE>
VOTING INSTRUCTIONS
PLEASE COMPLETE, SIGN AND DATE
THE BALLOT AND RETURN IT PROMPTLY
YOUR BALLOT MUST BE RECEIVED BY:
BALLOT TABULATION CENTER - MERCURY FINANCE COMPANY
C/O LOGAN & COMPANY, INC.
615 WASHINGTON STREET
HOBOKEN, NJ 07030
BY 4:00 P.M. EASTERN STANDARD TIME ON OR
BEFORE DECEMBER 7, 1998, OR YOUR VOTE WILL NOT BE COUNTED
1. All capitalized terms used in the Ballot or Voting Instructions but not
otherwise defined therein shall have the meanings ascribed to them in the First
Amended Plan of Reorganization dated October 15, 1998 of Mercury Finance Company
(the "Plan").
2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding
upon you if it is accepted by the holders of at least two-thirds in amount and
more than one-half in number of the Claims in each impaired Class of Claims that
vote on the Plan and by the holders of at least two-thirds in amount of the
Interests in each impaired Class of Interests that vote on the Plan, and if the
Plan otherwise satisfies the requirements of section 1129(a) of the Bankruptcy
Code. If the requisite acceptances are not obtained, the Bankruptcy Court may
nonetheless confirm the Plan if it finds that the Plan provides fair and
equitable treatment to, and does not discriminate unfairly against, the Class or
Classes of Claims or Equity Interests rejecting it, and otherwise satisfies the
requirements of section 1129(b) of the Bankruptcy Code. As described in
Article VIII.E of the Disclosure Statement, Mercury will seek confirmation of
the Plan under section 1129(b) of the Bankruptcy Code (known as the cram-down
section) because of the deemed non-acceptance of the holders of Claims in
Subclasses 7B and 7C and Equity Interests in Subclass 7A and Class 8. Mercury
also reserves the right to proceed under section 1129(b), if any other impaired
Class of Claims does not accept the Plan. To have your vote count you must
complete and return this Ballot. Please review the Disclosure Statement for
more information.
3. To ensure that your vote is counted, you must (i) complete the Ballot, (ii)
indicate your decision either to accept or reject the Plan in the boxes provided
in Item 2 of the Ballot, (iii) sign and return the Ballot to the address set
forth on the enclosed prepaid envelope. Your Ballot must be received by Logan &
Company, Inc., 615 Washington Street, Second Floor, Hoboken, New Jersey 07030
(the "Balloting Agent") by 4:00 p.m. Eastern Standard Time on or before December
7, 1998 (the "Voting Deadline"). If a Ballot is received after the Voting
Deadline, it will not be counted.
4. If multiple Ballots are received from an individual holder of Class 6 Claims
with respect to the same Class 6 Claims prior to the Voting Deadline, the last
Ballot timely received will supersede and revoke any earlier received Ballot.
5. The Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Plan. Accordingly, at this
time, holders should not surrender certificates or instruments presenting or
evidencing their Class 6 Claims, and neither Mercury nor the Balloting Agent
will accept delivery of such certificates or instruments surrendered together
with a Ballot. The remittance of evidence of your claims for exchange pursuant
to the Plan may only be made by you, and you will be notified following
confirmation of the Plan by the Bankruptcy Court as to what must be submitted.
6. This Ballot does not constitute, and shall not be deemed to be, a proof of
claim or equity interest or an assertion or admission of a claim or equity
interest.
7. Please be sure to sign and date your Ballot. If you are completing the
Ballot on behalf of an entity, indicate your relationship with such entity and
the capacity in which you are signing. In addition, please provide your name
and mailing address if different from that set forth on the attached mailing
label or if no such mailing label is attached to the Ballot.
8. If you hold Claims in more than one class under the Plan, you may receive
more than one Ballot coded for each different class. Each Ballot votes only
your claims indicated on that Ballot. Please complete and return each Ballot
you received.
9. The Ballot must be returned in sufficient time to allow it to be RECEIVED by
the Balloting Agent by no later than 4:00 p.m. Eastern Standard Time, on or
before the Voting Deadline. If you believe you have received the wrong Ballot,
please contact the Balloting Agent immediately.
PLEASE MAIL YOUR BALLOT PROMPTLY
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES,
PLEASE CALL THE BALLOTING AGENT AT 201-798-1031
-3-
<PAGE>
Exhibit T3E22
SETTLEMENT
COMMITTEE
PRELIMINARY
ANALYSIS
<PAGE>
ENTERPRISE VALUATION UNDER ALTERNATIVE ASSUMPTIONS
<TABLE>
<CAPTION>
ASSUMED
NET
DEBT CHARGE-OFF ENTERPRISE EQUITY
BORROWING RATE COLLATERALIZED? RATE (1) VALUE VALUE
-------------- --------------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Mercury Business 9% Previously
Plan Pre-Bankruptcy Unsecured -
Default Rate Now Secured (2) 12.1% $653.1 M $ 0
Settlement 7%
Committee Post-Bankruptcy
Evaluation Non-default rate (3) Yes 10.4%(4) $994.1 M $296.3 M
</TABLE>
- ----------
(1) Net charge-offs as a percentage of average net finance receivables
(2) Pre-petition debt was unsecured.
(3) Compares to a 6.5% pre-default, pre-petition interest rate.
(4) Peer group average is 6.8%.
<PAGE>
COMPARISON OF SUBPRIME LENDERS' NET CHARGE-OFF RATES
<TABLE>
<CAPTION>
SUBPRIME LENDER NET CHARGE-OFF RATE (1)
----------------- -------------------------
<S> <C>
Mercury Business Plan 12.1%
AmeriCredit 6.6%
Consumer Portfolio Services 5.2%
First Investors Financial Services (2) 3.0%
Credit Acceptance Corporation 12.4%
Peer Group Average 6.8%
</TABLE>
- ----------
(1) Net charge-offs as a percentage of average net finance receivables.
(2) Credit Acceptance Corporation is generally considered a "Subprime D"
lender, while Mercury and the others are generally considered to be
"Subprime C" lenders.
<PAGE>
REORGANIZED EQUITY
<TABLE>
<CAPTION>
PERCENT OF
TOTAL EQUITY
--------------
<S> <C> <C>
Valuation of Equity $296.3 M 66%
Plus: Increase in Equity Value by
Reason of Equity Issued to
Unsecured Creditors for 25% of
Debt
152.7 M 34%
-------- ----
Available Non-cash Equity $449.0 M 100%
-------- ----
</TABLE>
<PAGE>
CASH AVAILABLE FOR SETTLEMENT
<TABLE>
<S> <C>
$52 million Aggregate tax refunds due in 1998 and 1999
10 million D&O Policy
16 million "Forbearance fee"/Prepaid interest paid to the benefit of
Debtholders (1)
7 million Expenses paid by Mercury solely for the benefit of Debtholders
- ------------
$85 million Sub-total
10 million Aggregate from all Outside Directors (2)
- ------------
$95 MILLION TOTAL (3)
- ------------
</TABLE>
- ----------
(1) $13 million to have been paid into escrow for Directors & Officers.
(2) For exposure of claims asserted by Settlement Committee, including those
asserted in the adversary proceeding filed in bankruptcy.
(3) Total does not include 50% of John Brincat, Sr.'s net worth or any amounts
from the Estate of James Doyle.
<PAGE>
TOTAL AVAILABLE FOR SETTLEMENT
<TABLE>
<S> <C>
Cash $ 95.0 M
Non-cash Equity (66.5% of Equity) 296.3 M
----------
TOTAL (1) $ 391.3 M
----------
</TABLE>
- -----------
(1) Excluding contributions by John Brincat, Sr. (CEO) and the Estate of James
Doyle (CFO).
<PAGE>
Exhibit T3E24
April 6, 1996
John N. Brincat
Mercury Finance Company
40 Skokie Boulevard
Northbrook, Illinois 60062
Re: Indemnification of Directors and Officers of
MERCURY FINANCE COMPANY AND ITS SUBSIDIARIES
Dear Mr. Brincat:
The Certificate of Incorporation of Mercury Finance Company limits the
scope of personal liability of directors for breaches of fiduciary duty as a
director and extends to directors and officers indemnification in the event
of personal liability or expenses incurred by them as a result of certain
litigation.
Therefore, by way of further consideration for your continuing service as a
director or officer of Mercury Finance Company or subsidiaries (and as permitted
by the Delaware General Corporation Law and Article 9 of the Corporation
Charter) the corporation hereby commits to you as follows:
You shall be protected by the corporation to the fullest extent permitted
by applicable law from time to time in effect.
If you have been or are made a party or are threatened to be made a party
to or are involved in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "proceeding"), by reason of the
fact that you, or a person for whom you are the legal representative, is or was
a director or officer of the corporation or any of its subsidiaries or are or
were serving at the request of the corporation or any of its subsidiaries as a
director, advisory director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, you shall be indemnified
and held harmless by the corporation to the fullest extent authorized by the
Delaware General
<PAGE>
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment), against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by you in connection therewith, and such indemnification
shall continue after you have ceased to be a director, officer, employee or
agent and shall inure to the benefit of your heirs, executors and
administrators; provided, however, that, except as provided in the next
paragraph hereof, the corporation shall indemnify you in connection with a
proceeding (or part thereof) initiated by you only if such proceeding (or part
thereof) was authorized by the Board of Directors of the corporation. The
corporation shall pay your expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if the Delaware
General Corporation Law requires, the payment of such expenses incurred by you
in advance of the final disposition of a proceeding shall be made only upon
delivery to the corporation of an undertaking, by or on your behalf, to repay
all amounts so advanced if it shall ultimately be determined that you are not
entitled to be indemnified hereunder or otherwise.
If a claim under the preceding paragraph hereof is not paid in full by the
corporation within thirty days after a written claim has been received by the
corporation, you may at any time thereafter bring suit against the corporation
to recover the unpaid amount of the claim and, if successful in whole or in
part, you shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required by
Delaware General Corporation Law, has been tendered to the corporation) that you
have been adjudged by a court of competent jurisdiction that you have not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify you for the amount claimed, but
the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of you is proper in the
circumstances because you have met the applicable standard of conduct set forth
in the Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that you have not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that you have not met the
applicable standard of conduct.
The limitation of personal liability of directors and the right to
indemnification and the advancement and payment of expenses of directors and
officers conferred hereunder are contractual obligations of the corporation to
you and shall not be deemed exclusive of any other right which you may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise. These contractual obligations shall continue after you have ceased
being a director or officer and shall inure to the benefit of your heirs,
executors and administrators.
2
<PAGE>
Please acknowledge receipt of the extra copy of this letter and return it
to me.
Very truly yours,
MERCURY FINANCE COMPANY
By /s/ MICHAEL P. HARRINGTON
--------------------------
Michael P. Harrington
Receipt of this contractual
undertaking is acknowledged:
/s/ John Brincat
- ----------------------------
3
<PAGE>
April 6, 1996
Steve Gould
1401 West Paces Ferry Road, N.W., Suite A-213
Atlanta, Georgia 30327
Re: Indemnification of Directors and Officers of
MERCURY FINANCE COMPANY AND ITS SUBSIDIARIES
Dear Mr. Gould:
The Certificate of Incorporation of Mercury Finance Company limits the
scope of personal liability of directors for breaches of fiduciary duty as a
director and extends to directors and officers indemnification in the event
of personal liability or expenses incurred by them as a result of certain
litigation.
Therefore, by way of further consideration for your continuing service as a
director or officer of Mercury Finance Company or subsidiaries (and as permitted
by the Delaware General Corporation Law and Article 9 of the Corporation
Charter) the corporation hereby commits to you as follows:
You shall be protected by the corporation to the fullest extent permitted
by applicable law from time to time in effect.
If you have been or are made a party or are threatened to be made a party
to or are involved in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "proceeding"), by reason of the
fact that you, or a person for whom you are the legal representative, is or was
a director or officer of the corporation or any of its subsidiaries or are or
were serving at the request of the corporation or any of its subsidiaries as a
director, advisory director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, you shall be indemnified
and held harmless by the corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the corporation to
2
<PAGE>
provide broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise taxes or penalties,
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
you in connection therewith, and such indemnification shall continue after you
have ceased to be a director, officer, employee or agent and shall inure to the
benefit of your heirs, executors and administrators; provided, however, that,
except as provided in the next paragraph hereof, the corporation shall indemnify
you in connection with a proceeding (or part thereof) initiated by you only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the corporation. The corporation shall pay your expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however, that
if the Delaware General Corporation Law requires, the payment of such expenses
incurred by you in advance of the final disposition of a proceeding shall be
made only upon delivery to the corporation of an undertaking, by or on your
behalf, to repay all amounts so advanced if it shall ultimately be determined
that you are not entitled to be indemnified hereunder or otherwise.
If a claim under the preceding paragraph hereof is not paid in full by the
corporation within thirty days after a written claim has been received by the
corporation, you may at any time thereafter bring suit against the corporation
to recover the unpaid amount of the claim and, if successful in whole or in
part, you shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required by
Delaware General Corporation Law, has been tendered to the corporation) that you
have been adjudged by a court of competent jurisdiction that you have not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify you for the amount claimed, but
the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of you is proper in the
circumstances because you have met the applicable standard of conduct set forth
in the Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that you have not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that you have not met the
applicable standard of conduct.
The limitation of personal liability of directors and the right to
indemnification and the advancement and payment of expenses of directors and
officers conferred hereunder are contractual obligations of the corporation to
you and shall not be deemed exclusive of any other right which you may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise. These contractual obligations shall continue after you have ceased
being a director or officer and shall inure to the benefit of your heirs,
executors and administrators.
3
<PAGE>
Please acknowledge receipt of the extra copy of this letter and return it
to me.
Very truly yours,
MERCURY FINANCE COMPANY
By /s/ JOHN N. BRINCAT
--------------------------
John N. Brincat
President and Chief
Executive Officer
Receipt of this contractual
undertaking is acknowledged:
/S/ STEVE GOULD
- ----------------------------
<PAGE>
April 6, 1996
John Pratt
1311 South University Drive
Plantation, Florida 33324
Re: Indemnification of Directors and Officers of
MERCURY FINANCE COMPANY AND ITS SUBSIDIARIES
Dear Mr. Pratt
The Certificate of Incorporation of Mercury Finance Company limits the
scope of personal liability of directors for breaches of fiduciary duty as a
director and extends to directors and officers indemnification in the event
of personal liability or expenses incurred by them as a result of certain
litigation.
Therefore, by way of further consideration for your continuing service as a
director or officer of Mercury Finance Company or subsidiaries (and as permitted
by the Delaware General Corporation Law and Article 9 of the Corporation
Charter) the corporation hereby commits to you as follows:
You shall be protected by the corporation to the fullest extent permitted
by applicable law from time to time in effect.
If you have been or are made a party or are threatened to be made a party
to or are involved in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "proceeding"), by reason of the
fact that you, or a person for whom you are the legal representative, is or was
a director or officer of the corporation or any of its subsidiaries or are or
were serving at the request of the corporation or any of its subsidiaries as a
director, advisory director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, you shall be indemnified
and held harmless by the corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the corporation to
<PAGE>
provide broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise taxes or penalties,
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
you in connection therewith, and such indemnification shall continue after you
have ceased to be a director, officer, employee or agent and shall inure to the
benefit of your heirs, executors and administrators; provided, however, that,
except as provided in the next paragraph hereof, the corporation shall indemnify
you in connection with a proceeding (or part thereof) initiated by you only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the corporation. The corporation shall pay your expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however, that
if the Delaware General Corporation Law requires, the payment of such expenses
incurred by you in advance of the final disposition of a proceeding shall be
made only upon delivery to the corporation of an undertaking, by or on your
behalf, to repay all amounts so advanced if it shall ultimately be determined
that you are not entitled to be indemnified hereunder or otherwise.
If a claim under the preceding paragraph hereof is not paid in full by the
corporation within thirty days after a written claim has been received by the
corporation, you may at any time thereafter bring suit against the corporation
to recover the unpaid amount of the claim and, if successful in whole or in
part, you shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required by
Delaware General Corporation Law, has been tendered to the corporation) that you
have been adjudged by a court of competent jurisdiction that you have not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify you for the amount claimed, but
the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of you is proper in the
circumstances because you have met the applicable standard of conduct set forth
in the Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that you have not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that you have not met the
applicable standard of conduct.
The limitation of personal liability of directors and the right to
indemnification and the advancement and payment of expenses of directors and
officers conferred hereunder are contractual obligations of the corporation to
you and shall not be deemed exclusive of any other right which you may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise. These contractual obligations shall continue after you have ceased
being a director or officer and shall inure to the benefit of your heirs,
executors and administrators.
2
<PAGE>
Please acknowledge receipt of the extra copy of this letter and return it
to me.
Very truly yours,
MERCURY FINANCE COMPANY
By /s/ JOHN N. BRINCAT
--------------------------
John N. Brincat
President and Chief
Executive Officers
Receipt of this contractual
undertaking is acknowledged:
/S/ JOHN PRATT
- ----------------------------
3
